management matters a pmfo series. cost allocation national center on program management and fiscal...
TRANSCRIPT
![Page 1: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/1.jpg)
Management MattersA PMFO Series
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Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)
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Objectives
• Discuss reasons• Deepen your knowledge of cost allocation• Define key cost terms• Describe a step-by-step process for
developing a cost allocation plan
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What is Cost Allocation?The process of assigning to two or more
programs the shared cost of an item or service.
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Why is it Necessary?
The federal government should only bear its fair share of costs.
- Federal Cost Principles
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Cost Principles
To be allowable, costs must be:
•Reasonable•Allocable•Receive consistent treatment•Conform to award limitations or exclusions
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Cost Principles
To be allowable, costs must be:
•Reasonable•Allocable•Receive consistent treatment•Conform to award limitations or exclusions
![Page 8: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/8.jpg)
Cost Principles
To be allowable, costs must be:
•Reasonable•Allocable•Receive consistent treatment•Conform to award limitations or exclusions
![Page 9: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/9.jpg)
Cost Principles
To be allowable, costs must be:
•Reasonable•Allocable•Receive consistent treatment•Conform to award limitations or exclusions
![Page 10: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/10.jpg)
Cost Principles
To be allowable, costs must be:
•Reasonable•Allocable•Receive consistent treatment•Conform to award limitations or exclusions
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Key Cost Allocation Terms
Reasonable•The cost is necessary for performance of award and a prudent person would pay the same amount for an item under similar circumstances
Allocable•The cost can be assigned to the award because it benefits the program
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Key Cost Allocation Terms
Reasonable•The cost is necessary for performance of award and a prudent person would pay the same amount for an item under similar circumstances
Allocable•The cost can be assigned to the award because it benefits the program
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Which of the Cost Principles Apply to my Program?
•2 CFR Parts 215 & 220: Educational Institutions
•2 CFR Part 225: State & Local Governments
•2 CFR Part 230: Non-Profit Organizations
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Which of the Cost Principles Apply to my Program?
•2 CFR Parts 215 & 220: Educational Institutions •2 CFR Part 225: State & Local Governments
•2 CFR Part 230: Non-Profit Organizations
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Which of the Cost Principles Apply to my Program?
•2 CFR Parts 215 & 220: Educational Institutions
•2 CFR Part 225: State & Local Governments
•2 CFR Part 230: Non-Profit Organizations
![Page 16: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/16.jpg)
Which of the Cost Principles Apply to my Program?
•2 CFR Parts 215 & 220: Educational Institutions
•2 CFR Part 225: State & Local Governments
•2 CFR Part 230: Non-Profit Organizations
![Page 17: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/17.jpg)
Direct CostsCosts which clearly and directly benefit the implementation of a program or service. Direct costs may pertain to one program, or be shared across multiple programs.
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Examples of Direct Costs
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Head Start classroom furnishings and supplies
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Bus to transport Head Start children
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Teacher salaries
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Teacher Salaries Examples
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Indirect CostsIndirect Costs are incurred for common or joint objectives, and cannot be readily identified with one program.
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Examples of Indirect Costs
• Executive Director Salary
• Auditing services
• Administrative supplies
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Examples of Indirect Costs
• Executive Director Salary
• Auditing services
• Administrative supplies
![Page 26: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/26.jpg)
Examples of Indirect Costs
• Executive Director Salary
• Auditing services
• Administrative supplies
![Page 27: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/27.jpg)
Programs with Multiple Funding Sources Need a Cost Allocation Plan
Head StartState Pre-KChildcareAfterschool
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What is a Cost Allocation Plan?
The method to fairly and equitably allocate shared costs
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Step 1: Direct and Shared Expenses Identify all costs and services which benefit
only one program. These do not have to be allocated.
Identify all costs and services shared between Head Start and Early Head Start or between either program and another type of program.
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Step 2: Classify Shared Expenses
For each shared expense, determine if it is:– Shared, but can be distributed by benefit to each
program– Shared, but difficult to assign benefit to a
particular program
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Step 3: Categorize Initially, combine shared expenses into broad
categories, such as:– Personnel (salaries and fringe benefits)– Facilities (grantee owned, leased, donated)– Equipment (especially buses)– Service contracts (janitorial, maintenance)– Other shared expenses
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Step 4: Basis for Allocation Within the broad categories, consider how the
grantee operates its programs and how shared expenses vary within categories.
Identify a reasonable basis for allocating costs within each category and variation, i.e. hours worked, children served, services provided.
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Step 5: Create the Plan
Once categories, variations and a reasonable basis for allocation are identified, you are ready to create the cost allocation plan.
