### 1



# Proposed New Registrant Fee Schedule Calculations

Diversion Control Fee Account

By



## Drug Enforcement Administration

Office of Diversion Control

Diversion Pla nning and Resource Section

February 1, 2011Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 2 

## Table of Contents

1 INTRODUCTION

................................ ................................ ................................ ................................ ............ 3

2 OVERVIEW OF REGISTRA NT FEE CALCULATION M ETHODOLOGY

................................ ................................ .. 5

3 PROPOSED FEE CALCULA TION

................................ ................................ ................................ ...................... 7

3.1 B UDGET : FY 2012

- FY 2014

................................ ................................ ................................ ................................ 7

3.1.1 Definition

................................ ................................ ................................ ................................ ............... 7

3.1.2 FY 2012

................................ ................................ ................................ ................................ .................. 8

3.1.3 FY 2013 Estimate

................................ ................................ ................................ ................................ . 10

3.1.4 FY 2014 Estimate

................................ ................................ ................................ ................................ . 12

3.1.5 FY 2012

- FY 2014 Summary

................................ ................................ ................................ .................. 13

3.2 R EQUIRED C OLLECTIONS FROM R EGISTRATION F EES

................................ ................................ ................................ .. 13

3.2.1 Payment to Treasury

................................ ................................ ................................ ............................ 14

3.2.2 Operational Continuity Fund (OCF)

................................ ................................ ................................ ...... 14

3.2.3 Combat Methamphetamine Epidemic Act of 2005 (CMEA) Collections

................................ .............. 14

3.2.4 Other Collections

................................ ................................ ................................ ................................ .. 15

3.2.5 Recoveries from Money Not Spent as Planned (Deobligation of Prior Year Obligations)

.................... 15

3.2.6 Summary

................................ ................................ ................................ ................................ .............. 15

3.3 E STIMATED N UMBER OF R EGISTRATION F EE T RANSACTIONS : FY 2012

– F 2014

................................ ........................... 16

3.4 P ROPOSED R EGISTRATION F EES BY B USINESS A CTIVITY

................................ ................................ .............................. 17

3.5 E STIMATED C OLLECTIONS FROM R EGISTRATION F EES

................................ ................................ ................................ 18

4 SUMMARY OF RESULTS

................................ ................................ ................................ .............................. 19

5 FACTORS THAT CAN INF LUENCE ACTUAL RESULT S

................................ ................................ ...................... 21

APPENDIX 1: LIST OF ACRONYMS

................................ ................................ ................................ ........................ 22

APPENDIX 2: ASSUMPT IONS ON STAFFING LEV ELS FO R THE PURPOSES OF CA LCULATING DCP COST F OR

REGISTRATION FEES

................................ ................................ ................................ ................................ ............. 23

APPENDIX 3: MODULAR COSTS

................................ ................................ ................................ ........................... 24

APPENDIX 4: STAFFIN G PLAN IMPLEMENTATIO N COST

................................ ................................ ...................... 31

APPENDIX 5: TARGET OPERATIONAL CONTINUI TY FUND

................................ ................................ .................... 34

APPENDIX 6: ESTIMAT ED NUMBER OF REGISTR ATION FEE TRANSACTIO NS

................................ ........................ 37

APPENDIX 7: COLLECT IONS ESTIMATES BASED ON PROPOSED FEE

................................ ................................ ..... 42Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 3 

## 1 Introduction

Under the Controlled Substance s Act ( CSA ), the Drug Enforcement Administration ( DEA ) is

authorized to charge reasonable fees relating to the registration and control of the manufacture,

distribution, dispensing, import, and export of controlled substances and listed chemicals. 21

U.S.C. 821 and 958(f). DEA must set fees at a level that ensures the recovery of the full costs of

operating the various aspects of its D iversion C ontrol P rogram ( DCP )

. 21 U.S.C. 886a(1) ( C )

. Fee revenues are deposited into a separate fund of the Treasury called the Diversion Control Fee

Account (DCFA). 21 U.S.C. 886a.

DEA continually monitors the anticipated budget and collections to determine whether the

registration fee s need to be adjusted. DEA has determined that the fees need to increase in Fiscal

Year ( FY ) 2012, beginning October 1, 2011, to the amounts indicated in Table 1: Proposed

Registration and Reregistration Fees in order to fully fund the DCP as required by statute

.

Table 1 : Proposed Registration and Reregistration Fees

Registrants on Three Y

ear R egistration C

ycle

Registrant Class/Business Current

Three Year

Fee * Proposed

Three Year

Fee* Difference

Per Year

Pharmacy $551 $732 $60

Hospital/Clinic $551 $732 $60

Practitioner $551 $732 $60

Teaching Institution $551 $732 $60

Mid

- Level Practitioner $551 $732 $60

*Pharmacies, hospitals/clinics, practitioners, teaching institutions, and mid

- level practitioners currently pay a fee for a

three

- year period. This current three

- year fee is $551. The proposed new fee for the three year registration period

would be $732. The three y ear difference is $181 or an annual difference of $60.

Registrants on A nnual R egistration C ycle

Registrant Class/Business Current

Annual Fee Proposed

Annual Fee Difference

Researcher/Canine Handler $184 $244 $60

Analytical Lab $184 $244 $60

Maintenance $184 $244 $60

Detoxification $184 $244 $60

Maintenance and Detoxification $184 $244 $60

Compounder/Maintenance $184 $244 $60

Compounder/Detoxification $184 $244 $60

Compounder/Maintenance/ Detoxification $184 $244 $60

Distributor (chemical and controlled substances) $1,147 $1,526 $379

Reverse distributor $1,147 $1,526 $379

Importer (chemical and controlled substances) $1,147 $1,526 $379

Exporter (chemical and controlled substances) $1,147 $1,526 $379

Manufacturer (chemical and controlled

substances) $2,293 $3,052 $759Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 4 The purpose of this document is to allow the reader to understand the various factors that

contributed to the proposed fee and how these factors were applied in determining the proposed

fees.

*** DISCLAIMER ***

ALL ASSUMPTIONS, INP UTS, AND CALCULATION S CONTAINED IN THIS

DOCUMENT ARE FOR THE PURPOSES OF CALCULAT ING THE PROPOSED FEE

ONLY. MANY PROCEDUR AL, OPERATIONAL, AND ECONOMIC VARIABL ES

CAN CAUSE THE ACTUAL RESULTS TO DIFFER FR OM ESTIMATES AND

PROJECTIONS CONTAINE D IN THIS DOCUMENT.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 5 

## 2 Overview of Registrant Fee Calculation Methodology

As the vast majority of registrants are on a three year renewal cycle, the fee calculation is also

based on a three year analysis , FY 2012

- FY 2014

.

The proposed registration fees were calculated through the se five major steps :

1. Estimate the required budgets for FY 2012, FY 20 13, and FY 2014.

2. Determine the total amount of registration fees that need to be collected over the three year

period by a pplying additional factors such as:

a. Payment to Treasury , which increase s the amount to be collected from registration fees

.

b. Maintaining the Operational Continui ty Fund ( OCF ) balance , which increase s the

amount to be collected from registration fees

.

c. Combat Methamphetamine Epidemic Act ( CMEA ) of 2005 self certification fee

collections , which decrease the amount that need s to be collected from registration

fees

.

d. Ot her collections from sale of official government vehicles , which decrease s the amount

to be collected from registration fees

.

e. Recoveries from deobligation of prior obligations (see Section 3.2.5 for explanation),

which decrease the amount that need s to be collected from registration fees.

3. Estimate the total number of registration fee transactions 1 by business activity, new and

renewal, over the three year period.

4. Apply the weighted ratio to the total required collections and total number of registrations to

determine the various fees per each registrant business activity.

5. Finally, apply these fees to the estimated number of registrations by b usiness a ctivity for each of

the three years to determine projected collections per year and estimated OCF balance

.

C onfirm that the calculated fees allow DEA to recover the full cost of the DCP.



### Each of the five steps has multiple sub

- steps and components that will be described in Section 3

of this document. Section 3 details the various components and how these components were

applied in calculating the proposed fees.

Figure 1: Diagram of Major Components of the Proposed Registration Fee Calculation below

summarizes the five ma

jor steps and key components that were factored into the proposed fee

calculation.

