HomeMy WebLinkAboutAgenda Bill Item 3 3
CITY OF PETALUMA, CALIFORNIA
AGENDA BILL.
• Agenda Title: Meeting Date:
Resolution authorizing the City Manager to Sign an Agreement January 16, 2001
with Revenue and Cost Specialists=to prepare,a.Cost Allocation and
a Service'Study for the City
Department: Director,:.. k Contact Person: Phone Number:
Finance; William Thar William Thomas 778-4323
Cost of Proposal: $55,465 Amount Budgeted: $0
If authorized, will be included in the mid=year budget review
Account Number:
N/A
Attachments to Agenda Packet
1. Agenda Report
2. Proposals from Revenue and Cost Specialists and DMG-Maximus
Summary Statement:
The Finance Department is recommending that the City enter into an agreement with Revenue and
Cost Specialists to conduct a cost allocation study and a fee study (Service Cost Study). This
company provided the City with a bid of$55,465 to complete these two studies. The other company
that provided a proposal was DMG-Maximus, which submitted=a:bid.of$53,500. The City had a Cost
Allocation study done in 1996 and has not had a fee study done for at least twelve years.
•, :Council Priority: THIS AGENDA ITEM IS CONSIDERED To BE PART OF, OR NECESSARY To, ONE
OR MORE OF THE 1999-2000 PRIORITIES ESTABLISHED BY THE CITY COUNCIL ON JANUARY 30,
1999.
Priority(s): Establish Revenue Recapture,ancfRegeneration Program
•
Recommended City.Council Action:
Adopt the resolution authorizing the City Manager to sign an agreement with Revenue & Cost
Specialists.
,Reviewed by Finance Director: Reviewe s ` W : I rnev: A' rove' by Citv:.Mana er:
!!1 ate: , R Date:
odav's Da e: • Revision ti" , I :le-Revised( le Code:
4 S:/Agenda/al locationstudy
•
CITY OF PETALUMA, CALIFORNIA
January 16,2001
AGENDA REPORT.FOR .
Resolution Authorizing;the City Manager to Sign<an Agreement with Revenue and Cost
S'pecialiststto Prepare a Cost Allocation Plan arid Service"Cost Study
1. EXECUTIVE SUMMARY:
The Finance Department is recommending that the City enter into an agreement with Revenue
and Cost Specialists to conduct a cost allocation study and a fee study'(Service Cost Study). This
corripany provided the City with,a bid of $55,465 to complete these two studies. The other
company that provided a proposal was DMG-Maximus, which-submitted a bid of$53,500. The
City had a Cost Allocation•study done in 1996 and has not had a fee study done for at least
twelve years. -
2. BACKGROUND:
One of the City Council Priorities, as stated on January 30, 1999 was to establish revenue
recapture and regeneration•progrants. As,a means to achieve that goal the Finance Department is
recommending that a new Cost Allocation Study and Service Cost:Study be completed to update
the basis by which the City determines inter-departmental charges and the fees that the City
charges for the various services that it offers.
The last Cost Allocation plan was completed in 1996 and has not been updated since that,time.
• The City has been applying `cost of living' increases to the baseline figures that were established
four years ago to allocate administrative ,costs to the various funds. Although this method
generally will provide an adequate means of:determining what interdepartmental charges should
be, they do not take into account additional personnel, new business or reorganization of
tasks within the organization. Since all.of these have occurred within the last four years it is
prudent to have another study done.
A Cost-Allocation Plan is the allocation of indirect costs such as building maintenance,
accounting, data processing, personnel and other general administrative costs to either other
funds or to other departments. The consultant will be providing two types of cost allocation
plans. The first is the "full-cost" plan, which can be used for all internal charging. This method
includes,the ability to include general administrative charges: This will allow the-City to allocate
an appropriate share of general administrative costs to Enterprise and Internal Service funds
based on that fund's'use of general administration. It will also,be-used to allocate administrative
costs to the various Special Revenue and Capital Project funds' that utilize the City
administration. Overall, this plan will identify General Fund expenditures in non-general fund
activities and allocatethat cost to-those activities.
