1. January 22, 20021 How Does the Calculation Work?

2. January 22, 20022 Calculation Calculation uses: – Workload – Expenditures Sources for workload and expenditure data are from central service agencies (CSA).

3. January 22, 20023 Calculation - continued Workload is the first component of the calculation.

4. January 22, 20024 Workload Workload is obtained from CSAs. For source and type of workload, view the presentation What is Workload?

5. January 22, 20025 Workload - continued Workload is from the fiscal year just ended. It is the actual workload. For the 2004-05 plan, the workload is from the 2003-04 fiscal year.

6. January 22, 20026 Workload - continued Workload is adjusted for reimbursed and unallowable workload.

7. January 22, 20027 Workload - continued For our example, let’s use workload from the State Controller’s Office (SCO), Accounting.

8. January 22, 20028 Workload - continued SCO, Accounting workload is assigned function number 201.

9. January 22, 20029 Workload - continued Each the year, the SCO provides accounting transaction data, called records. Each record identifies by State department the number of records processed.

10. January 22, 200210 Workload - continued Workload, for each function, is totaled. For this example, the total workload for function 201 is 2,349,068.

11. January 22, 200211 Central Service Expenditure Data Next step is to obtain the central service expenditures for this function.

12. January 22, 200212 Central Service Expenditure Data - continued For additional information on expenditures, view the presentation What are Expenditures?

13. January 22, 200213 Central Service Expenditure Data - continued From each CSA, the expenditures for both the fiscal year just ended and the budget year (the year of the plan being developed) are obtained.

14. January 22, 200214 Central Service Expenditure Data - continued Expenditures are: –Past year actual for the fiscal year just ended. Agree with the year-end financial statements. –Budget year estimate for the budget year currently being developed. Agree with the proposed Governor’s budget.

15. January 22, 200215 Central Service Expenditure Data - continued Past year actual and budget year estimate expenditures are adjusted. For information on adjustments, view the presentation, What are Expenditures?

16. January 22, 200216 Workload Unit Cost Calculation For each function, the calculation utilizes two steps. The first step is: Total cost for a central service function divided by the central service workload function. Example: Total past year actual central service expenditures for Finance budget activities was $1 million for 10,000 hours of budget work for all State departments. The cost for this function is $100 per hour.

17. January 22, 200217 Another look at the first step of the calculation: CSA expenditures is divided by the total workload. This calculation is done for each function and for both budget year expenditure estimates and past year actual expenditures. BY estimate = Workload total = $879,121 9651 = $91.0875 per unit Other funds 0 Unallowable costs A-87 0 Adjusted estimated expenditures General Fund only $879,121 Workload Unit Cost Calculation - continued

18. January 22, 200218 Workload Unit Cost Calculation - continued Second step of the calculation is: Cost per unit multiplied by each department’s workload for a function equals the State department’s share for the function. Example: Cost per hour is multiplied by each State department’s share of the total budget hours $1,000,000/10,000 = $100/per hour X 50 hours = $5,000

19. January 22, 200219 Workload Unit Cost Calculation - continued Each department, the calculation is computed for: – Past year actual and – Budget year estimate Both calculations are computed the same way. Example: $1,000,000/10,000 = $100/per hour X 50 hours = $5,000

20. January 22, 200220 Workload Unit Cost Calculation - continued Calculation is developed for each function, the data becomes part of the formula. View the presentation Allocating Central Service Agencies Expenditures.

21. January 22, 200221 Workload Unit Cost Calculation - continued Next, let’s put the calculation together.

22. January 22, 200222 Workload Unit Cost Calculation - continued Past year (PY) actual example: Function 201 adjusted PY actual: $9,908,813 Divided by Function 201 total adjusted workload: 2,292,918 records Equals $4.3215 per unit

23. January 22, 200223 Workload Unit Cost Calculation - continued Function 201 unit cost multiplied by a State department’s workload equals PY actual. Function 201 unit cost: $4.3215 Multiplied by State department’s workload: 21 records PY actual equals (=) $90.7515 (rounded to $91)

24. January 22, 200224 Workload Unit Cost Calculation - continued Another way to view the calculation is: PY actual divided by total workload = Cost per unit $9,908,813 divided by 2,292,918 workload (records) = $4.3215 per unit. Calculation for a State department whose workload is 21: $4.3215 per unit multiplied by 21 (workload identified to a State department) equals $90.7515 rounded to $91. Amount ($91) will be shown in the PY actual column of the State departments report.

25. January 22, 200225 Workload Unit Cost Calculation - continued Budget year (BY) estimate example: Function 201 adjusted BY estimate: $10,001,710 Divided by Function 201 total adjusted workload: 2,292,918 records Equals $4.3260 per unit

26. January 22, 200226 Workload Unit Cost Calculation - continued Function 201 unit cost multiplied by a department’s workload equals BY estimate. Function 201 unit cost: $4.3620 Multiplied by State department’s workload: 21 records BY actual equals (=) $91.602 (rounded to $92)

27. January 22, 200227 Workload Unit Cost Calculation - continued Calculation distributes each State department’s usage of the functions. All functions used by a State department (their share of these functions) are reflected as total allocated costs.

28. January 22, 200228 For additional information, view our other presentations.