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FOREST SERVICE HANDBOOK
ALASKA REGION (REGION 10)
JUNEAU, ALASKA
FSH 2409.19 – RENEWABLE RESOURCES HANDBOOK
CHAPTER 20 – COSTS, COLLECTIONS, AND ACCOUNTING
Supplement No.: R-10 2409.19-2004-3
Effective Date: March 8, 2004
Duration: This supplement is effective until superseded or removed.
Approved: /s/ Steven A. Brink (for)
DENNIS E. BSCHOR
Regional Forester
Date Approved: 02/24/2004
Posting Instructions: Supplements are numbered consecutively by Handbook number and
calendar year. Post by document; remove the entire document and replace it with this
supplement. Retain this transmittal as the first page(s) of this document. The last supplement to
this Handbook was 2409.19-2004-2 to chapter 10.
New Document
2409.19_20
10 Pages
Superseded Document(s) by
Issuance Number and
Effective Date
2409.19,20 (2409.19-94-3, 7/15/94)
11 Pages
Digest:
This is a technical supplement to change the name of the handbook from ‘Renewable Resource
Uses for Knutson-Vandenberg (K-V) Fund Handbook’ to ‘Renewable Resources Handbook’ per
WO amendment and to convert the format and style of this supplement using the agency’s
current corporate word processing software.
Although some minor typographical and technical errors have been corrected, there are no
changes to the substantive direction in this supplement.
R-10 SUPPLEMENT 2409.19-2004-3
EFFECTIVE DATE: 03/08/2004
DURATION: This supplement is effective until superseded or removed.
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FSH 2409.19 – RENEWABLE RESOURCES HANDBOOK
CHAPTER 20 – COSTS, COLLECTIONS, AND ACCOUNTING
21 - COLLECTION OF FUNDS
21.1 - Associated Costs and Collections
21.11 - Direct Costs and Inflation
Identify direct costs of K-V projects at the District level using 3-4 year average costs, unless
another approach is more reasonable for the activity and is well-documented in the SAI plan (See
section 22.2). Examples of direct costs include costs of supplies, materials, contracts, and costs
for project personnel. It is appropriate to divide total annual district costs for the project by
number of units accomplished for building a historical average.
Adjust direct costs by the expected rate of inflation furnished annually by the Regional Office.
Adjust for inflation by applying the inflation factor from the date of SAI plan preparation to the
planned year of accomplishment. For example, assuming a 4-percent inflation rate:
Future Project Costs = Current Costs x 1.04
y
(y = number of years from date of SAI plan to year of accomplishment.)
21.12 - Indirect Costs
One of the keys to ensuring that SAI plans are recovering the total cost of accomplishing the
K-V program is to identify those costs that are direct project and those that are indirect (that is,
those in support of the program). Units will do an annual analysis of the actual components that
make up all of their K-V program expenditures and ensure these costs are recovered on SAI
plans, either as direct project costs or as indirect assessments. Indirect costs are recovered as a
percentage add-on to direct project costs.
Indirect costs include costs for support staff such as line management, business administration,
public affairs, civil rights; costs for support services such as rents, computers, building
maintenance, fleet, utilities, communications, unemployment compensation, Office of
Workman's Compensation costs, GIS assessments; and other support to K-V projects.
Indirect costs for the Washington Office and Regional Office are published each year in FSH
1909.13, chapter 30, section 37. Forests must update their Overhead Assessments in a manual
supplement within 30 days of notification of updated WO and RO rates.
District overhead and other District indirect costs will be included in direct project costs unless
there is a reason for using a separate add-on cost and this is clearly documented in the SAI plan.
R-10 SUPPLEMENT 2409.19-2004-3
EFFECTIVE DATE: 03/08/2004
DURATION: This supplement is effective until superseded or removed.
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FSH 2409.19 – RENEWABLE RESOURCES HANDBOOK
CHAPTER 20 – COSTS, COLLECTIONS, AND ACCOUNTING
Indirect cost rates for RO/SO levels are expressed as a percentage, using the following formula:
Indirect Cost (%)
=
Estimated Indirect Costs
Estimated Direct Project Costs
The RO withdraws the overhead from K-V accounts once a year. The withdrawal is actual cash,
not obligation authority, and includes the WO assessment. The RO withdraws only the cash
needed to fund the current year overhead needs adjusted for any balance or deficit from the prior
year. Withdrawal is based on planned obligations adjusted for any balances or deficits from the
prior fiscal year. Therefore, each Forest's actual assessment may differ from the Regional rate.