The other plan will follow federal guidelines and is referred to as the A-87 Cost Plan. This plan
is used to justify the allocation of overhead to federal grant programs. The federal guidelines
specifically exclude the costs for the legislative function and the portion of any department
• providing direct support for the legislative function. - This plan will be used to recapture City
expenses in administering federal grant programs.
•
The Cost of Service plan identifies all fee services and computes the full cost of performing a
typical unit of that service. 'Since the City has not had one of these plans completed recently, the
•
cost of providing these services have increased while a corresponding increase in fees has not
taken place. After developing a fully-burdened hourly rate for each staff person and
identification of services that are to be costed, fees will be set based on the information obtained.
As part of their proposal, they will also expand their service to include relationships between
City operations and funds. This will provide the ability to know, control and manage costs. The
result will be a businesslike:approach,to costs and the ability of City management personnel to
become cost-effective systematically.
Because,of the,importance of these two cost studies to the completion of the FY 2002 budget,
staff is recommending that they be completed as soon as possible. The consultant has indicated
that the cost allocation plan will be completed first so that it can be utilized in preparing the FY •
2002 budget. The Cost of Service plan will be completed so that the results are available for
Council consideration at the beginning.of FY 2002..
Staff is recommending that Council..select Revenue and Cost Specialist even thought their bid is
$1,965 higher'than the bid submitted`by DMG-Maximus. The reason for this choice is that
Revenue and Cost Specialists will provide the City with the complete softwarepackage1hat will
allow the annual updating of the cost allocation plans and the service cost Study without
additional costs.
3. ALTERNATIVES:
a. Reject Staff recommendation and provide authorization to contract with DMG-
• Maximus.
b. Reject staff recommendation and don't proceed with either the Cost Allocation.or
Service.Cost,plans. •
c. -Authorize City Manager to contract•with•one of the two consultants for only the
Cost Allocation or ServiceCost plan.
4. ,FINANCIAL IMPACTS:
This will require a separate action by the'Council at the mid-year budget review to appropriate
funds to pay for these studies.
5.. CONCLUSION,
The City last had a,Cost.Allocation plan done in 1996. Since that time the City has seen City
departments reorganized, additional staff positions, and new ways of doing business.
implemented. That study has been updated annually by increasing the costs.based on the latest
consumer price index. It has not taken into'account all of the other changes that have taken place
in the City. Therefore, the costs that are now being allocated most likely do not reflect the true
costs that are being generated by the various;departments of the City. Secondly, the City has not
recently analyzed the existing fee structure against the cost of providing that fee to the public.
This has resulted in fees that don't reflect the true'cost of delivering the service.
•
••
•
RESOLUTION OF THE.CITY COUNCIL OF THE .
CITY OF PETALUMA AUTHORIZING THE CITY MANAGER TO ENTER INTO AN
AGREEMENT WITH REVENUE AND COST SPECIALISTS,TO PREPARE A COST
• ALLOCATION STUDY AND A COST OF SERVICE PLAN
•
WHEREAS. the City desires to have a Cost Allocation Plan and a Cost of Service Plan
completed, and;
WHEREAS, Revenue and Cost Specialists have been identified as the preferred
consultant to prepare these plans,
NOW, THEREFORE BE IT RESOLVED, that the City Council authorizes the City
. Manager to enter into an agreement with Revenue and Costa Specialists to prepare a Cost
Allocation study and a cost of Service plan for a price not:to,exceed $55,465.
•
•
�1 evenue
� ost
� 51 ee al sts' LLC
.ice�:..t a.'W^? rt 7
Serving Local Governments Since 1975
December 18, 2000
•
William J. Thomas
Finance Director
City of Petaluma
1'1 English Street
Petaluma, CA 94953
Dear Bill,
Revenue & Cost Specialists, L.L.C. (RCS) is pleased to submit this Proposal to prepare
• a Cost Allocation Plan.and a'Service:Cost Study for the City of Petaluma at your request.
