How Rates Are Calculated
Calculating the FY 2024-2025 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 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 also changes.
NCDIT calculated the FY 2024-2025 subscription charge for each customer based on its use of IT services in FY 2023 (July 2022 to June 2023).
The Office of State Budget and Management approved rates on June 14, 2024, so the annual subscription amount is divided by the number of remaining invoice months in the fiscal year.
This means that for the 2024-2025 fiscal year, customers are billed the subscription in 12 installments from July 2024 through June 2025.
Calculating FY 2024-2025 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.
As part of the rate-building process each year, 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.