New York State Office for Technology: Internal Service Funds and Cost Allocation

1. Internal Service Funds Data Center- serving over 20 agencies • Mainframe – IBM and Unisys • Print • Tape-- manual and remote • Server monitoring • Data Storage Financed • Internal Service fund • OMB Circular A-87 Cost principles for State and Local Government • Rates based on projected costs • At year end actual costs are reconciled to projected costs and adjustments are made in future year rates. New York State Office for Technology

2. How are Rates developed • Determine the usage metric which will be used to allocate cost • Pages printed, CPUs, # of servers, amt of storage required • Estimate total costs for the year • Estimate the usage for the year • Divide costs by usage to establish monthly rate New York State Office for Technology

3. Cost Claimed • Agencies are billed monthly based on their actual usage • Agencies with federal funding sources take the costs and put them into internal cost allocation formula and distribute costs across federal programs • For example: Server support • Agency takes the monthly server support charge and allocates it among 4 programs based on the number of servers supporting each program. Formulas are applied when servers are shared by programs. New York State Office for Technology

4. On going vs. development cost • Development costs • OFT does not have a rate structure to support software development. Major software applications are developed by the agencies and usually involve a cost allocation rather than a rate based approach. • Ongoing • Hardware- depreciated over 3-5 years depending on useful life, or leased to allocate costs over multiple years • Rates/Internal service funds work well New York State Office for Technology

5. Contact Information Betsey Miller Federal Fiscal Liaison Office For Technology State Capitol, ESP PO Box 2062 Albany, NY 12220-0062 Phone: 518-473-2660 Email: Betsey.Miller@oft.state.ny.us New York State Office for Technology