Major recharge operations, auxiliaries, University Hospital, and other revenue generating units on campus, receive an allocation of the unit’s share of Institutional Support.

Basis of Allocation

In general the allocation is made on a Modified Total Direct Cost Basis (MTDC), which divides the total direct cost of the operation by the total current fund expenditures of the campus. The resulting percentage is multiplied by the allocable Institutional Support to arrive at the amount to allocate to each unit. In a few instances where the MTDC method would calculate an obviously incorrect amount, special studies are used to determine the amount to allocate.

Total Direct Cost of Operation

This is arrived at by taking the total expenditures of the operation excluding the following items:

• Capital expenditures such as equipment, capital repairs, and any other fixed asset expenditures.
• Cost of goods sold.
• Institutional support charges – current year charges based on the prior year’s calculation.
• Transfers

Allocable Institutional Support

This includes expenditures from general operating sources for executive management and fiscal operations of the campus as well as other administrative functions and operations that provide logistical support to the entire campus. Examples out of each category include:

• Chancellor
• Vice Chancellor Finance
• Provost
• Accounting Services
• Cashiers
• Payroll
• Human Resource Services
• Mail Services
• University Police
• Parking
• News Services

Major recharge operations, auxiliaries, University Hospital, and other revenue generating units on campus,

Timing of Calculation and Allocation

The calculation is usually done in the spring of the current fiscal year. It is based on expenditures of the previous fiscal year for the allocation that will take effect July 1 of the next fiscal year. (Example: The calculation done in the spring of FY 04 is based on FY 03 expenditures for the allocation that starts in FY 05).

Because the expenditures that the calculation was based on are two years old at the point the allocation takes effect, two years of inflation factors are included in the final amount that is allocated.

Cost of Goods Sold

Cost of Goods Sold (COGS) is defined to include the cost of obtaining and producing the goods that are sold. COGS has to be a tangible product, i.e., a physical item that you can hold in your hand. COGS excludes:

• Services
• Other items purchased for resale that are not tangible
• Supplies that are used as part of providing a service