We look forward to being of assistance-to the City in assuring the financial viability of its
services as it continues to operate in an era in which.local governments must seek ways
to serve more economically and to finance more fairly the City services enjoyed by the
residents, business persons and organizations in the City.
Sincerely,
arq" 1/4-17-
RICK KERMER, CPA .
President
RK:II
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Voice:714 992 9d20 '4 2545'E Chapman Avenue Suite 103z•nFullerton;CA:192831 r3�+,7 Fax 714':992.9021, „
PROPOSAL
Background
The RCS-copyrighted. MBSystem is an analysis of revenues and costs for specific
operational functions or"service centers."The System applies private business costing and
management principles and practices to specific local government services. Revenues
and full costs for each such center are identified and':compared. Some practitioners have
recently coined the phrase, "Activity-Based Costing" and "Activity-Based Management" to
describe the work thatRCS has been doing for over twenty years.
Full Costs Identified,The'basicprinciple involved is the identification and recognition of full
operational costs following the Constitutionally intended business definitions, not just those
costs which are budgeted. Costs include, among others, salaries, full fringe benefits,
central service expenses, supplies, building occupancy and equipment usage,
departmental and general'overhead, fixed asset replacement, and miscellaneous costs.
.. • '.. -. - • -. " • " "Costs reasonably borne" incurred in providing each
service will be identified pursuant to the terms and intent of California Constitution Article
XIIIB (commonly known as Proposition 4) so that cost control can be improved significantly.
Another result will be specific identification of beneficiaries of services not received or
desired by the entire public so that service fees and charges can be set equitably, tax
4. subsidies known and limited or eliminated, if desired, taxes directed back to general
services and California Constitutional provisions and rate-limiting legislation complied with..
In other words, there is now in California, a Constitutional mandate for local government
to be conscious of what it costs to provide specific services, and,to know whether those
services are being supported by taxes, fees or a.combination of both.
RCS uses the definitions of"costs reasonably borne" set out by the Authors of Proposition
4 in their Constitutional, intent documents. Those authors represented the California
Taxpayers Association, the California Chamber of Commerce, the California Association
of Realtors, the National Tax L'irnitation'Co"mmittee, and`the`'"Spirit of 13, Inc." movement
of Paul Gann. Their definitions are those which must'be used by business. Thus the
requirement..to apply business principles and practices to government.
The MBSystem identifies all cost elements so that City management personnel can control
all costs, and be able to provide the City Council with meaningful policy alternatives due
to the availability of specific cost data relating to the provision of a specific service. As
important, such ;comprehensive and detailed data permits the City Council to make
meaningful policy decisions concerning the degree of tax subsidy, if any, to be provided
for each service and to know where taxes are going so that they might defend such to
constituents as appropriate and necessary.
•
City of Petaluma Service Cost & Cost'Allocation.Proposal
•
This process does not encompass capital exaction fees, commonly referred to as
Development Impact Fees.
Scope of Work
Cost Allocation Plan (CAP). A CAP is for the:allocation of indirect costs such as building
maintenance, accounting, data processing, personnel and other general administrative
costs to either other funds or to departments.,A typical use of a CAP is to allocate''general
administrative costs to a Water Fund based on that fund's use of general administration.
A more recent use of a CAP is to allocate an appropriate share of general,administration
to a planning department so that planning fees are recovering their full cost which(includes
the work of planners (a "direct cost") as well as the general administrative, support
necessary for the planners td function ("indirect costs").
