1. Child Support Finance 101 Child Support Budget and Fiscal Issues CSDA New Directors Orientation

2. Child Support Finance 101 Issues Covered An overview of LCSA key fiscal management activities CS921 Administrative Funding EDP Funding Prior Approval Requirements CS356 Depreciation Disposition of Assets A-87 or COWCAP POC/MOU Audits

3. Child Support Finance 101 Budget Allocation Requests CS 921 Detailed administrative budget information used to display: FTEs Average salaries Expenditures Annual LCSA letter requesting data Data collected via web form Data used for various reports

4. Child Support Finance 101 Local Perspective - CS 921 Administrative Budget Information: Few people in LCSAs see this form FTEs are exactly that Explanations are necessary Classifications can vary county to county Section K is very important

5. Child Support Finance 101 EDP Recurring & Non-Recurring Funding Annual LCSA letter requesting budget data Submit via EDP web form M&O funding Current need Historical trend Non-recurring funding New non-recurring projects LCSAs submit requests in January

6. Child Support Finance 101 Local Perspective – EDP Things to watch Local definitions of EDP versus State definitions Local charges usually more detailed Timing issues Staffing and overhead

7. Child Support Finance 101 Prior Approval Requirements Administrative and EDP Policy in CSS Letters 04-20 and 05-05 All automation products and services planned for purchase using EDP or Administrative non-EDP funds Including personal computers, servers, printers, integrated voice response units, imaging systems, new and existing software, and web contracting services

8. Child Support Finance 101 Administrative and EDP Claim Processes (CS 356) Federal requirement to: Report expenditures Expenditure data used Reconcile funds advanced to LCSAs To determine future funding For various internal reports

9. Child Support Finance 101 Administrative and EDP Claim Processes (CS 356) Laws and Rules OMB Circular A-133 OMB Circular A-87 CFR Part 45, Section 92.25(b) Family Code 17714(b)

10. Child Support Finance 101 Administrative and EDP Claim Processes Submit quarterly claim 15 days after the end of the quarter Time certify vs. Time study Time certify When staff are working 100% on one activity or function Time study When staff are spending time on two or more activities or functions In the mid-month of quarters one and four (August and February)

11. Child Support Finance 101 Local Perspective – Claims Quarterly process Track expenses ongoing Categorize EDP expenses by claim numbers Remember cash basis accounting Less detail than CS 921 Different detail than CS 921

12. Child Support Finance 101 Local Perspective - Claims Supplemental Claims Abatements Reconciliation to final allocation

13. Child Support Finance 101 Depreciation Title 45 CFR, Section 95.705(a) AT 94-5 LCSA Letter 05-24 CSS Letter 04-20 Approved to purchase Recover costs over five years

14. Child Support Finance 101 Depreciation Non-EDP Equipment Purchase price over $25,000 Depreciate/claim over five years Equipment cost $60,000 ($60,000/5) Year 1 claim $12,000 Year 2 claim $12,000 Year 3 claim $12,000 Year 4 claim $12,000 Year 5 claim $12,000

15. Child Support Finance 101 Depreciation EDP Equipment Purchase price over $5,000 Depreciate/claim over five years Including EDP equipment purchased with Admin (Non-EDP) funds Example: Training room PCs

16. Child Support Finance 101 Local Perspective – Depreciation Understand the asset County “float”

17. Child Support Finance 101 Disposition of Assets CSS Letter 04-20 and LCSA Letter 05-19 Determine fair market value Notify DCSS of disposal Retain supporting documentation for four years and four months Consider recycling

18. Child Support Finance 101 Disposition of Assets Under $5,000 LCSAs may transfer, sell, dispose using county rules Proceeds must be abated as program income on administrative expense claim

19. Child Support Finance 101 Disposition of Assets Over $5,000 Transfer equipment Sell equipment Proceeds must be abated Dispose of equipment using county rules

20. Child Support Finance 101 Local Perspective Recovered money can be reduced by costs Environmental fees

21. Child Support Finance 101 Overhead/Indirect Costs (aka A-87 or Countywide Cost Allocation Plan) Claim State Controller’s Office approved amount only Should claim ¼ of the annual cost on quarterly expense claim Can split overhead costs with EDP An exception to cash basis claiming rule

22. Child Support Finance 101 COST ALLOCATION PLANS Goal: to appropriately charge Special Revenue funds (like Child Support) for their fair share of the services provided to them by County central service departments funded by the General Fund Costs are determined in advance, using actual data, so that Special Revenue departments can plan their budgets. There are two ways charges are allocated: Via the use of a formula (“allocation method”) Directly Tracked (can be billed currently or via CAP)

23. Child Support Finance 101 WHAT IS A COST ALLOCATION PLAN? “CAP” “CoCAP” “A-87” filed by the County with the State Controller’s Office (SCO) by December 31 of each year. desk-audited yearly, field audited periodically by the SCO. Public record

24. Child Support Finance 101 RULES Office of Management and Budget Circular A-87 ▼ now known as: 2 CFR Part 225 ASMB C-10 Find these rules at www.sco.ca.gov/www.sco.ca.gov/ (Use the site search feature)

25. Child Support Finance 101 DETAILS! Allocation Basis Department & FunctionBasis of Allocation Structure Use Allowance Rental RateSquare feet occupied per bldg County Counsel Legal ServicesDirect charges Auditor-Controller Financial AccountingNumber of Transaction Lines Processed PayrollAverage number of employees – all users General Services-Purchasing Mail CourierAverage minutes per delivery by mail routeProcurement Number of documents processed, weighted Human Resources Dental Ins (not SI)Average number of enrolled employees Treasurer Central CollectionsSeconds logged per client & dollars collected Bank ChargesActivity charges per quantity of transactionsDeferred Comp Average number of contributing employees

26. Child Support Finance 101 SMELL TEST The possibility of error Review what’s being directly charged to you, preferably before June 30 th Look at allocations over the years to spot large variances Understand allocation basis & evaluate its fairness Do the math! Check roll-forwards. It’s simple math. Confirm the numbers – square footage, number of employees, etc.

27. Child Support Finance 101 Start Sniffing * What happened here? ** What’s this? *** Math doesn’t add up

28. Child Support Finance 101 ISSUES Local Issues Human Error Understand & check the data! Cost Swings Meet with Auditor-Controller Annually to review records Direct Costs v. Allocations (Direct costs can be paid currently!) Allocation Basis Do they meet the “reasonable” test? Statewide Issues Allocation Basis Do they meet the “reasonable” test? Allow reserves to buffer cost swings? Get help with establishing norms of what can properly be charged to us

29. Child Support Finance 101 Local Perspective LCSA review supporting documentation and validate charges

30. Child Support Finance 101 POC/MOU Requirements Title 45 CFR 303.107 for fiscal portion Agreements should include: Budget estimates Covered expenditures Methods of determining costs Procedures for billing IV-D agency

31. Child Support Finance 101 Local Perspective Go through your county review process County Counsel Monitor for renewal Timeframes can be different When costs change – amend Must go through your county process

32. Child Support Finance 101 Audits Authority OMB A-87 and A-133 CFR 302.10 and 302.14 CSS Letter 04-20 LCSA Letter 05-09 History and process in this letter

33. Child Support Finance 101 Audits Keep supporting documentation for at least four years and four months Two (of six) most common audit findings Accrual vs. cash basis accounting Income or program income not abated on Administrative Expense Claim

34. Child Support Finance 101 Local Perspective Get used to audits Retain backup for required timeframe Keep findings Scope of work

35. Child Support Finance 101 Wrap Up Questions?