AUXILIARY RATE CALCULATIONConducted by the Budget Office

Mary Alice Mills – Budget Analyst

AGENDA

Guiding Principles

Rate Proposal Building Blocks

Calculating a Rate

Step by Step

Examples

Documentation & Record Retention

Important Dates

Resources

GUIDING PRINCIPLES

Florida Statutes 1011.47, 1009.24 FL BOG Regulation 9.013 OMB – Circular A-21 – Federally Sponsored

Contracts & Grants

Florida State University Auxiliary Policies NACUBO – College and University Business

Administration

GENERAL AUXILIARY GUIDELINES

Only expenses that are related to the generation of revenue can be included in the rates

Only items paid for by the Auxiliary can be built into the rates

Charges should not exceed actual cost over the break-even period for Internal & Federally Sponsored C&G customers

Rates should be reviewed and adjusted for over/under applied costs from previous period A cash surplus should lower rates A cash deficit should increase rates

Projected expenditures should be supported by a history of actual expenditures

RATE PROPOSAL BUILDING BLOCKS

Direct & Indirect Costs

Cost Adjustments

Special Criteria for Federally Sponsored C&G

Unallowable Costs (Federally Sponsored

C&G)

Revenues

DIRECT & INDIRECT COSTS

Direct Costs: Costs incurred because of some definite action by or for an organization unit, function, activity; costs identified specifically with a cost objective. Salaries & benefits of data entry person, Cost of

goods sold Materials & supplies: chemicals used in

experiment

Indirect Costs: Costs incurred that cannot be identified specifically with a cost objective but benefit multiple cost objectives. Salaries & benefits of general manager Office supplies for budget manager reconciliation Auxiliary Overhead Assessment

COST ADJUSTMENTS

Adjust for future expenses

Adjustments from previous period

surplus/deficit

Unallowable Costs for Federally Sponsored

C&G

Includes Funds: 520, 521, 523 & 524

SPECIAL CRITERIA FOR FEDERALLY SPONSORED C&G Check the source of revenue from customers Be cautious of charging a grant for depreciation

of a piece of equipment the grant already purchased

NO DOUBLE DIPPING!

Cannot recover the following: Future purchases of equipment or any item

Past purchases of equipment should be recovered through depreciation

Financing costs of inventory or reserves

Deficits from other activities

UNALLOWABLE COSTS TO FEDERALLY SPONSORED C&G

Costs that should not be built into rates because they are not eligible for reimbursement from the federal government include, but are not limited to: Advertising and public relations Alumni Activities Bad debts Charitable contributions, donations,

remembrances Entertainment Fines and penalties Housing and personal living expenses Marketing

REVENUES

Auxiliaries are allowed to have different sets of rates. May need to have three sets of rates:

Non-Federally Sponsored C&G customers

External (check – cash handling) can earn profit

Internal (IDR)

Federally Sponsored C&G customers Since auxiliaries can earn a profit on external

users, this excess cash could be used:

Buy Equipment

Compensated Leave

Reduce Rates to Internal Customers

COMPENSATED LEAVE

Who is on the Auxiliary Payroll? Is anyone retiring soon? Where were they paid from during the last 4

years? Check leave balances

Annual Leave Payout a maximum of 352 hours – Faculty & A&P Payout a maximum of 240 hours – USPS

Sick Leave Person must have been employed for 10+ years Payout ¼ sick leave hours up to max 480 hours

CALCULATING A RATE

Budgeted ExpensesBudgeted Usage Base

Budgeted usage base is the volume of work expected to be performed expressed in reasonable units of measurement: Equipment Usage = Machine Hours Labor Intensive = Labor Hours Measurable Product = Product Volume

Reasonable measurement should be amount of time equipment is likely to be used rather than amount of time equipment is available for use.

CALCULATING A RATE

Example: Computing Center Budgeted allowable costs of $180,000 for FY

2012 Under-recovery of $20,000 in FY 2011 Estimate an average of 1,000 hours of use per

year

$180,000 + $20,000 = $200,000

$200,0001,000

Rate = $200 per hour

CALCULATING A RATE

1. Print out departmental ledger2. Identify Expenditures or Costs

Salary OPS Expense OCO Overhead Assessment Transfer Depreciation

3. Identify Unallowable Costs4. Identify Past/Future Adjustments5. Prepare Estimated Usage Base6. Calculate Rate7. Develop Fund Balance Worksheet

CALCULATING A RATE

CALCULATING A RATE

Sales & Service of Educational Activities – 0%

2. Identify ExpendituresSalary $14,409Expense $ 97Total Expense $14,506

3. No Unallowable Costs

CALCULATING A RATE

4. Identify AdjustmentsEnded the year with too much cash

Cash Balance$13,186Expenditures $14,506Percentage 91%

What should the year end cash balance have been?

Expenditures $14,506 x 15% = $2,176

$13,186 - $2,176 = $11,010 - $43 liability = $10,967

New Purchase of Software = $2,000

CALCULATING A RATE

5. Prepare Estimated Usage Base

Labor Intensive = Labor Hour6 hours per session47 sessions per year

Total Estimated Hours = 282

CALCULATING A RATE

6. Calculate the Rate

Expenditures $14,506Adjustments

- over collection $10,967+ new purchase $ 2,000

Total Cost $ 5,539

Estimated Usage Hours 282

Rate = $5,539 ÷ 282 = $19.64 per hour

CALCULATING A RATE - WORKSHEET

CALCULATING A RATE

7. Fund Balance Worksheet

Beginning Cash Balance $13,186 + Revenue (290 x $19.60) $ 5,687 + Interest Earned $ 50 - Salary Expense $14,409 - Expenditures $ 2,097Ending Cash Balance $ 2,417

$2,417 ÷ $16,506 = 14.6%

DOCUMENTATION & RECORD RETENTION

Be sure to keep records of the following: Working papers supporting rate calculation Past rate schedules OBI Ledgers Inventory records Billings and usage records http://www.vpfa.fsu.edu/Quicklinks/Records-M

anagement-Program/Records-Disposal

IMPORTANT DATES

April: Submit Non-E&G Operating Budget

October: Memo is sent out to Budget Managers

with Casualty Insurance & Overhead Assessment

amounts

November: Casualty Insurance is charged (expense)

February: Overhead Assessment is charged (transfer

out)

RESOURCES

Budget Office Auxiliary Website www.budget.fsu.edu/Auxiliaries

OMB Circular A-21 http://www.whitehouse.gov/sites/default/files/omb/assets/omb/fedre

g/2005/083105_a21.pdf

Unallowable Costs http://www.research.fsu.edu/contractsgrants/unallowable.html

OBI Job Aids: Department Ledger AUX , HR GL Detail http://omni.training.fsu.edu/OMNI-BI-Reporting/Financial-Reports

RESOURCES

OMNI Financials Queries: FSU_DEPT_CASH_BALANCE FSU_DPT_GL_JOURNALS FSU_DPT_TRIAL_BALANCE FSU_CF_DEPT_ATTRIB2

Controller’s Office: forms, useful queries & policies Expenditure Guidelines:

http://control.vpfa.fsu.edu/Payables-Disbursement-Services

Property Accounting http://control.vpfa.fsu.edu/Property-Accounting FSU_DPT_AM_NBV_ASSETS

THANK YOU!

Please fill out a survey before you leave

Contact Us:The Budget Office

321 Westcottwww.budget.fsu.edu

644-4203