Billing rates for rate-based service operations are calculated using projected annual cost and the related units of measure. The following model provides an outline for rate determination.
Projected annual cost may include:
- Salaries and wages, including benefits
- Operating expenses, including but not limited to cost of goods sold, maintenance and repairs, services, utilities, etc.
- Equipment (depreciation transfers)
- General Administrative and Infrastructure Recharge (GAIR)
- Operating expense subsidy (if the department covers some of the costs)
- Up to a 60-day expense reserve for internal and external federal customers
Budget planning parameters, including information about proposed benefits and GAIR rates, can be found on the budget development information page. Planning assumptions will be posted around December of each year and will be updated as new information is available. These parameters are subject to change at any time.
Background information about benefits and GAIR can be found at the CCO Cost Allocation page.
Charge unit may be based on a service provided, an hourly rate, a per item rate, or some other measure. An estimate of annual units sold is needed for the per-unit calculation for each applicable customer type.
Unit rate is simply equal to the annual projected cost divided by the estimated number of annual units sold per customer type. Other considerations include reserves (working capital) and fund balance. Reserves are added to annual costs and must not exceed 60 days’ worth of cash needed for operations for internal and external federal customers. Fund balance is also added to internal expenses to recapture losses or excess collections from previous years.
The rate sheets perform all necessary calculations to ensure compliance with policies and procedures for each customer type. If you need any assistance identifying costs or using the rate-sheet, please email email@example.com and we will be glad to help.
- January: BFP contacts units that need to submit rates; initial planning parameters posted on BFP website.
- January-March: Units work on rate development for the following year.
- March-June: BFP does final reviews and follow-ups as necessary.
- July 1: New rates go into effect.