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Assumptions - Non-Profit.pdf
NON-PROFITCOST-BENEFITANALYSISASSUMPTIONS August23, 2012 Thisanalysisisacomparisonoftheprogrambudgetsforstayingwithintheexistingcountystructureand foroperatingasanon-profitentityforMentalHealth (MH), IntellectualDisabilities (ID), andEarly Intervention (EI) programs. Itisintendedtoshowthecostsandbenefitsofchangingthestructuretoa separatenon-profitentity. Theassumptionsbehindthefiguresaredefinedbelow. FINANCIAL 1.Thestatebudget2012-2013carriesrevenuecutsandaproposedblockgrantprogram. We assumedrevenuepass-thruconsistentwithadoptedstatebudgetandthateachprogramwill receivetheirshareasallocated. Seeadditionalrevenueassumptionsbelow. 2.AssumedJuly1, 2012throughJune30, 2013asfirstyearofactivity. Thisanalysisiscompleted for1yearonly. COMPLIANCE 1.ReductioninCivilServicerequirements – Thishasminimal, ifanyimpactonthecostbenefit analysis, andhasnotbeenconsideredinthecalculations. 2.Reductioninothercompliancerequirements. Impactisineliminationofcountycodepurchasing andotherrequirements, allowingflexibilitywithmeetingcasemanagementsupervision requirementsaswellasassigningdutiesacrossindividualswithinthecomplianceunit. PERSONNEL 1.TableofOrganization (SeeEXHIBITA) a.AdministrativePositions i.AddFiscalDirector – Thispositionwillreplacethemanagementconsultant currentlypaidthroughtheprograms. Thepositionwillberesponsiblefor generalfiscaladministrationincludingfinancialreporting, costsettlement, fixed assetrecordkeeping, andquarterlyandannualprogramfinancialreports. ii.EliminateoneFiscalOfficerII – ThecurrentoperationemploystwoFiscal OfficersIIandoneFiscalOfficerI, aswellasamanagementconsultantwho performsvariousfiscalrelatedtasks. Itisassumedthatdutiesrelatedtogeneral ledgeraccountingwillbeassumedbytheFiscalDirectorandthatthenewentity willoperatewithaFiscalDirectorandtheequivalentofoneFiscalOfficerIIand oneFiscalOfficerI. iii.NOTE: TheCountyhasreceivedaproposalfromamanagementconsultantto contractallcurrentprogramdirectfiscaloperations, pullingthemoutsidethe non-profitentity, eliminatinganadditionalthreepositions (FiscalDirector, Fiscal OfficerII, andFiscalOfficerI). Forafeeof $300,000thecontractorwould assumeallfiscalresponsibilitiesandoversightwiththeexceptionofaccounts payable. ThetotalestimatedA/Pcostis $18,728. Thisproposalismorecostly thanusingcountysupportandhiringafiscaldirector, andthereforehasnot beenincorporatedintothisanalysis. 1 NON-PROFITCOST-BENEFITANALYSISASSUMPTIONS August23, 2012 iv.EliminatevacantSecretaryII – Thepositioniscurrentlyvacantanditisassumed thatitwillnotbefilled. b.CaseworkPositions (MH/ID) i.KeepCaseworkManager ii.Maintaincurrentcaseworkstructure. c.EarlyIntervention i.EliminateCaseworkSupervisorIIinEarlyIntervention. ii.MaintaincurrentProgramSupport, withtheexceptionofcombiningaCase managementSupervisorandProgramSpecialistintoan “EarlyIntervention Coordinator”. d.ComplianceUnit – MH/ID i.CurrentlyknownasProgramSpecialistsorSupportsCoordinators. ii.Maintaineightremaining, makingoneaDirector. Nopayadjustmentisassumed fornewdirectorposition. 2.WagesandBenefits a.Assumed2012ratesremaininplacethroughDecemberanda3% payincreaseis effectiveJanuary1, 2013. b.Benefits i.FICA: thefederalrateis7.65%, butbasedontaxablevs. non-taxablebenefits, wetypicallypayless. Arateof7.5% wasusedforthispurpose. ii.Medicalbenefits: calculatedbasedonpreliminaryratesprovidedbyourhealth benefitsconsultantandincludesvisionanddentalcoverage. Themonthly estimatedcostwasannualizedandaflatpercentagewasassignedtoeach position. iii.Unemploymentcompensationrate: althoughitwillexpecttobepaidthrough