To determine total project costs: indirect cost recovery will be added to direct costs by
multiplying direct costs by the indirect cost percentage and adding the result to the direct cost; or
by using this formula:
Total Project Cost = (1 + Indirect rate) x Future Project Costs.
(Future Project Costs = Direct Project Costs adjusted for inflation.)
(Indirect costs are not adjusted for inflation.)
(Indirect rates are additive for the WO, RO and SO. For example, if the WO rate is 5
percent, the RO rate is 4 percent and the SO rate is 6 percent, the total indirect rate would be 5
percent + 4 percent + 6 percent = 15 percent.)
(Example: assume indirect cost rate = 15 percent; future project cost = $200/unit; then
total Project Cost = 1.15 x $200 = $230.)
21.2 - Documenting Sale Area Improvement and K-V Collection Plan
Sale Area Improvement plans will be developed by interdisciplinary teams and line officers
concurrently with environmental analysis (Gate 2) through detailed sale preparation (Gates 3
and 4).
In Gate 2 planning, the interdisciplinary team will develop a list of potential projects appropriate
for each alternative. These are pools of all integrated resource projects for the alternative and
should not identify funding source. Prior to including projects in pool, determine relative need,
cost, and effectiveness of projects (cost estimates will be preliminary, developed without
extensive site data). Rationale and priorities of projects will be clearly documented in NEPA
documents.
SAI plans will be prepared during Gate 3 for independent sales and long-term offerings. SAI
plans will be prepared using the Gate 2 project pool list and data gathered during field layout and
appraisal. SAI plans are developed by the interdisciplinary team and approving line officer, and
include a recommendation of priorities based on integrated resource needs. If priorities or
projects change from those identified in Gate 2, this needs to be documented. Further NEPA
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EFFECTIVE DATE: 03/08/2004
DURATION: This supplement is effective until superseded or removed.
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FSH 2409.19 – RENEWABLE RESOURCES HANDBOOK
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analysis or documentation may be required depending on the nature and scope of the changes.
The Forest/Area K-V Coordinator will review each SAI plan. The Line Officer responsible for
the sale will review and sign the SAI plan. After line officer approval, the SAI plan is reviewed
and signed by the Contracting Officer and is placed in the timber sale folder as part of the sale
record.
During development of the appraisal and sample contract (Gate 4), required reforestation and
non-required K-V costs are identified, along with base rates. For independent sales, base rates
are the applicable minimum rates increased where necessary to produce a total value of $.50 per
M board feet plus the cost of required reforestation. For long-term offerings, base rates are not
increased to protect the cost of required reforestation. For long-term offerings, if insufficient KV funds are available for reforestation, appropriated funds will need to be used.
Following award/release of a sale or offering, the SAI Plan will be revisited and the "Financed"
column completed based on stumpage available for K-V projects. The priority ranking on the
SAI plan is used to identify any additional projects to be financed through K-V. Caution should
be used in revising the K-V plan at this time because of potential changes in the purchaser credit
limit for this sale. The exact K-V funding available will not be identified until all specified road
construction and reconstruction is completed. See section 21.25 for more information on
determination of available stumpage for K-V financing and effects of purchaser credit transfers.
SAI Plans are the basis for development of K-V budget requests and project work plans. There
must be clear and easily accessed records linking NEPA documentation to SAI Plans to project
work plans.
Each SAI Plan must contain three essential components:
1. Form FS-2400-50, Sale Area Improvement and K-V Collection Plan.
2. Narrative Statement documenting costs and rationale for treatments.
3. SAI Plan Map(s).
Narrative Statements must contain self-supporting description of projects including:
1. A thorough description of each project, listed by priority.
2. A statement of project objectives, and how these link to the NEPA document and
Forest Plan direction.
3. Estimated project costs including when they are to be incurred, how estimates were
obtained, adjustments for inflation, indirect costs added, and so forth.
