What is CDT Cost Distribution?
CDT Cost Distribution (service code Z901) is an expense item billed to all California Department of Technology (CDT) customers based on the amount of total customers spending each month. This method is how CDT costs recover the amount of administrative overhead expenses to provide services to our customers. In the past, overhead costs were built into service rates for the services provided. Beginning on July 1, 2018, CDT removed the administrative overhead cost component out of the rate calculation and billed it as a separate line item on customer invoices.
The CDT Cost Distribution is calculated monthly and varies based on two key factors:
1. Proportional Share of Total Billing: The customer’s invoice is compared to the total of all CDT customer invoices to determine their share.
2. Total Administrative Overhead: The Department’s monthly overhead recovery target drives the overall percentage applied. If overhead costs change, the CDT Cost Distribution percentage may also change.
Non-Pass Through Services: The CDT Cost Distribution applied to non-pass-through services (e.g., CDT-managed services) averages 20% of the customer’s monthly invoice. However, some months may experience a reduced fee due to the annual billing of Microsoft Office 365 services.
Pass-through Services: The CDT Cost Distribution fee applied to pass-through services (such as vendor-hosted services and dedicated software licenses) is a fixed 3.5%. As a result, customers with a higher proportion of pass-through charges on their invoice typically see a lower overall Cost Distribution charge compared to customers whose charges consist primarily of non-pass-through services.
What is included in the CDT Cost Distribution?
CDT Cost Distribution is broken down into two areas of identified expenses.
1. Departmental External Costs:
- Statewide Pro Rata
- Government Operations Agency
- Supplemental Pension Payment
2. CDT Administrative Overhead:
This includes CDT’s administrative overhead, which is necessary to deliver customer-facing services and administrative support services.
- Human Resources
- Rates & Cost Recovery
- Procurement
- Budgeting
- Accounting
- Other Administrative Functions