When a CAP is used in California for allocating 'indirect. costs between funds or for
allocation indirect costs to services, Article XIIIB of the State Constitution provides that
costs:can include a reasonable share for general administration. However, when",used for
justifying the allocation of overhead to'a federal grant program,the federal;guidelines (A87)
specifically exclude the costs for the legislative function (city council) and the portion of any
department providing;direct support for the legislative function (such as a share of the city
attorney, city clerk and city manager). : .
RCS proposes to prepare two versions of a CAP that will meet both purposes. The final
report would Include a printed summary and detail (for both versions) of the
— Central Service Agencies (e.g. overhead departments)
Subpools of each Central Service Agency (CSA)
-- Allocation of each CSA's costs to the subpools of the CSA
Allocation Factors for each Subpool
•
-- Where each Subpool was allocated
-- The source of each department's allocation and a departmental rate which can be
applied against the department's direct salaries
RCS would prepare four bound copies and one unbound copy of each final CAP (Total and
A-87). Draft copies would be prepared'as needed.
Cost of Services — Single Unit.. The RCS process`for costing a single unit of service is
designed to•make the greatest••fiscal impact for the monies spent. It involves identifying all
fee'services and computing the full cost of performing one typical unit of that service. If
there are several types of a service provided, that service is broken down to each type so
that the unit cost is.:truly"representative.of that type. It involves the following:
A. Developing a Fully-Burdened Hourly Rate for all staff including:
2
City of Petaluma,Service•Cost,& Cost Allocation Proposal
S
1. Fringe Benefit Rates and Avail.-Work-Hours by MOU group
2. Allocation of department/division M&O to staff hourly rates
3. Allocation of building'occupancy, generaltoverhead, departmental overhead
&divisional overhead to the extent that it is not covered by the CAP to the
staff hourly rates (Note: Since the purpose of this version is "fee recovery",
the "Total .Cost" CAP rates are used.)
4. Allocation of department/division fixed asset replacement to staff hourly rates
to the extent fixed asset detail is provided
B. Identify services to`be costed:
1. Use existing;fee,schedules as a starting point, interview staff to determine if
services are provided for which there is no current charge.
2. Identify all departments/divisions.involved in providing the service
3. Interview relevant departments to identify which position provides the service
and the typical time for providing one unit of service. If the current fee
schedule does`notaccount"for a.service's diversity, RCS will subdivide the
service and cost each version.
4. Prepare a page for each fee identifying the primary service provider,
description of the service, who is the typical service recipient, detail of the
cost by position and recommendation for`feerevision,
5. RCS will review a draft of the above with staff to insure accuracy of the detail
and acceptanceof the recommendations,
6. RCS will prepare a bound report which includes as appendices the CAP
allocations, the staff fully-burdened hourly rates, and the service pages. The
text of the report will include a description'ofthe RCS process, summaries
of the findings, discussions of the options available to the Council for making
policy and a suggested process to°follow:This report will be initially prepared
in draft for staff review td insure its accuracy.
7. RCS will print ten copies=of the final report and°present the final report to the
Councilat a work session, public presentation or public hearing. Additional
report copies or'presentations would be at time and expense.
• • - 1 ' - — 11- 1 -. This enhanced service:costing process involves balancing
100% of the time of 100% of the City staff to the services'performed. It may not generate
more revenue for the City as it may show that some staff were over allocated when only
the time of a typical unit of service was considered. However, this process excels in
identifying how City resources are being utilized and typically generates staff and Council
decisions to discontinue a service onto re-engineer how the service is performed.
The following steps are performed in addition to the above steps for the additional fee
discussed below.
• 3
City of Petaluma Service Cost & Cost Allocation Proposal
•
A. RCS will *ark with departments to identify the total number of units of each service
that are likely to be provided in FY 2000-2001 and the staff effort expended for tax
services provided by each department.
B. RCS will prepare an analysis,of each department's/division's time allocations to
identify individual positions where the available work-hours are over/under
allocated. •
C. RCS will work with each department/division head to bring each position's time into
agreement.with,the fee/tax service times.expended by position. This effort may
involve numerous iterations of the analysis until City staff is,satisfied that the time
allocations are reasonably accurate. These iterations typically identify additional
services provided and provide a reality check to the time allocations for each
service.