SAI Plan Map(s) must clearly identify Sale Area Boundaries and long-term sale Offering Area
Boundaries (See chapter 10, section 11.4). Location of all planned SAI projects must also be
clearly identified.
R-10 SUPPLEMENT 2409.19-2004-3
EFFECTIVE DATE: 03/08/2004
DURATION: This supplement is effective until superseded or removed.
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CHAPTER 20 – COSTS, COLLECTIONS, AND ACCOUNTING
For long-term contracts, SAI plans prepared for an offering area must cover only the work
identified for that specific offering. SAI plans prepared for previous offerings should be treated
the same as plans for closed sales, even if they are a part of the same EIS.
21.25 - Determination of Stumpage Available for K-V Financing
After the sale is sold, stumpage available for K-V financing is determined by deducting deposits
to the National Forest Fund (NFF), the Salvage Sale Fund (SSF), and the Purchaser Credit Limit
from the gross sales bid value.
The current contract value of the timber sale is allocated as follows:
Current Contract Value = Base Rate Value (Protected) + Effective Purchaser
Credit + Unallocated Value*
(*Unallocated value = cash collected from purchaser available to fund non-required K-V
projects identified as funded in the SAI Plan, SSF Projects, or sent to the U.S. Treasury as NFF.)
Understanding determination of available K-V funding requires understanding of the following
terms:
1. NFF Deposits. NFF deposits are dollars paid to the treasury from sale of timber.
There is a minimum NFF deposit rate established for each species group and this is used to
establish base rates for the sale (for independent sales, base rates are developed by increasing the
minimum NFF fund deposit to cover required reforestation. See below.)
2. Base Rates. Base rates are the lowest rate at which timber will be advertised under the
authority of 36 CFR 223.4, even though appraised value calculations indicate lower rates. For
independent sales, base rates are the applicable minimum NFF Deposit rate for each species
group increased by $.50 per M board feet plus the cost of required reforestation. For long-term
sales, there are no provisions to increase base rates to cover required reforestation.
3. SSF Deposits. For salvage sales, a share of the gross stumpage receipts is deposited in
a SSF after base rates and Purchaser Credit for roads have been removed. Receipts to SSF and
K-V project financing may be competing if adequate funding is not available for all SSF and KV needs identified. The receipts to these two funds need to be balanced by line officers and
interdisciplinary teams in view of the specific program needs on the Forests and Districts
involved.
4. Purchaser Credit. The National Forest Roads and Trails System Act allows timber
sale purchasers to earn "purchaser credit" for costs of construction and reconstruction of
specified roads. Once this credit is earned and established in a purchaser's account, it is
immediately available to pay for stumpage value in excess of base rate value. Purchaser credits
cannot be applied to base rate values (cash deposits are required to cover base rates). The
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EFFECTIVE DATE: 03/08/2004
DURATION: This supplement is effective until superseded or removed.
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CHAPTER 20 – COSTS, COLLECTIONS, AND ACCOUNTING
portion of purchaser credit above base rates available to cover stumpage charges is called
Effective Purchaser Credit.
5. Purchaser Credit Limit. The Purchaser Credit Limit is the maximum amount of credit
that will be granted to the purchaser for satisfactory completion of required work on that road
segment or project. The Purchaser Credit Limit may be adjusted through change orders during
the life of the contract under certain conditions spelled out in the contract.
6. Transfer of Purchaser Credit. Effective Purchaser Credit earned but unused on one
sale may be transferred to other timber sale accounts held by the same purchaser within the same
proclaimed National Forest. Tongass timber sale purchasers may transfer effective purchaser
credits between accounts of sale contracts held by them on the Tongass, regardless of Area.
The "transfer-in" level of earned, unused purchaser credit is only calculated once prior to sale
award and based on the original SAI plan. Funding for K-V projects (required and nonrequired)
identified on the original SAI plan, is protected from transfer of purchaser credit. Future project
costs not identified in the original SAI plan may not be protected from purchaser credit transfers.
Therefore, it is critical that the original SAI plan be the most complete and accurate estimate of
the K-V needs at the time of the sale.
