Departments will be given credit (or a reduction of allocations) for the following item:

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1 O R E G O N H E A L T H & S C I E N C E U N I V E R S I T Y O V E R H E A D C O S T ( O C A ) M E T H O D O L O G Y D E S C R I P T I O N F O R T H E F I S C A L Y E A R E N D I N G J U N E 3 0, OCA stands for Overhead Cost Allocation. OCA is defined as the methodology used to allocate expenses that are directly and indirectly necessary for OHSU s missions to S U M M A R Y function. These are expenditures that are paid centrally, which are then allocated to individual units that receive direct or indirect benefit from these services. These allocated costs are composed primarily of the space cost of facilities, insurance, and interest expense on our debt, and administrative components such as the costs of the central departments that support the entire institution, such as Human Resources, Information Technology, Facilities, Legal Affairs, Risk Management and Finance. E X E C U T I V E At the direction of the Board of Directors, University operations are to breakeven over time. In order to achieve this goal it is critical for the institution to recover its overhead costs. In the past, only a small portion of these costs had been recovered leaving a significant loss from operations for the University. In fiscal year 2005, an allocation to recover overhead costs was created and a phased-in implementation began. The current model, documented here, reflects that we are no longer in a transition period. In an effort to ensure transparency and equitable treatment for all areas and provide departments with options for managing these costs, the allocations and credit will be divided as described below: Departments will be allocated a charge for the following items: (Adjusted Monthly) Space Allocation Departments are charged based upon square footage of space utilized. Different costs per square foot are charged depending on type of space: wet research, office or open structures. Information Technology Allocation Costs for information technology services such as networking, financial systems and that are provided to a unit are charged based upon the adjusted FTE of the Department. Personnel Related Allocation Services for processing employee related transactions such as Human Resources and Payroll are allocated based upon the adjusted FTE of the Department. Research Related Allocation Services provided to administer and support sponsored projects, like compliance, other research services and subsidies provide to support research are charged based upon the direct sponsored project expenses attributable to the Department. Other Administrative Costs Allocation Costs which cannot be reasonably allocated above are allocated based upon expenses generated by the Department. Departments will be given credit (or a reduction of allocations) for the following item: 1

2 Department Funded Building Credit Departments will receive a credit for building costs funded by the Department in prior years. All allocations will be based on actual activity on a monthly basis. Reports will be created for these calculations to facilitate an easier review of N E T charges by Departments. A Department is not able to receive a net credit or negative OCA charge. Since the amount of net OCA Charges to a department will be based upon actual activity, OCA budgets may be adjusted by Departments depending on estimated level of activities. M E T H O D F O R S Allocations S P A C E Costs Allocated: Projected 2012 expenses for Interest Expense, Depreciation, Property Insurance, Utility Expense, Custodial Services, Facilities and Real Estate, Utilities, Central Leases, Campus Planning and Development, and credit from Direct Leased Space. What Does Your OCA Dollar Pay For? FY12 OCA Non-Lab Cost Per Sq. Ft. - $43.85 Direct Lease Credit Insurance $(0.40) Central Leases $1.66 $0.04 Facilities $6.97 Debt Service $8.71 Utilities $7.91 Depreciation $18.96 Basis of Allocation: The allocation is based upon square footage occupied by a Department. There are different square footage charges for wet lab, office and open structure space. The 2

3 charge per square foot will be set during the budget season and will remain in effect for the entire fiscal year. Allocation Data: This allocation will be determined monthly based upon space that is occupied at the beginning of the time period. Data for space occupied will be collected by the Office of Space Planning once a year during the annual space survey. It is the responsibility of the Department to report any changes during the year to this office so that the proper monthly allocation will be received. Responsible Departments: Office of Space Planning in conjunction with Central Financial Services. Ways a Department Can Reduce this Allocation: This allocation decreases as space used by the department is reduced. I N F O R M A T I O N T E C H N O L O G Y Costs Allocated: Costs include projected 2012 expenses for network maintenance, software maintenance, desk top support, ITG and telecom space costs, and other IT infrastructure related items. Basis of Allocation: Based upon adjusted full time equivalent employees paid by the Department (no overtime is included). This charge will fluctuate monthly with changes in employees. The amount per employee will be set at the beginning of the 2012 fiscal year. Allocation Data: The allocation is based upon an adjusted full time equivalent calculation for employees based upon worked hours paid for the month. This calculation is based upon the funding department (as opposed to the home org). The data will be based upon the Oracle payroll system. Responsible Departments: Central Financial Services. Ways a Department Can Reduce this Allocation: This allocation decreases as employees worked hours are reduced. 3

