Administrative OverHead
What is Administrative Overhead?
Administrative Overhead (AOH) is how auxiliary units, which typically generate their own revenue rather than operating exclusively on general fund support, help pay for the shared resources and services from which Mines auxiliary units all benefit, such as:
- Infrastructure and Facilities maintenance
- Campus Safety
- Human Resources
- Information Technology (IT)
- Financial services
Charging auxiliary areas for these resources and services is essential to help ensure that general funding, which is mainly student tuition dollars, is not responsible for covering the entirety of these expenses. In other words, it’s a way to ensure that these shared expenses are paid for by all the University’s sources of revenue and not paid disproportionately by our students.
Research functions already help to support administrative costs through their Facilities & Administration (F&A) rates, which ultimately flow to the university through Indirect Cost Recovery (IDC). With the addition of AOH, total administrative costs will now be recovered through:
- Tuition rates – Instruction
- F&A rates / IDC – Research
- AOH – Auxiliary
Is AOH Brand New
While the name “AOH” and the calculation process are brand new, some auxiliary units have already been helping to pay for shared expenses through Operations & Maintenance (O&M) charges or an 8.5% Administrative Allocation charge on certain eligible expenses. Adopting AOH is intended to help ensure that all auxiliary areas help support these expenses, rather than just a few.
These new AOH processes have been in development for over a year and are driven solely by the desire to spread these shared expenses equitably across the university.
Who Pays AOH?
All revenue-generating auxiliaries will be subject to AOH except in limited, specific circumstances, including:
- Student groups registered with the Board of Student Organizations
- Auxiliaries affiliated with tuition-bearing programs
How much is AOH and how will I be charged?
The Administrative Overhead expense is 9.0% of the total revenue collected in the auxiliary worktag. For example, an auxiliary worktag that collects $1,000.00 in revenue in FY26 will be charged $90.00 in AOH expenses.
The AOH expense will be visible alongside the other labor and operating expenses, will appear on the line titled “9500E: Higher Ed Cost Allocations,” and will be recalculated and updated at the end of each calendar month. This means that if a unit views RPT001, our primary Workday report for viewing budgets and expenses, in mid-September, for example, the AOH expense will equal 9% of the revenue total as of August 31. Revenue increases will result in an increase in the AOH expense. Conversely, decreases in revenue (due to refunds, for example) will result in a decrease in the AOH expense.
Will there be any changes to the service i receive from central offices?
No, this new AOH process does not represent a change to the overall service model from central offices (IT, HR, etc.). This is only a change to how auxiliary areas help pay for those shared services. The services that auxiliary areas receive will continue to be aligned with the services that have always been provided to auxiliaries, and that are also provided to general and research funded areas.
Will AOH Always be 9% of revenue
While AOH will be 9.0% for at least FY26 (July 1, 2025 – June 30, 2026), the rate may change in future fiscal years.
As stated previously, the goal of AOH is to help support real operating expenses shared across the university. Changes to those expenses or changes to total auxiliary revenue expectations may warrant adjustments to the rate. Mines wants to ensure it collects enough to cover the necessary costs, but not so much that the burden is disproportionately landing on auxiliary areas.
Mines will work to communicate any anticipated changes to the AOH rate well in advance of the new fiscal year, since it understands the new rate may warrant changes to plans and fee structures within auxiliary units.
DOES AOH COVER ALL MAINTENANCE EXPENSES?
Overview:
Overhead rates include Facilities and Administration (F&A) for research and Administrative Overhead (AOH) for auxiliaries. These rates are intended to pay for general maintenance within auxiliary spaces, however, there are some Work Order Requests that are not covered by these rates.
Covered Maintenance represents reactive repairs that are considered essential to building operation and upkeep. In contrast, Billable Work represents the materials and labor required to perform additional services, such as installations, that are beyond the scope of covered maintenance.
Operationally, the shift to AOH will not change which services have historically been free of charge, and which services have required an additional bill. This document is not outlining a change to the overall service model, which remains unchanged, but rather seeks to provide clarity on which services may incur additional charges within the existing model.
Process:
When a Work Order Request is submitted, the request will be routed to the appropriate team within the Mines Infrastructure and Operations (I&O) department. Should the request represent billable work, as opposed to covered maintenance, the supervisor responsible for the work order will contact you to request a worktag.
For work orders over $300, a Work Order supervisor will provide an estimate of the anticipated cost, so the department can ensure funding availability before work begins.
Examples:
The table below is not exhaustive but is intended to provide standard examples of work that would typically fall into the covered maintenance and billable work categories.
| Covered Maintenance (Overhead Rates) | Billable Work (May Incur Additional Charge) |
|
|