Resource Allocation and
Unit Pricing Framework
Guidelines
July 2013
Contents
1.0
1.1
2.0
Funding Context .............................................................................................................. 2
Government Principles of Resource Allocation ...................................................................................2
Funding to the Disability and Community Services Sector ........................................ 3
2.1
Unit Pricing Principles .................................................................................................................................3
2.2
Unit Pricing Model .......................................................................................................................................4
2.3
Unit Costing ..................................................................................................................................................5
3.0
How Unit Prices for Service Types are Determined ................................................... 6
3.1
Information, Referral, Advocacy and Recreation Services .................................................................6
3.2
Accommodation Support Services ..........................................................................................................6
3.3
Individual Support Programs (ISPs) (Attendant Care, Personal Support, Disability Respite
Services (excluding centre-based)) ........................................................................................................................7
3.4
Centre Based Respite Services .................................................................................................................7
3.5
Community Support Services and Family Support Services ..............................................................7
3.7
Community Access Services .....................................................................................................................8
4.0
Other Price Considerations............................................................................................ 9
5.0
Unit Prices and Efficiency ............................................................................................. 10
6.0
Capital Funding .............................................................................................................. 11
6.1
Definitions................................................................................................................................................... 11
Appendix 1 - Current Unit Prices ........................................................................................... 13
Appendix 2- Rostering Adjustments for Disability Services Group Homes ....................... 16
Page 1 of 19
1.0 Funding Context
1.1
Government Principles of Resource Allocation
The key principles underlying the Department’s resource allocation and unit pricing
framework are:

every Tasmanian has the right to safe, high quality, affordable health and human services
when they need them. They also have the right to expect services to be coordinated and
take their individual views and needs into account. The overriding purpose of funding
relationships between the Department and community sector organisations is to ensure
that this happens

client focus and outcomes are paramount – funding approaches must empower people to
make choices and there must be opportunities to seek and use client feedback

funding decisions are based on an assessment of the suitability of a combination of funds
allocation methods and quality assurance strategies that best advance the public interest.

the basis for the funding relationship between the Department and community sector
organisations is mutual respect, open and honest communication, and concurrence to
ensure that the client is at the centre of all that we do

effective working relationships are built on reciprocal links between the Department and
community sector organsations that reflect the mutual and complementary roles of each
in the planning and delivery of sustainable and efficient services

the Department’s resource allocation and unit pricing framework aims to provide
certainty for both the Department and community sector organisations. Certainty for the
Sector covers funding periods, funding arrangements and funding levels. Certainty for the
Department, covers funded activities, outputs, and quality and safety of service provision –
leading to sustainable outcomes for the Tasmanian community

the need for certainty must be balanced against the prerogative of Government to make
funding decisions as part of the Budget process and changing priorities.
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2.0 Funding to the Disability and Community Services
Sector
Funding to the Disability and Community Services sector is administered through the
Department’s Resource Allocation and Unit Pricing Framework.
Unit pricing commenced 1 January 2012. Unit prices incorporate a provision for salaries,
allowances, long service leave, recreation and sick leave, public holidays, annual leave loading,
workers compensation and superannuation. The unit prices also include provisions for
operating and other costs.
For most community sector organisations the Department has implemented three-year
funding agreements to assist in making long-term investments and in retaining experienced
and qualified staff.
Under Unit Pricing service providers are able to roll over surplus funding within the three
year funding agreements. Service providers are also expected to manage any annual deficits
within the three year agreements.
Three-year funding agreements make a clear distinction between base funding and funding for
new and growth services. All funding rollovers are conditional upon service providers
meeting minimum performance benchmarks and service quality standards.
The prices are adjusted annually to reflect movements in wages and prices in accordance with
the annual Department of Health and Human Services indexation allocation.
2.1
Unit Pricing Principles
The Unit Pricing Principles set out the ‘market rules’ that define the general scope of costs
that pricing is intended to cover and the relationship between the funder (DHHS) and the
recipients of funds (service providers) in relation to the management and discharge of costs
and price based issues within service funding. The Principles are as follows:

pricing should recognise the primacy of the client and enhance the capacity of clients to
exercise choice and access the most appropriate services

prices paid for services should enable service providers to recover costs for a nominated
service over the short and long terms

prices paid for services should provide incentives to promote effectiveness, innovation
and quality

prices paid should be based on a reasonably accepted definition of efficient services and
allow service providers to benefit from increasing their efficiency

prices should be predictable over time and provide certainty to service providers.