D. RCS will expand the service cost appendix to include information on the total
revenue and total cost over all units of service provided.
E. RCS will include a chapter in the textual report identifying the,general tax'revenues
received by the City, the general tax services provided by the City, and the tax
subsidy to fee services.
F. RCS will include in the Report text a discussion of the City infrastructure assets and
the average annual replacement'of those assets necessary to maintain the integrity
of the City's infrastructure.
G. RCS will include summary schedules in the Report text identifying the total revenue,
total cost, total,profit/subsidy'and.potential fee/cost adjustments which the City could ✓�
adopt.
H. RCS will provide an additional meeting to'the City for the review and/or presentation
of the additional information at a work session, public presentation public hearing.
Result The RCS-copyrighted process,outlined above,will determine fair, equitable,legally
proper and consistent relationships between City operations ands funds. From the service
costing data ,comes the ability to know, control, and, manage costs. The result is a
businesslike'approach to costs and the ability of City management personnel to become
cost-effective systematically. As important, the City Council also is 'aware of any
discrepancies between fees paid and services rendered for any of the service centers,
thereby being able to both make policy as to the use of tax monies, and to judge cost-
effectiveness.
Software - -
The work performed by RCS will utilize the copyrighted software of our sister company,
Government Software Systems, L.L.C. (GSS). GSS has its own website (www.gss-.
software.com) and a national following for its Windows-based costing software. A demo
version of the software can be downloaded from the website.
4 •
City of Petaluma Service Cost°&Cost Allocation Proposal
S
The proposal includes the separate option of purchasing the complete software package
plus the applicable California sales tax: The complete package includes the "Indirect Cost
Module" which prepares the Cost Allocation Plans, the "Direct Cost Module" which
identifies the service costs, and the "Support Modules" which can be used for entry of the
fringe benefit detail, the building occupancy cost detail, and the fixed asset replacement
cost detail.
The purchase of the software.would.make it possible for the City to annually update the
cost allocation plan and the service cost study without additional cost.
Timing of Services
RCS will focus initially on the preparation of the Cost.Allocation Plan so that interfund
allocations are available for the preparation of the FY 2001-2002 budget. The remainder
of the work would be scheduled so that results are available for adoption at the beginning
of the new fiscal year. -
Fee for Services
The flat-rate fee for each component of our services based on the above scope of work is
as follows:
I. Cost Allocation Plan (includes and "A87""versions) incl. travel $ 9,500
II. Unit Cost of Services Study including travel $26,000
III. Enhanced Cost of Services Study including additional travel $13,500
IV. Complete Software Package including tax $6,465
The above fees cover all costs except the following:
• any business license tax imposed on RCS which is not waived by the City,
in and, attendance at any additional.meetings-which would be on a time and
expense basis.
These prices and the Proposal are good until January 31, 2001 .
S 5
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City of Petaluma Service Cost& Cost Allocation Proposal
ProjectStaff
Our professional qualifications are attached hereto as Appendix A.
•
Rick`Kermer. CPA, President,will direct all of the work, using one or more of the following:
Owen 0. Olsen, CPA,'Partner
Frio Johnson. Partner
Scott Thorpe, Partner
RCS is very interested in working with and for the City of Petaluma: The work would be
performed in a timely manner by principals of the company who desire to make Petaluma
happy, not just satisfied!
END
6 •
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APPENDIX A
RESUMES
ALBERT RICHARD("RICK") KERMER,JR.
EDUCATION . •
Bachelor of Arts - University of Chicago-Economics
Master of Business;Administration - University of Chicago-Accounting and Math Methods/Computers
•
•
PROFESSIONAL CERTIFICATION
Certified Public•Accountant, State of California
PROFESSIONAL EXPERIENCE
Management Services Institute and Revenue.&•CostSpecialists, LLC- President
(1979-Present);Chief Executive•Officer of a diversified management services company.
