Departmental Budget Officers
Departmental Accounting Officers

REVISION TO THE 1997-98 STATEWIDE COST ALLOCATION PLAN

The Department of Finance and the Federal Department of Health and Human Services (DHHS) recently completed negotiations on the 1997-98 Statewide Cost Allocation Plan (SWCAP). As a result of these negotiations, the total allowable central service expenditures were reduced to $368 million. The reduction is associated with adjustments for the State Controller’s Office, Health Benefits for Retired Annuitants, the Department of Justice, and the Bureau of State Audits. The adjustment amounts, by agency, are shown on the attached schedule.

If your Indirect Cost Rate Proposal (ICRP) or Cost Allocation Plan (CAP) have been submitted, your department may be required to resubmit the ICRP or CAP incorporating the revised SWCAP amount. However, you may be able to demonstrate to your federal cognizant agency that a revised ICRP or CAP for your department may be unnecessary if the following are considered:

• Will the adjustment have a material effect on your ICRP or CAP? Will the adjusted cost recovery outweigh the cost of preparing, reviewing, and approving the revised ICRP or CAP?

• Did your department include all costs in the initial ICRP or CAP? Can you show that you have additional allowable costs that offset the adjustment?

• If you must recalculate your ICRP or CAP, are there costs that should have been included in the original ICRP or CAP but were not? Do such costs minimize the effect of this adjustment?

If you have not yet prepared and submitted your 1997-98 ICRP or CAP, please use the revised SWCAP allocation for your department. Should you have any questions or need additional information, please contact Amanda Evans at 445-3434, extension 2144.

Sincerely,
Wanda D. Kelley
Fiscal Systems and Consulting Unit