pricing should be transparent

prices should promote equitable access to services by clients and promote client choice
where appropriate

pricing should enhance sector and individual service provider sustainability and viability.
Page 3 of 19

pricing should be based on open and ethical relationships between funder and service
provider.
The Pricing Principles reflect six general areas of government policy priority, namely:
Area of focus
Efficiency
Allocation of services, general productivity and
innovation
Simplicity
Easy implementation, transparency and low
administrative burden
Sector sustainability
2.2
Encompasses
Funding certainty and sufficiency
Equity
Avoiding discrimination on ability to pay, avoiding
discrimination in relation to location of demand,
and levels of care being appropriate to level of
need
Quality
A focus on continually improving aspects of
services, standards, and services being high quality
Choice
Empowering clients and providing them with
discretionary choice
Unit Pricing Model
The unit pricing model used by Disability and Community Services is the ‘fully distributed
cost’ model. Under this model the price for a unit of service is based on the total average
cost per unit of output (fixed cost, variable direct costs and overheads).
This method of unit pricing is widely used to fund human services because it offers a relatively
simple way of allocating joint costs and corporate overheads, it also reconciles most closely
with the pricing principles.
Fully distributed costing has a further benefit in that its simplicity is relatively easy to reflect
within funding agreements and hence lends itself well to the establishment of government
funded human services.
It should be noted that the mechanisms through which services are funded under fully
distributed costing are subject to some variation, for instance:

the type and volumes of services contained within a funding model may be such that the
resulting costs are expressed either in units of service (unit funding) or in totality (block
funding)

a service may be expressed in different units (e.g. hours, places, instances of service)
within unit pricing. The selection of a unit will primarily reflect the nature of the service

some costs may be excluded from a unit or block funded amount and funded in a different
manner. This exclusion may be to add simplicity and clarity regarding what is being
funded,( for example, some types of capital costs).
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Not all service types are suitable for unit pricing. In some rare instances a service will be
covered by a number of distinct unit prices and a mixture of different levels of each type of
service. In these cases a price will have to be established based on the individual staffing
needs and other supports required to deliver the particular service.
2.3
Unit Costing
Essential to the construction of a Resource Allocation and Unit Pricing Framework is a
detailed understanding of the ‘fully absorbed cost’ of service delivery. All unit prices are
fundamentally based on the median cost of labour derived from an online survey and
adjusted to account for non-labour costs and overheads.
This cost accounts for all labour related cost inputs, which are known to include:

underlying variations in awards levels and classifications

shift penalties for non-core hours, weekends and public holidays

salary related costs such as superannuation and workers’ compensation

backfill for vacation, public holidays, sick leave, training and ‘buddy’ shifts.
In addition to the basic cost of labour required to manage the client needs for each service, a
series of adjustments have been made that result in an overall increase in the total hours of
staff time required. These adjustments (where appropriate) provide for service management,
service coordination, staff meetings and where applicable client sick days and closure of
Community Access services.
To ensure accuracy in the final pricing mechanism a further adjustment was made to the
observed labour cost for some accommodation support services. The adjustment was
mandated by the significant increase in the amount paid for a sleepover shift under the
Disability Services Industry Wages Agreement 2008-09 (DSIWA).
The impact of this allowance was removed from the survey-related labour cost. Subsequently
the actual cost of a sleepover was added in separately for applicable residences/placements.
Page 5 of 19
3.0 How Unit Prices for Service Types are Determined
3.1 Information, Referral, Advocacy and Recreation Services
There are significant variations in the way these services operate and they are therefore not
considered suitable for transition to a unit price. Services such as Information, Referral and
Advocacy (i.e. those classified under both Disability and Family Support Services) effectively
define a number of unique service types under a narrow array of service definitions, which
exhibit a number of key variances related to:

