General and administrative costs and cost allocation

Page updated: 4/6/22

This section of the cost report collects general and administrative costs not captured on previous sections. The cost report preparer must allocate these costs to at least one administration cost category.

This section is broken into three distinct types of administrative costs:

1. Facilities costs: This type of cost includes all administrative costs for facilities owned and/or operated by the organization. It does not include any facility costs for service provision, including residential facilities. Home and community-based service (HCBS) waivers do not pay for residential facilities and, therefore, should not be reported anywhere in the cost report.

Note: Do not report a home mortgage as facility costs. A home mortgage is not considered a waiver cost and is covered by other supports outside of the waiver costs. Report facility costs for day programs on the day program facility costs section.

Example: A unit-based provider rents office space for administrative staff, even though all direct care staff work remotely in the homes of people who receive services.

2. All other administration costs: This type of cost includes expenses associated with typical costs of running a business that are not specific to DWRS service administration.

Example: Most businesses have office supply costs for items such as paper, printers and pens.

3. Program general and administration costs: This type of cost includes administrative expenses associated with the specific requirements of providing DWRS services. This could include:

· Technology, both software and hardware (e.g., billing software).

· Telecommunications devices (e.g., cell phones and tablets direct care workers use to serve people).

· Costs to provide service/program oversight and ensure compliance with laws and regulations (e.g., HIPAA compliance training and related compliance activities).

Quick tip: Even if the cost report preparer thinks the organization does not have a general and administrative cost, they should report the organization’s yearly DHS licensing and fee costs on this section.

Category	Instructions
Amount	For each expense type, provide the total actual expenses the organization incurred during the reporting period. Do not include residential facility costs (e.g., family or corporate foster care homes). DWRS payments do not cover these costs. For more information, refer to the “what to include” section on the home page.
Administrative cost allocation	For each reported expense type, provide the percentage attributed to each cost category, based on the allocation methodology determined to be appropriate for this section. This section does not allow the cost report preparer to allocate general and administrative expenses to direct care cost categories. All costs reported on this section are administrative in nature. If the cost report preparer feels that any costs reported on this section should be allocated to direct care, the cost report preparer should report those costs on the applicable section instead.
Total allocation	The total allocations automatically calculate and should equal 100%.
Cost allocation methodology	Describe the methodology the organization used to allocate costs for this section. Include enough detail so a person unfamiliar with the organization can understand the allocation procedure used. For information about how to allocate costs, refer to the general guidance about cost allocation methodologies section.
Other costs	Describe the expenses categorized as “other costs” in the facility costs, all other administration expenses and program general and administration cost subsections. Include enough detail so a person unfamiliar with the organization can understand these costs.
Home office/corporate overhead expense	Only complete this part of the section if the organization is part of a larger organization that operates multiple lines of business or in multiple states and has corporate staff members who are not connected directly to the local line of business. Note: This is not a typical situation. Unless the cost report preparer is aware of a home office expense, the organization most likely does not have this expense. Provide the home office/corporate overhead expenses the organization pays to the larger organization. Example: Provider M is part of Provider USA, a national company that oversees the Minnesota-specific operation for providing DWRS services. Provider M has executive and administrative staff for the Minnesota-specific operation, so the cost report preparer reports those costs on the administrative and program support wages – employees section. Provider USA receives funding from each state-level operation, including Provider M, via a percentage of each provider’s annual revenue. The cost report preparer reports the amount of the funding Provider M shares with the national-level corporation on this section. Describe the methodology the organization used to allocate costs for this section. Include enough detail so a person unfamiliar with the organization can understand the allocation procedure used. For information about how to allocate costs, refer to the general guidance about cost allocation methodologies section.

Next step

Next, review direct care worker questionnaire.