August State’s Full Cost Recovery Policy

August State’s Full Cost Recovery Policy State of California’s full cost recovery policy is defined in: – Government Code (GC) – State Administrative Manual (SAM) Each State department will comply with the requirements.

August State’s Full Cost Recovery Policy - continued Government Code (GC) Section 11010: Authorizes full cost recovery and sharing of central service costs by special fund. And...

August State’s Full Cost Recovery Policy - continued State Administrative Manual (SAM) Sections: – Explains the full cost recovery policy. – Identifies the cost elements to include.

August State’s Full Cost Recovery Policy - continued State departments will... – Recover full costs when goods or services are provided to others. – Include all costs attributable directly to the activity plus a fair share of indirect costs. And...

August State’s Full Cost Recovery Policy - continued State departments will: – Apply the State’s full cost recovery policy to all funding sources. – Follow this policy, except where statutes prohibit full cost recovery.

August State’s Full Cost Recovery Policy - continued Additionally, for federal reimbursements follow: – Federal circular A-87 – ASMB C-10

August Elements of Full Cost Cost elements recovered under the full cost recovery policy are... – Direct costs – Indirect costs

August Elements of Full Cost - continued Direct costs include the actual cost of running the program... – Personal Services – Operating Expenses and Equipment

August Elements of Full Cost - continued Indirect costs include the State departments own overhead, which often are... – Executive Staff – Information Technology (IT) Staff – Accounting Staff – Budget Staff – Other (administrative units) Staff Plus...

August Elements of Full Cost - continued Central service costs are: – Known as the other indirect costs. – Incurred by central service agencies for the benefit of all State departments. – Known as: - Pro Rata - SWCAP

August Elements of Full Cost - continued Total direct costs plus the indirect costs should equal the full cost of running the programs of a State department. Direct costs$ X,XXX Indirect costs State department $ XXX Statewide : Pro Rata$ XX SWCAP$ XX Total costs$XX,XXX

August Elements of Full Cost - continued – Costs included in an Indirect Cost Rate Proposal (ICRP) must be adjusted for unallowable costs. – Unallowable cost information is discussed in various training classes.

August Elements of Full Cost - continued State department billings to other entities or the federal government must include an ICRP rate, which includes: – State department indirect amount. – Either: - Pro Rata ICRP rate. - SWCAP ICRP rate. SWCAP amount recovered will be transferred to the General Fund.

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