January 22, 2002 1

How Does the Calculation Work?

January 22, 2002 2

Calculation

• Calculation uses:

– Workload

– Expenditures

• Sources for workload and expenditure data are from central service agencies (CSA).

January 22, 2002 3

Calculation - continued

Workload is the first component of the calculation.

January 22, 2002 4

Workload

• Workload is obtained from CSAs.

• For source and type of workload, view the presentation What is Workload?

January 22, 2002 5

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.

January 22, 2002 6

Workload - continued

Workload is adjusted for reimbursed and unallowable workload.

January 22, 2002 7

Workload - continued

For our example, let’s use workload from the State Controller’s Office (SCO), Accounting.

January 22, 2002 8

Workload - continued

SCO, Accounting workload is assigned function number 201.

January 22, 2002 9

Workload - continued

• Each the year, the SCO provides accounting transaction data, called records.

• Each record identifies by State department the number of records processed.

January 22, 2002 10

Workload - continued

Workload, for each function, is totaled.For this example, the total workload for function 201 is 2,349,068.

January 22, 2002 11

Central Service Expenditure Data

Next step is to obtain the central service expenditures for this function.

January 22, 2002 12

Central Service Expenditure Data - continued

For additional information on expenditures, view the presentation What are

Expenditures?

January 22, 2002 13

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.

January 22, 2002 14

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.

January 22, 2002 15

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?

January 22, 2002 16

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.

January 22, 2002 17

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

January 22, 2002 18

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

January 22, 2002 19

Workload Unit Cost Calculation - continued

Each department, the calculation is computed for:

– Past year actualand

– Budget year estimate

Both calculations are computed the same way.

Example:

$1,000,000/10,000 = $100/per hour X 50 hours =

$5,000

January 22, 2002 20

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.

January 22, 2002 21

Workload Unit Cost Calculation - continued

Next, let’s put the calculation together.

January 22, 2002 22

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

January 22, 2002 23

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)

January 22, 2002 24

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.

January 22, 2002 25

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

January 22, 2002 26

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)

January 22, 2002 27

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.

January 22, 2002 28

For additional information, view our other presentations.