1 “Number of registration fee transactions” is different from the number of registrants. First, fee exempt

registrations are not included in this number. Second, the registrants on the three year registration cycle will register

only once in the FY 2012

– FY 2014 period. Since the vast majority of registration (non

- fee exempt) fee

transactions are on the three year registration cycle, the number of registrations per year is roughly one

- third the

number of registrants. In calculating the proposed fee, the “number of registration fee transactions” is a key figure

discussed in Section 3.3.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 6 Figure 1: Diagram of Major Components of the Proposed Registration Fee CalculationProposed New Registrant Fee Schedule Calculations 2/1/2011



### 7 

## 3 Proposed Fee Calculation

3.1 Budget: FY 2012

- FY 2014

As depicted in Figure 1, the process for formulating the budget for each year is the same. The

previous year’s budget provides the base level of DCP activities to which various adjustments

are made to formulate the budget for the given fiscal year

.

Cost com ponents and steps taken t o formulate the budget for the given fiscal year are :

1. Begin with previous year’s DCFA budget as base level of activities.

2. Make adjustment for cost increases due to inflation.

3. Add Personnel Cost/ Staffing Plan : I ncrease in cost due to addition of personnel.

4. Make adjustment for annualization of prior year staffing level changes : C ost increases or

decreases due to multi

- year effect on cost of adding personnel.

5. Add Non

- Personnel Program Costs : I ncrease in cost due to increase in activities not associated

with adding personnel or not captured in fully loaded cost of personnel, i.e. rent, outreach

program , IT system upgrades, etc.

6. Add each adjustment and addition to calculate budget for the given fiscal year.



### Section 3.1.1 provides further descriptions of each budget formulation component.



### 3.1.1 Definition

Prior Year

Budget Estimated spending in the year immediately prior to the given fiscal year , the

year for which budget is being formulated.

Adjustment

for Inflation Estimated increas e in the cost of prior year’s activities in the new fiscal year

due to inflation.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 8 Personnel

Costs Personnel costs are the costs associated with hiring government personnel.

These costs include pay, benefits, training, supplies, equipment, and

operational funding required for a position to perform their job functions.

DEA’s Office of Resource Management ( FR ) works with the Department of

Justice and Office of Management and Budget to develop “Cost Modules”

for each DEA job category: Special Agent ( SA ), Diversion Investigator ( DI ),

Intel Analyst ( IA ), 2 

### Forensic Chemist (CH), Attorney (AT), Investigative

Technology Specialist (IT), Professional/Administrative (PA), and

Technical/Clerical (TC). The fully loaded personnel cost, or modular cost, i s

applied to the planned increase in number of on

- board personnel to

determine the cost of planned staffing increases.

Staffing Plan Staffing Plan is the projected increase in cost due to a planned increase in the

number of personnel on

- board. 3 

### Not all vacant positions were filled in FY

2011 or FY 2012 due to unbudgeted costs discussed in 3.1.2. In order to fill

the vacancies in FY 2013 and FY 2014, DCP will need additional resources.

Annualization

of Prior Year

Staffing Level

Plan The modular costs used to estimate the cost of staffing level changes includes

non

- recurring costs. Additionally, due to anticipated pay grade increases and

other job category specific cost changes from 1 st 

### to 2 nd 

### year and from 2 nd 

### to

the 3 rd 

### year, adjustments are ma de to each of th e two following years’

budget. This adjustment is called, “Annualization of Prior Year Staffing

Level Changes.” See Appendix 4 for further explanation and example.

Non

Personnel

Program

Costs Non

- Personnel Program Costs are the increase s in cost due to new increases

to DCP activities that are not included in Modular Costs, i.e., rent, outreach

program, 4 

### IT system upgrades, or modifications. Non

- personnel program

costs also include the cost of State and Local Task Force Officers (TFOs) 5



### and Tactical Diversion Squad Contractors (CON) because these are not

Federal government employees.

Budget The formulated budget for the given fiscal year.



### 3.1.2 FY 2012

As described in Section 3.1 , the budget formulation for FY 2012 begins with the FY 201 1 budget

as the base year to which adjustments and additions are added for the FY 2012 budget.

2 Intel An alysts are sometimes referred to as Intelligence Research Specialists or Intel Specialists (IS).

3 “On

- board” refers to personnel occupying a position (not a vacant position). Further explanation is provided in

Appendix 2.

4 Outreach efforts include DCFA funded personnel educating the public by speaking, presenting, or providing

assistance regarding DCP activities, e.g. efforts to schedule/control emerging drugs, trends and methods of

controlled substance diversion, consequences of diversion, and diversion prevention. It also includes liaison efforts

directly with registrants and indirectly with professional and trade organizations.

5 Task Force Officers (TFO) are also called “State & Local (SL).” The two terms are used interchangeably.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 9 1. FY 2011 DCFA b udget is estimated to be $2 90,304,000 6 for the level of

activities described in the “FY 2011 Performance Budget , Drug Enforcement

Administration, Congressional Budget Submission,” by Department of Justice

( DOJ ). $ 290,304,000

2. The annual adjustment to base to maintain current services is ad ded to the FY

2011 budget. $ 801

, 000

3. FY 2012 Personnel Costs : DEA plans to increase the number of authorized DCP

positions by 124

. The i ncrease in the number of authorized positions and the

cost of the increases are indicated below : $ 21

, 492 ,000

a. Special Agent (SA): 50 $ 11,782,000

b. Diversion Investigator (DI): 50 $ 6,844,000

c. Intel Analyst (IA): 9 $ 1,088,000

d. Forensic Chemist ( CH ): 3 $ 742,000

e. Attorney ( AT ): 1 $ 121,00 0

f. Investigative Technology Specialist ( IT ): 2 $ 345,00 0

g. Professional/Administrative ( PA ): 4 $ 271,00 0

h. Technical/Clerical ( TC ): 5 $ 298,00 0

4. FY 2012 Non

- Personnel Program Costs: The below costs are increases in non

personnel funding for rent, task force officer overtime, and administrative

support and training for Tactical Diversion Squads (TDSs) task force officers. $9,393,000

a. Task Force Officers: $ 4,288,000

b. Administrative Contractors: $ 622,000

c. Rent for Task Force Officers : $ 2,983,000

d. Tactical Diversion Squad Training : $ 1,500,000

5. The adjustments to the FY 2011 budget and Program Enhancements yield the

FY 2012 budget of $321,990,000. $321,990,000

*Numbers are rounded to the thousands to reflect the FY 2012 President’s Budget Submission

.



### Although authorized positions will be increased for FY 2012, DEA projects that the resources to

fill all of these positions in FY 2012 will not be available due to the following unbudgeted costs

to DCP :

Overhead: The DCP’s share of DEA’s overhead costs , such as rent, have been increasing due to

the increasing proportion of DCP employees to DEA overall. Some of these increases have been

included as base adjustments or enhancements in prior budget requests and others have been

funded by realigning program funding. For example, f rom FY 2007 to FY 2011, DCP rent costs

6 Originally submitted FY 2011 Congressional Budget Submission for DCFA was $291,832,000. Due to a recently

implemented two year pay freeze, the budget was reduced to $290,304,000.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 10 have increased by $ 16.4 million, although only $7.9 million have been received as adjustments

to base or enhancements over the same time period.

The DCP is required to full y fund all diversion activities. Thus, diversion activities that are

performed by Special Agents and others assigned to non

- diversion specific enforcement groups

or task forces must be funded by the DCP

. DEA estimates these costs to be $2 9,000,000 in FY

2012

. These indirect costs impact the resources available to fill DCP vacancies. We anticipate

these costs will continue, even when DCP vacancies have been filled.

Some years Congress has authorized pay raises that exceed the amount estimated in the

budget

. Between FY 2006 and FY 2009, the actual pay raises approved by Congress exceeded

the budget amount by $2 million. DEA was able to cover the difference for existing positio ns by

not filling DCP vacancies.



### DEA projects the following staffing levels by the end of FY 2012:

FY 2012

Authorized

Positions FY 2012

On

- board Estimated

FY 2012

Vacancies

Diversion Control Program 1,497 1,195 3 02



### 3.1.3 FY 2013 Estimate

Similar to the way in which the FY 2011 budget form ed the base level for the FY 2012 budget,

the FY 2012 budget is the base level to which adjustments and additions are added for the

estimated FY 2013 budget.