the nature of the services themselves

the defined unit of service

the level of resourcing required to deliver each unit of services

critical variations within the underlying cost base.
The Department continues to fund these services under a block funding arrangement.
However individual Funding Agreements now clearly define service delivery targets and
performance measures.
Funding Agreements define the level of service being purchased and the price being paid
constructed on the basis of the median cost of labour, uplifted to include non-labour and
overhead costs, associated with that level of service.
Funding is provided in terms of the number of FTE staff positions required linked to a level of
service (e.g. hours per year). Current funding for one FTE position purchases 1,300 hours of
direct service delivery annually (which represents a ‘utilisation’ rate of 65.62 per cent i.e. the
average percentage of time per FTE spent on direct client and client related activity).
3.2
Accommodation Support Services
3.2.1 Large Residential
Models of service delivery among these service types vary significantly in a number of areas,
ranging from relatively low support hostel accommodation to nursing home facilities
providing substantial medical support to increasingly frail and elderly clients. The underlying
cost base also varies with some services receiving alternate sources of funding (i.e. from
Commonwealth, client fees and staffing costs depending on the model of care and
professional mix of staff).
The Department will continue to fund these services on a block funding arrangement. The
Department will make an assessment of the number of FTE staff required to deliver the
service to the number of clients being supported.
3.2.2 Supported Accommodation – Group Homes
The unit of service is one FTE place. The unit price links the derived labour requirements per
place to the observed labour cost and incorporates non-labour costs and overheads, which
were elicited from service providers during the online survey.
The unit prices recognise three characteristics, these are:
Page 6 of 19
1. client requirement for an active night, sleep-over shift or no night support
2. client with low, standard or complex (medical/behavioural) support needs
3. facility size (i.e. number of beds).
The cost of a unit of service (price per place) is based on the cost of one FTE staff position
derived from the median cost of labour and adjusted to account for non-labour costs and
overheads.
The cost per house is established by converting the total hours of observed roster support
plus rostering adjustments into required FTE staff (see Appendix 2) and multiplying by the
median cost of labour. The cost of labour is then uplifted by the non-labour costs and
overheads component (35.14 per cent, in line with survey findings) to derive the total cost
per house and cost per place (see Appendix 1).
3.3
Individual Support Programs (ISPs) (Attendant Care, Personal Support,
Disability Respite Services (excluding centre-based))
The unit of service is one hour of support. The unit price is developed by taking the
observed median cost of one FTE staff position and dividing this by the median number of
direct ISP support hours delivered annually.
This provides the cost of direct labour incurred, which represents 67 per cent of the total
cost. Non-direct labour and overheads account for 33 per cent of total cost.
This price represents the ‘fully absorbed’ cost of service delivery – namely it includes service
delivery on weekdays, weekends, mornings, afternoon, evenings and public holidays.
These times are covered because the observed cost of labour (on which unit prices are
constructed) has been uplifted by approximately 12.6 per cent above the observed cost in the
survey findings and services are therefore purchased at a single unit price only. This also
includes a component for coordination.
3.4
Centre Based Respite Services
The unit of activity is ‘days’ of respite provided. The unit price is aligned to the cost per place
in a 4 bed ‘standard/active night’ group home, This purchases 365 days of respite or one full
time equivalent client placement.
Prices per house are constructed on the basis of the facility’s housing configuration, so for
example if we have a 6 bed respite centre, funding would be based on that number of beds
providing 2,190 respite days.
3.5
Community Support Services and Family Support Services
The unit of service for both of these service types is one hour of client and client related
activity/support. The unit price is constructed on the basis of the following components:
The ‘utilisation rate’ represents the average percentage of time direct service delivery staff
spend on direct service delivery to clients. The agreed utilisation target is 70 per cent.
The Unit Price is composed of the following elements:
Page 7 of 19

