4.9 Variations and adjustments to service agreements
With the introduction of three-year agreements and consistent with the principles of the partnership agreement, a distinction is made between funding that is negotiated and changes to funding to reflect price and or service changes, movements or adjustments.
Variations
A service agreement variation refers to the process through which organisations agree to receive funding for one of the following:
- growth
- new services
- minor capital
- ‘one-off’ items.
Changes due to service and funding model redevelopment are implemented through this process during the term of the agreement.
Variations are negotiated with an organisation and processed at set times throughout the year. In 2006-09, there will be three variation processing periods per year, in August/September, November/December and March to mid-April. Processes have been developed for any variation that needs to occur outside of the designated variation processing periods.
The variation process involves:
- negotiating the substance of the variation (as required)
- re-issuing any schedules that are affected by the variation
- completing a variation form
- signing the variation form.
Organisations will receive a copy of the revised service agreement.
The signed variation becomes an addendum to the original service agreement and forms the revised basis on which the service agreement will be conducted. A variation is a legal document.
Adjustments
Adjustments are changes to funding levels that occur automatically.
The main type of funding adjustment is a 'price adjustment'. Normal price adjustments are made for wages growth and consumer price index (CPI).
A price index is the department's preferred approach,. replacing wages and CPI with a single percentage increase.
The other type of adjustment is a 'service adjustment'. Service adjustments will only be made where the number of services actually delivered is used to adjust funding and the adjustment is not negotiated.