Pro Rata / Statewide Cost Allocation Plan (SWCAP) - PowerPoint Presentation

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Pro Rata / Statewide Cost Allocation Plan (SWCAP) Overview

Department of Finance

Fiscal Systems and Consulting Unit

MAY 2016Slide2

Full Cost Recovery Policy

Central Service Costs Allocation

Budgeting for SWCAP and Pro Rata

Recoveries

ReportsFAQs

Agenda

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Full Cost Recovery Policy

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The state policy is for departments to recover full costs whenever goods or services are provided for others.

The full cost includes

all costs attributable directly to the activity plus a fair share of indirect costs. Departmental

direct costs

Departmental indirect (overhead) costs Statewide central service costsFull Cost Recovery Policy4Slide5

What are the authorities to recover Costs?

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Recovery Authority

The authorities for Pro Rata and SWCAP recoveries are :

State Administrative Manual (SAM) (sections 8752, and 8753-8756)

Government Code (GC)

(sections 11270-11277 and 22883)Federal Provisions (SWCAP only)Guidance at CFR 200 (formerly 2 CFR Part 225,

Circular A-87)Cost Principles and Procedures (ASMBC-10) 6Slide7

Government Code 11010 (Law)

and SAM 8752 (Policy)

GC 11010 ~ When billing other entities, state agencies supported by the General Fund are

required to include an administrative cost factor

. SAM 8752 ~ Departments providing goods or services to others will recover full costs. This applies to all departments regardless of funding sources and in all cases unless a department is specifically exempted by law. 7Slide8

Elements of Full Costs

Direct Costs

(DC) $ XXXXIndirect Costs

(IC)

a) Departmental $ XXb) Statewide: Pro Rata (Special & NGC funds) $ XX or SWCAP (Federal Funds) $ XX $ XXXX

Total Costs (TC) $ XXXXXDC + IC = TC (full costs)8Slide9

What are Direct Costs?

Direct Costs are costs directly

assignable to a program. (For example, the cost of carrying out specific work performed in an audit or services agreed to in a Federal Grant.)Salaries and wages

Equipment

Operating expenses (not included in use allowance calculations)Travel expenses incurred to carry out the federal award 9Slide10

What are Indirect Costs?

Indirect costs are

not directly assignable to a specific program.The costs are not easily identifiable nor are they tied to a specific cost objective.

The costs are normally used for a common or joint purpose.

Departmental (overhead) costs assigned to many programs: Executive staffInformation technologyAccounting staffBudget staff

Other (Insurance, Rent, Internet Connectivity)10Slide11

Indirect Costs (Continued)

Statewide Costs: Fair share of costs incurred by Central Service Agencies (CSAs).Pro Rata

(Special Funds)

SWCAP (Federal Funds)All departments must pay their fair share of costs incurred by the Central Service Agencies for statewide costs.11Slide12

Plan Definitions

Pro Rata Plan

Recovery of central service costs from Special and certain Non-G

overnmental Cost Funds (NGC)

Statewide Cost Allocation Plan (SWCAP)Recovery of central service costs from Federal Funds 12Slide13

What is a Central Service Agency Cost?

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Central Service Agency Costs

SAM 8753 states the following:

Central service costs are those amounts expended by central service departments and the Legislature for overall administration of state government and for providing centralized services to state departments.

These functions are necessary for state operations and are centralized to provide efficient and consistent statewide policy and services

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Who are the Central Service Agencies?

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What type of functions do the CSAs perform?

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Examples of central service

functions

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Examples of Central Service functions (

cont.)

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How are Central Service Costs funded?Central service costs are funded by the

General Fund and the

Central Service Cost Recovery Fund appropriations made to each central service department. (Note: Funding and Recovery is not a direct relationship.)19Slide20

Central Service Cost

Allocation

Process20Slide21

How does Cost Allocation work?Central Service costs are

provided to Finance by the Central Service Agencies

and are then allocated to departments based on the corresponding workload provided.