The value of purchaser credit transfer is calculated using:
1. Timber Sale Contract Clause C4.211# which sets the transfer-in limit.
2. The original SAI plan.
Movement of Purchaser Credit on long-term sales can profoundly affect funding available for KV projects. Rate redeterminations can also cause fluctuations in availability of K-V funds. For
long-term sales, required reforestation is not protected by base rates and appropriated funding
may be needed to complete required reforestation. The Regional Office will ensure that these
needs are funded by giving them the highest priority for appropriated reforestation.
21.26 - Determination of Funded Projects
At sale closure, a project's status as funded or unfunded is frozen and cannot change. In
addition, at sale closure, unfunded work should be evaluated for financing with alternative
funding sources or removed from the SAI plan.
It is extremely important that SAI plans clearly show which projects are funded and which are
not funded in order to avoid confusion between funded and unfunded projects when carrying out
projects listed on an SAI plan.
Projects cannot be performed and charged to K-V accounts unless they are shown as funded on
approved SAI plans. Unfunded projects cannot be funded out of Forest or area pooled accounts,
even if there are surpluses.
R-10 SUPPLEMENT 2409.19-2004-3
EFFECTIVE DATE: 03/08/2004
DURATION: This supplement is effective until superseded or removed.
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FSH 2409.19 – RENEWABLE RESOURCES HANDBOOK
CHAPTER 20 – COSTS, COLLECTIONS, AND ACCOUNTING
22 - ACCOUNTING TECHNIQUES
22.1 - K-V Pool and Tracking of K-V Funds
The K-V pool is an accounting process for each proclaimed National Forest, established for ease
of accounting so that each individual expenditure need not be tracked on a sale-by-sale basis.
The pool allows for covering reasonable cost fluctuations between SAI plan estimates and actual
sale costs. However, the pool cannot be used to facilitate moving funds between sales. Do not
collect funds on one sale/offering with the intention of spending them on another sale/offering
area.
There are two proclaimed National Forests in R-10; therefore, two K-V pools (Tongass NF and
Chugach NF). Each Forest Supervisor will track and be accountable for their own K-V accounts.
On the Tongass NF, each Forest Supervisor will be accountable for their own Area's K-V
accounts. There will be no transfer of funds between Areas.
Cost variances covered by the K-V pool need to be reasonable. For example, if the SAI plan
collected $200/acre for planting and the actual contract cost was $210/acre, that is reasonable
and can be funded by the pool. However, if the SAI plan collected $200/acre and the actual cost
was going to be $400/acre, that is an unreasonable difference and action would need to be taken
such as:
1. Delete some lower priority items from the SAI plan to stay within the amount of K-V
collections realized.
2. Cover the $200 overrun with appropriated funds. What is "reasonable" will be left to
the Line Officer's judgement on a case-by-case basis and must be well justified.
K-V funds may be expended from the Forest/Area K-V pool for a project if the following criteria
have been satisfied:
1. The project is identified in approved NEPA documents and is identified as funded on
an approved SAI plan. The project also should be clearly tracked in project work plans and
balance reports. It is improper to finance unfunded work from the K-V pool, even if surplus
exists in the K-V pool. Projects identified as unfunded on the SAI plan may only be
accomplished if the SAI plan is amended to show them as funded.
2. At least one payment has been collected and is on deposit for material cut on the sale
area on which the project is located (funds can be released from the pool to finance a funded
project with immediate need as long as at least one payment for material cut is collected and on
deposit).
3. There are adequate K-V dollars on deposit to fund reforestation (required K-V) and
higher priority K-V projects on the SAI plan for that sale area.
R-10 SUPPLEMENT 2409.19-2004-3
EFFECTIVE DATE: 03/08/2004
DURATION: This supplement is effective until superseded or removed.
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4. The activity is within the required timeframe (5 years, or up to 10 years with Regional
Forester approval).
Forests/Areas will use a bottom-up, interdisciplinary approach to programming and budgeting KV projects. K-V projects will be tracked from NEPA documents to SAI plans to Project Work
Plans. Funded projects on approved SAI plans will be the basis for K-V budget requests.
The status of pooled K-V accounts is to be determined and reported annually by each Forest
Supervisor. The Regional Forester will consolidate Tongass Area balances and report balances
from both proclaimed National Forests to the Washington Office (See section 22.2).