City of Buena Park-Director of Finance/City'Treasurer
(1976-1979)'Managed'a department responsible for administering the budget,and general accounting
plus water billing,'treasury management, business•licensingand data processing;of a full-service city.
Developed and implemented an integrated on-line,financial and program budgeting.system. Prepared
City's first Annual Financial Report for FY 1978-79 which received a CSMFO Meritorious Award.
Municipal Finance Consultant; Lecturer aridcAuthor
(1976-Present) Performed accounting and financial:assistance to numerous;municipal governments.
Assisted redevelopment agencies, housing authorities, and other specialized districts: Provided
contractual accounting services to cities'including service as Acting.Controllerof Compton.
Lecturer on governmental accounting, budgeting, cost accounting and risk management at the
University of Southern California. Speaker at several;League of California Cities meetings on,risk
management and cost accounting. Co-author of several articles on risk management by
the Municipal Finance Officers Association and Western Cities magazine. Co-author of the League'
of California Cities publication, Cost Accounting for California Cities.
City of Lynwood-Fiscal Officer
(1975-1976) Created Finance Department, Established centralized purchasing and review of
accounts payable. Administered:risk management program. Organized utility billing system for
accounting control and follow-up on delinquents.
Lance,.Soll &Lunghard, CPAs-Senior Auditor
(1971-1975) Audited the Cities of Bell, California City, Claremont, Costa Mesa, Duarte; El Monte,
Lynwood, Montclair, Oxnard,Rialto,San Dimas and Whittier. Recommended warrant processing and
receipting procedures: Reviewed-internal control and recommended changes to strengthen same:
Prepared' annual financial reports and monitored adherence to generally accepted accounting
procedures.
Publications: .
Co-Author of c,nstAcr:rn rating for-California Cities, League of California Cities, 1981 Sacramento, CA
•
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•
ALBERT RICHARD ("RICK") KERMER,.JR.c(continued)
CLIENTS SERVED
• SERVICE COST STUDIES; SERVICE'COST STUDIES(coot.)
City of Alhambra Cltyof Slerra.Madre
City of Banning City of Solana Beach.
City of Big Bear Lake City of South Gate
City of Brea City of South Lake Tahoe
City of Carlsbad City of Tulare.
City of Carpinteria City of Turlock
City of Ceres City of Upland
City of Chino Cityof Villa Park .
City Of Claremont City of Vista „ .
City of Coachella City of Westminster
County of Contra Costa City of West Jordan,Utah
City of Corona
City of Cudahy COST ALLOCATION PLAN
City of;Dinuba City of Alhambra ,
City of,-Dublin,Ohio City of Buena Park .
City Of Folsom - City of Carlsbad
City of.Fontana City of El Cajon
City of.Foster City City of Lynwood:
City-of Goodyear,Arizona City of San Rafael .
City of Hemet City of,Solana'.Beach
City of:Highland
City of Huntington Beach 'CASH MANAGEMENT
County of Imperial City of Buena Park
City of La Mirada City.of Commerce
City of La Palma City of Compton
City of Lake Forest La Mirada Civic Theater •
City.of.Lemoore City of Palmdale
City of Lindsay
City of Los Altos ACCOUNTING{PROCEDURES
City of Lynwood City of Buena.Park.
City of Mammoth Lakes •� CommerceRed
• Redevelopment Agency
City of Marina City of Compton`
City of Merced -rCity of La Habra .
City of Milpitas City of La Palma
City.of Monrovia ' City Of Morgan Hill
City of Monterey City of.Palmdale •
City of Moreno Valley South Gate Housing Authority
City of Morgan Hill DATA City of Norwalk
City of Oakdale City of La Patina.