Observed direct labour costs per FTE staff position

Utilisation rate

Adjusted direct labour cost per FTE (observed cost x 104.38 per cent)

Hours available for client support (65.62 per cent of 1,976)

Direct labour cost per hour

Non-labour and overhead costs per hour
3.7
Community Access Services
The unit of service is one Full Time Equivalent place (which equals 6 hours per day, five days
per week for 47 weeks per year). The unit price is based on the expected level of staffing
required to deliver the service.
The observed labour cost for one FTE staff position, costed on the basis of a 32-hour work
week comprises 70 per cent of the total cost, this is uplifted to incorporate non-labour costs
and overheads (which comprise 30 per cent of the total cost), giving a total cost per annum.
The observed client to staff ratio is 2.64 to 1. Based on the observed client to staff ratios and
the known costs of the labour, non-labour and overheads components, it is possible to
develop an average cost per place across the sector. For clients receiving one-to-one
support funding (for 30 hours per week) will equate to the cost of 1 FTE staff.
Page 8 of 19
4.0 Other Price Considerations
Calculations for each of the service types deemed suitable for a move to unit pricing are
constructed on the basis of the observed labour cost across the sector. This observed labour
cost includes amounts that reflect:

the varying level of staff (qualifications and experience) employed

the use of employment agency and/or casual staff (where applicable)

shift penalties that account for the day (or time of day) that services are delivered

senior staff time directed to clinical and staff supervision

case management or service coordination time.
In addition to these observed labour costs standard uplifts for non-labour and overheads have
been incorporated into the unit price and are expected to cover all expenses that are not
considered direct labour or long term fixed capital costs, such as:

travel

training

management expenses and corporate/facilities costs

consumables.
The inclusion of representative allowances for all these key cost components is intended to
reflect the true, total cost of contemporary service delivery.
Page 9 of 19
5.0 Unit Prices and Efficiency
Unit prices are based upon an assessment of the fully distributed cost of delivering current
services. These costs reflect the range of inputs (labour and general resources) used in
delivering services under existing service providers models of service delivery. The unit prices
developed have not been based on any assessment regarding what constitutes an efficient
model for each service type and hence does not mandate what labour and general resources
should be employed.
Under continuing service system reforms, particularly the adoption of best practice models,
the consideration of what constitutes an efficient resourcing model will be relevant. In the event
of further system reforms, the basis of future unit prices may be altered. It is noted,
however, that where service providers access efficiency savings through other innovative
practices and through factors such as economies of scale, the benefits of these savings will
remain with the service providers, as noted in the pricing principles.
Page 10 of 19
6.0 Capital Funding
6.1
Definitions
Working capital
The collective term for the resources of an organisation that cycle through its
cash flows to allow it to operate day to day – includes cash and easily
convertible investments, stock, debtors and creditors.
Fixed capital
The collective term for the resources of an organisation that are employed
with a longer-term focus. In most cases this will primarily be physical
infrastructure, but may include longer-terrm investments and long-term
borrowings.
Short-term fixed capital
This refers to capital assets that have a short life. For most service
providers this will predominantly be vehicles and computers, but may
include furniture, equipment, fixtures and fittings.
Long-term fixed capital
This refers to capital assets that have a long life. For most service
providers these will predominantly be buildings and large one-off
pieces of equipment (i.e. specially modified buses).
Unencumbered grants
Grants that do not impose any conditions that result in the grant
making body retaining an interest in the asset.
6.2
Funding of Capital Under Unit Pricing
The unit pricing framework is based on fully funding efficient operating costs and as such, in
regard to ‘working capital’ no additional capital funding arrangements, beyond the unit price
funding, are required.
The unit pricing framework divides the maintenance of ‘fixed capital’ into short and long term
fixed capital requirements.
The unit pricing framework makes allowances for ‘short term fixed capital’ costs as they are
highly predictable and effectively recurrent in nature. Under unit pricing, these costs (as
represented by depreciation charges) have been included in the established unit prices.
‘Long term fixed capital’ assests have higher levels of uncertainty regarding future value to an
organisation and to potential resale value. This is mainly the case because the markets for
long-term fixed capital assets can be limited and subject to arbitage and to obsolescence.
The cost to an organisation of employing and subsequently replacing a long-term fixed asset is
difficult to determine and hence not suitable for inclusion in operating funding. Also when an
organisation needs to replace a long-term fixed asset it may not have accumulated sufficient
resources through depreciation to acquire a replacement asset.
Separate capital funding support may therefore be required for these assets. This is most
likely in cases where:
Page 11 of 19