thestateinsteadofthroughself-insurance, therateisassumedtobethesame asFranklinCounty. Therateworksouttoapproximately $135/personandis paidonthefirst $8,000ofwages iv.Workers’ compensation: usedcode953, whichappliestothelargestnumberof staff (caseworkers) andisthemostconservative. v.Lifeinsurance: usedarateprovidedbyourbenefitsconsultant, annualizedit andcalculateditasapercentageofwages. vi.Retirement: assumednewentitywilleithermatchorpayaflatpercentageof eachperson’ssalaryintoadefinedcontributionplan. Arateof5% ofwageswas used. TheimpactonFranklinCounty’sretirementARCwilldependonhowmany individualsleavetheirretirementmoneyinthecounty’splan, howmanymay choosetoretire, vestingetc. TheimpacttoFranklinCountyisnotdetermined forthispurpose. vii.Post-EmploymentHealthBenefits: FranklinCounty’sannualrequired contribution (ARC) isdistributedtoeachprogrambyparticipatingmember. Sincethebenefitwillnotbepartofthebenefitsofferedbythenewentity, the 2 NON-PROFITCOST-BENEFITANALYSISASSUMPTIONS August23, 2012 ARCwillremainacosttoFranklinCountyforanyplanmemberwhoremainsin theplan. c.ManagementConsultant: theexistingprogramstructurepaysamanagementconsultant toprovidefiscalandadministrativeassistance. Theamountpaidforcalendar2011was 91,530. ThenewentityhasproposedaFiscalDirectorpositionwhichwillassumethese dutiesaswellasadditionalones. TheFiscalDirectorpositionwasaddedtothetableof organizationandisincludedinwagesandbenefits. Asnotedin1.a.iii. above, the managementconsultanthaspresentedaproposaltoassumeprogramrelatedfiscal operations. ALLOCATEDANDSHAREDCOSTS 1.CentralServiceAllocatedCosts (CSCAP): includesthefollowingcomponents a.Equipmentdepreciation - Securityandtelephonesystemsaresharedacrossmultiple countyoperationsanddepreciationispartoftheCSCAP. Itisassumedthatthe operationwillremaininitscurrentlocation(s) andwillthereforecontinuetobecovered bythisequipment. Nochangeisexpectedwithtransitioningtoanewentity. b.PropertyandLiabilityInsurances - Theseexpenseswillcontinuethoughtheywillbe incurreddirectlyratherthanbeingpassedthroughFranklinCountythroughCSCAP. Assumedtherateswillbethesame, butincludedthecostsunderGeneralOperating. c.RetirementAdministration - ThechargesthroughCSCAParebasedontotalretirement administrationcostsandarechargedbasedonthenumberofplanmembers. Therate usedinthisanalysisof $3,090isbasedonaquotefromaserviceproviderforthecostof 401kadministrativeservicesforthefirstyearofoperation. Feesareincludedwith GeneralOperatingCosts. d.Commissioners’ Office - Thisindirectchargewillnolongerbeapplicableasoversightof theentitywillbetheresponsibilityofitsboardofdirectors. e.CountySolicitor - ThechargesthatarepassedthroughtheCSCAParetheresultofan evaluationofhowthecountysolicitorsspendtheirtime. Whilethenewentitywillnot fallunderthecounty, itisassumedthattheywillincurlegalfeesthroughanoutside professional. Theamountwasassumedtobeapproximatelythesame, butincludedthe costsunderGeneralOperating. f.CountyControllerandCountyTreasurer - Theseservicesarepartofoverallcounty operations. Itisassumedthatfunctionssuchasissuingvendorandpayrollchecksand makingbankdepositswillbetakenoverbythenewentity, eitherdirectlyorthrough contractingtheiraccountspayableandpayrollprocesses. g.GeneralAdministrativeCosts - Theseservicesincludethecounty’smailcouriersystem andassumingthatthenewentitywillremaininitscurrentlocationthroughJune2013, thisminorcostcouldcontinue. 3 NON-PROFITCOST-BENEFITANALYSISASSUMPTIONS August23, 2012 h.CentralTelephone - Itisassumedthatthenewentitywillremaininitscurrentlocations andwillcontinuetobepartofFranklinCounty’sphonesystem. Assuch, thesecostswill remainthesame. 