1. FY 201 2 DCFA b udget is $321,990,000. $321,990,000

2. Annual adjust ment for inflation of $7,109, 399 ( 2.2 % 7 of $321,990,000) is

added to the FY 2012 budget. $ 7,109, 399

3. FY 2013 Staffing Plan : DEA plans to fill 111 authorized vacant positions

that were unfilled due to unbudgeted costs identified in 3.1.2 above

. In

order to fill the vacancies in FY 2013 , DCP will need additional resources.

The additional resources required are estimated by multiplying the

number of vacancies to be filled by the m odular c ost (fully

- loaded cost)

for each job category. The vacancies to be filled and the cost are

indicated below : $ 13,974,434

a. Special Agent (SA): 1 8 $5,183,132

b. Diversion Investigator (DI): 0 $ 0

c. Intel Analyst (IA): 26 $3,279,627

d. Forensic Chemist ( CH ): 4 $ 998,796

7 Annual inflation rate of 2.2% (rounded for display purposes) is used thro ughout this analysis.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 11 e. Attorney ( AT ): 3 $371,200

f. Investigative Technology Specialist ( IT ): 2 $ 344,328

g. Professional/Administrative ( PA ): 30 $ 2,085,431

h. Technical/Clerical (TC): 28 $ 1,711,920

See Appendix 2: Assumption on Staffing Level for the Purposes of

Calculating DCP Costs for Registration Fees for a complete list of

personnel levels from FY 2010 to FY 2014.

See Appendix 3: Modular Costs for each job category.

See Appendix 4: Staffing Plan Costs for explanation of how the Modular

Costs were applied to calculate staffing plan implementation costs.

4. Annualization of Prior Year Staffing Level Changes : As explained in

Section 3.1.1, o n

- board staff ing level changes in FY 2011 and FY 2012

ha ve an impact on the FY 2013 budget. $4,083,855

a. First year to second year (On

- board changes

from FY 2011 to FY 2012) $575,000

b. Second year to third year (On

- board changes

from FY 201 0 to FY 201 1 ) $3,508,855

5. Estimated N on Pe rsonnel Program Costs

. $ 9,424,634

State & Local/Task Force Officer ( SL ): $5,420,771

Tactical Diversion Squad Contractors ( CON ): $776,685

Increased rent and overhead $ 3,227,178

6. The additio ns and adjustments to the FY 2012 budget yield t he FY 2013

budget of $356,582,322

. $3 56,582,322

*Numbers are rounded to the dollar

.



### DEA plans to fill a total of 141 vacancies in FY 2013 , including the 111 vacancies detailed

above. DEA projects the following staffing levels by the end of FY 2013:

FY 201 3

Authorized

Positions FY 201 3

On

- board Estimated

FY 2013

Vacancies

Diversion Control Program 1,497 1, 3 36 161Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 12 

### 3.1.4 FY 2014 Estimate

Similar to the way in which the FY 2012 budget for ms the base level for the FY 2013 budget, the

FY 2013 is the base level to which adjustments and additio ns are added for the estimated FY

2014 budget.

1. Estimated FY 2013 DCFA b udget is $356,582,322

. $356,582,322

2. An a nnual adjust ment for inflation of $ 7,873,183 ( 2.2 % of $ 356,582,322 ) is

added to the FY 2013 budget. $ 7, 873,183

3. FY 201 4 Staffing Plan : DEA plans to continue to fill autho rized vacant positions

that were unfilled due to unbudgeted costs identified in 3.1.2 above. DEA plans

to fill 12 vacancies in FY 2014, which will require additional resources for the

DCP. The additional resources required are estimated by multiplying the

number of vacancies to be filled by the modular cost (fully

- loaded cost) for each

job category. The vacancies to be filled and the cost are indicated below : $ 2,622,221

a. Special Agent (SA): 0 $0

b. Diversion Investigator (DI): 0 $0

c. Intel Analyst (IA): 2 $263,240

d. Forensic Chemist ( CH ): 8 $2,015, 57 8

e. Attorney ( AT ): 0 $0

f. Investigative Technology Specialist ( IT ): 2 $343,403

g. Professional/Administrative ( PA ): 0 $0

h. Technical/Clerical ( TC ): 0 $0

See Appendix 2: Assumption on Staffing Level for the Purposes of Calculating

DCP Costs for Registration Fees for a complete list of personnel levels from FY

2010 to FY 2014.

See Appendix 3: Modular Costs for each job category.

See Appendix 4: Staffing Plan Costs for an explanation of how the m odular c osts

were applied to calculate the staffing plan implementation costs.

4. Annualization of Prior Year Staffing Level Changes : As explained in Section

3.1.1, o n

- board staffing level changes in FY 2012 and FY 2013 ha ve an impact on

the FY 2014 budget. $ 4,753,569

a. First year to second year (On

- board changes

from FY 2012 to FY 2013) $ 2,765,609

b. Second year to Third year (On

- board

changes from FY 2011 to FY 2012) $1,987,960Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 13 5. No increase in Non

- Personnel Program Costs

. $0

6. The additions and adjustments to the FY 2013 budget yield the FY 2014 budget

of $371,831,295. $371,831,295

*Numbers are rounded to the dollar.



### DEA projects the following staffing levels by the end of FY 2014:

FY 201 4

Authorized

Positions FY 201 4

On

- board Estimated

FY 2014

Vacancies

Diversion Control Program 1,497 1, 34 8 149



### 3.1.5 FY 2012

- FY 2014 Summary

Budget Summary FY2012 FY2013 FY2014

Prior Year Obligations 290,304,000 321,990,000 356,582,322

Annual Adjustment 801

, 000 7,109,399 7,873,183

Personnel Costs 21,492,000 13,974,434 2,622,221

Annualization of Prior Year Staffing Plan **

- 4,083,855 4,753,569

Non

- Personnel Program Costs 9,393,000 9,424,634

-

Budget 321,990,000 356,582,322 371,831,295

*Numbers are rounded.

**See Section 3.1.1 and Appendix 4 for detailed description of “Annualization of Prior Year Staffing Level Changes.”



## 3.2 Required Collections from Registration Fees

As described in Section 2: Overview of Registrant Fee Calculation Methodology , in order to

fund the full cost of the DCP, DEA needs to collect enough from registration fees to fund the FY

2012

– FY 2014 budgets and:

1. Make the statutorily required p ayment to the Treasury, which increase s the amount to be

collected from registration fees.

2. Maintain the target ed Operational Continuity Fund ( OCF ) balance , which increase s the amount

to be collected from registration fees.

3. Includes estimated Combat Methamphetamine Epidemic Act ( CMEA ) of 2005 self

- certification

fee collections, which decrease the amount to be collected from registration fees.

4. Adds o ther collections from the sale of personal property and official government vehicles,

which decrease s the amount that need s to be collected from registration fees.

5. Estimates r ecoveries from money not spent as planned ( deobligation of prior obligations ) (see

Section 3.2.5 for an explanation), which decrease s the amount that need s to be collected from

registration fees.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 14 

### 3.2.1 Payment to Treasury

In the 1993 appropriations for DEA, Congress determined that the DCP would be fully funded

by registration fees and no longer by appropriations. 8 

### Congress established the DCFA as a

separate account of the Treasury to “ensure the recovery of the full costs of operating the various

aspects of [the Diversion Control Program]” by those participating in the closed system

established by the CSA. 21 U.S .C. 886a(1)(C). Fees collected are deposited into a separate

Treasury account. Each fiscal year

, t he first $15 million is transferred to the Treasury and is not

available for use by the DCP. Therefore, DEA needs to collect an additional $15 million per

year for payment to Treasury.



### 3.2.2 Operational Continuity Fund (OCF)

DEA maintains an operational continuity fund (OCF) to maintain DCP operations during

historically low (or negative) collection periods (e.g.

, the first quarter of a new fiscal year when

the first $15 million collected is transferred to Treasury). Monthly collections and obligations

fluctuate throughout the year. There are times when obligations (spending) exceed collections.

