Non-Personnel Expenditures
Service activity funds base their rates on actual historical expenditures. If a fund has only one rate, then all expenditures go into that rate. When a service activity fund has multiple rates in one Banner 3E fund, then the service activity must allocate salaries and wages and non-personnel expenditures across the appropriate lines of service.
The best way to allocate is to know in advance which expenditures belong to each line of service and to allocate those expenditures directly.
Program codes and/or activity codes can be used to allocate expenditures to individual lines of service at a transaction level. Reviewing expenditures at an account code level is a good place to start with allocations:
- If all expenditures in a specific account code benefit one line of service, include the total expense for that service
- If expenditures in a specific account code benefit multiple lines of service but can be identified to an individual line of service, identify which expenditures belong to which line of service
- If expenditures in a specific account code benefit multiple lines of service and cannot be identified to a line of a service, these expenditures need to be allocated using appropriate percentages. Examples of frequently used methods to allocate include determining percentages to total based on one of the following:
- Usage by line of service (i.e., hours, samples, persons etc.)
- Square footage
- Staff time spent on activities
Personnel Expenditures
Like allocating expenditures, you must allocate salaries and wages to the appropriate service or line of service. Service activities must track employee time to know where they spend their time related to each line of service.
- Review salaries by position and determine the time employees spend working on each service. If they only work on one line of service, include the total salary expenditures in the column for that service.
- If a position benefits multiple lines of service and can be identified to specific lines of service based on how they spend their time (or by using program and/or activity codes), allocate salary expenditures directly to each service.
- For example, if one employee spent 80% of their time last year working on one line of service and the remaining 20% providing staff assistance and training, allocate accordingly based on how he/she spent their time.
- If a position benefits multiple lines of service and you cannot identify a percentage by line of service, you will need determine a percentage to allocate the salaries. Examples of frequently used methods to allocate include the following:
- Review hours employees spend working on lines of service. You will use the hours by employee to develop a percentage to total hours and use to allocate the salaries.
- Allocate salaries as a percent to total based on usage by line of service (i.e.hours, samples, etc.). More usage should equate to more staff time on that service.
Allocation methods must be allowable, reasonable, justifiable, and well documented to be acceptable. Using revenue is never considered an acceptable method of allocation. Also, splitting expenditures without justification is not allowable. For example, splitting all expenditures 50/50 just because it is easy is not an appropriate way to allocate. There must be a methodology for all allocations. Our office is always available to talk through appropriate allocation methods for your specific situation.
Contact
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