Health Care Agency Administration Distribution And Indirect Cost Plan Overview

1. Health Care AgencyAdministration Distribution AndIndirect Cost PlanOverview

2. Administration Cost Distribution • Administrative costs are distributed to the budget unit level within HCA each month. This allows the Agency to: • More accurately identify the full, actual cost of administering programs. • Recover some administrative costs through specific grants or allocations. • Recover some administrative costs through fee or rate calculations. • Administrative costs are distributed to HCA divisions/budget units in two components – Agency Administration and Service Area Administration.

3. Agency Administration Distribution • Agency Administration costs spread to all appropriate HCA divisions from the following eight budget units: • 7000 – Director’s Office • 7020 – Compliance Office • 7030 – Contract Development and Management(CDM) • 7050 – Financial and Program Support Services (F&PSS) • 7100 – Central Operations • 7600 – Quality Management (QM) • 7700 – Information Technology (IT) • 8000 – Human Resources (HR) These costs are budgeted in and book to 1900AD

4. Service Area Administration Distribution • Service Area Administration includes costs for the offices of the service area Deputy Agency Directors, as well as Program Support staff providing direct support to service areas. These costs are budgeted in and book to 1900SA. • Service Area Administration costs are included in four budget units, which each spread to divisions/budget units within the appropriate service area: • 1000 – Public Health Services Administration • 2000 – Behavioral Health Services Administration • 3000 – Correctional Health Services Administration • 6000 – Medical Services Administration

5. Admin Distribution Calculations • Costs are tracked within each administrative budget unit by job number. • Expenditures that are related to a particular program are coded to job numbers that spread just to that program’s budget unit. • Example 1: CDM staff directly supporting Alcohol and Drug Abuse Services code to a CDM job number just for ADAS-related costs. Those costs are spread 100% to unit 2800 and book to 1900AD. • Example 2: IT’s IRIS costs are spread to user programs based on cost pool allocations.

6. Admin Distribution Calculations (cont) • Expenditures that cannot directly be identified with a particular program are spread to all programs. • CDM – general CDM costs are spread based on proportionate share of each program’s contracts (within object 1900) budgeted appropriations for that fiscal year. • All Others – costs are spread based on proportionate share of Agency’s monthly actuals for salaries and employee benefits.

7. Admin Distribution Calculations (cont) • Budget Technical Unit staff download administrative job costs monthly. • Costs to be offset by revenues are removed (ex: TSR). • Costs are distributed to appropriate budget units for each job number through journal voucher. • Summary reports are distributed monthly to PS staff. • Summaries show current month and year-to-date amounts for each budget unit. • Full files are available through F&PSS staff. • Questions about administrative distribution amounts, calculations, methodology, etc, can be directed to F&PSS managers.

8. Indirect Cost Plan • The HCA Indirect Cost Plan (ICP) is prepared annually, based on the Agency’s adopted budget. • The ICP may be updated one or more times during the fiscal year if there is information that materially impacts the rate calculations. • The ICP is prepared in conformance with: • Federal Office of Management and Budgets Circular A-87. • County of Orange Accounting Procedure B-2.

9. Indirect Cost Plan (cont) • Each ICP rate includes three pieces: • County-Wide Cost Allocation Plan (CWCAP) represents administrative support such as Central Human Resources, County Executive Office, and Auditor-Controller. • Agency-wide Administration includes HCA costs for the Agency Director’s Office, Compliance Office, Contract Development and Management, Financial and Administrative Services, Central Operations, Quality Management, Information Technology, and Human Resources. • Service Area Administration includes the offices of the Service Area Deputy Agency Directors, as well as administrative Program Support staff providing direct support to service areas.

10. Indirect Cost Plan (cont) • Rates are calculated for: • Public Health Services: • Environmental Health • Other PHS Programs • Behavioral Health Services: • Children and Youth Services and Adult Mental Health • Alcohol and Drug Abuse Services and Mental Health Services Act • Correctional Health Services • Medical Services • Health Care Agency, primarily for Tobacco Settlement Revenue claim purposes

11. Indirect Cost Plan (cont) • Calculations are based on the Agency’s budgeted appropriations. • Non-eligible items are removed. This includes administrative expenses to be capitalized. • If a change to these amounts is known, and could materially impact the calculations, an adjustment is made and footnoted.

12. Indirect Cost Plan (cont) • S&EB base percentage rate – the allocated administrative cost estimate for each major program is divided by the estimated Salaries and Employee Benefits for the same major program. • The S&EB base rate is used for most HCA grant claims and fee allocations that utilize an ICP rate. • The S&EB base rate is applied only to S&EB, and not to other program costs in the claim or fee calculation.

13. Indirect Cost Plan (cont) • Gross base percentage rate - the allocated administrative cost estimate is divided by the total program cost estimate to provide a rate based on total program cost for each major program. • This rate is used for programs that have little or no Salaries and Employee Benefits.

14. Indirect Cost Plan (cont) • The ICP is reviewed and approved by the Deputy Agency Director for Financial and Administrative Services. • Once signed, the package is scanned and saved to the financial server. • The file with all ICP calculations is also on the financial server and can be shared if appropriate (i.e. grantor request, cost applies). • A summary page, with the updated rates and a comparison to the new rates, is distributed electronically to financial and accounting staff