Sharing the Costs of Human Services Transportation (2011)

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66 A P P E N D I X C Introduction Adopting fully allocated cost accounting practices strongly supports federal grants management goals. First, many federal programs contain regulatory or program guidance to indicate that, for funds expended on third party contracts and vendors, due diligence must be exercised to ensure that the lowest cost service that is most appropriate to client needs is obtained. Second, in situa- tions where an organization is purchasing service from a third party, the purchasing organization needs assurance that it is only paying for services rendered to its own clientele. This second factor is particularly relevant when a human service organization opts to contract with a transportation provider that coordinates services in the local community. Organizations that coordinate transportation programs at the local level often do so for a multitude of pro- grams and funding sources. For example, JAUNT, Inc., in Charlottesville, Virginia, has provided services for more than 40 different programs in any given fiscal year. When such broad coordi- nation occurs, purchasers need to be assured that they pay only their fair share of program costs. The Federal Coordinating Council on Access and Mobility (CCAM) has issued a policy on vehicle and resource sharing among differing federal programs that states: Thus, vehicles and transportation resources may be shared among multiple programs, as long as each program pays its allocated (fair) share of costs in accordance with relative benefits received. While the CCAM policy statement (see Chapter 2 in Volume 2 of TCRP Report 144 for the full text) establishes cost allocation as a fundamental process for coordinating similar transportation efforts funded by separate federal programs, this statement does not provide any specific guid- ance on how to perform the required cost allocation analysis. Another issue to recognize is that organizations that purchase service from coordinated providers may not have the requisite expert- ise or staff resources to conduct an evaluation of a transportation provider’s cost allocation methodologies. States in which longstanding efforts have attempted to build coordinated transportation infra- structure at the local level have recognized the need to provide tools for both providers and pur- chasers to assist in the equitable allocation of program costs to users. Such tools provide assurance to transportation service purchasers that they are being charged only their fair share of the costs of transportation. Two states, Florida and North Carolina (long recognized for their coordina- tion efforts), have developed cost allocation and rate-setting models. Development of Rate Models The advantage of fully identifying transportation costs is that this information provides an organization with the ability to understand on a per trip or per person basis what it costs to Examples of Fully Allocated Transportation Cost Accounting Programs

provide that transportation as a direct service. This information also provides a benchmark with which to compare the unit costs of other service delivery alternatives (e.g., different modes, dif- ferent providers, different models of service delivery) and thus to make informed management decisions concerning the most cost-effective strategies for service delivery. A number of years ago, Florida and North Carolina developed tools to assist transportation providers in accumulating information on the full cost of transportation services and translat- ing this cost information into rates to charge to third parties who may be interested in purchas- ing service from the transit provider organization. Despite being developed independently, both cost allocation and rate-setting models have commonalities. In addition to using simple and commonly understood computer spreadsheet software (e.g., Microsoft Excel), both models • Require the transportation provider to report all costs as part of the model’s input, using a standardized and comprehensive chart of accounts. • Require the transportation provider to specify projected units of services to be consumed (i.e., vehicle miles and vehicle hours). • Take in account potential subsidies that may be directed toward a specific client population or program from sources other than the federal government. • Compute unit rates for service. In addition to the Florida and North Carolina efforts, the Federal Transit Administration’s (FTA’s) National Transit Database (NTD) contains a high level of detail on transportation services and costs that more sophisticated agencies may want to emulate. For full details on the Florida and North Carolina efforts and FTA’s National Transit Database, see TCRP Report 144, Volume 2, “Research Report.” Examples of Fully Allocated Transportation Cost Accounting Programs 67