4 P E R S O N N E L R E L A T E D Costs Allocated: Projected 2012 expenses for the Payroll, Human Resources, Corporate Integrity, Equal Opportunity and Affirmative Action Departments. This charge also includes projected 2012 expenses for the library, tuition assistance, workers compensation insurance and vacation time earned by employees to be taken in the future. FY12 OCA Personnel Services Breakdown Total Cost of Personnel Services equal $16,649 (Includes $3,606 credit not shown) Integrity $1,343 Workers Comp $3,142 BICC $7,962 Human Resources* $4,063 Other $3,745 *HR Excludes Retirement and Benefit Administration Credit of $3,606 Basis of Allocation: Based upon adjusted full time equivalent employees paid by the Department (no overtime is included). This charge will fluctuate monthly with changes in employees. The amount per employee will be set at the beginning of the 2012 fiscal year. Allocation Data: The allocation is based upon an adjusted full time equivalent calculation for employees based upon worked hours paid for the month. This calculation is based upon the funding department (as opposed to the home org). The data will be based upon the Oracle payroll system. Responsible Departments: Central Financial Services. Ways a Department Can Reduce this Allocation: This allocation decreases as employees worked hours are reduced. 4

5 Costs Allocated: This allocation includes projected 2012 costs for Research R E S E A R C H Services including the Departments of Grants and Contracts, Sponsored Project R E L A T E D Administration, Research Integrity, Technology and Research Collaborations, Comparative Medicine, the Clinical Research Program, Tech Transfer and Business Development, Purchased Services related to research support, and other related expenses. Basis of Allocation: This allocation is based upon direct sponsored project expenses of Department. Recovery for indirect costs is not included in the basis of allocation. This charge will fluctuate monthly with changes of sponsored project related expenditures. The rate will be set at the beginning of the 2012 fiscal year. Allocation Data: Direct expenses of sponsored projects will be tabulated on a monthly basis from the University s financial system. Responsible Departments: Central Financial Services in conjunction with Sponsored Projects Administration. Ways a Department Can Reduce this Allocation: This allocation decreases as direct sponsored project expenditures decrease. 5

6 Costs Allocated: This allocation includes the projected 2012 costs for Legal, O T H E R Public Affairs & Marketing, Insurance (excluding property and workers compensation), Logistics, Financial Services, the Presidents Office, Chief C O S T S Administrative Officer s Office, Risk Management, the University s contingency and commitment pools, and Board of Directors. Included for the first time in FY12 are previous space related costs which includes Schnitzer campus, South Waterfront campus, Space Committee, Public Safety, and Environmental Health and Radiation Safety. A D M I N I S T R A T I V E Campus Wide $558 FY12 OCA Other Admin Breakdown Total Cost of Other Admin equals $66,605 Communications $2,050 Dept. Specific $1,938 Misc. $2,000 Legal $3,634 Student Services $6,880 Insurance $15,387 Executives/Board $4,493 Sales and Services $10,231 Central $19,434 Basis of Allocation: This allocation is based upon total non-capital expenses of Department. This charge will fluctuate monthly with changes of expenses. The rate will be set at the beginning of the 2012 fiscal year. Allocation Data: This allocation data is collected from the University s financial systems on a monthly basis. Non-Capital Expenses include all total non-capital expenses (all OHSU funds) with the exception of the following: a) Funds (Oregon Opportunity), (Central Service) b) Object Codes 6577, 5521, 6033, 5711, 5524, 5399, 5521, 5595, 6594, 6710, Responsible Department: Central Financial Services. Ways a Department Can Reduce Allocation: This allocation decreases as non-capital expenses in a Department decline. 6

7 Credits and Reductions D E P A R T M E N T F U N D E D B U I L D I N G Credit Based Upon: Departments will receive a credit for building costs funded by the Department in prior years. This includes funding from gifts or other departmental revenue. CRED I T Description of Data: This credit will be based upon fixed asset analysis reviewed prior to the beginning of the prior year. This should not fluctuate monthly since this credit is given evenly throughout the year. Responsible Department: Central Financial Services. Ways a Department Increase Credit: This credit increases when the department invests funds in building assets in their area for the department. Appendix A FY12 OCA Rates F Y 1 2 R A T E S The following are the rates set for FY12: Space per Square Foot: Location Lab Non-Lab Open Structure University $ $ $ 1.12 Direct Lease $ 5.00 $ 5.00 $ 0.35 Primate Center $ 1.98 $ 1.98 $ - Hospital $ 6.34 $ 6.34 $ - Personnel Services & ITG per FTE: Personnel Services $ 2,075 ITG $ 3,745 Total $ 5,820 7

8 Other Admin Expense and Research Expense: Unit Type Other Admin Research Standard Unit 6.62% 8.18% Research Only Unit 5.58% 8.18% SOM Unit 6.88% 8.18% SOM Research Only Unit 5.82% 8.18% Appendix B How OCA will Look to a Department S A N D C R E D I T S A T T H E Allocations and credits will be listed on the department accounts as follows: D E P A R T M E N T Allocations: OCA Space Allocation, Object Code 6521 OCA Information Technology Allocation, Object Code 6522 OCA Personnel Related Allocation, Object Code 6523 OCA Research Related Allocation, Object Code 6524 OCA Other Administrative Costs Allocation, Object Code 6525 Credits: OCA Department Funded Building Credit, Object Code