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Commonwealth of Massachusetts IT Consolidation Program

IT Finance and Budgeting Sub-committee Discussion Document

June 23, 2010

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Agenda

1. Update on Fringe Revenue (K.Luddy)

2. Transferring and Funding IT staff using the chargeback model (K.Luddy)

3. Day 1 Readiness – All Set?? (K.Luddy)

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Update on Fringe Revenue

Background- The general fund was previously collecting between $4.5 - $5 million in fringe revenue from federal,

trust, and capital accounts that were funding IT staff.

- IT staff are being transferred from these accounts and into either the -1700 or -1701 accounts.

- It is important to continue to collect most/all of this fringe revenue in order to avoid a $4.5 - $5 million “hole” in the general fund after transferring these staff.

- The chargeback rate used for the -1701 includes an amount for fringe.

Options- Include language in -1701 accounts that allows assessment of fringe/indirect on payroll costs.

- Require agencies to revert from -1701 accounts an amount equal to the fringe assessment on payroll costs.

Stay tuned!

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Transferring IT staff

In order for consolidation to be “substantially complete” by December 31, 2010 (per E.O. 510), staff should be transferred to either the -1700 or -1701 accounts.

SCFOs should work with SCIOs to determine the appropriate account from which IT staff should be paid. Account splits do not necessarily need to correspond to the accounts from which the staff were paid prior to consolidation. In determining the account from which to pay a staff member, you may consider:

- Funding levels in the -1700

- Ease of implementation (e.g., application staff from chargeback account, etc.)

- Whether you will directly charge salary costs to federal grants, capital accounts, or trust accounts

The IT Finance Subcommittee has previously provided guidance on the process by which staff can be transferred in HR/CMS from one account to another.

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Funding Staff Using the Chargeback Rates

1) Salaries Total Helpdesk Salaries 531,511$ Paid from -1700 244,495$

Paid from -1701 287,016$

2) Fringe Approximate Fringe Amount Anticipated for GF 95,672$ (33% of salaries from -1701)

3) Rate without fringe 196.05$ per FTERate with fringe 257.71$ per FTE

4) Total FTEs 2,711.1

5) FTE Dist. Memo Bill Chargeback

Non-Fringe Rate * # of FTEs Fringe Rate * # of FTEs

Total FTEs within Department A 903.7 76,577$ 132,308$ FTEs from bugetary 390.6 76,577$ -$ FTEs from non-budgetary 513.4 -$ 132,308$

Total FTEs within Department B 1,807.4 153,056$ 264,488$ FTEs from bugetary 780.7 153,056$ -$ FTEs from non-budgetary 1,026.3 -$ 264,488$

Total 2,711.1 229,633$ 396,796$ Amount Returned to GF in Fringe 95,672$ Amount Retained by Secretariat 301,124$

6) Amount Retained by Secretariat 530,757$

Memo Bill 229,633$ Chargeback Recoupment 301,124$

Amount Returned to GF for Fringe 95,672$ Memo Bill -$ Chargeback Recoupment 95,672$

Calculation of Charges

Chargeback Rates

Recovery Analysis

"Denominator"

EXAMPLE - HELP DESK

Determined by SCIO and SCFO

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Day 1 Readiness

Staff- Transferred to correct accounts, both in budget and in HR/CMS?

Contracts- Approved by SCIO

- Encumbered, where possible

Bills- MMARS security established

- Workflow for bills that will continue to be sent to agencies created

- Final plan in place for bills that may remain with agency for the first part of fiscal year 2011

Chargeback- Secretariat established as a vendor in MMARS

- Chargeback levels communicated to agencies

- Fiscal staff has knowledge of chargeback process (ITI/ITA)

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Critical Dependencies Still Under Development

#Pending

Guidance Item

Description LeadResponse Deadline

Start Date

Status

1Asset

Management

What is the process for transferring Assets from agency to the secretariat? How soon does this need to be completed?

Linda Hamel TBD TBD In Progress

2 Chargebacks Guidance related to chargebacks, other than billing rates (e.g., process of reconciliation, etc.).

Kathy Sheppard 6/1/2010 7/1/2010 Complete

3Fringe /

Indirect / Payroll Taxes

How do we use the chargeback account xxxx-1701 to charge off-budget accounts without losing revenue to the general fund from fringe or indirect rates?

ANF, Eric Berman, and

Kathy Sheppard6/1/2010 7/1/2010 In Progress

4IT Bond

Authorization Should bond authorization remain at the agency level or at the secretariat level?

ITD, Lou Angeloni TBD TBD Complete

5Open / Close

Issues What needs to occur in order to Close FY10 and Open FY11 (mainly for lead agency model)?

Kathy Sheppard 6/1/2010 7/1/2010 In Progress

6Service Level Agreements

(SLA)

Develop sample documents for at least 2 SLAs for IT services and administrative services

HHS/HED 6/1/2010 7/1/2010 Complete

7

“Shared IT Services”

Legislative Authorization

What are the alternative implementation steps for Lead Agency Models if Shared Service Language is not enacted

OSC/ANF 6/1/2010 7/1/2010 In Progress

8FTE Position

TransfersWhat is the process for making sure that FTEs are transferred to the correct IT account

ANF 6/1/2010 7/1/2010 Complete