TRAC and fEC: background, implications and current situation

1. TRAC and fEC: background, implications and current situation John Newton Assistant Director (Costing, Pricing and Special Projects), Cardiff University

2. Background • Transparency Review – PFT, NPFT, PFR, NPFR, O,S • UK Government expectations/commitment - 2002 • JCPSG, TRAC and its strategy – methodology finally agreed June 2005 • Additional support for UK Research Councils • Implementation for Research Councils from September 2005 • Cost-based pricing based on TRAC/fEC • Market-based pricing • Sustainability – Reporting of data to UK government, Funders Forum, metrics

3. fEC • Definition of fEC • Full economic costs based on TRAC – definitions of activities, data, time allocation schedules, validation, testing, internal audit- refer to http://www.jcpsg.ac.uk/ • Cost models and rates vary between institutions • QA process – implications • Rates calculated for Estates and Indirect costs – generic and lab-based departments • Breakdown of costs: • Directly Incurred (DI) – note library costs • Directly Allocated (DA) • Indirect • Exceptional items

4. Indirect costs • Cost driver model • Consists of: • the Support time of academics • clerical and administrative staff in • academic departments (exc. DI/DA costs) • non-staff costs in academic departments • central services (Finance, Research Admin, Libraries, Computing, etc) • estates costs of central service departments • Return on Financing and Investment Cost Adjustment (RFI) • FTE calculation – TRAC Time Allocation Schedules/PGR weightings • The total indirect costs for Research/total FTEs for Research provides the indirect cost rate/FTE for Research • Annual calculation, using historical data for the previous accounting year

5. Library/Learning Resources • Materiality • Information Services - Library/Learning Resources, Media, IT, etc • Cost categories – staff/non-staff • Staff – costs to be analysed between selection/acquisition/collection management, cataloguing, binderies, enquiries/staffing reading rooms/training, shelving/book retrieval, preservation/conservation, publicity, income-generation, management/administration • Non-staff – costs to be analysed between acquisition of books, acquisition of journals, inter-library loans, e-services (serviced access to external databases), special collections, other costs not included above, estates costs of libraries • Costs can be identified from accounting statements – discussion/review

6. Main steps in allocation of costs • Identification of costs of the HEI’s libraries – agreed by Librarian • Allocation of these library costs tom academic departments/Library income-generating activities – units using libraries and their facilities are identified • Allocation of these academic department library costs to activities (i.e. T,R, O) – review by Finance Note testing for fairness and reasonableness. Learning Resource facilities (e.g. e-Learning, Blackboard) will be similarly identified.

7. Step 1 • Attribute costs of internal services (e.g. cataloguing) to branch libraries on basis of their use of each service (e.g. number of books catalogued) • Attribute other central library costs (management, equipment, etc) to branch libraries using appropriate cost drivers (e.g. cost, number of staff/student FTEs, etc) as agreed with the Librarian • Central administration costs (such as Finance) and estates may be attributed to libraries (this involves review of the HEI cost model, allocation of costs and interaction with various managers)

8. Step 2 • The costs of each library are allocated to the academic schools they service, based on appropriate cost drivers – agreed by Finance and the Librarian. • Cost pools (staff, non staff costs – broken down by type of cost) for each library will be apportioned on the basis of cost drivers. • Cost drivers may include the staff and student FTEs in the appropriate academic schools, spend on categories of cost, usage and other data. These will be discussed with the Librarian and various data sources used – annual accounts, electronic data collection systems, statistical sampling, etc

9. Step 3 • The costs of each library are allocated directly to T, R, O where possible (e.g. research libraries to R). Finance will discuss with the Librarian. • The costs of specific cost pools (e.g. books, periodicals, journals, inter-library loans, etc) are allocated to T, R, O on the basis of estimates, based on review and data sources, by the Librarian. • Staff costs could be allocated to T, R, O on the basis of staff and student FTEs. Student FTEs will include Home/EC, Overseas and PGR students. Weightings will be needed between staff and students – the Librarian to determine. • Central costs (e.g. management, equipment) should be allocated in proportion to all other library costs. • Costs of R costs may be split further between PF and NPF activities on the basis of data derived from school time allocation schedule returns for academic staff and the weighted PGR student FTEs. Finance will advise. • Costs of T costs may be split between PF and NPF activities on the basis of staff and student weighted FTEs, using data from electronic systems. If staff numbers are relatively small in relation to student numbers, then student numbers alone may be used. .

10. General • Some costs may include central information services and/or IT staff but similar cost drivers to those outlined will be used. Similar attribution of costs will be used for IT services. • Costs are included in the HEI’s cost model and will be used to calculate the costs of PFT, NPFT, PFR, NPFR, O for funding council returns annually. The costs are also used to calculate the cost rates for Research, Services Rendered/Consultancy, etc and used for pricing and cost recovery on external funding proposals. Such rates may also be used where library staff are classed as researchers as outlined in the TRAC guidance. • Costs may be compared between libraries, compared over different time periods, compared with other HEIs, etc • Cost rates specifically for the Library may be calculated for service activities (such as information retrieval). • HEIs will have different resource allocation processes and some may reallocate income derived back to library accounts. Note research councils meet 80% of full economic costs on successful projects.

11. Conclusions • Do not underestimate work in implementing fEC systems • All staff across university are involved in fEC • There are different funding regimes - Structural Funds, Charities, UK Research Councils, EU, etc – which may affect inclusion of costs in proposals for pricing purposes.

12. Contact • John Newton • Assistant Director (Costing, Pricing and Special Projects) • Cardiff University • P O Box 497 • 30 -36 Newport Road • Cardiff CF10 3XR • UK • Email: newton@cardiff.ac.uk