JFAC briefed on SWICAP: how central‑service and direct‑billing charges flow through agency budgets

State budget staff walked the Joint Finance and Appropriations Committee through the mechanics of the Statewide Cost Allocation Plan (SWICAP) on Jan. 7, explaining why central service charges and direct billings appear in many agency appropriations and how those amounts are recovered and recorded.

"Statewide cost allocation or SWICAP... is an actual document that the division of financial management puts together that they send off to our federal authorizing entity," the presenter, Jared Tetrault, said. He described SWICAP as the mechanism that allocates central‑service costs (attorney general, state controller, state treasurer) and direct billing services (risk management, building services, Legislative Services Office audits, and the state information technology office) across eligible state funds and agencies.

Tetrault told the committee that the budgetary adjustments the committee sees represent only a portion of a much larger allocation plan; much of the plan concerns agency‑specific cost pools and operating details that do not require an appropriation action in JFAC. He said the plan uses measures such as billable attorney hours, number of active payroll employees, and number of warrants issued to assign shares of central costs to agencies and fund sources.

Two‑year timing lag and funding flows

Tetrault emphasized that SWICAP changes have a two‑year lag: costs appropriated in fiscal year X are reconciled to actual usage and recovered in fiscal year X+2 through adjustments to agency appropriations. He described the cash flow as: central‑service agencies receive appropriations, deliver services across state government, DFM computes allocations based on actual activity, agencies receive SWICAP adjustment notices in October, and JFAC considers appropriations that implement the recovery.

He gave summary figures for recent years to illustrate the program’s scale: about $70–80 million in recurring appropriations are typically affected by SWICAP adjustments in the budget, and the overall program – when counting all related appropriations and recoveries across funds – touches several billion dollars of state activity (he referenced a $7,978,000,000 program magnitude when all agencies and fund flows are included). Tetrault said most central service costs are recovered (the controller and treasurer costs typically are fully recovered; the attorney general is often partially recovered because some functions, such as criminal work, are excluded from the billable base).

Examples and direct billings

Tetrault said recent estimated adjustments included: legislative audit billings falling from about $1.5 million to about $1.1 million based on audit calculations, risk management billings decreasing from $18.3 million to about $16.2 million, and ITS billings decreasing from $39.7 million to about $36.8 million. He also explained that dedicated and federal funds pay their share of allocated costs and that the collections are deposited back to the general fund to keep the payment and recovery process transparent.

Committee members asked clarifying questions about the measures used (billable hours, payroll counts, warrants issued) and about year‑to‑year impacts on agencies with atypical workloads (for example, agencies that recently were recipients of large new federal grants or agencies that had unusually high legal costs). Tetrault said agencies are notified of calculated adjustments and can raise allocation splits and other questions with DFM before the adjustments are finalized for JFAC.

Ending

Tetrault offered to provide the committee a more detailed breakdown showing fund‑level percentages and pledged to prepare a committee report with more accurate percentages after building a specific report. He said the SWICAP process is intended to ensure a fair, auditable and equitable recovery of statewide administrative costs across fund sources.