This can happen consecutively for several months. Therefore, an operational continuity fund is

maintained to avoid operational disruptions due to these fluctuations and monthly differences in

collections and obligations (spending). Using statistical analysis of the historical fluctuations

between amounts collected an d amounts obligated, DEA has determined that a reserve fund of

$15 million plus seven percent of the projected obligations is adequate. See Appendix 5 : Target

Operational Continuity Fund for an explanation of how this level was determined. The amount

required to bring the operational continuity fund balance to the $15 million plus a seven percent

level is added to projected costs.

T he t able below summarizes the target ed OCF balances and amounts needed to raise the OCF

balance to the target ed balance :

FY2012 FY2013 FY2014

Budget 321,990,000 356,582,322 371,831,295

Target OCF ($15M + 7%) 39,960,763 41,028,191 41,828,482

Beginning OCF balance 33,508,367

Needed Increase to

Achieve Target OCF 6,452,395 1,067,428 800,291



### 3.2.3 Combat Methamphetamine Epidemic Act of 2005 (CMEA) Collections

Under CMEA, DEA collects a self

- certification fee for regulated sellers of sche duled listed

chemical products that are included as part of the total collections

. The fee is waived for any

person holding a current DEA registration in good standing

, such as a pharmacy , authorized to

dispense controlled substances. DEA has observed an approximately 15 percent decline in self

certifications from FY 2008 to FY 2010 and anticipate s that the decline will continue through FY

2014. The s elf

- certification fee is $21 and is paid on an annual basis

. The CMEA self

certification fee collection estimate s for FY 2012

– FY 2014 are below :

8 Departments of Commerce, Justice, and State, the Judiciary and Related Agencies Appropriations Act of 1993,

Public Law 102

- 395, codified in relevant part at 21 U.S.C. 886a.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 15 FY12 FY13 FY14

Number of paying self

- certifications 8,240 6,993 5,935

Fee $21 $21 $21

CMEA collection estimate $173,040 $146,853 $124,635



### 3.2.4 Other Collections

DEA also derives revenue from the sale/salvage of official government vehicles dedicated for

use within the DCP. DEA’s estimate for o ther c ollections is $307,153 per year. This is the

actual amount for FY 2010.



### 3.2.5 Recoveries from Money Not Spent as Planned ( Deobligation of Prior

Year Obligations )

At times, DEA enters into an obligation to make a purchase of a product or service that is not

delivered immediately

, such as in a multi

- year contract. Changes in obligations can occur for a

variety of reasons, i.e ., changes in planned operations, delays in staffing, implementation of cost

savings, changes in vendor capabilities, etc. When DEA does not spend money planned to be

spent, that obligation is “deobligated.” T he “deobligate d ” funds are “recovered” and th e fund s

become available for DCP use. Based on historical trends, the recovery from money not spent as

planned ( deobligation of prior year obligations ) is estimated at $10 million per year.



### 3.2.6 Summary

The r equired registration fee collections for F Y 20 12

– F Y 20 14 are summarized below :

FY2012 FY2013 FY2014 3

- yr Total

Budget 321,990,000 356,582,322 371,831,295 1,050,403,617

Recoveries (10,000,000) (10,000,000) (10,000,000) (30,000,000)

Net Budget 311,990,000 346,582,322 361,831,295 1,020,403,617

Payment to Treasury 15,000,000 15,000,000 15,000,000 45,000,000

Needed Increase to Achieve Target OCF 6,452,395 1,067,428 800,291 8,320,115

CMEA Self

- cert collections (173,040) (146,853) (124,635) (444,528)

Other collections (307,153) (307,153) (307,153) (921,458)

Required collections from Registration

Fees 332,962,203 362,195,745 377,199,798 1,072,357,746

*Numbers are r ounded

.



### DEA needs to collect $1,072,357,746 in registration fees over the three year period, FY 2012

–

FY 2014 to fully fund the DCP.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 16 

## 3.3 Estimated Number of Registration Fee Transactions : FY 2012

– F 2014

In Section 3.2, DEA determined that the required collection over the three year FY 2012

– FY

2014 period must be $1,072,357,746

. T o determine the registration fees, the number of

registration fee transactions by business activity was estimated. Although related, the number of

registration fee tra n sactions is different from the registran t population for three primary reasons

. One, r egistrants on a three year registration cycle have only one registration fee transac tion every

three years. Registration renewal dates are staggered across a three year period to generate

registration fee transactions from roughly one

- third of these registrants each year. Two, a

registrant may have multiple registrations

, paying multiple fees. Three , a pproximately seven

percent of the registrant population is exempt from paying registration fees.

Based on historical data, the t able below summarizes the estimated num ber of registration fee

transactions for FY 2012

– FY 2014. See Appendix 6 : Estimated Number of Registration Fee

Transactions for details on h ow the estimate was derived.

Group Business Activity 2012 2013 2014 Total

3 year registration A Pharmacy 25,462 23,050 25,901 74,413

B Hospital/Clinic 4,456 4,553 4,647 13,656

C Practitioner 376,425 366,802 382,390 1,125,617

D Teaching Institution 81 68 73 222

M Mid

- level Practitioner (MLP) 70,821 72,309 79,037 222,167

1 year registration E Manufacturer 534 536 536 1,606

F Distributor 713 718 722 2,153

G Researcher/Canine Handler 4,181 4,308 4,440 12,929

H Analytical Lab 902 898 895 2,695

J Importer 212 214 216 642

K Exporter 245 246 247 738

L Reverse Distributor 65 66 67 198

N Maintenance 178 180 181 539

P Detoxification 78 78 78 234

R Maintenance & Detox 875 888 900 2,663

S Compounder/Maintenance 5 5 5 15

T Compounder/Detoxification 1 1 1 3

U Compounder/Maintenance/Detox 52 52 52 156

W Chemical Manufacturer 228 232 235 695

X Chemical Importer 185 186 187 558

Y Chemical Distributor 387 290 217 894

Z Chemical Exporter 177 180 183 540

Total 486,263 475,860 501,210 1,463,333



### Groups A, B, C, D, and M renew their registration every three years. The remaining groups

renew annually. The 1,463,333 registrations over the three year period will need to result in

collections of $1,072,357,746

.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 17 

## 3.4 Proposed Registration Fees by Business Activity

The proposed registration fees are based on:

1. The amount that needs to be collected (determined in Section 3.2 ).

2. The number of transactions/ registration fee transactions (determined in Section 3.3)

.

3. The share of cost burden (relative fees) across various registrant groups



### DEA examined four options and decided to use the “ weighted

- ratio ” approach to set varying fees

across registrant groups. A d iscussion of the other options considered is beyond the scope of this

document.

As in previous f

ee s che dules, the fees for distributors, importers, and exporters are 6.25 times the

fees for retail level registrants and manufacturer fees are two times the fees for distributors. The

table below describes the relative difference among the groups :

Group Bus iness Activity Ratio

A Pharmacy 3.00

B Hospital/Clinic 3.00

C Practitioner 3.00

D Teaching Institution 3.00

M Mid

- level Practitioner (MLP) 3.00

E Manufacturer 12.50

F Distributor 6.25

G Researcher/Canine Handler 1.00

H Analytical Lab 1.00

J Importer 6.25

K Exporter 6.25

L Reverse Distributor 6.25

N Maintenance 12.50

P Detoxification 1.00

R Maintenance & Detox 1.00

S Compounder/Maintenance 1.00

T Compounder/Detoxification 1.00

U Compounder/Maintenance/Detox 1.00

W Chemical Manufacturer 12.50

X Chemical Importer 6.25

Y Chemical Distributor 6.25

Z Chemical Exporter 6.25



### Fees for groups A, B, C, D, and M are three times the other retail level registrant s: G, H, P, R, S,

T, and U . Since these groups are on a three year renewal cycle, the annualized fee remains the

same as for other retail level registrants.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 18 The number of registration fee transactions in Section 3.3 can be simplified as below:

Groups Ratio Registration

Fee

Transactions :

FY12

- FY14

Distributor F,L,Y 6.25 3,245

Importer/Exporter J,K,X,Z 6.25 2,478

Manufacturer E,W 12.50 2,301

Retail, 1

- yr G,H,N,P,R,S,T,U 1.00 19,234

Retail, 3

- yr A,B,C,D,M 3.00 1,436,075

Total 1,463,333



### After a ssigning the ratio as weights, a simple algebraic expressio n is used to calculate the fees:

( 6.25 x 

### * 3,245 ) + ( 6.25 x * 2,478 ) + ( 12.50 x * 2,301 ) + ( 1.00 x * 19,234 ) + ( 3.00 x * 1,436,075 ) =

$1,072,357,746

Solving for x, x = $244.16 (Retail, 1

- yr)



### By applying the weights/ratio

, the calculated fees are shown in the table below

, rounded to the

whole dollar.

