Chapter 2 – Fiscal Management

The California Department of Corrections and Rehabilitation (CDCRCalifornia Department of Corrections and Rehabilitation) shall recover the full costs of reimbursable goods and/or services, unless full cost recovery has been prohibited by statute.

This article shall specify the requirements for full cost recovery on reimbursable goods and/or services.

The Office of Fiscal Services (OFSOffice of Fiscal Services) through the Budget Management Branch (BMBBudget Management Branch), and the California Correctional Health Care Services (CCHCS) through the Fiscal Management Section (FMS), shall work with the Department of Finance (DOFDepartment Of Finance) to ensure the inclusion of reimbursements in the Governor’s budget, and the allocation of reimbursement authority to the various institutions and divisions utilizing Systems, Applications, and Products (SAP).

BMBBudget Management Branch and FMS Responsibilities:

• Assist institutions and program managers and coordinate with Accounting Services Branch (ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton) in determining the reimbursement budget authority to be collected for goods and/or services to individuals, other governments, and entities.

• Request additional budget authority if the total departmental budget for reimbursements is insufficient, in accordance with procedures described in the State Administrative Manual (SAMState Administrative Manual) §§ 6551-6557 and Control Sections of the Budget Act.

ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton Responsibilities:

• Timely record reimbursement billing and receipt activities.

• Monitor the reimbursement activity at the program, element, and component level for unanticipated reimbursement activity.

• Coordinate with institutions, program managers, BMBBudget Management Branch, and FMS for possible budgetary adjustments.

• Notify institutions and program managers of uncollectable account receivables, as they may have a negative impact on the ability of CDCRCalifornia Department of Corrections and Rehabilitation to fully fund its normal support operations.

• Obtain written agreements from institutions and program managers for goods and/or services to individuals, state and federal agencies, and other entities.

Institutions and Program Managers’ Responsibilities:

• Stay within reimbursement budget or make timely requests for an additional allocation from BMBBudget Management Branch or FMS through the established SAP and budget processes.

• Promptly notify BMBBudget Management Branch or FMS of new reimbursement activities for inclusion in the budget through the established SAP and budget processes.

• Monitor the level of reimbursement activity and promptly notify BMBBudget Management Branch or FMS and ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton of significant upward or downward trend in activity, as budgetary adjustment may be necessary.

• Will not enter into verbal, informal, or undocumented agreements with individuals, state and federal agencies, and other entities.

• Ensure written agreements with individuals, state and federal agencies, and other entities are on file.

• Ensure the timely submission and/or processing of all documents related to reimbursable activities to ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton.

A reimbursement is repayment for the cost of work or services performed, or for other expenditures made for or on behalf of and for the convenience of another governmental unit, fund, or department, or for an individual firm or corporation. There should be a positive, direct relationship of the charge to the cost of the particular services performed for an individual or entity before one considers a receipt to be a reimbursement. Refer to SAMState Administrative Manual § 6463.

• Reimbursement services require the use of Internal Orders (IO) in SAP in order to segregate the financial effects from the ongoing support operations. Prior to establishing an IO, programs must have the approval of BMBBudget Management Branch or FMS and ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton.

• Reimbursements represent the recovery of expenditures.

• Reimbursement receipts shall not exceed the reimbursement authority that is allotted per program.

• Changes in authority at any level will require timely communication with BMBBudget Management Branch or FMS and may require approval of DOFDepartment Of Finance and the Legislature.

• Monies received directly from the federal government will be classified as Federal Funds. Federal monies passed from another State agency to CDCRCalifornia Department of Corrections and Rehabilitation will be classified as reimbursements to CDCRCalifornia Department of Corrections and Rehabilitation’s General Fund (GFGeneral Fund). Refer to SAMState Administrative Manual § 17105.

The Budget Act classifies reimbursements as either “Scheduled” (budgeted) or “Unscheduled” (not budgeted). It is the intention of this section to ensure that all CDCRCalifornia Department of Corrections and Rehabilitation reimbursements are “Scheduled.” The Uniform Codes Manual lists the various types of reimbursements, which include the following:

• Intradepartmental – Scheduled reimbursements from other departmental units/programs within the same organization, such as Inmate/Ward Labor (IWL) services related to Facility Planning, Construction, and Management (FPCMFacility Planning, Construction, and Management) construction projects.

