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Pro Rata/SWCAP Plan Overview 2013

Department of Finance Fiscal Systems and Consulting Unit. Pro Rata/SWCAP Plan Overview 2013. Full Cost Recovery Policy Central Service Costs Allocation SWCAP Budgeting & Recoveries Pro Rata Budgeting & Recoveries Reports Timeline. AGENDA. Full Cost Recovery Policy.

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Pro Rata/SWCAP Plan Overview 2013

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  1. Department of Finance Fiscal Systems and Consulting Unit Pro Rata/SWCAP Plan Overview2013

  2. Full Cost Recovery Policy Central Service Costs Allocation SWCAP Budgeting & Recoveries Pro Rata Budgeting & Recoveries Reports Timeline AGENDA

  3. Full Cost Recovery Policy

  4. The state policy is for departments to recover full costs whenever goods or services are provided for others. The full cost includes all costsattributable directly to the activity plus a fair shareof indirect costs. Direct Costs Indirect Costs Full Cost Recovery Policy

  5. Full Cost Recovery 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.

  6. Elements of Full Cost Direct Costs $ XXXX Indirect Costs a) Departmental $ XX b) Statewide: Pro Rata XX or SWCAP XX XXXX Total Costs $XXXXX

  7. Direct Costs – are directly assignable to a program: • Salaries and wages • Equipment • Operating expenses (not included in use allowance calculations) • Travel expenses

  8. Indirect Costs – are not directly assignable to a program: • Departmental (overhead) costs assigned to many programs: • Executive staff • Information technology • Accounting staff • Budget staff • Other

  9. Indirect Costs • Statewide: Fair share of costs incurred by Central Service Agencies (CSAs). • Pro Rata • Recovery of CSA costs from special funds and some nongovernmental cost funds • SWCAP • Recovery of CSA costs from federal funds

  10. Indirect Costs Indirect Costs Department’s Indirect Costs (Budgets, IT, Acctg, etc.) Pro Rata Costs(CSA cost allocation to special funds) SWCAP Costs (CSA cost allocation to federal funds) Only 60 departments have SWCAP

  11. What is a Central Service Agency (CSA) Cost?

  12. Central Service Agency Costs State Administrative Manual Section 8753 Central service costs are those amounts expended by central service departments and the Legislature foroverall 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.

  13. Central Services

  14. Central Services

  15. Central Service Costs Allocation

  16. 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) estimate expenditures Calculate and distribute CSA costs to state departments based on workload

  17. 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.

  18. 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 – = + =

  19. Classify the allocation by billable or non-billable funds (Pro Rata only) Billable funds: Funded by special revenue sources such as fees, licenses, penalties, assessments, interests, etc. Non-billable funds: General Fund Federal Funds Special Deposit Fund (SWCAP only federal fund is billable)

  20. Budgeting for SWCAP(Federal Recoveries)

  21. Budgeting for SWCAP All departments receiving federal funds must budget and recover SWCAP. Department’s Total SWCAP Allocation Department’s Budgeted SWCAP Federal Funding State Operations = X If there are caps/restrictions in the grant language for recovering administrative costs, departments should try to work with their federal cognizant agency to see if it can be eliminated. If this cannot be done, the SWCAP budget may need to be modified by using Method B.

  22. Budgeting for SWCAP Finance budget analyst receives SWCAP apportionment sheet (pink). • Department budget analyst, in collaboration with Finance budget analyst, determine if the Method A calculation results in an equitable budgeted amount, or if a Method B should be used. • Department certification and Finance approval is required.

  23. SWCAP Recoveries

  24. SWCAP Recoveries • SWCAP Plan submitted/approved to the federal government. • Methods of SWCAP Cost Recovery: • ICRP’s (Indirect Cost Rate Proposal) • CAP (Cost Allocation Plan) • PACAP (Public Assistance Cost Allocation Plan) • Direct billing

  25. SWCAPRecoveries • As a general rule ICRP’s and CAP’s are to be filed with the department’s cognizant federal agency at least six months prior to the fiscal year that applies. • ICRP’s and CAP’s must be submitted to the Department of Finance for approval before filing with the cognizant federal agency.

