Statewide cost allocation (SWICAP) explained: two-year lag, central service billings recouped from agencies

Jared Tetrault, a budget analyst with the Legislative Services Office, briefed the Joint Finance and Appropriations Committee on Jan. 7 about the statewide cost allocation plan (SWICAP), the mechanism states use to recover central service costs and to bill agencies for shared services.

"There's always a 2 year lag," Tetrault said, describing the sequence by which central service agencies receive appropriations and later have their costs allocated back to all eligible funds and agencies.

How SWICAP works

Tetrault told members the SWICAP is a written plan prepared by the Division of Financial Management and reviewed by the federal cognizant agency (for Idaho, Health and Human Services). It sets the method for allocating costs for statewide central services (primarily the attorney general, state controller, and state treasurer) and identifies allowable costs and exceptions. The legislative budget book includes a statutory reference (Idaho Code 67-3531) describing the plan.

The plan produces two budget impacts that JFAC members see in agency presentations: an allocation of central service costs to each eligible agency and direct billings for statewide services such as risk management, building services for the Capitol complex, the legislative audit billings, and information technology services. Tetrault said direct-billing totals in the current cycle include an auditing charge that will drop from roughly $1.5 million to $1.1 million and risk-management billings that declined in the governor's recommendation from about $18.3 million to $16.2 million.

Timing and examples

Tetrault explained the two-year timing: the legislature funds central service agencies in Year 1; actual usage is measured across agencies for Year 2; the allocations based on those measured percentages are included in the budget for Year 3. He summarized the last completed cycle, saying the controller's appropriation in the prior biennium was about $4.8 million and the treasurer was estimated to recoup about $966,000; the attorney general's billings historically are not fully recovered and may be $14 million to $16 million depending on the year.

The analyst also emphasized that most costs are recovered and deposited back into the general fund, and that agencies with more payroll transactions, accounting transactions or legal work will bear a proportionate share of the allocation. Tetrault said the SWICAP process ensures agencies that use central services pay a fair share, and agencies receive a notice from DFM (Division of Financial Management) each October with calculated adjustments to be included in the next budget cycle.

Ending

Tetrault offered to provide more granular breakout tables on request and said budget staff will supply the committee with a more precise percentage report on recoveries. Committee members thanked him and said the high-level overview would help them understand recurring line items they see across agency budgets.