The more thought you put into how the plan will function, the more accurate the plan will be.
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Shared FacilitiesHead StartHead Start Early Head StartEarly Head Start Adult Basic EdAdult Basic Ed
Classrooms 3,000 n/a 2,000
Offices n/a 2,000 n/a
Meeting Room• 30 hours ABE (75%)• 10 hours EHS (25%)
n/a250 750
Subtotals: 3,000 2,250 2,750
Percentages: 37.5% 28.0% 34.5%
Common Area-2,000 sq ft 750 560 690
Entire Center: 3,750 2,810 3,440
Total: 10,000
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Bus Cost Allocation PlanTrip No. Mileage Head Start Public School
Morning Route 80 10 20
2:00 pm Route 80 10 None
3:30 pm Route 80 None 20
Totals: 240 20 40
Percentage used: n/a 33.3% 66.7%
Cost per day: n/a 240 x $1.32=$316.80.333 x $316.80=
$105.50
240 x $1.32=$316.80.667 x $316.80=
$211.30• Considerations for Allocation of Buses and Vehicles
o Reason for use of vehicleo Operating cost o Cost per mileo Number of passengerso Make-up of passengers
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Cost Allocation Planning Summary
Define who, what, when, where, and how the agency provides services
Identify what costs are direct and what costs need to be allocated
Categorize shared costs
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Cost Allocation Planning Summary
Define who, what, when, where, and how the agency provides services
Identify what costs are direct and what costs need to be allocated
Categorize shared costs
![Page 38: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/38.jpg)
Cost Allocation Planning Summary
Define who, what, when, where, and how the agency provides services.
Identify what costs are direct and what costs need to be allocated.
Categorize shared costs.
![Page 39: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/39.jpg)
Cost Allocation Planning Summary (cont.)
Develop allocation methods based on actual agency operations
Periodically review for accuracy and consistency
Update cost allocation plans as plans change
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Cost Allocation Planning Summary (cont.)
Develop allocation methods based on actual agency operations
Periodically review for accuracy and consistency
Update cost allocation plans as plans change
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Cost Allocation Planning Summary (cont.)
Develop allocation methods based on actual agency operations
Periodically review for accuracy and consistency
Update cost allocation plans as plans change
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Cost Allocation Red FlagsDifferent cost categories allocated the same way
HS/EHS program charged disproportionately or in response to funding losses in other programs
Allocations of similar expenses vary from year to year
Double charging both direct and indirect costs
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Cost Allocation Red FlagsDifferent cost categories allocated the same way
HS/EHS program charged disproportionately or in response to funding losses in other programs
Allocations of similar expenses vary from year to year
Double charging both direct and indirect costs
![Page 44: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/44.jpg)
Cost Allocation Red FlagsDifferent cost categories allocated the same way
HS/EHS program charged disproportionately or in response to funding losses in other programs
Allocations of similar expenses vary from year to year
Double charging both direct and indirect costs
![Page 45: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/45.jpg)
Cost Allocation Red FlagsDifferent cost categories allocated the same way
HS/EHS program charged disproportionately or in response to funding losses in other programs
Allocations of similar expenses vary from year to year
Double charging both direct and indirect costs
![Page 46: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/46.jpg)
Cost Allocation Tips• Staff allocations match time sheets, payroll
and personnel activity reports
• Allocations are consistent with job descriptions
• Program changes are reflected in allocation plan.
• Cost allocation plan is documented.
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Cost Allocation Tips• Staff allocations match time sheets, payroll
and personnel activity reports
• Allocations are consistent with job descriptions
• Program changes are reflected in allocation plan
• Cost allocation plan is documented
![Page 48: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/48.jpg)
Cost Allocation Tips• Staff allocations match time sheets, payroll
and personnel activity reports
• Allocations are consistent with job descriptions
• Program changes are reflected in allocation plan
• Cost allocation plan is documented
![Page 49: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/49.jpg)
Cost Allocation Tips• Staff allocations match time sheets, payroll
and personnel activity reports
• Allocations are consistent with job descriptions
• Program changes are reflected in allocation plan
• Cost allocation plan is documented
![Page 50: Management Matters A PMFO Series. Cost Allocation National Center on Program Management and Fiscal Operations (PMFO)](https://reader030.vdocuments.site/reader030/viewer/2022033106/56649ce55503460f949b2aae/html5/thumbnails/50.jpg)
Cost Allocation Tips• Staff allocations match time sheets, payroll
and personnel activity reports
• Allocations are consistent with job descriptions
• Program changes are reflected in allocation plan
• Cost allocation plan is documented