HomeMy WebLinkAbout03. (Handout) Administrative Overhead MethodologiesCentral Contra Costa Sanitary District
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Administrative Overhead Methodologies
Regular Calculation
Admin Overhead
Benefits
Non -Work Hours
Change From 2013 -14
Source: Admin Overhead
Source: Benefits
3 -Year Smoothing
Admin Overhead
Benefits
Non -Work Hours
Full -Cost Recovery using Matrix
Prior Year
Current Method
For 2013 -14
For 2014 -15
117%
111%
85%
100%
18%
18%
220%
229%
9%
11/12 Audit
12/13 Audit
12/13 Budget
13/14 Budget
Prior Year
Current Year
For 2013 -14
For 2014 -15
105%
111%
73%
85%
18%
18%
196%
214%
Recommended by
Staff & MCG
For 2014 - 2015 **
95%
81%
18%
194%
-26%
12/13 Audit
12/13 Audit
** Criteria for this method:
1. Audited financials used rather than budgeted numbers for the Benefits piece of overhead
Pros: consistency in component calculations for admin O/H and benefits
lowers O/H rate
have an actual source document to refer to as support (most recent audited financials)
eliminates charge for budgeted salaries that are vacant and associated operating expenses
Cons: a lag in capturing full cost for big ticket items such as CCCERA pension and healthcare increases
2. OPEB contribution for active employees and retirees removed from Admin Overhead to direct cost of business
Pros: allocates expenses to original depts where employees worked
fair and equitable allocation
lowers O/H rate
have an actual source document to refer to as support (most recent audited financials)
Cons: doesn't capture 100% of today's cost
3. Retiree premiums portion of OPEB to remain as part of Admin Overhead calculation
Pros: reflects today's cost of retirees (Kaiser, HealthNet, Delta Dental, Life Insurance, etc.)
current budget is already structured as an indirect cost
Cons: an argument could be made that a majority of the expense is also direct and should not be in the O/H calculation
a more complex calculation required to spread actual individual premiums to depts where employees worked
4. Additional UAAL payments of $5.0 to $10 million removed from Admin Overhead to direct cost of business
Pros: an "optional" expense customers shouldn't have to pay
Cons: this expense is a true cost of running the District that is not captured in the O/H rate
more complex calculation as staff has to keep track of retirees by department
WACCOUNTING \GMTEMPI\Hdmin Overhead \Consensus after March 17, 2014 meeting with MCG and Roger