1. Year-end Unallocated Costs

2. What are unallocated costs?
Unallocated costs are costs that cannot be directly related to:
A specific road
Construction/engineering project
Equipment unit
Every effort should be made to charge costs directly to the appropriate cost area before using unallocated accounts.
Unallocated costs are divided between two categories:
Highway related
Administration
Maintenance
Construction/engineering
Shop/equipment
Non-highway related
These should be isolated and will not be distributed highway activities

3. Administrative costs Administrative costs
Are expenses that are not directly attributable to a specific activity
Any unapplied administrative costs will be included with the maintenance reporting by road system as unallocated
Examples of unallocated administrative costs are:
Administrative salaries
Engineering computer program/service contract
Fringe Benefits
County FICA, Medicare, PERA Expenses
County Health Insurance Expense for employees
Vacation, sick leave, personal leave, military leave, etc.
Minor office furniture/equipment
Office supplies
Training and education
Travel and lodging

4. Administrative costs (continued)
A portion of the engineer’s salary may be moved to the construction area
Based on a fair estimate of the engineer’s time
Documentation should be on file to show how this estimate was determined
Some costing systems distribute Fringe Benefits directly to labor costs by actual Fringe Benefit Costs for
The period by actual labor activities OR
inflate actual labor rates by a Fringe Benefit Overhead Rate.

5. Administrative costs (continued)
If Fringe Benefits are applied to actual labor costs
The amount applied will appear in a separate column on various reports provided by the costing system
The credit offset for the Fringe Benefit Expense will be cash or a liability account
If Fringe Benefits are applied by inflating actual labor rates by a Fringe Benefit Overhead Rate
The labor cost column on various reports will be inflated by the Fringe Benefit Overhead Rate
Reports may be printed including or excluding the Fringe Benefit Overhead Rate
The credit offset for the Fringe Benefit Overhead Rate is included in the Fringe Benefit section of the unallocated costs

6. Administrative costs (continued)
Fringe Benefit Overhead Rate Calculation
Isolate and identify all benefits for full time employees that are a part of the county’s employment package.
Identify the total labor dollars worked for full time employees
Calculate the Fringe Benefit Overhead rate by dividing the Fringe Benefits by the total labor dollars for full time employees.

7. Administrative costs (continued)
Fringe Benefit Overhead Rate Calculation

8. Construction costs Unallocated construction costs
Expenses relating to construction operations that cannot be identified to a particular construction project.
The costs in these accounts should be prorated to engineering based on total costs of the projects at year-end.
If the county chooses, they may seek reimbursement of these engineering costs using their State Aid allocation.
Examples of unallocated construction costs include:
Alignment surveys
Cross section stock piles
Drafting supplies
Engineering expense
Engineering field work
Field engineering supplies
General permits
Road studies
Wetlands bank/mitigation

9. Construction costs (continued)
Education and training costs related to the county engineering staff
Are not allowed to be prorated to construction projects or individual roads
These costs should be included in the administrative unallocated dollar amount on the maintenance report by road system

10. Maintenance costs Unallocated maintenance costs
Are maintenance expenses that are difficult to associate with a particular road
All efforts should be made to charge to the individual roads before using unallocated maintenance accounts
After costs have been accumulated in each unallocated account
They may be spread to the individual roads in the appropriate maintenance account
Unallocated maintenance costs may be distributed to the roads based on
Total mileage
System mileage
Surface mileage
Labor
Number of intersections, curves, and hills
The formula used to distribute unallocated costs will be determined by the type of unallocated cost

11. Maintenance costs (continued)
Examples of unallocated maintenance costs include
Annual bridge inspections and report
Bridge inspections (not related to a project)
Building barricades
Gravel (stockpiled, crushing, prospecting)
Maintenance supplies for specific maintenance accounts (brooms for minor surface maintenance sweeping)
Salt and sand, materials and mixing costs
Sign materials
Straightening sign posts
Traffic studies/counts
Weight restrictions
Weight scale calibration

12. Maintenance costs (continued)
Most unallocated costs
Will be distributed by mileage
Some costs that will be distributed based on special distribution formulas
Each county should develop a method of allocating materials they choose to spread that works best for them
Salt and sand is a good example of a special distribution formula
It’s usually applied to bituminous or concrete surfaces only at intersections, curves and hills
A survey of all road systems should be done to determine the number of intersections, curves and hills on bituminous or concrete roads
Example
CSAH regular: 120 intersections, 55 curves, 30 hills = 205
CSAH municipal: 110 intersections, 20 curves, 3 hills = 133
County roads: 30 intersections, 5 curves, 10 hills = 45

13. Maintenance costs (continued)
Based on this example
The percentage of salt and sand distributed to CSAH regular would be 54%
CSAH municipal would be 35%
County roads would be 11%
The salt and sand would be distributed to each road program
Based on the calculated percentages to bituminous or concrete surfaces only
Using this formula will place more costs on the CSAH municipal roads since the number of CSAH municipal miles are usually the least of the county’s road systems.

14. Shop/equipment costs Unallocated shop and equipment costs are expenses
Relating to shop and equipment operations that cannot be identified to a particular unit
Examples of unallocated equipment costs include
Shop overhead (utilities)
Shop supplies and small tools
Miscellaneous repair parts
Building and grounds maintenance
Inventory adjustments for fuel
Inventory adjustments for parts and replacements

15. Shop/equipment costs - Continued
Inventory adjustment
Should be held to a minimum through the use of good inventory control and management
Should become part of cost added to equipment
And prorated back to the units in developing a rate
Or ultimately become an entry into adjustment to equalize depreciation

16. Non-highway related costs
Non-highway costs
Should be accumulated in the area for county dollars or authorized work for others.
Non-highway related activities must not be included in the unallocated costs which are distributed to the road system
Non-highway costs may include costs associated with:
Capital outlay
Ditch fund for flood control
Agricultural inspection
Work for others
Other non-highway related costs
911 signing

17. Conclusion
Every effort should be made to charge costs directly to the appropriate cost area before using unallocated accounts.
Unallocated costs are divided between two categories – highway related and non- highway related
The highway related unallocated costs are divided into categories for administration, maintenance, construction/engineering and shop/equipment
Non-highway related unallocated costs should be isolated and will not be distributed highway activities
A worksheet for distributing unallocated costs at year-End is available on the State Aid Finance Worksheets & Applications webpage
State Aid Finance Worksheets & Applications webpage -

18. Questions?
Mike Kilanowski