Groups Ratio Registration

Fee

Transactions :

FY12

- FY14 Calculated

Fee Rounded

Fee

Distributor F,L,Y 6.25 3,245 1,526.01 1,526

Importer/Exporter J,K,X,Z 6.25 2,478 1,526.01 1,526

Manufacturer E,W 12.50 2,301 3,052.03 3,052

Retail, 1

- yr G,H,N,P,R,S,T,U 1.00 19,234 244.16 244

Retail, 3

- yr A,B,C,D,M 3.00 1,436,075 732.49 732



## 3.5 Estimated Collections from Registration Fees

Due to rounding

, the registration fees will not generate exactly $1,072,357,746

. 

### Therefore, the

number of registrations for each group is multiplied by the fee for each group and summed to

calculate the estimated collections based on proposed fees, $1,071,655,946

. The table below

summarizes the estimated collections from registration fees for the three years, FY 2012

– FY

2014.

FY2012 FY2013 FY2014 Total (3

- yr)

Collections from Registration

Fees 356,226,916 348,491,800 366,937,230 1,071,655,946



### See Appendix 7 : Collections Estimates B ased on Proposed Fee for a detailed calculation

.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 19 

## 4 Summary of Results

T he t able below summarizes the proposed fee and resulting cash flow :Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 20 FY2011 FY2012 FY2013 FY2014

Congressional Budget 290,304,000 321,990,000 356,582,322 371,831,295

Operational Continuity Fund (OCF)

Brought Forward From Prior Year 68,089,927 33,508,367 63,225,476 50,588,959

Collections: Registration Fees 257,254,274 356,226,916 348,491,800 366,937,230

Collections: CMEA 203,889 173,040 146,853 124,635

Treasury (15,000,000) (15,000,000) (15,000,000) (15,000,000)

Net Collections 242,458,163 341,399,956 333,638,653 352,061,865

Recoveries from Deobligations 12,957,124 10,000,000 10,000,000 10,000,000

Other Collections 307,153 307,153 307,153 307,153

Subtotal Availability 323,812,367 385,215,476 407,171,281 412,957,977

Obligati ons* 290,304,000 321,990,000 356,582,322 371,831,295

End of Year OCF Balance 33,508,367 63,225,476 50,588,959 41,126,682

Target OCF ($15M+7% of Budget) 37,539,300 39,960,763 41,028,191 41,828,482

Numbers are rounded.

*For purposes of the proposed fee calculation, the Congressional Budget and Obligations are treated as the same.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 21 

## 5 Factors that Can Influence Actual Results

All assumptions, inputs, and calculations contained in this document are for the purposes of

calculating the proposed fee only. Many procedural , operational, and economic variables can

cause the actual results to differ from estimates and projections cont ained in this document.

Factors include (but are not limited to):

Delay in New Fee

Effective Date Collections and budget estimates are based on proposed fees being

effective beginning October 1, 2011. Any delay will have a large

impact on the registration fees collected. Additionally, projected

spending will also be impacted as operations are adjusted to meet

financial constrain t s.

Change in Proposed

Fee Collections and budget estimates are based on the calculated

propose d fees. Any change in the amount will have a large impact

on the registration fees collected. Additionally, projected spending

will also be impacted as operations are adjusted to meet financial

constrain t s.

New

Legislative/ Regulatory

Mandate A new legislative/ regulatory mandate can require more spending

and greatly impact cash flow.

Changes in

Technology New technology can be leveraged to improve efficiency and

effectiveness within the Diversion Control Program. Technology can

also be exploited b y criminal groups to illegally divert controlled

substances or listed chemicals.

Change in Staffing

Level or Mix Staffing increases account for the majority of budget increases.

Changes in diversion trends may require DEA to change the level or

mix (mix of job categories) in staffing, which would impact spending.

Change in Registrant

Population The registration fee collection projection assumes a certain level of

new registran t s and renewals. The a ctual number of registrations

will impact collections from registrant fees and cash flow.

Change in Annual

Inflation of DEA Costs 2.2 percent is assumed for an annual inflation increase in DEA cost s

(except for cost increases in m o dular c osts, where historical cost

increases for each job category and l apse 50 percent

, second y ear,

and third y ear). Actual inflation increases different from this

assumed value can impact obligations/expenditures. Depending on

the severity, operationa l adjustments may be required.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 22 

## Appendix 1: List of Acronyms

Acronym Definition

AT Attorney

CAGR Compound Annual Growth Rate

CH Forensic Chemist

CMEA Combat Methamphetamine Epidemic Act of 2005

CON Tactical Diversion Squad Contractor

CSA Controlled Substances Act

DCFA Diversion Control Fee Account

DCP Diversion Control Program

DEA Drug Enforcement Administration

DI Diversion Investigator

DOJ Department of Justice

EOY End of Year

FR DEA Office of Resource Management

FY Fiscal Year

GS General Schedule

IA Intel Analyst

IT Investigative Technology Specialist

LEAP Law Enforcement Availability Pay

MET Mobile Enforcement Team

MLP Mid

- level Practitioner

OCF Operational Continuity Fund

OF Other Federal

OT Overtime

PA Professional/Administrative

PE/PI Purchase of Evidence/Purchase of Information

SA Special Agent

PCS Permanent Change of Station

SL State & Local

TC Technical/Clerical

TDS Tactical Diversion Squad

TFO Task Force OfficerProposed New Registrant Fee Schedule Calculations 2/1/2011



### 23 

## Appendix 2: Assumptions on Staffing Levels for the Purposes of

Calculating DCP Cost for Registration FeesProposed New Registrant Fee Schedule Calculations 2/1/2011



### 24 

## Appendix 3: Modular Costs

Modular Cost s (also called “Cost Module”) are developed by DEA Office of Resource

Management (FR) and represent the fully loaded cost of an employee , with the exception of rent

and new initiatives

. A separate cost module is developed for each job category: Special Agent

(SA), Diversion Investigator (DI), Intel Analyst (IA), Forensic Chemist (CH), Attorney (AT),

Investigative Techn ology Specialist (IT), Professional/Administrative (PA), and

Technical/Clerical (TC). Additionally, the SA cost module is modified to develop the Task

Force Officer 9 

### cost module. The c ost module for Tactical Diversion Squad ( TDS ) contractor

was developed by the Office of Diversion Control, Diversion Planning and Resources Section

(ODA).

FY 2012 Modular Costs were used to estimate the cost of personnel increases from FY 2012 and

beyond. FY 2011 Modular Costs were used to estimate the a nnualization of prior year staffing

level changes

. The first year c ost of new employee is assumed to be for six months. Cost

module assumes that some employees may come on

- board early in the year, some late in the

year, therefore, average of “50% lapse” into the fis cal year. Payroll and most of the operational

cos ts are lapsed 50 percent , while non

- recurring equipment and infrastructure costs are at full

cost.

