Overview

Cost allocation provides for an automated process by which project costs are allocated based on Time and Labor data. The integration of payroll and labor cost allocation is a statewide requirement for reporting. Expenditure data should be reported at the Employee level for time and cost which will be directly coded to projects by pay period. In order to meet the requirements detailing cost allocation and labor hour tracking for grants and projects, it is necessary to interface Time and Labor systems with the SFS. The time, labor, and activity elements provided through LATSnet, for example, along with wage information from PayServ will enable the State to accurately track costs, bill customers for those costs, and recognize receivables more efficiently.

Principles

1. Costed labor will be brought into the SFS for each bi-weekly pay period.
2. The reconciliation requires that labor be based on paid payroll expenditures.
3. A system reconciliation of costed labor from a time and labor system to what has been paid in PayServ will occur by pay period and employee.
4. The reconciliation between costed labor and payroll expenditures will be based on the same time period.
5. The reconciliation requires that labor be reconciled once per pay period and that any subsequent adjustments that relate to that pay period will be costed in a subsequent pay period.
6. Costed labor data will be brought into Project Costing if it has a project and only after being reconciled.
7. Reclassification entries will be systematically created to update the General Ledger for the accounting from the costed labor.
8. Reclassification offset entries will use the same chartfields as provided by PayServ in the payroll file for each employee and will address both the payroll paid journal and the payroll expenditure journal.

The reclassification and offset entries for steps 7 and 8 above will be generated using the SFS Allocations functionality.

In addition to the payroll costs allocation, there are certain other costs that can be allocated based on the costed labor allocation. These costs include indirect, rent, phone, utilities, etc., virtually any other costs that can be reasonably allocated based on payroll data.

Procedure

To ensure that PayServ charges are allocated correctly and in a timely manner, agencies should require that employees accurately and timely enter their Time and Labor information when filling out their time card information. This should be done within one week of the pay period end date. For those employees who are unable to enter their information due to absences or other issues, the employee’s supervisor, or other designated person, should enter the information on their behalf.

Agencies should then submit their Time and Labor allocation information to SFS no earlier than three days prior to the payroll payment date (check date). The payroll expenses should NOT be reallocated until after the payment date (check date). Any changes that need to be made to employee payroll pools should be submitted to OSC Bureau of State Payroll Services as soon as possible to limit the amount of correcting entries that may be required.

Guide to Financial Operations

REV. 03/09/2022