Title
Budget Spotlight: Cost Allocations
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Receive a Budget Spotlight presentation on Cost Allocations.
Report
Issue:
Whether to receive a Budget Spotlight presentation on Cost Allocations.
Staff Contact:
Joan Lutz, Senior Budget and Finance Manager, 360.753.8760.
Presenter(s):
Joan Lutz, Senior Budget and Finance Manager.
Background and Analysis:
The City of Olympia operates with multiple funds - such as the General Fund, Utility Funds and Special Revenue Funds. To maintain transparency and fairness in budgeting, the City allocates direct and indirect costs to ensure each fund and program bears its fair share of operating expenses.
Direct costs are expenses that can be clearly attributed to a single department, program or service. Examples include departmental employee salaries, contracted services, PC use and device rates.
Indirect costs are shared expenses that support multiple departments, programs or services. These typically include Human Resources, Information Services, Legal, Finance and Front Desk. Since these costs benefit multiple areas, they are allocated based on reasonable and supportable methods such as number of employees, transaction volume or service hours.
The City’s allocation plan is reviewed annually and updated as necessary under the guidance of federal standards such as OMB Uniform Guidance (2 CFR Part 200), even if not federally mandated, to ensure consistency and audit readiness.
Climate Analysis:
This agenda item is not expected to result in climate impacts.
Equity Analysis:
One of the goals of the City’s budget process is to ensure that city services are provided equitably to our residents and business communities, as well as the greater Olympia community. This agenda item is not expected to further impact known disparities in our community.
Neighborhood/Community Interests (if known):
Members of the community may have an interest in this agenda item as it deals with transparency, City finances and fiscal governance.
Financial Impact:
There is no financial impact associated resulting from this discussion, however, cost allocations impact rate models with direct and indirect costs.
Options:
1. Receive the presentation on cost allocations.
2. Do not receive the presentation on cost allocations.
3. Reschedule the presentation on cost allocations to a future meeting date.
Attachments:
Presentation