• Interdepartmental – Scheduled reimbursements from other State departments, commissions, boards, etc., such as rent and utility costs for California Prison Industry Authority (CALPIACalifornia Prison Industry Authority (formerly PIA)), inmate and custody services provided to the California Department of Forestry and Fire Protection (CALCalipatria State Prison FIRE), and health care services related to the Inmate Medi-Cal Program.

• External/Federal – Scheduled reimbursements received DIRECTLY from the federal government, such as overtime costs for parole/special agents working on the Violent Crime/Gang Task Force.

• External/Local – Scheduled reimbursements received from local governmental entities within the State, such as housing and care costs for county inmates assigned to fire camps.

• External/Private – Scheduled reimbursements received from private individuals, firms, institutions, or corporations, such as inmate services for Joint Venture Programs.

• External/Other – Scheduled reimbursements not otherwise classified. This classification should only be used when a reimbursement does not fit it into one of the above broad classifications.

• Unscheduled – Reimbursements which either were not anticipated nor provided for when the budget was prepared, or for which budget revisions to increase scheduled reimbursements have not been processed. Unscheduled reimbursements shall not be used without prior consultation and authorization from ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton, BMBBudget Management Branch or FMS, and/or DOFDepartment Of Finance.

It is State policy that departments recover full costs whenever goods or services are provided for others. These costs of goods or services include all costs attributable directly to the activity plus a fair share of indirect costs which can be ascribed reasonably to the goods or services provided. Refer to SAMState Administrative Manual §§ 8752, 8752.1 and 8753.

• Direct costs are those which can be identified specifically with a particular program, e.g., salaries and wages of assigned staff to a reimbursable activity.

• Indirect costs are support costs which usually benefit more than one program or organizational unit. They are accumulated and allocated periodically to the cost objective or organizational units which benefit from the support activity/function.

• Central service costs are costs incurred by central service departments for the benefit of all State departments. This is a pro-rata share of statewide central services costs as determined by the Fiscal Systems and Consulting Unit of the State DOFDepartment Of Finance through the Statewide Cost Allocation Plan (SWCAP).

When projects involve multiple locations, whenever possible, the budget should be apportioned by the institution or program. When this is not feasible (e.g., when there are many locations, or when one location must manage a project in its entirety with subsidiary operating units) the subsidiary operating unit will still establish its share of the budget, using a reimbursement IO number.

Reimbursement receipts should have a direct relationship to the cost of the particular services performed. Reimbursable expenditures and reimbursement receipts should be recorded in SAP using IO numbers. Reimbursable services not directly recorded to IO numbers, such as salaries and wages, require expenditure reclassifications to align the reimbursement receipts to the reimbursable expenditures at the program, element, and component level. Refer to: SAMState Administrative Manual § 6463.

Reimbursement funding comes from various sources, including projects or agreements funded indirectly with Federal Funds, such as with the California Governor’s Office of Emergency Services (Cal OES); cooperative agreements funded with general funds, such as with CALCalipatria State Prison FIRE; and projects funded with capital outlay or bond funds, such as IWL projects.

Various services are provided to counties and cities, such as housing of inmates subject to Penal Code Section 4007, when ordered by a Superior Court Judge (e.g., Safekeepers); housing of inmates at Fire Camps to aid in fire suppression services; and providing inmate work crews to perform various tasks, such as general clean-up and maintenance work, etc.

• Rates to be charged these entities for services rendered (including medical services), shall be based on the standard agreement.

• Billings for these services will be processed by ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton.

• Counties and cities will not be charged for retention of prisoners who are under CDCRCalifornia Department of Corrections and Rehabilitation commitment.

The reimbursement accounts for support of prisoners from other jurisdictions are processed as follows:

• Rates to be charged these entities, for retention of prisoners (including medical services), shall be based on the interstate agreement.

• Billing for the care of prisoners from other states will be processed by ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton.

• Other states will not be charged for retention of prisoners who are under CDCRCalifornia Department of Corrections and Rehabilitation commitment.

The reimbursement accounts for care of federal prisoners are processed as follows:

• Rates to be charged these entities, for retention of prisoners (including medical services), shall be based on the interstate/intergovernmental agreement.

