Statewide Cost Allocation Plan (SWCAP)
Federally Approved SWCAPs
Section One Costs
These indirect costs represent expenditures incurred for such central services as accounting, payroll, purchasing, personnel, budget, etc. These costs are not billed to agencies because they generally are not easily measured, and/or do not readily lend themselves to billing. Although these indirect costs are not owed, they should be included in your agency's departmental indirect cost plan (if one is prepared) so that applicable overhead may be charged to federal grants. To the extent that agencies include the indirect SWCAP costs in their federal programs, corresponding state general fund dollars can be allocated elsewhere. Thus SWCAP maximizes the use of federal dollars "freeing" state general fund resources for other uses.
Since these costs are not directly billed, they are allocated using methodology prescribed by OMB A-87. The actual allocation function is performed by consultants and Federal Grants/Cost Allocation Unit. The coordination of gathering data, information collection/preparation, etc. on the central service costs centers is assigned to staff within the Division of Accounts and Reports. The basis for allocation of the central service cost center expenditures is specific to each cost center. For example, Controller's services are allocated based on the number of transactions that an agency processes through the central accounting system. Human Resource services are allocated based on the number of FTEs.
Section Two Costs
These are central service costs which are billed. Section II costs include those that are generally more easily measured and are usually based on demand usage by the agency. This is any central service cost which user agencies actually pay in one form or another. For those central services directly billed to user agencies, a rate is established to recover the full cost of the operations of a particular central service cost center. However, OMB A-87 disallows certain costs from federal reimbursement. For this reason, as well as other OMB A-87 reconciling factors, there are normally differences between the full (and actual) cost of a central service operation and what is allowed under OMB A-87.
Note that Section II billed costs are "direct" costs to agency programs. This means that if the agency program is funded by federal funds, normally 100% of a specific program's share of the billed "direct" cost is allowable for federal participation.