Administrative Overhead (AOH) Rate for FY 2010

From: 
Richard Lariviere, Provost and Executive Vice Chancellor
Sent: 
Wednesday, May 13, 2009 1:10 PM
To: 
Deans, Directors, and Department Chairs

The Administrative Overhead rate that is charged to campus units generating income from outside the University community will be adjusted from 2% to 5% effective with the FY 2010 assessment (based on FY 2009 revenue).

This revision to the assessment rate is consistent with the intent that initially established the AOH rate based on FY 1996 revenues. The new assessment rate is a more accurate reflection of the level of effort that is required by University administrative units to provide the full range of support activities for units that generate external income.

The assessment rate has not changed since FY 1999. A recent review of the costs that are associated with the processing requirements for restricted use income showed that the current rate of 2% is insufficient to cover these costs. In fact, increasing the AOH rate to over 6% could be justified. The decision to increase the AOH assessment rate from 2% to 5% also has been made from an equity perspective in view of the budget cuts that are facing the units who receive general use funds.

Other than changing the assessment rate, we are not making other changes to the protocol by which the AOH assessment is made. The revenue base to which the assessment applies will continue to exclude payments made from one university department to another (both SOV revenue and KUCR revenue), tuition revenue, and required campus fess.

If you have any questions concerning this change in policy, please contact Diane Goddard or Richard McKinney.

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