Download Auxiliary Rate Calculation - Budget Office

AUXILIARY RATE CALCULATION
Conducted by the Budget Office
Mary Alice Mills – Budget Analyst
AGENDA
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Guiding Principles
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Rate Proposal Building Blocks
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Calculating a Rate
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Step by Step
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Examples
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Documentation & Record Retention
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Important Dates
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Resources
GUIDING PRINCIPLES
Florida Statutes 1011.47, 1009.24
 FL BOG Regulation 9.013
 OMB – Circular A-21 – Federally Sponsored
Contracts & Grants
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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
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A cash surplus should lower
 A cash deficit should increase
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rates
rates
Projected expenditures should be supported by a
history of actual expenditures
RATE PROPOSAL BUILDING BLOCKS
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Direct & Indirect Costs
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Cost Adjustments
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Special Criteria for Federally Sponsored C&G
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Unallowable Costs (Federally Sponsored C&G)
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Revenues
DIRECT & INDIRECT COSTS
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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
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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
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COST ADJUSTMENTS
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Adjust for future expenses
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Adjustments from previous period surplus/deficit
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Unallowable Costs for Federally Sponsored C&G
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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
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NO DOUBLE DIPPING!
Cannot recover the following:
 Future purchases of equipment or any item
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Past purchases of equipment should be recovered
through depreciation
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Financing costs of inventory or reserves
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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:
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Advertising and public relations
Alumni Activities
Bad debts
Charitable contributions, donations, remembrances
Entertainment
Fines and penalties
Housing and personal living expenses
Marketing
REVENUES
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Auxiliaries are allowed to have different sets of
rates. May need to have three sets of rates:
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Non-Federally Sponsored C&G customers
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External (check – cash handling) can earn profit
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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
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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
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Annual Leave
Payout a maximum of 352 hours – Faculty & A&P
 Payout a maximum of 240 hours – USPS
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Sick Leave
Person must have been employed for 10+ years
 Payout ¼ sick leave hours up to max 480 hours
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CALCULATING A RATE
Budgeted Expenses
Budgeted Usage Base
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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
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
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
$200,000
1,000
Rate = $200 per hour
CALCULATING A RATE
1.
2.
Print out departmental ledger
Identify Expenditures or Costs
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3.
4.
5.
6.
7.
Salary
OPS
Expense
OCO
Overhead Assessment Transfer
Depreciation
Identify Unallowable Costs
Identify Past/Future Adjustments
Prepare Estimated Usage Base
Calculate Rate
Develop Fund Balance Worksheet
CALCULATING A RATE
CALCULATING A RATE
Sales & Service of Educational Activities – 0%
2.
Identify Expenditures
Salary
Expense
Total Expense
3.
No Unallowable Costs
$14,409
$
97
$14,506
CALCULATING A RATE
4.
Identify Adjustments
Ended the year with too much cash
Cash Balance $13,186
Expenditures $14,506
Percentage
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 Hour
6 hours per session
47 sessions per year
Total Estimated Hours = 282
CALCULATING A RATE
6.
Calculate the Rate
Expenditures
Adjustments
- over collection
+ new purchase
Total Cost
Estimated Usage Hours
$14,506
$10,967
$ 2,000
$ 5,539
282
Rate = $5,539 ÷ 282 = $19.64 per hour
CALCULATING A RATE - WORKSHEET
CALCULATING A RATE
7.
Fund Balance Worksheet
Beginning Cash Balance
+ Revenue (290 x $19.60)
+ Interest Earned
- Salary Expense
- Expenditures
Ending Cash Balance
$13,186
$ 5,687
$
50
$14,409
$ 2,097
$ 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/RecordsManagement-Program/Records-Disposal
IMPORTANT DATES
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April: Submit Non-E&G Operating Budget
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October: Memo is sent out to Budget Managers with
Casualty Insurance & Overhead Assessment amounts
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November: Casualty Insurance is charged (expense)
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February: Overhead Assessment is charged (transfer out)
RESOURCES
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Budget Office Auxiliary Website
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OMB Circular A-21
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http://www.whitehouse.gov/sites/default/files/omb/assets/omb/fedreg/2005/
083105_a21.pdf
Unallowable Costs
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www.budget.fsu.edu/Auxiliaries
http://www.research.fsu.edu/contractsgrants/unallowable.html
OBI Job Aids: Department Ledger AUX , HR GL Detail
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http://omni.training.fsu.edu/OMNI-BI-Reporting/Financial-Reports
RESOURCES
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OMNI Financials Queries:
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Controller’s Office: forms, useful queries & policies
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FSU_DEPT_CASH_BALANCE
FSU_DPT_GL_JOURNALS
FSU_DPT_TRIAL_BALANCE
FSU_CF_DEPT_ATTRIB2
Expenditure Guidelines:
http://control.vpfa.fsu.edu/Payables-DisbursementServices
Property Accounting
http://control.vpfa.fsu.edu/Property-Accounting
 FSU_DPT_AM_NBV_ASSETS
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THANK YOU!
Please fill out a survey before you leave
Contact Us:
The Budget Office
321 Westcott
www.budget.fsu.edu
644-4203