How Rates Are Calculated
Calculating the Subscription
The subscription is comprised of two parts – subscription proper and full-time employees for rate-based services.
| Component | Description | Allocation Method |
|---|---|---|
| Subscription Proper | This is the cost of NCDIT’s agency administration (HR, finance, facilities, internal audit and miscellaneous statewide expenses not otherwise billed). | Subscription proper is allocated using the traditional straight-line method (i.e., the customer’s total billings divided by total NCDIT billings). |
| Full-Time Employees for Rate-Based Services | This is the personnel cost for rate-based services. Beginning in FY 2022-23, the NCDIT personnel cost was removed from rate-based services and became a part of the NCDIT subscription cost baseline. | This is allocated by reviewing personnel cost by service line and allocating that total personnel cost to each customer based on the total billings within each service line. |
Since the amount of total billings for a customer varies by fiscal year and the NCDIT budget approved each year changes, the amount a customer is billed for subscription changes.
NCDIT calculated the FY 2023-2024 subscription charge for each customer based on its use of IT services in FY 2022 and nine months of FY 2023.
Rate approval from the Office of State Budget and Management was provided on Nov. 14, 2023, so the annual subscription amount is divided by the number of remaining invoice months in the fiscal year.
This means that for the 2023-2024 fiscal year, customers are billed the subscription in seven installments from December 2023 through June 2024.
Calculating Service Rates
NCDIT establishes service rates using a consumption model based on a customer’s actual use of the service, trends and formal agency commitments to using services.
Each year as part of the rate-building process, NCDIT identifies three key costs on which it establishes rates:
- Non-full-time employee expenses
- NCDIT-allocated expenses
- NCDIT internal expenses
NCDIT consults with agencies to determine their future-year consumption of NCDIT products. After identifying all expenses and total consumption for a service, NCDIT calculates rate forecasts for each product in a service.
NCDIT then compares forecasted agency utilization (previous year) to the forecasted agency utilization (budget year) to determine the increase or decrease in expenses to an agency.
This is presented to agencies in the form of an impact analysis document. The budgets, rates, and narrative of the budget and rate package is then submitted to NCDIT’s finance office and the N.C. Office of State Budget and Management.