FY 2012 Domestic Cost Module Estimates

Position: Special Agent

Object Class 2012 Cost 2013 Cost 2014 Cost

Pay and Benefits 47,339 112,361 180,571

Travel and Transportation of Things 78 3,478 3,478

Facility Overhead 2,673 5,407 5,407

Services 19,200 1,989 1,989

Investigative and Administrative Supplies 6,507 5,621 5,621

Office Equipment and Technology 21,570 4,098 4,098

Investigative Equipment 85,416 22,522 22,522

Training 30,556 4,585 4,585

Operational Expenses 0 24,283 24,283

PCS 22,302 36,507 36,507

Total 235,641 220,851 289,061

9 TFO’s and SA’s are functionally similar, while the TFO c ost module is considerably lower than the SA cost

module. Inclusion of TFOs in the DCP aids in reducing the cost of the DCP.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 25 Position: Diversion Investigator

Object Class 2012 Cost 2013 Cost 2014 Cost

Pay and Benefits 33,538 82,227 131,926

Travel and Transportation of Things 78 3,478 3,478

Facility Overhead 2,616 5,291 5,291

Services 12,836 1,465 1,465

Investigative and Administrative Supplies 1,265 2,253 2,253

Office Equipment and Technology 20,816 3,910 3,910

Investigative Equipment 52,561 15,041 15,041

Training 13,174 3,076 3,076

PCS 0 17,679 17,679

Total 136,884 134,420 184,119

Position: Intelligence Analyst

Object Class 2012 Cost 2013 Cost 2014 Cost

Pay and Benefits 33,538 82,227 131,926

Travel and Transportation of Things 78 3,478 3,478

Facility Overhead 2,323 4,701 4,701

Services 9,333 1,285 1,285

Investigative and Administrative Supplies 924 1,337 1,337

Office Equipment and Technology 52,126 19,390 19,390

Investigative Equipment 2,877 1,046 1,046

Training 19,688 3,400 3,400

PCS 0 25,268 25,268

Total 120,887 142,132 191,831

Position: Chemist

Object Class 2012 Cost 2013 Cost 2014 Cost

Pay and Benefits 33,538 82,227 131,926

Travel and Transportation of Things 78 4,850 4,850

Facility Overhead 5,699 11,595 11,595

Services 8,867 1,803 1,803

Investigative and Administrative Supplies 9,550 9,417 9,417

Office Equipment and Technology 20,816 3,910 3,910

Investigative Equipment 152,235 30,447 30,447

Training 7,909 4,967 4,967

PCS 8,779 24,255 24,255

Total 247,471 173,471 223,170Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 26 Position: Attorney

Object Class 2012 Cost 2013 Cost 2014 Cost

Pay and Benefits 77,247 182,812 182,812

Travel and Transportation of Things 1,720 3,478 3,478

Facility Overhead 2,387 4,828 4,828

Services 15,520 17,438 17,438

Administrative Supplies 653 1,113 1,113

Office Equipment and Technology 21,570 4,098 4,098

Training 1,409 3,249 3,249

Total 120,506 217,016 217,016

Position: Investigative Technology Specialist

Object Class 2012 Cost 2013 Cost 2014 Cost

Pay and Benefits 39,833 97,527 156,835

Travel and Transportation of Things 78 3,478 3,478

Facility Overhead 2,673 5,407 5,407

Services 8,368 1,523 1,523

Administrative Supplies 2,069 4,185 4,185

Office Equipment and Technology 20,816 3,910 3,910

Investigative Equipment 78,311 21,227 21,227

Training 20,479 3,914 3,914

Total 172,627 141,171 200,479

Position: Professional Administrative

Object Class 2012 Cost 2013 Cost 2014 Cost

Pay and Benefits 33,538 82,227 131,926

Travel and Transportation of Things 1,720 3,478 3,478

Facility Overhead 2,054 4,163 4,163

Services 7,802 1,821 1,821

Administrative Supplies 447 904 904

Office Equipment and Technology 20,816 3,910 3,910

Training 1,494 3,347 3,347

Total 67,871 99,850 149,549

Position: Technical Clerical

Object Class 2012 Cost 2013 Cost 2014 Cost

Pay and Benefits 27,713 69,955 69,955

Travel and Transportation of Things 78 3,478 3,478

Facility Overhead 2,017 4,089 4,089

Services 7,802 1,821 1,821

Administrative Supplies 447 904 904

Office Equipment and Technology 20,816 3,910 3,910

Training 765 1,860 1,860

Total 59,638 86,017 86,017Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 27 Position: State & Local (Task Force Officer)

Object Class 2012 Cost 2013 Cost 2014 Cost

Travel and Transportation of Things 77 3,478 3,478

Facility Overhead 2,672 5,406 5,406

Services 9,579 17,734 17,734

Investigative and Administrative Supplies 5,938 5,431 5,431

Office Equipment and Technology 21,570 4,098 4,098

Investigative Equipment 44,524 14,391 14,391

Training 0 3,039 3,039

Operational Expenses 0 24,283 24,283

Total 84,360 77,860 77,860

Modular Cost: Tactical Diversion Squad Contractor (CON)

(Based on contract)

FY2011 FY2012 FY2013 FY2014

Cost per Data Analyst 90,779.69 93,871.85 97,085.64 100,414.16

Lapse 50% 45,389.84 46,935.93 48,542.82 50,207.08

FY 2011 Domestic Cost Module Estimates

Position: Special Agent

Object Class 2011 Cost 2012 Cost 2013 Cost

Pay and Benefits 47,025 111,482 178,936

Travel and Transportation of Things 79 3,459 3,459

Facility Overhead 2,698 5,500 5,500

Services 21,779 3,830 3,830

Investigative and Administrative Supplies 7,283 7,218 7,218

Office Equipment and Technology 23,303 4,450 4,450

Investigative Equipment 87,971 22,777 22,777

Training 25,060 4,382 4,382

Operational Expenses 0 23,854 23,854

PCS 19,642 35,912 35,912

Total 234,840 222,864 290,318Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 28 Position: Diversion Investigator

Object Class 2011 Cost 2012 Cost 2013 Cost

Pay and Benefits 35,346 86,890 139,261

Travel and Transportation of Things 79 3,459 3,459

Facility Overhead 2,645 5,393 5,393

Services 18,240 3,261 3,261

Investigative and Administrative Supplies 1,569 2,860 2,860

Office Equipment and Technology 22,467 4,241 4,241

Investigative Equipment 52,466 14,762 14,762

Training 13,233 3,095 3,095

PCS 0 17,695 17,695

Total 146,045 141,656 194,027

Position: Intelligence Analyst

Object Class 2011 Cost 2012 Cost 2013 Cost

Pay and Benefits 35,329 86,855 139,226

Travel and Transportation of Things 79 3,459 3,459

Facility Overhead 2,118 4,318 4,318

Services 9,755 3,017 3,017

Investigative and Administrative Supplies 941 1,516 1,516

Office Equipment and Technology 50,366 16,567 16,567

Investigative Equipment 2,841 1,038 1,038

Training 21,423 3,468 3,468

PCS 0 26,391 26,391

Total 122,852 146,629 199,000

Position: Chemist

Object Class 2011 Cost 2012 Cost 2013 Cost

Pay and Benefits 35,329 86,855 139,226

Travel and Transportation of Things 79 3,805 3,805

Facility Overhead 5,724 11,675 11,675

Services 9,795 3,567 3,567

Investigative and Administrative Supplies 9,154 9,577 9,577

Office Equipment and Technology 22,467 4,241 4,241

Investigative Equipment 155,011 31,622 31,622

Training 6,934 4,971 4,971

PCS 6,672 18,503 18,503

Total 251,165 174,816 227,187Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 29 Position: Attorney

Object Class 2011 Cost 2012 Cost 2013 Cost

Pay and Benefits 81,404 192,882 192,882

Travel and Transportation of Things 1,696 3,459 3,459

Facility Overhead 2,294 4,676 4,676

Services 13,575 13,516 13,516

Administrative Supplies 691 1,181 1,181

Office Equipment and Technology 23,303 4,450 4,450

Training 1,446 3,320 3,320

Total 124,409 223,484 223,484

Position: Investigative Technology Specialist

Object Class 2011 Cost 2012 Cost 2013 Cost

Pay and Benefits 43,967 107,821 173,284

Travel and Transportation of Things 79 3,459 3,459

Facility Overhead 2,631 5,364 5,364

Services 9,221 3,249 3,249

Administrative Supplies 2,834 5,781 5,781

Office Equipment and Technology 22,467 4,241 4,241

Investigative Equipment 94,148 24,181 24,181

Training 6,845 3,368 3,368

Total 182,192 157,464 222,927

Position: Professional Administrative

Object Class 2011 Cost 2012 Cost 2013 Cost

Pay and Benefits 35,346 86,890 139,261

Travel and Transportation of Things 1,696 3,459 3,459

Facility Overhead 2,144 4,373 4,373

Services 8,715 3,602 3,602

Administrative Supplies 467 953 953

Office Equipment and Technology 22,467 4,241 4,241

Training 1,494 3,391 3,391

Total 72,329 106,909 159,280

Position: Technical Clerical

Object Class 2011 Cost 2012 Cost 2013 Cost

Pay and Benefits 29,147 73,958 73,959

Travel and Transportation of Things 79 3,459 3,459

Facility Overhead 2,091 4,264 4,264

Services 8,715 3,602 3,602

Administrative Supplies 467 953 953

Office Equipment and Technology 22,467 4,241 4,241

Training 1,511 1,892 1,892

Total 64,477 92,369 92,370Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 30 Position: State & Local (Task Force Officer)

Object Class 2011 Cost 2012 Cost 2013 Cost

Travel and Transportation of Things 79 3,459 3,459

Facility Overhead 2,698 5,500 5,500

Services 9,538 17,721 17,721

Investigative and Administrative Supplies 6,700 7,022 7,022

Office Equipment and Technology 23,303 4,450 4,450

Investigative Equipment 44,165 13,984 13,984

Training 0 3,104 3,104

Operational Expenses 0 23,854 23,854

Total 86,483 79,094 79,094

### 31



## Appendix 4: Staffing Plan Implementation Cost

The cost modules in Appendix 3 are summarized into tables below , with the exception of the SA

cost module which has been modified (see explanation on the side).