22.2 - Annual Review and Report of the K-V Balance
Each Forest Supervisor must send a completed K-V Balance Sheet Summary to the RO TM
Director by November 15 annually. Any deficit balance in the overall fund balance (worksheet
item 9) must be explained in detail. Remember that costs for unfunded work as described in
Sections 05 and 21.26, cannot be projected in this analysis. They must be programmed
elsewhere or dropped. They do not belong on the K-V analysis since they cannot be
accomplished with K-V funds.
This analysis is designed to provide management with a reasonable estimate of the K-V program
funding needs, for each major work category, and determine if there are adequate funds collected
and projected to be collected to accomplish the planned work. This is not an accounting report,
although the figures must agree with the accounting reports. The objective is to provide
information to determine whether program funding is adequate to accomplish remaining work.
It is important that data shown in the annual balance report is accurate and current. Each
Forest/Area will use a data base and record tracking system to identify work completed,
expenditures to date, and work remaining on each SAI plan.
As a part of the annual review, each SAI plan will be reviewed and revised using an
interdisciplinary process, and a determination made of work remaining, dollars collected and
available, and surpluses or deficits in funding for remaining work.
Forest/Area annual balance reports will be reviewed by a Regional team and formal feedback
will be provided which will include recommended actions to correct or avert potential problems.
The Director of Timber Management will consolidate the three Areas of the Tongass NF into one
report.
22.21 - Format for Annual Forest Review
Items to consider in this review are the available fund balance, the anticipated collections on
existing sales, and the estimated cost of remaining eligible SAI work on existing and closed sales
to be performed with K-V funds.
R-10 SUPPLEMENT 2409.19-2004-3
EFFECTIVE DATE: 03/08/2004
DURATION: This supplement is effective until superseded or removed.
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Responsible line officials will review each SAI plan annually, prior to the annual review of the
K-V balance, and revise plans as needed. Each plan review will include an interdisciplinary
review and final plans will reflect integrated resource management activities and priorities.
Each unit shall provide a K-V Balance Sheet Summary (See 22.5 - Exhibit 03 of the parent text).
The Regional Office will consolidate and send one report for each proclaimed National Forest to
the Washington Office.
Use historical cost information as a benchmark in validating the cost of projected work yet to be
accomplished. Use an average cost per unit of the past 3 or 4 years, inflated to the year of the
review to provide a good indicator of cost of future work. While the 3-4 year average is the
basic benchmark value to apply against remaining K-V work, there may be occasions when a
unit feels an alternative cost should be used to make their projections more accurate. If a
Forest/Area feels that a unit cost, other than the 3-4 year average, is more appropriate to the
review, then the Forest/Area may project their K-V program needs using this alternative unit
cost. Document the reason for establishing the alternate unit cost in a narrative and attach it to
the documentation of the review.
The Regional Office will provide inflation factors to be used for outyear cost projections.
Inflation factors will be included in the cover letter from the Regional Office to units requesting
annual balance review.
All eligible work that was unfunded when the sale closed is no longer eligible for K-V funding
and must be removed from SAI plan.
22.4 - Timeframes
K-V projects must be completed within 5 years after sale closure for independent sales and 5
years after end of an offering period for long-term sales. The Regional Forester can approve
exceptions of up to 10 years after sale closure (independent sales) and 10 years after offering
period (long-term sales). Exceptions must fit one of the following criteria:
1. The planned work is needed to regenerate the area cut over by the timber sale and
could not logically be accomplished within 5 years following sale closure.
2. The planned work is made necessary by natural events which could not be predicted
and which prevented accomplishment of the activity within 5 years after sale closure.
3. The planned work is to provide control of latent disease problems not identifiable
within the required 5-year period, or unpredictable as to the extent of the infestation.
R-10 SUPPLEMENT 2409.19-2004-3
EFFECTIVE DATE: 03/08/2004
DURATION: This supplement is effective until superseded or removed.
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4. The following reforestation activities would generally meet these criteria:
a. Replanting or site preparation for natural regeneration where standards for
satisfactory reforestation were not or would not be met within the initial 5 years.
b. Controlling animal damage on reforested areas prior to certification.
c. Certification of satisfactory reforestation.
Other activities considered for timeframe extension should be evaluated against the above
criteria on a case-by-case basis.