10.1. UNALLOCATED COST DISTRIBUTION Chapter 10 UNALLOCATED COST DISTRIBUTION NARRATIVE

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1 Chapter 10 UNALLOCATED COST DISTRIBUTION 10.1 NARRATIVE Costs that cannot be directly related to a specific road, construction/engineering project, or unit of equipment are considered unallocated costs. Every effort should be made to charge costs directly to the appropriate cost area before using the unallocated accounts. Unallocated costs are divided between two categories highway related and non-highway related. The highway related unallocated costs are divided into categories for administration, maintenance, construction/engineering and equipment. All engineering and administrative personnel time should be supported by timesheets to justify highway and non-highway related costs. ADMINISTRATIVE COSTS Administrative costs are expenses which are not directly attributable to a specific operation. These costs include expenses which benefit all roads currently and in the future. Any unapplied administrative costs will be included with the maintenance reporting by road system as unallocated. Examples of administrative costs are: * Administrative Salaries Engineering Computer Prog/Serv Contract ** Fringe Benefits Minor Office Furniture/Equipment Office Supplies and Expenses ** Offsetting Fringe Benefits applied to direct labor Railroad Inspection Road Studies Training and Education Travel & Lodging Utilities * A portion of the Engineer's salary may be moved to the construction area based on a fair estimate of the Engineer's time. You should have documentation on file as to how you determined this estimate. ** Fringe Benefits should have an offsetting account to record the credit for fringe benefits applied to direct labor. This offsetting credit is based on the fringe benefit rate calculation schedule included in this section.

2 10.2 FRINGE BENEFIT RATE CALCULATION The following steps should be followed to determine the fringe benefit rate calculation. Refer to the example below. 1. Isolate and identify all benefits for full time employees that are part of the County s employment package. Do not include any items that are not payroll related. 2. Identify the total labor dollars worked for full time employees. Exclude any wages for temporary or part-time employees that do not receive the County s normal benefit package. 3. Calculate the fringe benefit rate by dividing the fringe benefits by the total labor dollars for full time employees. Apply this rate factor to all direct labor dollars costed for the County Highway operations with an offsetting credit to the fringe application account in the Unallocated Administrative area. Example 20XX Fringe Benefits Disability Insurance 4, Health Benefits 40, Group Life Benefits 1, Accidental Death 0.00 P.E.R.A 45, Social Security 46, Unemployment Tax 4, Workers Comp. Taxes 24, Liability Insurance Salary adjustments, premium time, shift differential 41, Leave time vacation, sick, jury, and military 59, Total Fringe Benefit Costs $268, Total Labor Dollars = $815, Labor dollars should exclude temporary or part-time employees that do not receive a benefit package. In addition, labor dollars should not include vacation, sick leave, military leave, and jury duty that are included within fringe benefits. Fringe Benefit Rate = $268,508.52/$815, =

3 10.3 CONSTRUCTION COSTS Unallocated construction costs are expenses relating to construction operations that cannot be identified to a particular construction project. The costs in these accounts should be prorated to engineering based on total costs of the projects at year-end. If the County chooses, they may seek reimbursement of these engineering costs using their State Aid allocation. Examples of unallocated construction costs include: Alignment Surveys Cross Section Stock Piles Drafting Supplies Engineering Expense Engineering Field Work Field Engineering Supplies General Permits Road Studies Wetlands Bank/Mitigation MAINTENANCE COSTS Unallocated maintenance costs are maintenance expenses that are difficult to associate with a particular road. All efforts should be made to charge to the individual roads before using unallocated maintenance accounts. Maintenance costing accounts are listed in Chapter 14. After costs have been accumulated in each unallocated account they may be spread to the individual roads in the appropriate maintenance account. Unallocated maintenance costs may be distributed to the roads based on total mileage, system mileage, surface mileage, labor, or number of intersections, curves and hills. The formula used to distribute unallocated costs will be determined by the type of unallocated cost. Examples of unallocated maintenance costs include: Annual Bridge Inspections & Report Bridge Inspections Not related to a project Building Barricades Gravel (stockpiled, crushing, prospecting) Maintenance Supplies for specific maintenance accounts (brooms for minor surface maintenance sweeping) Salt and Sand, materials and mixing costs Sign Materials Straightening Sign Posts Traffic Studies/Counts Weight Restrictions Weight Scale Calibration

4 10.4 Most unallocated costs will be distributed by mileage, there are some costs that will be distributed based on special distribution formulas. Each county should develop a method of allocating materials they choose to spread that works best for them. Salt and sand is a good example of a special distribution formula. It is usually applied to bituminous or concrete surfaces only at intersections, curves and hills. A survey of all road systems should be done to determine the number of intersections, curves and hills on bituminous or concrete roads. Example: CSAH Regular: 120 intersections, 55 curves, 30 hills = 205 CSAH Municipal: 110 intersections, 20 curves, 3 hills = 133 County Roads: 30 intersections, 5 curves, 10 hills = 45 Based on this example, the percentage of salt and sand distributed to CSAH Regular would be 54%, CSAH Municipal would be 35% and county roads would be 11%. The salt and sand would be distributed to each road program based on the calculated percentages to bituminous or concrete surfaces only. Using this formula will place more costs on the CSAH Municipal roads since the number of CSAH Municipal miles are usually the least of the county s road systems. SHOP AND EQUIPMENT COSTS Unallocated shop and equipment costs are expenses relating to shop and equipment operations that cannot be identified to a particular unit. Examples of unallocated equipment costs include: Shop Overhead (Utilities) Shop Supplies & Small Tools Miscellaneous Repair Parts Building & Grounds Maintenance Inventory Adjustments for Fuel Inventory Adjustments for Parts and Replacements Inventory adjustment should be held to a minimum through the use of good inventory control and management. Inventory adjustments should become part of cost added to equipment and prorated back to the units in developing a rate or ultimately become an entry into adjustment to equalize depreciation.

5 10.5 NON-HIGHWAY RELATED COSTS Non-highway costs should be accumulated in the area for county dollars or authorized work for others. Non-highway related activities must not be included in the unallocated costs which are distributed to the road system. Non-highway costs may include costs associated with: Capital Outlay Ditch Fund for Flood Control Agricultural Inspection Work for Others Other Non-Highway Related Costs 911 Signing