asset prices have been subject to significant inflation (for instance in relation to the
replacement of land/buildings)

asset replacement is not ‘like-for-like’ (for instance impact of industry standards may
require enhanced building designs, layout, number and design of rooms)

there is no market to sell the existing asset, other than for scrap, (for instance run down
modified buses which are close to being written off).
In these cases the Department recognises that the capital risk should be shared between the
sector and the Department and should not impose any unreasonable burden on service
providers. At present the Department will negotiate on ‘unencumbered grants’ on a case by
case basis.
Page 12 of 19
Appendix 1 - Current Unit Prices
Recommended Unit Prices – 2013-2014
(All Unit Prices include 2.25 per cent indexation for 2013-14)
Service Type
DISABILITY
SERVICES
Unit
Price
Individual Support Program
Hour
$41.70
Attendant Care Services
Hour
$41.70
Personal Support Services
Hour
$41.70
Respite Services (own home)
Hour
$41.70
Group Homes
Place
Respite Services (Centre-based)
Large and small residential
See table below
Place (active night facility)
$145 973
(sleep-over facility)
$111 534
Block funded (per FTE Place)
Varies
Hour
$94.07
Place (FTE)
In-groups - $24 475
institutions
Community Support Services
Community Access Services
One-to-one - $64 612
Information, Referral and
Block funded (per FTE staff)
$117 593
Advocacy Services
Block funded (per FTE staff)
$117 593
Information and Advisory
Block funded (per FTE staff)
$117 593
Block funded (per FTE staff)
$117 593
Hour
$85.28
Recreation Services
FAMILY SUPPORT
SERVICES
Services
Advocacy Services
All other services
Page 13 of 19
Appendix 1- Current Unit Prices
Unit Prices for Disability Services Group Homes – 2013-2014
Configuration
ONE BEDROOM
Rostering
Low Support
Standard
Complex
Sleep over
Active night
Sleep over
Active night
Cost per place
NOT
241 229
378 982
420 101
557 856
Cost per house
APPLICABLE
241 229
378 982
420 101
557 856
87
143
163
219
Hours of client
support per week
Configuration
TWO BEDROOM
Low Support
Standard
Complex
Sleep over
Active night
Sleep over
Active night
Cost per place
NOT
174 400
243 278
225 787
294 669
Cost per house
APPLICABLE
348 801
486 556
451 575
589 338
122
178
168
224
Hours of client
support per week
Configuration
THREE BEDROOM
Rostering
Low Support
No
Standard
Complex
Sleep over
Sleep over
Active night
Sleep over
Active night
sleepover
Cost per place
87 676
95 265
143 995
189 916
195 553
241 475
Cost per house
263 028
285 795
431 986
569 749
586 661
724 425
Hours of client
92
92
153
209
220
276
support per week
Configuration
Rostering
FOUR BEDROOM
Low Support
No
Sleep over
Standard
Sleep over
Active night
Complex
Sleep over
Active night
Page 14 of 19
sleepover
Cost per place
78 739
84 572
111 534
145 973
155 271
189 712
Cost per house
314 959
338 290
446 139
583 892
621 087
758 849
Hours of client
113
113
158
214
234
290
support per week
Configuration
Rostering
FIVE BEDROOM
Low Support
No
Standard
Complex
Sleep over
Sleep over
Active night
Sleep over
Active night
sleepover
Cost per place
88 248
92 914
106 815
