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General Administrative and Infrastructure Recharge (GAIR)


The General Administrative and Infrastructure Recharge (GAIR) is a combination of the General Administrative Recharge (GAR) and the General Infrastructure Recharge (GIR). GAR & GIR are overhead charges that the university levies on self-supporting operations, primarily Auxiliary fund groups, which benefit from central campus services and support. The two rates are distinct and are calculated separately, but are commonly referred to in combination as GAIR. Charging self-supporting operations for central support and services is common practice in Higher Education since this overhead charge supports the notion that an auxiliary is to be self-supporting. Methodologies for how to charge this overhead vary greatly as do the operational and financial structures of universities.

The GAIR methodology was established decades ago using components of the formal federal Facilities and Administrative (F&A, also known as ICR) calculation methodology, in addition to actual expenditures incurred for common infrastructure improvements. Specifically, the GAR portion is calculated using the federally defined general and administrative (G&A) cost pool divided by total campus operating expenditures per the annual audited campus financial statements.G&A expenditures are commonly found in the General Fund. Examples include accounting, human resources, budget office, a portion of OIT, and CU-system services (e.g. purchasing, payroll, IT functions). GAIR proceeds come into the general fund and are used to cover these general administrative costs.

The GIR portion is calculated by determining the auxiliary share of common infrastructure costs and then dividing that amount by total auxiliary operating expenses excluding GAIR expenses. Examples of common infrastructure costs include sidewalks, roads, garbage cans, and bike racks.

GAIR is a cost recovery model.The GAIR rate is calculated annually using data from two years in arrears. For example, the FY2015 GAIR rate is calculated during FY2014 using FY2012 actuals. In general, if the G&A cost pool grows more slowly than the total operating expenditure base, the rate will go down; if the reverse is true, the rate will go up. Prior to FY14, the rate was calculated based on the most recent full fiscal year actual expense. The methodology was changed so the rates could be finalized and distributed early in the campus budget process.

GAR is charged on a monthly basis to auxiliary and self-funded operations (20, 26, 28, 29) and their renewal and replacement plant fund (78) and to agency funds (80). GAIR is only applied against expenses, not cash transfers or revenue.

GIR is charged on a monthly basis to auxiliary and self-funded operations (20, 26, 28, 29) and their renewal and replacement plant fund (78).

Please contact the Office of Accounting and Business Support Cost Accounting or the Budget Office with questions.

The following table highlights the change in rates over time from FY2009 to FY2015, with explanations of the changes.

GAIR Rate
Year
Expense
year
used for
rate
GAR GIR Combined Drivers of change from prior year
2015 2012 6.01% 0.57% 6.58% Effective for FY15, the GAIR rate will be calculated based on data from two years in arrears rather than one year. Therefore, the rate is based on the same FY12 data used to calculate the rate for FY14. As noted below, the true calculated rate for FY14 was 6.63%. A review of the G&A pool done for the F&A rate calculation, completed after the publication of the FY14 GAIR rates, reduced the G&A pool while leaving all other cost components the same, so the recalculated combined rate was reduced to 6.58%.
2014 2012 5.54% 0.55% 6.09% G&A pool grew 25% while campus operating expense grew 1.54%; G&A drivers were increased expenditures in IT and amount paid to system office for its central services; operating base growth smaller than in past years in part due to expiration of ARRA state tax and research funding. The true calculated GAIR is 6.63% (6.08% GAR; GIR 0.55%); however, the campus will take a 50% postponement of the total increase from FY2013 due to the timing in the budget planning cycle and the size of the change.This postponement will not be built into subsequent rates.
2013 2011 5.15% 0.39% 5.54% Both G&A pool and operating base grew at about the same rate, 7%, in 2011
2012 2010 5.13% 0.37% 5.50% G&A pool decreased 2.1% while all-campus operating expense grew 5.7%; G&A driver was a large reduction in amount paid to system office for central services; all-campus operating expense driver was increased research (ARRA) expenditures
2011 2009 5.54% 0.42% 5.96% G&A pool growth outpaced all-campus operating expense growth, 9.6% increase and 7.1% respectively
2010 2008 5.42% 0.43% 5.85% G&A pool growth was less than all-campus operating expense growth, 3.7% increase and 4.5% respectively
2009 2007 5.46% 0.44% 5.90%  

Last revision 11/05/13


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