Faculty Practice Accounting determines balances using an income and disbursement formula.
Sample of Income and Disbursement Flow
Below is a sample of an income and disbursement flow.
Gross Receipts—practice and consultation fees from all sources.
Less Special Department Allocation—percent varies depending on the Department's Agreement.
Less FPA Assessments:
- School Equalization Fund at 5.00 percent
- Indirect Overhead Expenses at 5.20 percent
- Growth Fund at 0.75 percent
- Renovation Reserve Fund at 0.25 percent
Less Overhead Charge (0H)—consists of two components: direct expenses that are controlled by the participants, and indirect expenses to cover administrative and general expenses relative to departmental operation.
Adjusted Gross Income (AGI)—remaining balance after the assessments have been subtracted from the receipts.
Items that may be charged against AGI are:
- Portion of base salary (defined as salary listed in the faculty salary guide as approved by the Board of Trustees in which fringe benefits are paid or calculated)
- Salary related fringe benefits
- Space
- Malpractice
- Additional disability insurance (limit of $10,000 per annum)
- Bonus
- Faculty Practice Accounting (FPA) Surcharge Adjustment
- Salary Reimbursement
Residual Balance (RB)—amount remaining after deducting all charges against Adjusted Gross Income.
Residual balance is divided as follows:
- FPA Supplement(s)—varies depending on the participant’s agreement with the Department.
- Departmental Fund (DF)—remaining portion of the residual balance. Expenditures of these funds are for purposes established by the Department Chair in consultation with the Department's Faculty Practice Associates and must be in accord with institutional policies and guidelines.