8752 FULL COST RECOVERY POLICY
(Revised 2/99)
The state policy is for departments to recover full costs whenever goods or services are provided for others (Requirements for General Fund departments are included in Government Code (GC) Sections 11010 and 11270). This policy, which applies to all departments regardless of funding sources, is to be followed in all cases except where statutes prohibit full cost recovery.
The full cost of goods or services includes all costs attributable directly to the activity plus a fair share of indirect costs which can be ascribed reasonably to the good or service provided. SAM Section 8752.1 contains a discussion of the cost elements to include.
8752.1 COST ELEMENTS INCLUDED
(Revised 2/99)
Include the following costs in charges for goods and services:
Department direct costs
Department indirect (overhead) costs
Central service costs
- Department direct costs are those which can be identified specifically with a particular cost objective, such as:
- Personal service costs incurred in meeting the cost objective (personal service costs will include the fringe benefit factors prescribed in SAM Section 8740).
- Operating expenses and equipment costs incurred in meeting the cost objective, such as the cost of contracts, travel expenses, etc.
- Department indirect (overhead) costs are those support costs which benefit more than one cost objective/organizational unit. These costs are accumulated and allocated periodically to the cost objective/organizational units which benefit from the support activity/function. Departmental indirect costs include:
- Personal services costs of unit, bureau, division, and department administrative, supervisory, and executive staff.
- Personal services costs of support units, including clerical support, housekeeping, etc.
- Operating expenses and equipment costs not included as part of department direct costs.
- Central service costs are costs incurred by central service departments (e.g., Department of Finance (DOF), State Controller, State Personnel Board, etc.) for the benefit of all state departments. See SAM Section 8753 for more information on central service costs.
