1. A UXILIARY R ATE C ALCULATION Conducted by the Budget Office Mary Alice Mills – Budget Analyst

2. A GENDA Guiding Principles Rate Proposal Building Blocks Calculating a Rate Step by Step Examples Documentation & Record Retention Important Dates Resources

3. G UIDING P RINCIPLES 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

4. G ENERAL A UXILIARY G UIDELINES 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

5. R ATE P ROPOSAL B UILDING B LOCKS Direct & Indirect Costs Cost Adjustments Special Criteria for Federally Sponsored C&G Unallowable Costs (Federally Sponsored C&G) Revenues

6. D IRECT & I NDIRECT C OSTS 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

7. C OST A DJUSTMENTS Adjust for future expenses Adjustments from previous period surplus/deficit Unallowable Costs for Federally Sponsored C&G Includes Funds: 520, 521, 523 & 524

8. S PECIAL C RITERIA FOR F EDERALLY S PONSORED 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

9. U NALLOWABLE C OSTS TO F EDERALLY S PONSORED 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

10. R EVENUES 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

11. C OMPENSATED L EAVE 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

12. C ALCULATING A R ATE Budgeted Expenses Budgeted 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.

13. C ALCULATING A R ATE 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

14. C ALCULATING A R ATE 1. Print out departmental ledger 2. Identify Expenditures or Costs Salary OPS Expense OCO Overhead Assessment Transfer Depreciation 3. Identify Unallowable Costs 4. Identify Past/Future Adjustments 5. Prepare Estimated Usage Base 6. Calculate Rate 7. Develop Fund Balance Worksheet

15. C ALCULATING A R ATE

19. Sales & Service of Educational Activities – 0% 2. Identify Expenditures Salary$14,409 Expense $ 97 Total Expense$14,506 3. No Unallowable Costs

20. C ALCULATING A R ATE 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

21. C ALCULATING A R ATE 5. Prepare Estimated Usage Base Labor Intensive = Labor Hour 6 hours per session 47 sessions per year Total Estimated Hours = 282

22. C ALCULATING A R ATE 6. Calculate the Rate Expenditures$14,506 Adjustments - over collection$10,967 + new purchase$ 2,000 Total Cost$ 5,539 Estimated Usage Hours 282 Rate = $5,539 ÷ 282 = $19.64 per hour

23. C ALCULATING A R ATE - W ORKSHEET

24. C ALCULATING A R ATE 7. Fund Balance Worksheet Beginning Cash Balance$13,186 + Revenue (290 x $19.60)$ 5,687 +Interest Earned$ 50 -Salary Expense$14,409 -Expenditures$ 2,097 Ending Cash Balance$ 2,417 $2,417 ÷ $16,506 = 14.6%

25. D OCUMENTATION & R ECORD R ETENTION 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- Management-Program/Records-Disposal

26. I MPORTANT D ATES 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)

27. R ESOURCES Budget Office Auxiliary Website www.budget.fsu.edu/Auxiliaries OMB Circular A-21 http://www.whitehouse.gov/sites/default/files/omb/assets/omb/fedreg/2005/ 083105_a21.pdf http://www.whitehouse.gov/sites/default/files/omb/assets/omb/fedreg/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

28. R ESOURCES 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 http://control.vpfa.fsu.edu/Payables-Disbursement- Services Property Accounting http://control.vpfa.fsu.edu/Property-Accounting FSU_DPT_AM_NBV_ASSETS

29. T HANK YOU ! Please fill out a survey before you leave Contact Us: The Budget Office 321 Westcott www.budget.fsu.edu 644-4203