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State’s Full Cost Recovery Policy. State’s Full Cost Recovery Policy. State of California’s full cost recovery policy is defined in: Government Code (GC) State Administrative Manual (SAM) Each State department will comply with the requirements.

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state s full cost recovery policy2
State’s Full Cost Recovery Policy

State of California’s full cost recovery policy is defined in:

  • Government Code (GC)
  • State Administrative Manual (SAM)

Each State department will comply with the requirements.

state s full cost recovery policy continued
State’s Full Cost Recovery Policy- continued

Government Code (GC) Section11010:

Authorizes full cost recovery and sharing of central service costs by special fund.

And . . .

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State’s Full Cost Recovery Policy- continued

State Administrative Manual (SAM) Sections:

  • 8752
    • Explains the full cost recovery policy.
  • 8752.1
    • Identifies the cost elements to include.
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State’s Full Cost Recovery Policy- continued

State departments will . . .

  • Recover full costs when goods or services are provided to others.
  • Include all costs attributable directly to the activity plus a fair share of indirect costs.

And . . .

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State’s Full Cost Recovery Policy- continued

State departments will:

  • Apply the State’s full cost recovery policy to all funding sources.
  • Follow this policy, except where statutes prohibit full cost recovery.
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State’s Full Cost Recovery Policy- continued

Additionally, for federal reimbursements follow:

  • Federal circular A-87
  • ASMB C-10
elements of full cost
Elements of Full Cost

Cost elements recovered under the full cost recovery policy are . . .

  • Direct costs
  • Indirect costs
elements of full cost continued
Elements of Full Cost- continued

Direct costs include the actual cost of running the program . . .

  • Personal Services
  • Operating Expenses and Equipment
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Elements of Full Cost - continued

Indirect costs include the State departments own overhead, which often are . . .

  • Executive Staff
  • Information Technology (IT) Staff
  • Accounting Staff
  • Budget Staff
  • Other (administrative units) Staff

Plus . . .

elements of full cost continued11
Elements of Full Cost - continued

Central service costs are:

  • Known as the other indirect costs.
  • Incurred by central service agencies for the benefit of all State departments.
  • Known as:
    • Pro Rata
    • SWCAP
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Elements of Full Cost- continued

Total direct costs plus the indirect costs should equal the full cost of running the programs of a State department.

Direct costs $ X,XXX

Indirect costs

State department$ XXX

Statewide:

Pro Rata $ XX

SWCAP $ XX

Total costs $XX,XXX

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Elements of Full Cost- continued
  • Costs included in an Indirect Cost Rate Proposal (ICRP) must be adjusted for unallowable costs.
  • Unallowable cost information is discussed in various training classes.
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Elements of Full Cost- continued

State department billings to other entities or the federal government must include an ICRP rate, which includes:

  • State department indirect amount.
  • Either:
    • Pro Rata ICRP rate.
    • SWCAP ICRP rate. SWCAP amount recovered will be transferred to the General Fund.