• Billing for care of federal prisoners will be processed by ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton.

• The federal government will not be charged for retention of prisoners who are under CDCRCalifornia Department of Corrections and Rehabilitation commitment.

Receipts directly from federal agencies – such as the USUnder Supervisor Department of Justice and the USUnder Supervisor Marshals Service, are recorded under the Federal Trust Fund. They require a federal catalog number (from the Catalog of Federal Domestic Assistance – (CFDA)). Institutions and programs must strictly monitor these reimbursements, as any services beyond the budgeted amount will not be billable to the federal agencies. Instead, the costs of services above the authorized amount will be absorbed by the institution or program’s regular (non-reimbursable) budget. Refer to: SAMState Administrative Manual § 17105.

For those services (including custody pay) which are to be reimbursed to the support appropriation from the Prison Industries Revolving Fund, refer to the Penal Code (PCPenal Code) §§ 2806 and 2816. These are expenses necessary in the administration of the prison industry program, and projects involving construction, renovation, or repair of prison or juvenile justice facilities, which are to be performed by inmate/ward labor. These services should be properly covered within an interagency agreement and must consider full cost recovery as detailed above.

Institutions and programs provide services to the Inmate Welfare Fund (IWFInmate Welfare Fund) for which reimbursement from the IWFInmate Welfare Fund may be required. In order for ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton to invoice IWFInmate Welfare Fund for these services, institutions must first provide ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton with supporting documentation of the services rendered.

Miscellaneous reimbursement services include but are not limited to: work furlough administrative charges, repayment cash assistance to parolees, and community correctional center reimbursements.

For the purposes of this article, grants are defined as: funds from sources other than the CDCRCalifornia Department of Corrections and Rehabilitation GFGeneral Fund, for operational and demonstration programs, which involve CDCRCalifornia Department of Corrections and Rehabilitation facilities, employees, inmates, or parolees. Typically, grant funds are received for a specific purpose with no obligation to be repaid.

Some grants allow funding for additional positions. Positions are to be established through the Change in Established Positions process, utilizing STDStandard Form (DGS). Form 607. Only fully funded positions will be established. Current positions partially assigned to in-kind match grants will continue to be charged against their regular reporting units.

• Care must be exercised to determine that all in-kind match positions are filled at all times. Otherwise, the ability to recover the full amount of the contract is reduced by the amount represented by vacant positions.

• In-kind match positions and the time being billed for such positions must be readily identifiable for audit purposes.

• Billings must be prompt and regular within the terms of the contract.

Many grant project agreements contain a provision for advances. Where possible, the institution or program grant administrator must apply for an advance payment that will be sufficient to maintain an anticipated continuing level of expenditure prior to the first reimbursement and thereafter between reimbursements. Maximum advances will be obtained from all grantors as early as possible. Monies received in advance will be recorded by ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton in the advance collections account until the reimbursement is earned.

• Grants must be self-supporting, except for in-kind match (e.g., positions, expenses, etc.). Continuous and careful monitoring of project-related activity and records must be performed by the institutions and/or programs, and ASBOffices identified as: ASB Bakersfield, ASB Corcoran, ASB El Centro, ASB Paso Robles, ASB Rancho Cucamonga, ASB Sacramento, ASB Stockton to assure that billings, requests for advances from grantors, and grantor’s payments, are current.

Each grant project will be established budgetarily by promptly submitting a request to BMBBudget Management Branch or FMS upon approval of the agreement. Only that portion of the grant that in the best estimate will be expended within the current year budget will be established. The remaining portion of the grant, overlapping into budget year, will be established for the new budget year before July 1.

A grant which is expiring within the current year and which is being extended or renewed must be re-documented for that portion of the renewal or extension falling within the current year.

The Deputy Director, Office of Fiscal Services, or designee shall ensure that the content of this article is accurate and current.

SAMState Administrative Manual §§ 6463, 6551-6557, 8752-8758.1, 17105.

Uniform Codes Manual.

PCPenal Code §§ 2806, 2816, 4007, and 11189.

DOMDepartment Operations Manual Chapter 2, Article 20.

Control Sections of the Budget Act.