Section 22.6 - Departmental Administrative Support Assessed on Self-Supporting Funds
Before you begin
Units that provide departmental administrative support to their auxiliary (3J/3M) and departmental activity (3Q) self-supporting funds are allowed to recover these costs by using one of the following methods:
- Directly charge the costs to their self-supporting funds; or
- Reallocate administrative overhead costs to their self-supporting funds by transferring costs; or
- Charge an administrative allowance assessment to their self-supporting funds.
Units must implement procedures to ensure that monies recovered by a departmental administrative allowance assessment closely approximate the amount of administrative support costs being recovered. These assessments cannot be developed to generate supplemental revenues by also recovering for additional, unrelated, discretionary expenses. A suggested control method for ensuring an appropriate rate of cost recovery is to charge the actual related administrative costs to the allowance C-FOP. Other methods for ensuring an appropriate cost recovery rate can also be utilized. Unit control methods for monitoring the adequacy of the recovery rate must be disclosed as part of the rate calculation that is submitted for review.
This policy does not apply to Service/Storeroom (3E) funds, which are regulated by 22 Self-Supporting/Revenue Generating Activities - Service and Storeroom Activities.
The following procedures describe how to recover departmental administrative support costs using the administrative assessment method.
Begin
To develop a departmental administrative assessment on self-supporting funds:
- Identify the costs that support the administration of self-supporting activities.
- The following costs can be included:
- A reasonable portion of the salaries and wages of individuals providing administrative support to the self-supporting activity.
- A reasonable portion of the materials and supplies costs related to administering the self-supporting activity.
- The following costs cannot be included because they are included in the F&A cost pool:
- Maintenance and repair of equipment assigned to the self-supporting activity.
- Equipment depreciation expense related to the self-supporting activity.
- Determine the basis of the administrative assessment on the self-supporting fund. The recommended basis is total expenditures posted to the self-supporting funds receiving the administrative support, excluding administrative assessment charges and bad debt expense. The basis must be based on transactions posted to Banner account codes in the self-supporting funds.
- In a spreadsheet:
- Document detailed estimates of the annual support costs and the annual rate basis amount, including source of information used to estimate the costs and basis; and
- Calculate the rate to be assessed by dividing the total estimated annual support costs by the basis.
- Submit an email request to your campus OBFS Budget Office for review. Upon technical review, the Budget Office will consult with the campus Provost Budget staff. Upon approval by the Budget Office, the request will be forwarded to University Accounting and Financial Reporting (UAFR) for review and implementation. Requests must include:
- The rate calculation spreadsheet.
- The fund(s) to which the rate will be applied.
- Any supplemental information useful in justifying the assessment and the rate.
- If your request is approved, UAFR will establish an Allocations and Assessment (ALAS) type code to automate the charging of administrative allowance assessments on the self-supporting funds, or will set up a manual process to calculate and post the assessments on a periodic basis. The charge on the self-supporting funds posts is to account code 198550 - department admin allowance. The assessment is accumulated as revenue in fund type 2A - Educational and Administrative Allowances.
- UAFR provides the campus budget office with the administrative assessment amount in order to post expense budget, no less frequently than quarterly, to the unit's Educational and Administrative Allowances CFOAPAL.
- Make appropriate changes (labor redistributions, change orders on purchase orders, etc.) that enable charging administrative costs identified in the rate calculation described above to this Educational and Administrative Allowance CFOAPAL, if that method of control is utilized. In the event a unit chooses to employ an alternate method of control, please contact UAFR for further information.
- Review the assessment rate at least once every two years, and submit your rate review to your campus OBFS Budget Office and UAFR for review and approval.
Related Policies and Procedures
22 Self-Supporting/Revenue Generating Activities - Service and Storeroom Activities
Additional resources
Educational and Administrative Allowance (EAA) Funds FAQs
Please send questions regarding this policy manual to busfinpolicyoffice@uillinois.edu.
Last Updated: January 28, 2014 | Approved: Senior Associate Vice President for Business and Finance | Effective: July 2012