Budget and Billing Methodology

1. Budget and Billing Methodology Northwood Shared Resource Center Member Meeting May 21, 2009

2. Alignment of DCF and NSRC • Legislative • The NSRC was established by the 2008 Legislature via Senate Bill (SB) 1892 as one of two primary data center facilities, the Southwood Shared Resource Center (SSRC) and the Northwood Shared Resource Center (NSRC). • Each primary data center will be governed by a Board of Trustees, who are selected from member agencies. • Budget/Accounting • NSRC is a separate budget entity falling under the larger DCF budget

3. Budget Allocation Methodology • Snap-shot of DCF budget • Proportional split • 70% - 30% for Salaries, OCO, OPS, Risk Management based on transfering FTE to NSRC • CRE allocation based on current contracts and purchase obligations moving to NSRC • Expenses – DCF will maintain the largest due to lease and utility costs

4. Budget Funding • Proportional allocation • Based on current DCF budget funding (%) • Ex. If 60% of funding of DCF budget was based on GR – mirrored percentage of GR on NSRC budget

5. Issues/Concerns • Position moves (future reality) • LBR/LBC process • Others

6. Billing Methodology • Compliance with OMB Circular A-87 (2 CFR, Part 225) – Cost Principles for State, Local and Indian Tribal Governments • Federal programs are going to be billed for these services • Lessens the likelihood of subsequent unexpected Federal disallowances • Billing Rates • Each service must have a separate billing rate • Based on budgeted costs for each service and the estimated utilization for each service

7. Billing Methodology (continued) • Accounting Requirements for Billed Central Services • Required to separately account for each individual service’s revenues and expenses • Required to reconcile revenues generated by each individual service to the actual allowable costs of each service annually • Over recoveries must be either refunded to the customer or, if there are insufficient Retained Earnings, kept in Retained Earnings

8. Billing Methodology (continued) • Retained Earnings • Retained earnings for up to 60 days cash expenses for normal operating purposes is allowable • Retained earnings are determined by applying a percentage to the allowable operating expenditures. • The percentage is the number of days in the billing cycle days divided by 360.

9. Billing Methodology • Equipment Purchases/Leases • Not allowable as a direct charge, i.e., cannot be included in the cost of the service • Depreciation is used to allocate the costs to the periods benefiting from their use • Must be purchased/leased from contributed funds, depreciation or loan • Contributed funds are general revenue funds appropriated by the state to cover expenditures not allowed under A-87