Cost Allocation of System-Administered Services

Allocation Methodologies and Strategic Considerations

Topics: Budget Models and Cost Allocations, Budgeting, Administration and Finance, University Systems and Governance

This is a preview of restricted content.

  • If you are an EAB member, please log in.
  • If you are logged in and still see this message, the content is outside your membership portfolio, and we invite you to learn more by contacting us.
  • If you are not an EAB member and wish to learn more, please contact us.


System offices often facilitate and administer a variety of services and contracts across the system’s constituent institutions. This brief profiles relevant budget policies, cost allocation methodologies, and strategic management considerations.

  • Key observations from our research:

    1. Most profiled institutions allocate at least 50 percent of the cost of system-administered services to the central budget.

    2. Costs of system-administered services are allocated to auxiliary units and less often to academic units.

    3. Cost allocation determined either by proportional share of total institutional headcount or total annual institutional operating expenditures.

    4. Contacts at profiled institutions prefer straightforward, simple allocation methodologies that promote transparency and mitigate unit-level resistance .

    5. Changes to cost allocation policies require approval from senior leadership.

    6. Contacts recommend regular communication with unit-level administrators to discuss cost allocation changes and review budgetary policy changes.

Download the Report