Statewide cost‑allocation plan explained: committee hears how central service costs are allocated and billed

State budget staff on Jan. 7 gave Joint Finance and Appropriation Committee members a high‑level primer on the statewide cost allocation plan, the mechanism used to allocate central service expenses (legal, accounting and treasury functions) across state agencies and fund sources.

“SWICAP in the budget…is an actual document that the Division of Financial Management puts together that they send off to our federal authorizing entity,” said Jared Tetrault during the Jan. 7 committee meeting. He explained the plan’s purpose: to recover allowable central service costs fairly from the funds and agencies that benefit from those services.

Tetrault told the committee the plan has two parts in the budget: the recovery of central‑service costs provided by the attorney general, the state controller and the state treasurer; and direct billing for services such as risk management, building services, ITS billing and LSO audits. He emphasized that only allowable, statewide costs are recovered; items that exclusively benefit a single office or program are excluded.

Staff described the operation as having a two‑year lag: amounts appropriated to central service agencies in a fiscal year are later reconciled to actual usage and then recovered from all eligible funds in a subsequent budget cycle. DFM runs the calculations using measures such as billable attorney hours, number of active payroll employees for controller charges, and the number of warrants issued for treasurer charges. Agencies may dispute allocations and provide context for splits between general, dedicated and federal funds before the committee considers appropriation adjustments.

Tetrault provided several summary figures and examples from the most recent cycle. He said the controller’s FY2023 appropriation for central services was about $4.8 million and that those costs are generally recovered; the treasurer’s recoverable amount was roughly $966,000; and attorney‑general recoverable fees were shown at roughly $14 million–$16 million (the attorney general’s criminal division is excluded from SWICAP calculations). The combined central‑services program, including direct billings for risk management, ITS and other items, amounted in staff materials to roughly $7.98 billion in the universe of funds subject to allocation; the budget book shows year‑to‑year netting so the committee typically sees only the net change for each agency. Tetrault noted that most controller and treasurer costs are recovered and deposited back to the general fund; he said the reported general‑fund appropriation for central services was about $21.8 million with roughly $19.8 million collected in the reconciliation example he presented.

Tetrault also summarized direct‑billing line items the committee will encounter in agency budgets: LSO audit billings (about $1.5 million historically, decreasing toward $1.1 million in recent calculations), risk‑management chargebacks (a base of roughly $18.3 million projected to fall to $16.2 million after adjustments), and ITS charges (from about $39.7 million projected down to $36.8 million). He said those figures can go up or down depending on actual service levels and a three‑year review cycle used by billing units.

Committee members asked procedural questions about how billing shares are calculated and where to find detail. Tetrault said the legislative budget book and the DFM calculations include underlying detail, and he offered to produce a more precise percentage breakdown for the committee. He reiterated that SWICAP ensures agencies and fund sources “pay their fair share” for central services rather than leaving costs concentrated in the general fund.

The presentation concluded with an explanation that the budget book language displays net changes to an agency’s appropriation for these allocations and that analysts and staff can provide line‑level detail on request.