Common Good Fee (CGF) to fund Enterprise Technology Services (ETS)

September 3, 2014

In FY 2013-14, the campus formed Enterprise Technology Services (ETS) in an effort to establish a more coordinated and integrated approach to enterprise IT ahead of upcoming business transformations. As the official campus enterprise service provider, ETS provides existing services and implements new projects that are a “common good” for the campus. Over the next two to seven years the campus will need to invest many millions of dollars in enterprise technology. The annual cost for just the new projects the campus has committed to is expected to be from $8 to $12 million.

A new model for funding enterprise technology is being implemented to encourage the optimal use of services and ensure predictable funding for basic shared services. Beginning in FY 2014-15 the campus will implement a Common Good Fee that will be assessed using the same methodology that is used to fund the annual UCOP assessment.

Key components of the Common Good Fee that were presented to the Coordinating Committee on Budget Strategy (CCBS) include:

• The Common Good Fee will cover all “common” technology costs. It will eliminate the current separate monthly TIF fee, the annual North Hall Data Center recharge, and some other minor recharges.
• The funding required for benefit costs, debt payments, and depreciation reserves will be included.
• While stated as “one fee” it is calculated with two components – operations and projects – to better understand the relationship between ongoing operations and system development (project) costs.
• Expenses will be funded from both core and non-core funds.
• In round numbers, approximately 75% of the ETS costs will be funded centrally and 25% will be funded via the net assessed fee to the control points.
• Core funds currently used to support the existing operations will be returned to a central provision account and supplemented by new core resources taken off the top of any new funds coming to the campus.
• The non-centrally funded portion of the fee will be collected through an assessment (tax) of each Vice Chancellor control point. The Control Points may distribute the fee further at their discretion. Any assessment associated with contract and grant expenditures will be funded centrally from indirect cost recovery funds.

How the Common Good Fee (CGF) works:

In the following example, Control Point A has a high percentage of Core Funds and Control Point B has a low percentage of Core Funds:

• The Common Good Fee for FY 2014-15 is based on campus expenditures in FY 2012-13 (A).
• Control Point expenditures are reduced by Financial Aid Funds (78 Fn) and by Campus Based Student Fees (B).
• All Control Points will be assessed the same CGF assessment percentage (D) on their net expenditure base (C) to calculate their CGF Gross Assessment (E).
• Each Control Point will receive credits (F) based on the fund sources of their net expenditure base (C). Expenditures made with the following funds will generate credits: General Funds, Mandatory Student Fees, State Contracts & Grants, Local Contracts & Grants, Federal Contracts & Grants, and Private Contracts & Grants. These credits are calculated on a percentage basis, i.e., if 85% of their FY 2012-13 Expenditures (A) is general funds, their credit is equal to 85% of the Common Good Fee Gross Assessment (E).
• The CGF Net Assessment (G) is the amount that each control point is required to return to a central account in order to fully fund the Common Good Fee.

Next Steps

• A new common fund has been established for ETS to better track expenditures associated with ETS operations and Enterprise projects. ETS financial transactions will move to this new fund beginning FY 2014-15.
• Development of a budget for the entire ETS operations is being prepared and all current funding sources are being identified.
• The Information Technology Board (ITB) needs to approve a budget for ETS and make recommendations to CCBS and the Chancellor.
• The Common Good Fee assessment rate needs to be identified for FY 2014-15. In the meantime, control points should use 1.91% as a planning figure for the CGF Assessment Percentage
• Control points would have to pay their assessment by the end of the third quarter of the fiscal year.

There is a list of frequently asked questions with more detailed information at:

https://evc.ucsb.edu/information.technology/CGF-FAQ.pdf

Please direct any questions or concerns regarding the Common Good Fee to Todd Lee or Elise Meyer.

An announcement regarding the elimination of the TIF fee will be sent to departments later this week, along with brief announcement of the Common Good Fee and a link to the frequently asked questions.