FULL COST RECOVERY - COST ELEMENTS - 9211

(Renumbered: 01/2022)

(Revised and renumbered from 8752.1)

Include the following cost elements in the charges for goods and services provided to others:

Direct Costs

Direct costs are identified specifically to activities or services that benefit specific projects/programs. Since these activities/services are easily traced to projects/programs, their costs may be charged to programs directly as incurred.

Agency/department direct costs include:

1. Personal services costs incurred in meeting the cost objective which include the state’s staff benefit contribution percentage as prescribed in SAM section 8299.
2. Operating expenses and equipment costs incurred in meeting the cost objective, such as the cost of contracts, travel expenses, materials required for a particular activity, etc.

Indirect (Overhead) Costs

Indirect (overhead) costs are incurred for services or activities that cannot be easily identified to a specific cost objective (e.g., program/projects, cost objective/organizational unit), but it is used for a common or joint purpose. These costs are accumulated and allocated periodically to the programs/projects or cost objective/organizational units which benefit from the support activity/function. Cost allocation is the assignment of indirect (overhead) costs to one or more programs using a reasonable and equitable formula.

Agency/department indirect costs include:

1. Personal services costs of unit, bureau, division, and agency/department administrative, supervisory, and executive staff which provide services for multiple projects/programs.
2. Personal services costs of support units, including clerical support staff, accounting, human resources, etc.
3. Operating expenses and equipment costs not included as part of agency/ department direct costs (e.g., rent, utilities).

Central Service Costs

 

Central service costs are costs incurred by central service agencies/departments (e.g., Department of Finance, State Controller’s Office, State Personnel Board, etc.) for the benefit of state agencies/departments. See SAM section 9216 for more information on central service costs.