Except SA 50% lapse, non

- shaded numbers

are directly copied from the cost modules

while shaded numbers are calculated values.

SAs in DCP usually enter DCP as grad e GS

- 13.

Therefore, 50% lapse of $276,358 and

$277,835 are determined by combining the

third year payroll cost with the first year

operational and equipment costs. Second

year and third y ear costs are both based on

the third year costs

.

FY 2013 and FY 2 014 costs are estimated

using historical changes in these costs. (See

the table on the next page.)

“Annualization 50% Lapse to 2 nd Y r” is the cost

difference between the base bud get from the

50% Lapse and the second year . For example,

a new DI in FY 201 1 costs $146,045 and the

budget for FY 2011 will increase by this

amount. In FY 2012 (2 nd Year), the same DI

would cost $ 141,656 so there is an

annualization decrease of $4,389 for this DI

.

“Annualization 2 nd Year to 3 rd Year” is the cost

difference fo r a new position from the second

year to the journeyman level of that position

. For example, the DI that was hired in FY 2011

will cost $ 141,656 in FY 2012, based on the

cost module. Th e journeyman level for this DI

is estimated to cost $1 94,027 as refle cted in

the third year in the FY 2011 cost module.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 32 Historical Modular Costs are used to determine cost changes over time. Compound Annual

Growth Rate (CAGR) is calculated for each job category for f i r st year 50 %

, second y ear, and

third y ear.

Assumed staffing levels from Appendix 2 are applied to the Cost Module Summary to calculate

50% lapse, Annualization 50% to 2 nd 

### Year, and Annualization 2 nd 

### Year to 3 rd 

### Year for each job

category for FY 2012, FY 2013, and FY 2014. ( See table below. )Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 33 Estimated Cost of On

- board Staffing ChangesProposed New Registrant Fee Schedule Calculations 2/1/2011



### 34 

## Appendix 5 : Target Operational Continuity Fund

Unlike appropriated funds where approved budgets are assured by law, DEA collects registration

fees

, which are subject to fluctuations and uncertainty, to fun d the activities of DCP. DEA

maintains an operational continuity fund (OCF) 10 

### based on the need to maintain DCP operations

during historically low (or negative) collection periods.

Specifically, the OCF serves two purposes:

1. Have sufficient funds at the beginning of the fiscal year to fund operations while the first $15

million in collections are paid to the Treasury.

2. Have sufficient funds to prevent fluctuations in collections from adversely affecting operations.

(Without OCF, periods of lower than expected collection would require adjustment in

operation/spending to prevent a negative balance.)



### Since the $15 million is a constant amount specified in law that is needed at the beginning of

each year, $15 million would be enough to satisfy purpose one above

.

To determine the OCF needed to satisfy purpose two above , historical collections and obligations

were examined. Tables below summarize the monthly collections and obligations as a percent of

the total :

10 Often called “working capital” in industry, DEA avoids using this term to not cause confusion between OCF and

a specific account “Working Capital Fund” maintained by DOJ. Cumulative Net Obligations as % of Total Obligations

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

FY2004 9.27% 16.66% 20.62% 32.55% 38.64% 46.31% 53.56% 61.09% 69.62% 78.38% 88.06% 100.00%

FY2005 7.34% 12.76% 21.52% 28.83% 35.27% 45.84% 55.88% 64.38% 70.87% 83.04% 85.59% 100.00%

FY2006 8.51% 14.36% 25.49% 32.69% 42.17% 51.27% 59.73% 66.95% 74.02% 83.88% 92.71% 100.00%

FY2007 4.80% 12.57% 19.33% 25.62% 33.26% 42.87% 53.48% 60.53% 65.62% 72.54% 90.36% 100.00%

FY2008 4.91% 11.42% 16.30% 22.65% 29.62% 42.19% 48.32% 55.14% 74.84% 83.52% 92.21% 100.00%

FY2009 7.14% 12.34% 22.38% 28.94% 35.51% 41.10% 48.14% 58.73% 69.01% 77.34% 87.77% 100.00%

FY2010 5.02% 10.70% 19.24% 25.22% 33.48% 40.59% 51.85% 59.65% 72.99% 83.62% 89.23% 100.00%

Average 6.71% 12.97% 20.70% 28.07% 35.42% 44.31% 52.99% 60.92% 71.00% 80.33% 89.42% 100.00%

Minimum 4.80% 10.70% 16.30% 22.65% 29.62% 40.59% 48.14% 55.14% 65.62% 72.54% 85.59% 100.00%

Maximum 9.27% 16.66% 25.49% 32.69% 42.17% 51.27% 59.73% 66.95% 74.84% 83.88% 92.71% 100.00%

(Net Obligations = Obligations

- Recoveries from Deobligation)

Cumulative Gross Collections as % of Total Gross Collections

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

FY04 2.12% 7.23% 14.90% 23.49% 31.96% 41.51% 49.01% 58.16% 71.19% 79.99% 91.20% 100.00%

FY05 4.77% 12.92% 21.51% 30.56% 37.89% 47.78% 55.43% 63.90% 72.82% 81.38% 90.80% 100.00%

FY06 6.01% 13.00% 20.49% 31.39% 40.71% 48.92% 56.72% 65.33% 74.54% 82.58% 91.90% 100.00%

FY07 4.90% 9.71% 16.75% 28.23% 37.64% 46.15% 54.02% 64.19% 73.10% 82.32% 91.71% 100.00%

FY08 6.48% 12.51% 21.67% 31.53% 40.52% 48.44% 56.17% 64.22% 72.90% 82.00% 91.09% 100.00%

FY09 6.84% 13.39% 19.32% 29.42% 39.87% 48.39% 55.76% 64.87% 73.97% 82.92% 91.26% 100.00%

FY10 6.10% 12.77% 20.55% 29.89% 38.96% 47.23% 55.77% 65.13% 73.89% 82.29% 91.36% 100.00%

Average 5.32% 11.65% 19.31% 29.22% 38.22% 46.92% 54.70% 63.68% 73.20% 81.92% 91.33% 100.00%

Minimum 2.12% 7.23% 14.90% 23.49% 31.96% 41.51% 49.01% 58.16% 71.19% 79.99% 90.80% 100.00%

Maximum 6.84% 13.39% 21.67% 31.53% 40.71% 48.92% 56.72% 65.33% 74.54% 82.92% 91.90% 100.00%

(Gross Collections = Registration Fees + Other Collections (sale of vehicles) + CMEA Self

- certification Collections)Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 35 The tables show that there are times where o bligations exceed c ollections. For example, in

November FY 2004

, cumulative obligations exceeded collections by 9.4 percent , or the

cumulative balance (collections minus obligations) was

- 9.4 percent . This was an unusual year

and operational adjustments were made to ensure DEA did not spen d beyond funds that were

available.

Therefore, OCF needs to be sufficient to cover the maximum difference between c umulative

o bligations and c umulative c ol lections at any given month in the year.

Model historical data as a triangular probability distribution

, 11 

### f or ex ample

, in the month of

November:

Cumulative O bligation

o Maximum: 16.66%

o Minimum: 10.70%

o Average /Mode : 12.97 %.

