1. Auxiliary & Self Supporting Activities (ASSA) – Administrative Assessment Update to HSSAL
May 12, 2016

2. Background
Sales and services enterprise is a significant and growing component
Comprised of auxiliary and self supporting activities:
Housing and dining, parking, bookstore, Extension, space rentals, conferences, athletic events, lab service agreements, the medical center, the clinical practice, etc
Expected to set market based rates that recover direct and indirect costs to “fully self-support” without institutional subsidy
Campus charges an ASSA assessment so that:
The institution does not subsidize these activities
They contribute back to core mission
Assessment includes overhead costs incurred by the campus:
Institutional oversight by Chancellor and VC offices, computing services, human resources, business & financial services, payroll, budget, capital planning, facilities, development, diversity, legal council, etc
Currently, there are 2 rates based on prior year adjusted expenses (MTDC):
4.1% for auxiliaries and other self supporting activities. Calculated in 2009/10 by dividing applicable institutional support expenses by total campus expenses (has remained unchanged) by dividing.
.7% for Medical Center. Calculated annually based on agreed level of administrative services provided by the campus

3. Issue
Current methodology is viewed as too complex and not understood by the units being assessed
The assessment is structured as a cost recovery but the perception is that there is not sufficient accounting of services rendered
The Federal Facilities and Administrative (F&A) methodology used for calculating research overhead, and used for setting the ASSA rate appears to be insufficient basis for some activities
View is that some activities would opt out if given an option which is not a realistic option

4. Alternative Proposal
Shift current methodology from a complex adjusted expenditure base (MTDC) to a simplified assessment rate as a percent of revenues
Activities be grouped into three self-supporting categories to better distinguish the nature of the business income:
Academic/Educational
Auxiliaries
Health Care (Medical Center and Clinical Practice)
Impact:
Rate shifts from 4.1% on MTDC to 3.4% of Academic/Educational and Auxiliaries’ revenues
Health Care remains at .7% of revenues
Academic/Educational and Health Care activities contribute less
Auxiliaries contribute more (generally have higher margins than educational activities and should be able to absorb the increase)

5. Benefits of Proposed Alternative
Simpler to explain and understand
Improves units’ ability to plan and project annual assessment
Allows for ability to assess in the year revenue is earned versus the current method that assesses on prior year expenses
Increases efficiency by allowing automated assessments on revenues
Corrects questionable behavior to avoid or lower assessment (misclassifying activities and expenses or seeking exclusions/waivers)
Ability to assess differential rates to three self-supporting categories

6. Next Steps
Discuss with the Vice Chancellor unit’s Financial Officers - Done
Integrate into 2016/2017 budget discussion – In progress
Communicate policy decision to impacted units – In progress
Coordinate with ITS on automation – FY 2017/18 roll out

7. 2015/16 ASSA Administrative Overhead Comparison ($000s)
Modeling based on 2015/16 Assessment
Campus Unit
Current Method based on Expense/MTDC1
Med Practice to Med Ctr w/ all others one rate and based on % of Revenues 2
Change to current
Educational/Academics
$ ,312
$ ,501
$ (810)
UCSD Extension
1,280
1,510
230
Clinical Service Agreements
690
782 93
Rady School of Management
356
399 43
Patent Income
300
665
365
Patient Consult/Witness Agreements
218
364
146
Aquarium Museum
177
156
(21)
OCME/CFM Dept Course Inc
115 84
(31)
Other
3,177
1,543
(1,634)
Auxiliaries
4,339
6,684
2,345
Clinical Practice - Integrated with Primary Care -
Housing and Dining
3,573
5,057
1,484
Parking
274
734
460
Bookstore
166
615
448
Daycare Center
125 91
(34)
201
188
(13)
Primary Care
13,001
11,467
(1,534)
Medical Center
9,804
Clinical Practice
3,197
1,663
Total
$ ,652
$ (0)
1. Current assessments based on 2014/15 adjusted expenses/MTDC. 4.1% for Auxiliaries, Educational/Academics, Medical Clinical
Practice and approximately .8% for Medical Ctr.
2. Medical Center and Med Practice integrated and held at .7% rate and all others at a single rate of 3.4%. Redistributes
differential amount of contribution to Auxiliaries.