134 366
136 513
164 066
Cost per house
441 240
464 572
534 076
671 832
682 569
820 332
Hours of client
164
164
193
249
259
315
support per week
Configuration
Rostering
SIX BEDROOM
Low Support
No
Standard
Complex
Sleep over
Sleep over
Active night
Sleep over
Active night
sleepover
Cost per place
85 246
89 103
103 514
126 474
122 372
145 332
Cost per house
511 480
534 619
621 087
758 849
734 234
871 996
Hours of client
198
198
234
290
280
336
support per week
Page 15 of 19
Appendix 2- Rostering Adjustments for Disability Services
Group Homes
1.
Adjustments (where applicable) provide additional hours, for Community Access Services closure, client
sick time, house management and staff meetings.
2.
All hours are Annual Hours
3.
One staff FTE equals 1,976 hours per annum as per the Disability Services Providers Award
Configuration
Rostering
ONE BEDROOM
Low Support
Direct labour
Standard
Complex
Sleep over
Active night
Sleep over
Active night
4 524
7 436
8 476
11 388
710
787
639
716
5 234
8 223
9 115
12 104
2.6488
4.1614
4.6129
6.1255
hours
Direct labour
adjustments hours
Total hours per
NOT
APPLICABLE
residence
Total FTE (staff)
per residence
Configuration
Rostering
TWO BEDROOM
Low Support
Direct labour
Standard
Complex
Sleep over
Active night
Sleep over
Active night
6 344
9 256
8 736
11 648
1 224
1 301
1 062
1 139
7 568
10 557
9 798
12 787
3.8300
5.3426
4.9585
6.4712
hours
Direct labour
adjustments hours
Total hours per
NOT
APPLICABLE
residence
Total FTE (staff)
per residence
Page 16 of 19
Configuration
Rostering
THREE BEDROOM
Low Support
No
Standard
Complex
Sleep over
Sleep over
Active night
Sleep over
Active night
3 450
3 450
7 956
10 868
11 440
14 352
1 334
1 334
1 417
1 494
1 289
1 366
4 784
4 784
9 373
12 362
12 729
15 718
2.4210
2.4210
4.7434
6.2561
6.4418
7.9545
sleepover
Direct labour
hours
Direct labour
adjustment hours
Total hours per
residence
Total FTE per
residence
Configuration
Rostering
FOUR BEDROOM
Low Support
No
Standard
Complex
Sleep over
Sleep over
Active night
Sleep over
Active night
4 474
4 474
8 216
11 128
12 168
15 080
1 402
1 402
1 464
1 541
1 308
1 385
5 876
5 876
9 680
12 669
13 476
16 465
2.9736
2.9736
4.8988
6.4114
6.8198
8.3325
sleepover
Direct labour
hours
Direct labour
adjustment hours
Total hours per
residence
Total FTE per
residence
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Configuration
Rostering
FIVE BEDROOM
Low Support
No
Standard
Complex
Sleep over
Sleep over
Active night
Sleep over
Active night
6 970
6 970
10 036
12 948
13 468
16 380
1 558
1 558
1 552
1 629
1 342
1 419
8 528
8 528
11 588
14 577
14 810
17 799
4.3157
4.3157
5.8644
7.3770
7.4949
9.0076
sleepover
Direct labour
hours
Direct labour
adjustment hours
Total hours per
residence
Total FTE per
residence
Configuration
Rostering
SIX BEDROOM
Low Support
No
Standard
Complex
Sleep over
Sleep over
Active night
Sleep over
Active night
9 037
9 037
12 168
15 080
14 560
17 472
1 259
1 259
1 308
1 385
1 371
1 448
10 296
10 296
13 476
16 465
15 931
18 920
5.2105
5.2105
6.8198
8.3325
8.0622
9.5749
sleepover
Direct labour
hours
Direct labour
adjustment hours
Total hours per
residence
Total FTE per
residence
Page 18 of 19