TRAC and fEC: background, implications and current situation

1
TRAC and fEC background, implications and
current situation

• John Newton
• Assistant Director (Costing, Pricing and Special
  Projects),
• Cardiff University

2
Background

• Transparency Review PFT, NPFT, PFR, NPFR, O,S
• UK Government expectations/commitment - 2002
• JCPSG, TRAC and its strategy methodology
  finally agreed
• June 2005
• Additional support for UK Research Councils
• Implementation for Research Councils from
  September 2005
• Cost-based pricing based on TRAC/fEC
• Market-based pricing
• Sustainability Reporting of data to UK
  government, Funders Forum, metrics

3
fEC

• Definition of fEC
• Full economic costs based on TRAC definitions
  of activities, data, time allocation schedules,
  validation, testing, internal audit- refer to
  http//www.jcpsg.ac.uk/
• Cost models and rates vary between institutions
• QA process implications
• Rates calculated for Estates and Indirect costs
  generic and lab-based departments
• Breakdown of costs
• Directly Incurred (DI) note library costs
• Directly Allocated (DA)
• Indirect
• Exceptional items

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Indirect costs

• Cost driver model
• Consists of
• the Support time of academics
• clerical and administrative staff in
• academic departments (exc. DI/DA costs)
• non-staff costs in academic departments
• central services (Finance, Research Admin,
  Libraries, Computing, etc)
• estates costs of central service departments
• Return on Financing and Investment Cost
  Adjustment (RFI)
• FTE calculation TRAC Time Allocation
  Schedules/PGR weightings
• The total indirect costs for Research/total FTEs
  for Research provides the indirect cost rate/FTE
  for Research
• Annual calculation, using historical data for the
  previous accounting year

5
Library/Learning Resources

• Materiality
• Information Services - Library/Learning
  Resources, Media, IT, etc
• Cost categories staff/non-staff
• Staff costs to be analysed between
  selection/acquisition/collection management,
  cataloguing, binderies, enquiries/staffing
  reading rooms/training, shelving/book retrieval,
  preservation/conservation, publicity,
  income-generation, management/administration
• Non-staff costs to be analysed between
• acquisition of books, acquisition of journals,
  inter-library loans, e-services (serviced access
  to external databases), special collections,
  other costs not included above, estates costs of
  libraries
• Costs can be identified from accounting
  statements discussion/review

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Main steps in allocation of costs

• Identification of costs of the HEIs libraries
  agreed by Librarian
• Allocation of these library costs tom academic
  departments/Library income-generating activities
  units using libraries and their facilities are
  identified
• Allocation of these academic department library
  costs to activities (i.e. T,R, O) review by
  Finance
• Note testing for fairness and reasonableness.
• Learning Resource facilities (e.g. e-Learning,
  Blackboard) will be similarly identified.

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Step 1

1. Attribute costs of internal services (e.g.
   cataloguing) to branch libraries on basis of
   their use of each service (e.g. number of books
   catalogued)
2. Attribute other central library costs
   (management, equipment, etc) to branch libraries
   using appropriate cost drivers (e.g. cost, number
   of staff/student FTEs, etc) as agreed with the
   Librarian
3. Central administration costs (such as Finance)
   and estates may be attributed to libraries (this
   involves review of the HEI cost model, allocation
   of costs and interaction with various managers)

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Step 2

• The costs of each library are allocated to the
  academic schools they service, based on
  appropriate cost drivers agreed by Finance and
  the Librarian.
• Cost pools (staff, non staff costs broken down
  by type of cost) for each library will be
  apportioned on the basis of cost drivers.
• Cost drivers may include the staff and student
  FTEs in the appropriate academic schools, spend
  on categories of cost, usage and other data.
  These will be discussed with the Librarian and
  various data sources used annual accounts,
  electronic data collection systems, statistical
  sampling, etc

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Step 3

1. The costs of each library are allocated directly
   to T, R, O where possible (e.g. research
   libraries to R). Finance will discuss with the
   Librarian.
2. The costs of specific cost pools (e.g. books,
   periodicals, journals, inter-library loans, etc)
   are allocated to T, R, O on the basis of
   estimates, based on review and data sources, by
   the Librarian.
3. Staff costs could be allocated to T, R, O on the
   basis of staff and student FTEs. Student FTEs
   will include Home/EC, Overseas and PGR students.
   Weightings will be needed between staff and
   students the Librarian to determine.
4. Central costs (e.g. management, equipment) should
   be allocated in proportion to all other library
   costs.
5. Costs of R costs may be split further between PF
   and NPF activities on the basis of data derived
   from school time allocation schedule returns for
   academic staff and the weighted PGR student FTEs.
   Finance will advise.
6. Costs of T costs may be split between PF and NPF
   activities on the basis of staff and student
   weighted FTEs, using data from electronic
   systems. If staff numbers are relatively small in
   relation to student numbers, then student numbers
   alone may be used. .

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General

• Some costs may include central information
  services and/or IT staff but similar cost drivers
  to those outlined will be used.
• Similar attribution of costs will be used for IT
  services.
• Costs are included in the HEIs cost model and
  will be used to calculate the costs of PFT, NPFT,
  PFR, NPFR, O for funding council returns
  annually. The costs are also used to calculate
  the cost rates for Research, Services
  Rendered/Consultancy, etc and used for pricing
  and cost recovery on external funding proposals.
  Such rates may also be used where library staff
  are classed as researchers as outlined in the
  TRAC guidance.
• Costs may be compared between libraries, compared
  over different time periods, compared with other
  HEIs, etc
• Cost rates specifically for the Library may be
  calculated for service activities (such as
  information retrieval).
• HEIs will have different resource allocation
  processes and some may reallocate income derived
  back to library accounts. Note research councils
  meet 80 of full economic costs on successful
  projects.

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Conclusions

• Do not underestimate work in implementing fEC
  systems
• All staff across university are involved in fEC
• There are different funding regimes - Structural
  Funds, Charities, UK Research Councils, EU, etc
  which may affect inclusion of costs in
  proposals for pricing purposes.

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Contact
John Newton Assistant Director (Costing, Pricing
and Special Projects) Cardiff University P O Box
497 30 -36 Newport Road Cardiff CF10 3XR UK
Email newton_at_cardiff.ac.uk