August 2002 1

State’s Full Cost Recovery Policy

August 2002 2

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 2002 3

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 2002 4

State’s Full Cost Recovery Policy - continued

State Administrative Manual (SAM) Sections: – 8752

- Explains the full cost recovery policy.– 8752.1

- Identifies the cost elements to include.

August 2002 5

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 2002 6

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 2002 7

State’s Full Cost Recovery Policy - continued

Additionally, for federal reimbursements follow:

– Federal circular A-87– ASMB C-10

August 2002 8

Elements of Full Cost

Cost elements recovered under the full cost recovery policy are . . .

– Direct costs– Indirect costs

August 2002 9

Elements of Full Cost - continued

Direct costs include the actual cost of running the program . . .

– Personal Services – Operating Expenses and Equipment

August 2002 10

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 2002 11

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 2002 12

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,XXXIndirect costs

State department $ XXXStatewide:

Pro Rata $ XXSWCAP $ XX

Total costs $XX,XXX

August 2002 13

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 2002 14

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.

August 2002 15

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