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Staff Report by: <br />Brian Carlson <br />Budget and Finance Director <br />Topic: <br />Annual Indirect Cost Allocation Plan <br />Meeting <br />BOCC Regular Meeting <br />April 4, 2023 <br /> <br />Summary: <br />• The attached Resolution and plan documents reflect the County’s internal allocation of administrative costs. <br />• This is presented annually to BOCC. Public Health and Sheriff each produce similar annual cost-rate plans. <br />• The Auditor’s recommended rate is 13.3% <br />Background: <br />• Indirect Cost Allocation refers to the cost of certain county departments to provide services to other County <br />Departments. This enables a quantifiable, reasonable and consistent way to offset the County’s costs to <br />administer grants. <br />• Indirect Cost Allocation is also applicable to certain County contracts, and for internal accounting and <br />budgeting, e.g. Departments and/or Funds pay one another for the provision of services. <br />• A cost allocation plan is required for most Fed grant recipients. A plan’s threshold requirements are <br />established by the Federal Office of Management and Budget. <br />• The rate calculation is formula-driven, and uses the most-recent audited financial data. Therefore, there is <br />commonly a two-year lag for implementation of a given rate. E.g. 2021 data is used to establish a rate for <br />operations in 2023. <br />• The rate calculation is forwarded to the County Auditor, who then commonly applies a margin of error to <br />arrive at a final “certified” rate. The Certified rate is forwarded to BOCC for review/approval. <br /> <br />Analysis: <br />• The current plan and recent history are shown below: <br /> <br /> <br />• The 2023 “actual” rate has returned to its historic-norm, following a year (2020) of extraordinary expenses in <br />the IT Department. <br />• The recommended “adopted” rate is proposed by the Auditor following his review of the calculated figures. <br />• Additional plan information and calculations are contained in the attached 2023 Indirect Cost Allocation Plan <br /> <br />Conclusion / Next Steps: <br />• Approve resolution adopting central services cost allocation plan. <br />Effective Year 2019 2020 2021 2022 2023 <br />Actual Rate 13.01%14.44%13.36%16.89%13.25% <br />Adopted Rate 12.75%12.75%12.75%15.00%13.30% <br />Variance 0.26%1.69%0.61%1.89%0.05%