The Central Service Agencies are responsible for the

accuracy of the data they provide.Finance also analyzes the data for reasonableness of any variances prior to allocating these costs out to departments.21Slide22

Pro Rata vs SWCAP

SWCAP:

Allocate costs to departments by functionDistribute department’s total allocation to federal fund based on its proportion of total funding

Federal fund is only billable fund

Pro Rata:Allocate costs to departments by functionDistribute department’s total allocation to each fund based on the fund’s proportion of total fundingClassify each fund’s cost as billable or nonbillable

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Cost Allocation Process

Obtain workload and expenditure data from the CSAs:

Past year (PY) actual workload data

PY actual expenditures (must tie to year-end financial statements)

Budget year (BY) estimated expendituresCalculate and distribute CSA costs to state departments based on workload23Slide24

Cost Allocation Process (Cont.)

Distribute total departmental allocation

Pro Rata

– proportionately to all funds in the department based on each fund’s percentage of total departmental funding.

SWCAP – proportionately to the federal fund based on its percentage of total departmental funding.

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Determine the total allocated to each

fund (Pro Rata Only)

Calculate the total allocation using the departmental allocation for each fund (PY and BY) from Step 3 and the BY estimate from two years ago (PY estimate).

PY PY Roll -

BY Total Actual Estimate Forward Estimate Allocation–

=

+

=

Cost Allocation Process (Cont.)

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Cost Allocation Process (Cont.)

Classify the allocation by billable or

non-billable funds

(a) Pro RataBillable funds: Funded by special revenue sources such as fees, licenses, penalties, assessments, interests, etc.Non-billable funds:

General Fund Federal Funds Special Deposit Fund (b) SWCAP - only federal funds are billable26Slide27

27Budgeting for SWCAP

and Pro RataSlide28

Budgeting process involves:

Finance, Fiscal Systems and Consulting Unit (FSCU)

Finance Budget AnalystsDepartments’ Budget Office

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Budgeting

SWCAP

Pro Rata

Department’s Total SWCAP Allocation

Federal Funding State OperationsX=Department’s Budgeted SWCAP

Special Fund State OperationsXDepartment’s Total Pro Rata Allocation=

Budgeted Pro Rata

for Fund

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31Pro Rata Assessments are currently apportioned to funds at the appropriation level.

The proposed change will allow assessments to be charged at the fund level instead of within each departments’ various support appropriations.

Charging at the fund level will eliminate layers of budgeting and accounting steps while achieving the same results.

Upcoming Budget Letter in late Summer/early

Fall. http://www.dof.ca.gov/budgeting/trailer_bill_language/budget_operations_support/documents/100StatewideGeneralAdministrativeCosts.pdfComing Soon

Proposed technical change, effective with 2016-17 Pro Rata AssessmentsSlide32

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To Be DeterminedSlide33

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RecoveriesSlide34

Recoveries process involves:

Finance, Fiscal Systems and Consulting Unit (FSCU)

Departments’ Accounting Office and Program UnitState Controller’s Office

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SWCAP Recovery Process(Department’s Responsibility)

Bill

Federal Fundfor Direct Plus IndirectCosts

Receipt of

FederalFundsTransferSWCAP portion toGeneral Fund

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SWCAP Recoveries

Departments must submit

an indirect cost plan

to the federal government in order to establish the

billing basis for recovering indirect costs.Methods of Cost Recovery:ICRP (Indirect Cost Rate Proposal)CAP (Cost Allocation Plan)

Direct billing36Slide37

SWCAP Recoveries (Cont.)

SWCAP transfers:

Departments submit a Transaction Request to SCO with a copy to FSCU and a copy to the department’s Finance Budget analyst. (SAM 8755.2)

SWCAP transfers are due within 30 days after the end of a quarter where a recovery occurs.

