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