Cumulative Collection

o Maximum: 13 .39%

o Minimum: 7.23%

o Average /Mode : 11.65%



### In a given year, there may have been instances where spending was altered due to low

collections. Since the purpose of the OCF is to prevent adjusting operations/spending as a result

of low collections, collections and obligations are modeled independently to prevent this

relationship from influencing the model.

Using Monte

- Carlo 12 

### simulation (10,000 iterations)

, the maximum negative minimum balance

( cumula tive collections minus obligations) was determined . T he t able below is an example of

one iteration . T he minimum balance is

- 3.61 percent in April.

11 Triangular distribution in this example means that future cumulative collections in November will be at a

minimum 7.23 percent, a maximum 13.39 percent, and most likely 11.65 percent.

12 Monte Carlo simulation (named after Monte Carlo, Monaco, where games of chance are a popular attraction) is

an iterative method where variables are randomly varied according to the assumed probability distribution. Aided

by a computer, numerous iteration s (10,000 in this case) result in numerous outcomes. The results define the

probability of different outcomes occurring.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 36 Results of the 10,000 iterations are summarized by the below probability density function.

The results indicate that of the 10,000 iterations the lowest minimum balance is

- 9.64 percent

, the highest minimum balance is 0.00 percent and on average the minimum balance is

- 4.47

percent . Also, 95 percent of the outcomes are above

- 7.00 percent , which m ean s that only five

percent of the time the cumulative obligations w ere more than seven percent of cumulative

collections. Alternatively, having a seven percent OCF has a 95 percent likelihood of being

enough to fund DCP operations without operational adjustments as a result of fluctuations and

dif ferences between collections and obligations.

DEA has decided that the five percent risk of having to adjust operations as a result of month

- to

month fluctuations/ differences in collections and obligations is a tolerable risk. Therefore, a

sufficient amo unt for purpose number two above is seven percent of planned obligations/budget.

Combining the two components of the OCF, Target OCF Balance is $15 million plus seven

percent of planned obligations.Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 37 

## Appendix 6: Estimated Number of Registration Fee Tra nsactions

The estimated number of registration fee transactions is a forecast based on a ten year history of

registration fee transactions

.

Below is a summary of the forecasted number of registrations. Groups A, B, C, D, and M are on

three year registration cycles. Thus the number of annual registration fee transactions is roughly

one

- third of the population of paying registrants.

Group Business Activity 2012 2013 2014 Total

3 year registration A Pharmacy 25,462 23,050 25,901 74,413

B Hospital/Clinic 4,456 4,553 4,647 13,656

C Practitioner 376,425 366,802 382,390 1,125,617

D Teaching Institution 81 68 73 222

M Mid

- level Practitioner (MLP) 70,821 72,309 79,037 222,167

1 year registration E Manufacturer 534 536 536 1,606

F Distributor 713 718 722 2,153

G Researcher/Canine Handler 4,181 4,308 4,440 12,929

H Analytical Lab 902 898 895 2,695

J Importer 212 214 216 642

K Exporter 245 246 247 738

L Reverse Distributor 65 66 67 198

N Maintenance 178 180 181 539

P Detoxification 78 78 78 234

R Maintenance & Detox 875 888 900 2,663

S Compounder/Maintenance 5 5 5 15

T Compounder/Detoxification 1 1 1 3

U Compounder/Maintenance/Detox 52 52 52 156

W Chemical Manufacturer 228 232 235 695

X Chemical Importer 185 186 187 558

Y Chemical Distributor 387 290 217 894

Z Chemical Exporter 177 180 183 540

Total 486,263 475,860 501,210 1,463,333



### The f orecast ed number of registration fee transactions is based on the following mathematical

expressions:

[New Registration Fee Transactions ] + [ Registration Renewal Transactions ] = [Total Registration Fee

Transactions ]

Wh ere

,

[ Registration Renewal Transactions ] = [Total Registration Fee Transactions , previous period] x

[Retention Rate]Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 38 And

,

[Retention Rate] = average of historical ( Registration Renewal Transactions divided by Total

Registration Fee Transactions Previous Period)

“Previous Period” = 3 years fo r Business Activities on 3 year registrations, 1 year for Business

Activities on 1 year registrations



### The following steps were taken to generate the forecast (refer to detailed table below) :

1. Get historical data

a. Query historical numbers for [New Registration Fee Transactions ] and [ Registration

Renewal Transactions ] by Registrant Group (Business Activity) for each of the 10 years.

b. Sum the two numbers to get [Total Registration Fee Transactions ]

c. Calculate [Retention Rate] for each year by dividing the [ Registration Renewal

Transactions ] by [Total Registration Fee Transactions , previous period].

d. Calculate [Average Retention Rate]

2. Forecast [New Registration Fee Transactions ] for FY 2011 13 to FY 2014

a. Examine FY 2001 to FY 2010 [New Registration Fee Tran sactions ] for any discernable

trends

.

i. Examination of the historical number of new registrants showed that some

registrant groups had a well defined trend line (low scatter), while other s did

not (large scatter). Trend lines were used to project new regist rants for

registrant groups with well defined trend lines, while an a verage was used for

registrant groups with large scatter. Although a trend line can be

mathematically generated on a registrant group with large scatter, the

confidence level on the tren d line would be low.

ii. Additionally, trend lines for some groups changed over time

. For the registrant

groups that did have a noticeable change in new registrants, a five year history

is used to not skew the data with data prior to the fee increase. For th e

registrant groups that did not have a noticeable drop in new registrants, ten

year history is used

.

b. If there is a discernible trend, use linear regression 14 to develop trend line and

forecast 15 [New Registration Fee Transactions ] for FY 2011 to FY 2014.

13 Need FY 2011 numbers to forecast FY 2012 to FY 2014 numbers.

14 Linear regression is a statistical approach used to calculate a strai ght line that best fits the data: historical number

of new registration fee transactions by year. The calculated line is used to forecast the number of registration fee

transactions for future years.

15 Used “FORECAST” function in MS Excel. From Microsof t Office Excel 2007 Help: “(FORECAST function)

Calculates, or predicts, a future value by using existing values. The predicted value is a y

- value for a given x

- value.

The known values are existing x

- values and y

- values, and the new value is predicted by u sing linear regression. You

can use this function to predict future sales, inventory requirements, or consumer trends. ”Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 39 c. If the trend is indiscernible, use average of FY 2001 to FY 2010 [New Registration Fee

Transactions ] to forecast [New Paying Registration] for FY 2011 to FY 2014.

d. Use five or ten years of data based on historical data examination in step 2.a.ii above.

[New Registration Forecast Method] in the table below indicates whether five or ten

year history was used and whether a trend line or average was used to forecast [New

Paying Registration] for FY 2011 to FY 2014.

3. Forecast [ Registration Renewal Transactions ] for FY 2011 to FY 2014

a. Use [Average Retention Rate] as the [Retention Rate] for years FY 2011 to FY 2014.

b. Multiply [Total Registration Fee Transactions , previous period] by [Retention Rate] for

[ Registration Renewal Transactions ]

i. For groups A, B, C, D, M ( Thr ee year registrations):

[Total Registration Fee Transactions , FY 2008] * [Retention Rate, FY

2011] = [ Registration Renewal Transactions , FY 2011]

ii. For all other groups ( One year registrations):

[Total Registration Fee Transactions , FY 2008] * [Retention Rate, FY

2011] = [ Registration Renewal Transactions , FY 2011]

4. Forecast [Total Registration Fee Transactions ] for FY 2011 to FY 2014

a. Sum [New Registration Fee Transactions , FY 2011 ] from step 2 and [Paying Renewal, FY

2011] from step 3 for [Total Registration Fee Transactions , FY 2011]

b. Repeat steps 3 and 4.a for years: FY 2012, FY 2013, and FY 2014 for [Total Registration

Fee Transactions ] for FY 2013 to FY 2014.

### 40Proposed New Registrant Fee Schedule Calculations 2/1/2011



### 41

### 42



## Appendix 7 : Collections Estimate s Based on Proposed Fee

The number of registration fee transactions by registrant group in Appendix 6 is summarized in

the left portion of the table below. Multiply each of the groups by the proposed fee for that

group for each of the years to calculate es timated collections from proposed fees for each of the

registrant groups for each of the years. The s um represents estimated total collections by year.