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Transaction Request

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SWCAP Journal Entry

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SWCAP Recoveries

If a department has not transferred federal funds to the General Fund on a timely basis, Finance has the authority to enforce recovery by instructing the SCO to transfer the amount that should have been transferred pursuant to GC Section 13332.02.

The 2015-16 Budget Act, Control Section 8.54 provides Finance authority to reduce a department’s support appropriation when required transfers are past due or not sufficient. 40Slide41

Pro Rata Recoveries

Finance informs the SCO

of Pro Rata billable assessments.SCO will set-up the transfers to occur automatically.

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Pro Rata Journal Entry

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Reports

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Pro Rata/SWCAP Cost Allocation

Reports are

posted on our DOF website:Each state department can view a list of their fair share of CSA costs

Each state department’s total allocation is reflected

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Reports

SWCAP Detail by

AgencySWCAP Recoveries

Pro Rata Detail by

Department and FunctionPro Rata Detail by Department and FundPro Rata Detail by Fund and Department

Internet website: http://www.dof.ca.gov/accounting/fscu/pro_rata-swcap/45Slide46

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Let’s look at your Department’s reports

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Timeline

June – August

FSCU provides training for Central Service Agency (CSA) staff (as needed)CSAs receive Workload, Expenditure and Misc spreadsheets from FSCU

FSCU reviews and processes central services data

Departments to complete final prior year SWCAP recoveriesSeptemberFSCU runs Pro Rata and SWCAP cost allocation Finance Budget Letter released to departmentsOctober

Departments certify Pro Rata and SWCAP amounts.FSCU finalizes Pro Rata and SWCAP amounts for the January 10 Governor’s BudgetOctober – DecemberSWCAP departments turn in their ICRP/CAP to FSCU for review before submitting to the federal government by December 31February – April

FSCU notifies departments of the final negotiated SWCAP amounts (DHHS Rerun)

June

SCO notifies departments on the new fiscal year Pro Rata assessments

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Frequently Asked Questions (FAQs)What is the main difference between SWCAP and Pro Rata Plan?

Pro Rata

distributes a department’s total allocation to each Special Fund based on the fund’s proportion of total funding.

SWCAP

distributes a department’s total allocation to Federal Fund based on its proportion of total fundingWhat is the state’s recovery policy? The state policy is for departments to recover full costs whenever goods or services are provided for others. Which funds are considered non-billable for Pro Rata?General Fund, Federal Fund, Special Deposit Fund

What are indirect Costs? Indirect costs are not directly assignable to a specific program. The costs are not easily identifiable nor are they tied to a specific cost objective. The costs are normally used for a common or joint purpose.What are the methods to recover indirect cost from the Federal Government? Indirect Cost Rate Proposal (ICRP), Cost Allocation Plan (CAP), Direct Billing

Where can my department review our Pro Rata and SWCAP

reports?

DOF Website

http://www.dof.ca.gov/accounting/fscu/pro_rata-swcap

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References

Pro Rata/SWCAP:

Variety of information:http://www.dof.ca.gov/accounting/fscu/pro_rata-swcap

Federal information:Guidance CFR 200 (Formerly, 2 CFR Part 225 ,Federal Circular A-87) http://www.ecfr.gov/cgi-bin/text-idx?SID=2479ed439db69a7b9732bb2bfcb4901a&mc=true&tpl=/ecfrbrowse/Title02/2cfr200_main_02.tplCost Principles and Procedures (ASMB C-10):

https://rates.psc.gov/fms/dca/asmbc-10.pdf54Slide55

Contact UsFSCU phone number : (916) 445-3434 Ext XXXX

Pro Rata Analyst – Monica Medina (Ext 2145)

SWCAP Analyst – Corrine Lim (Ext 2166)Lead Analyst - Jerome Tribble (Ext 2140)Manager - Jennifer Mora (Ext 2141) E-mail: FIPROSWP@dof.ca.govDOF Website: http://www.dof.ca.gov

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