ALLOCATION DOCUMENTATION - 9203-MAR-2010

All state departments will document and retain their cost allocation procedures and methodology in a cost allocation plan (CAP). Each CAP will contain detailed information regarding the costs being allocated, the allocation methodology, and the following information:

1. The frequency of allocating various costs to programs.
2. The rationale for selecting an allocation base.
3. How often the allocation base is evaluated to determine its continued accuracy.
4. Anticipated changes in the bases used to allocate costs.

   All CAPs should be supported by appropriately cross-referenced working papers or system documentation, updated periodically, and retained for reference and for audit purposes. A sample outline of a CAP is displayed below:

   PROGRAM COST ACCOUNTING, COST ALLOCATION PLAN

1. Purpose/Scope/General Overview
2. Definitions
3. Budget Structure
4. Methodology

   Allocation of Indirect Cost Pools-Explain allocation basis Allocation of Administration

   1. Include a description of costs charged to administration.
   2. Describe method or methods for allocating each type of costs to programs.
5. Allocation Sequence
6. Program and Organization Charts in Picture Form Displaying Roll-Up Levels and Coding Schemes

2009-2010 COST ALLOCATION PLAN

DEPARTMENT OF AIR QUALITY

I. PURPOSE/SCOPE/GENERAL OVERVIEW:

The purpose of this report is to document the Department's 2009-10 CALSTARS cost allocation plan. Each month the Department of Air Quality allocates all of their administrative costs and some costs that are not practical or convenient to charge to a single program (indirect cost pools).  The Department's Administration costs are identified in the Budget Act under Program 30, Element 01. The indirect cost pools are not identified in the Budget Act but are recorded within CALSTARS under Program 96 - Undistributed Multi-Program Costs.

II. DEFINITIONS:

Direct Costs - Any cost that can be identified to a particular program cost center.

Indirect Costs - Costs that are (a) incurred for a common or joint purpose benefiting more than one program cost center, and (b) not easily assigned to those particular program cost centers.

III. BUDGET STRUCTURE:

Program 10 – Research

Program 20 – Enforcement

Program 30 – Administration

Element 01 - Administration

Element 02 - Distributed Administration

Administration contains functions and activities that are directly concerned with establishing the policy and methods and controlling the execution of the Department's role in State government. The functions performed by this program are policy formulation, direction and coordination. This program also contains support and specialized services that are essential to the administration and operation of the department.

IV. ALLOCATION METHODOLOGY

ALLOCATION OF INDIRECT COST POOLS:

Indirect cost pools are identified in the Cost Allocation Table as Program 96.

Program 96 cost pools allocate to the following programs during the cost allocation process:

• 10 – Research
• 20 – Enforcement
• 30.01 – Administration

These costs allocate without Index identification. Use Index Code 0000 in the Cost Allocation Table Key.

Charges to the Program 96 cost pools include:

Training Facility Usage (PCA 96101, Various Object Details)

Distribution Type: 4 - Fixed Percentage PCA Type: 3 – Redistribution

Distribution:  Programs 10, 20 and 30.01

Basis: Fixed percentage of square footage previously determined in Programs 10, 20 and 30.01.

Credit Information:

The Program 96 cost pools will recover back to themselves using the same Object Detail and Agency Object as charged in the initial expenditure coding.

ALLOCATION OF ADMINISTRATION

Administrative costs allocate to the following direct programs during the cost allocation process:

10 – Research; and

20 – Enforcement

These costs allocate without Index identification. Use Index Code 0000 in the Cost Allocation Table Key.

The total administration dollars allocate to those programs based on the personal services charged to each direct program.

Distribution Type: 5 - Calculated Pro rata Percentage of expenditures in the allocation range

PCA Type: 5 - Special - Administration

Charge Information:

Distribution:  Programs 10 and 20.

Basis: Total administration dollars allocated based on the personal services dollars charged to each direct program. (Object Detail Codes 003 Agency Object 00 through 137 Agency Object 99)

Credit Information:

Allocation Range:
The PCA range of 10101 - 20199 may include Object Detail 427, allocated costs.