HomeMy WebLinkAboutItem 15 - FY 2021-22 Central Service Cost Allocation Plan (CAP) Department Name: Finance
Cost Center: 2001 Administration
For Agenda of: May 4, 2021
Placement: Consent
Estimated Time: N/A
FROM: Brigitte Elke, Finance Director
SUBJECT: FISCAL YEAR 2021-22 CENTRAL SERVICE COST ALLOCATION PLAN,
COST OF SERVICES FEE CALCULATION, AND LABOR RATES
RECOMMENDATION
Approve the 2021-22 Central Service Cost Allocation Plan including the Cost of Services
Allocation and Labor Rates.
DISCUSSION
Cost Allocation and Reimbursement to the General Fund
Consistent with governmental best practices, the City annually prepares a formal Central Service
Cost Allocation Plan (CAP). One of the primary uses of the CAP is to quantify in dollars, the
relationship between administrative and support services contained within the General Fund and the
operations programs they support throughout the City. As such, the CAP provides reimbursement
for those services to the General Fund. The CAP can also be used to determine the appropriate
amount of administrative and support costs that may be charged to federal and state grants and
provides the base for the labor rates used for cost recovery charges.
The CAP is prepared using actual operating expenses from the last audited year and the resulting
cost allocations are programmed into the City’s budget two years later. Basing the CAP on the
audited financials allows the City to avoid the need to recalculate and true-up the allocations at a
later date and ensures that the allocation is based on actual cost and not budget assumptions. In this
case, the CAP is based on 2019-20 actual cost and the cost allocations are reflected in the 2021-22
proposed budget.
Two CAP Documents Required
There are two CAP documents presented. The first is a full cost plan which considers all
administrative and support costs that are allocated across all programs (Attachment A). The second
CAP is the “2 Code of Federal Regulations Part 200 Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards” (2 CFR 200) (Attachment B). The 2 CFR
200 supersedes, consolidates, and streamlines requirements from the Office of Management &
Budget Circular A-87. The purpose of 2 CFR 200 is to streamline Federal government’s guidance
on administrative requirements, costs principles, and audit requirements to more effectively focus
Federal resources on improving performance and outcomes, while ensuring the financial integrity of
taxpayer dollars in partnership with non-Federal stakeholders. The 2 CFR 200 is used to determine
what cost can be allocated to federal grant programs.
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The 2 CFR 200 is used to allocate cost to the Transit Fund because it is mainly funded from the
Federal Transit Authority. Under the 2 CFR 200, the cost of the City Council are not allocated to
other programs.
The full cost version of the CAP establishes the allocable costs shown in the table below for the
Water, Sewer, Parking and Whale Rock Funds. The amounts shown in the column labeled
“Direct Billing Adjustments” represent amounts that offset the CAP-generated cost allocations to
the enterprise funds because certain costs can be charged back to the General Fund by the
programs that receive allocated costs from the CAP. The cost allocation for the Transit Fund is
reflective of the assessment within the 2CFR 200 CAP.
2021-22 Reimbursement Transfers (Full CAP)
Fund
Cost Allocation
Based on 2019-20
Actuals
Direct Billing
Adjustments Final Billing
Water $1,722,409 $0 $1,722,409
Sewer $1,712,752 $0 $1,712,752
Parking $869,887 $0 $869,887
Whale Rock $186,211 $0 $186,211
Total $4,491,259 $0 $4,491,259
2021-22 Reimbursement Transfers (2 CFR 200)
Fund
Cost Allocation
Based on 2019-20
Actuals
Direct Billing
Adjustments Final Billing
Transit $223,324 $0 $223,324
Total $223,324 $0 $223,324
Upon approval by the Council, the 2 CFR 200 certification will be signed by the Finance
Director/City Treasurer.
Cost of Services Analysis
In addition to the Cost Allocation Plan, the City has also prepared a Cost -of-Service analysis,
which establishes the annual cost of providing the Water and Sewer Enterprise Funds with access
to the City’s right-of way-property, as well as the cost of providing police and fire protection for
both funds in accordance with Proposition 218. As part of the fee analysis that was prepared,
enterprise facilities that are not within the City limits were excluded from consideration. This
document was incorporated into the Cost Allocation Plan as Appendix A.
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Water Enterprise 2020-21 2021-22
Public Safety $239,335 $230,214
Right of Way $597,564 $467,983
Total $836,899 $698,197
Sewer Enterprise 2020-21 2021-22
Public Safety $213,358 $223,767
Right of Way $449,746 $357,726
Total $663,104 $581,492
The labor rates applicable for 2021-22 are included in the Cost Allocation Plan as Appendix B.
Policy Context
The annual cost allocation plan informs the City of the true cost of delivering the services
through the various support departments and programs. This forms the base for policies related
to cost recovery goals, including reimbursement transfers and labor rates.
Public Engagement
This cost allocation plan is updated annually based on the City’s audited financials and the
annual financial report and adopted at a public meeting of the City Council.
CONCURRENCES
The Public Works and Utilities Departments have reviewed the CAP and concur with the
recommendations contained within this report.
ENVIRONMENTAL REVIEW
This is not a project under CEQA. The California Environmental Quality Act does not apply to
the recommended action in this report, because the action does not constitute a “Project” under
CEQA Guidelines Sec. 15378.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2021-22
Funding Identified: N/A
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Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current Funding
Request
Remaining
Balance
Annual
Ongoing Cost
General Fund N/A
State
Federal
Fees
Other:
Total N/A
The 2021-22 Central Services Full Cost Allocation Plan including Appendix A, net of direct billing
adjustments results in a total cost recovery of $5,994,271 in 2021-22, including the Cost of Services
reimbursement as outlined in Appendix A. This amount is consistent with the estimate that is shown
in the Five-Year Fiscal Forecast.
ALTERNATIVES
Do not approve the 2021-22 Central Services Full Cost Allocation Plan. This is not recommended
as the General Fund would bear the full costs for various programs, contracts, and agreements
provided on behalf of the City’s Enterprise Funds.
Attachments:
a - COUNCIL READING FILE - 2020 Cost Allocation Plan
b - COUNCIL READING FILE - 2020 2 CFR Part 200 Cost Allocation Plan
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