2.Shared/allocatedcosts a.FiscalDirect – ChargesfordirectFiscalsupportrelatetosupervisionfromtheHuman ServicesFiscalManagerandarebasedonthecalendar2012budget. Itisassumedthat theseexpenseswillremaininplaceforthefirstyearofoperationsforthenewentity. b.FiscalAccountsPayable – ItisassumedthatFranklinCounty’sAccountsPayablefunction willcontinuetoprocessinvoicesforthenewentityandalsoprintaccountspayable checksandprepareannualForms1099. The2012budgetedamountforaccounts payableprocessingwasincreasedby10% tocovertheestimatedadditionalservices. c.Purchasing – Itisassumedthatthenewentitywillassumeitsownpurchasing proceduresratherthangoingthroughFranklinCounty’sPurchasingDepartment. d.FiscalGeneral – GeneralFiscalSupportwillbeeliminatedthroughuseoftheentity’s ownFiscalDirectorandthroughcontinuedsupportfromthecounty’sHumanServices FiscalManager. e.HumanResourcesandRiskManagement – Itisassumedthatthenewentitywill contractwithFranklinCountyforitsHumanResourcesandRiskManagementfunctions, includingpersonnelrecruitingandmanagement, payrollprocessingandbenefitsand riskandworkers’ compmanagement. Anadditional10% hasbeenaddedtothe2012 budgettocoverexpensesofprocessingpayrollthroughissuanceofpaychecks, submissionofwithholdingandpreparationofpayrolltaxformsandannualW-2s. f.HumanServicesAdministrationandFultonCountyOversight – TheHumanServices Administratorsofbothcountieswillcontinuetohavesomeinvolvementinoversight andparticipationwiththenon-profit’sboardofdirectors. Franklin’sshareisestimated at20% oftheprograms’ 2012-2013preliminarybudgetsandFulton’sisestimatedatthe fullamountofthe2012-2013budgets. g.InformationServices (GeneralandDirect) – Thesecostsincludesoftwarelicenses, hardwareandsoftwaresystems, generalsupport, anddirecttechnicalassistance. Itis assumedthatthenewentitywillcontinueoperatingonFranklinCounty’snetworksand utilizingexistingsoftwaresystemsaswellastechnicalsupport. OTHERCOSTS 1.Occupancyexpense – Itisassumedthattheprogramswillremainintheirexistinglocationsin theHumanServicesBuildingandtheAdministrationAnnexduringtheperiodofthisanalysis. Thiscostisanetleaseandincludesutilities, maintenanceandbuildingsecurity. 2.Generaloperatingcosts – Thesecostsincludepostage, employeetravel, supplies, training, minorequipment, auditfees, copierleases, consultants, andgeneralprogramexpenses. This proposalshowsthematthesamelevelasthe2012-2013preliminarybudgetsofeachprogram, 4 NON-PROFITCOST-BENEFITANALYSISASSUMPTIONS August23, 2012 exceptthatlegalfees, retirementadministrationandpropertyandliabilityinsurancehavebeen movedfromtheCentralServiceAllocation. 3.Capitalpurchases – Capitalincludescomputersandrelatedequipmentandisassumedtobeat thesamelevelastheprograms’ preliminary2012-2013budgets. PURCHASEDSERVICES Purchasedservicesincludepaymentstooutsideserviceprovidersforservicestoclientseligible undertheMentalHealth, IntellectualDisabilitiesandEarlyInterventionprograms. Thesecostsare basedonbudgetedservicesusingestimatedallocationsfor2012-2013. REVENUE 1.Interestincome – Interestincomeisbasedoneachprogram’spreliminary2012-2013budget. 2.Federal – Federalrevenueisbasedontheprograms’ preliminary2012-2013budgets. 3.State – Staterevenueisbasedonthenewlypassedbudget, includingimplementationofa HumanServiceBlockGrant, andreductionsof7.6% and9.2% innumerousfundingcategories forMentalHealthandIntellectualDisabilities, respectively. 4.ChargesforServices – AssumedtoincreaseforMentalHealthascertainserviceswillnowbe reimbursedthroughmanagedcare. 5.OtherMiscellaneousRevenue – Otherrevenueincludesmiscellaneousgrantsandothersources. 6.CountyShare – CountysharerepresentstherequiredmatchthatiscontributedbyFranklinand FultonCountiesaswellasanyovermatch. 5