  26. SWCAP Recoveries State departments must bill the federal government for direct and indirect costs. Departments are responsible for complying with federal and state requirements to ensure that SWCAP costs can be recovered from the federal government.

  27. SWCAP Recovery Process (Department’s Responsibility) BillFederal Fundfor Direct Plus Indirect Costs Receipt of Federal Funds TransferSWCAP portion toGeneral Fund

  28. SWCAP Transfer • Each federally funded state department must initiate the transfer process using the Transaction Request, TR form CA 504. (Transfers do not occur automatically.) • SAM section 8755.2 states “Government Code Sections 13332.01–13332.02, require departments to recover SWCAP costs from the federal government and to transfer the SWCAP recoveries to the General Fund within 30 days after the end of each quarter.”

  29. Transaction Request

  30. SWCAP Transfer • Departments submit Transaction Request to SCO and send copies to: • FSCU • Department’s Finance Budget analyst • SWCAP transfer(s) are due within 30 days after the end of a quarter where a recovery occurs.

  31. SWCAP Journal Entry

  32. Control Section 8.54 • As of the 2010-11 Budget Act, Control Section 8.54 was added to provide Finance the authority to reduce a department’s support appropriation when required transfers are past due or not sufficient. • Control section is cited on the pink sheet certification. • FSCU monitors and reports SWCAP recoveries. State departments will be contacted for discrepancies.

  33. Budgeting for Pro Rata

  34. Budgeting Pro Rata • Similar to SWCAP’s calculation Department’s Total ProRataAllocation Billable Fund State Operations Fund’s ProRata Assessment = X

  35. Budgeting Pro Rata Assessment Sheet (green sheet) • Does not include amounts less than $1,000 or negative amounts. • Finance budget analysts forward assessment sheet(s) to the departments for certification.

  36. Pro Rata Recoveries

  37. Pro Rata Recoveries Pro Rata Certification • In June Finance certifies Pro Rata billable assessments to the SCO. • SCO notifies state entities of their Pro Rata assessments. • SCO will set-up the transfers to occur automatically on a quarterly basis.

  38. Pro Rata Journal Entry

  39. Reports

  40. Reports Pro Rata Detail by Functions Pro Rata Detail by Funds SWCAP Detail by Agency SWCAP Recoveries

  41. Timeline June – August • FSCU provides training for Central Service Agency (CSA) staff • CSAs receive Workload, Expenditure and Misc spreadsheets from FSCU • FSCU reviews and processes central services data • Departments to complete final prior year SWCAP recoveries September • FSCU runs Pro Rata and SWCAP cost allocation (pink and green sheets prepared) • Finance Budget Letter release to departments • Finance budget analysts distribute the pinks and greens to departments’ budget office October • Departments turn in signed/certified pinks and greens to Finance budget analysts • FSCU finalizes Pro Rata and SWCAP amounts for the January 10 Governor’s Budget October – December • SWCAP departments turn in their ICRP/CAP to FSCU for review before submitting to the feds by December 31 February – April • FSCU notifies departments of the final negotiated SWCAP amounts (DHHS Rerun) June • SCO notifies departments on the new fiscal year Pro Rata assessments

  42. References • Pro Rata/SWCAP: • Variety of information: http://www.dof.ca.gov/accounting/fscu/pro_rata-swcap/ Federal information: • Federal Circular A-87: http://www.whitehouse.gov/omb/circulars/a087/a87_2004.html • Cost Principles and Procedures (ASMB C-10): http://www.hhs.gov/grantsnet/state

  43. Contacts Phone: (916) 445-3434 Lead Analyst – Jerome Tribble (ext 2140) Pro Rata Analyst – Monica Medina (ext 2145) SWCAP Analyst – Corrine Lim (ext 2166) E-mail: FIPROSWP@dof.ca.gov DOF Website: http://www.dof.ca.gov

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