Is headspace making a difference to young people’s lives?

6. The Costs of headspace
Valuing the in-scope headspace grant component
In order to further understand the way in which the headspace grant is utilised and to estimate the
average cost per occasion of service, an analysis of each headspace centre operating within the
2013/14 financial year was undertaken and these results are presented below by implementation
round.
An assessment of Round 5 centres has shown that these centres are anomalous across a number
of financial and operational indicators. This is to be expected because these centres were only
beginning operations when the analysis was undertaken. This means that expenditure undertaken
by these centres at this time is over-estimated relative to occasions of service and that including
these amounts in an overall cost per unit will distort estimates. To this end, all Round 5 centres
have been excluded from the analysis.
Total revenue, direct and indirect costs, along with other approved expenditure and operating
surplus/deficits for Round 1-4 centres are presented in Table 6.3 below. Across these rounds,
headspace centres are operating with net surpluses, adding to a value of approximately $7.6
million for the 2013/14 financial year out of a total grant value of $57.2 million. Net surpluses as a
proportion of total revenue (which largely represent unspent headspace grant funding and interest
on grant funds) range from 11.5% to 17.7% across each round, with an overall average of 13.4%.
It is recognised that it is general business practice to maintain a surplus cash flow; however, the
value of this cash flow could be reviewed.
The differences observed between total revenue received and total expenditure are important to
take into account when estimating the headspace grant contribution that can be assessed against
outcomes. For our purposes, we have selected total expenditure within the financial year (both
direct and indirect) rather than total revenue received.
Table 6.3 Revenue, expenditure, average costs by centre round, headspace grant 2013/14 financial
year
Revenue/
Expenditure
Round 1 Round 2 Round 3 Round 4 Total (Rounds 1-4)
Total Revenue $11,403,738 $20,574,466 $10,580,177 $14,628,086 $57,186,467
Total Direct Costs $6,791,396 $13,495,240 $6,889,569 $9,587,400 $36,763,605
Total Indirect Costs $2,472,083 $4,303,059 $2,311,328 $3,206,762 $12,293,232
Total Approved
Other Expenditure $123,241 $177,555 $24,801 $154,503 $480,100
Total Expenditure $9,386,720 $17,975,854 $9,225,698 $12,948,665 $49,536,937
Net Surplus /
(Deficit) $2,017,018 $2,598,612 $1,354,479 $1,679,421 $7,649,530
Net Surplus/Total
Revenue 17.7% 12.6% 12.8% 11.5% 13.4%
Direct Costs/Total
Expenditure 72.4% 75.1% 74.7% 74.0% 74.2%
Indirect Costs/Total
Expenditure 26.3% 23.9% 25.1% 24.8% 24.8%
Other/Total
Expenditure 1.3% 1.0% 0.3% 1.2% 1.0%
No. of headspace
centres 10 20 11 15 56
Average cost per
centre within round $938,672 $898,793 $838,700 $863,244 $884,588
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headspace Evaluation Final Report
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