City of Oceanside. Ontario-Montclair School District
Oceanside Harbor Distract City of Palmdale
City of Palmdale City of Sao Clemente
City of Palm,Desert City of South;Gate
City of Pasadena City of Villa-Park
City of Pittsburg mona
City of Pom ORGANIZATIONAL AND MANAGEMENT
City of Port Hueneme City:of Lai Mirada
City of Rancho Cucamonga Ontario-Montclair School District
City of Rancho Palos Verdes City of South Gate
City of Red Bluff City of Vista
City of Redlands
City of Rialto UTILITY'-RATE STUDIES
.
City of Richmond Ci ty,'of of '
Chin Brea o .
City City of Riverside
City of Rocklin • _ City of El Segundo
City of Salinas.
City of San Clemente . - LONG RANGE FINANCIAL PLAN
City of San Juan Capistrano City of Chino
- City of San Rafael City.of Cudahy
City of Sanger Citylof.Lake;Eisinore
City of Santa Clarita - City of South Gate
City of Scotts Valley City.of Hesperia
City of Seal Beach City of Turlock
City of Selma •
OWEN O. OLSEN
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EDUCATION
•
Bachelor of Arts-'University Of California-at Los Angeles
Accounting,Auditing and Taxation - U.C.L.A. Extension
Accounting and Law'-Florida Southern College=:Lakeland, Florida.
PROFESSIONAL CERTIFICATION
Certified Public Accountant-California
PROFESSIONAL EXPERIENCE
Revenue &'Cost Specialists&ManagementServices Institute`-Partner
(1981-Present) Providing financial and accounting type services for municipalities, counties and special
districts.
Certified Public Accountant
(1980=1981)Consulting accounting services for the cities of Costa Mesa:Duarte, La.Mirada, Palmdale, and
South Gate Housing ;Authority; audited Central Basin Municipal Water Districts; audited Southeast
Recreation and.Park District for the cities of.La Mirada and Norwalk, performed services for the Retirement
Plan for Safety Employees of the City of Costa Mesa; compiled financial statements for corporations,
partnerships and sole proprietorships, prepared tax returns for corporations (profit-and non- profit),
.partnerships,estates(Form 706,and 1041)and individuals; represented clients before the Internal:Revenue; sik
Service, Board of Equalization, Franchise Tax Board, County Property Tax Assessments, as well‘as other
related•services.
Lance,Soli &Lunghard-CPA
(1967-1980) Supervised audits, prepared financial statements and provided management services.to
various-sized.cities,s special districts and'authorities;°provided accounting and tax-services for diversified
corporations, partnerrships, estates, and.individualsl
Alert Refractory Corporation, Florida
(1965-1967)`Managed corporate finances;for three interrelated corporations that performed,contracts work
in Alabama, Florida, Georgia, North'.Carolina; Illinois, Louisiana, New Mexico, and Canada. .
•
Mentor Engineering Corporation, Florida-Treasurer
(1961-1965)'Managed corporate•finances for an engineering corporation that serviced aerospace and
defense industries clients. A Security,clearance"was Iequired.
State otCa1ifornia•Disabili ty Insurance'Officer
(1957-1961)Claims Examiner for the,Department of Employment.
•
OWEN O. OLSEN
CLIENTS SERVED
SGANN APPROPRIATIONLIMIT Canyon Lake
CITIES/TOWNS Highland. .
American Canyon. Lake Forest
Avalon Murrieta
Azusa. Santa Clanta
Banning Yucca Valley
Bell Gardens -
Carson MUNICIPAL.BUSINESS SYSTEM COST STUDIES
Chino: City of:Hollister
Chula Vista. City;of Norwalk
Compton City of Pomona ,
Coronado City Rancho Palos Verdes
Cotati City,of Seaside
Cypress City of.Stanton
Del Rey Oaks City of Tracy
Fontana - Town of Truckee
Hawthorne County of,Contra Costa
Irwindale County of Imperial
La.Mirada
La Palma DEVELOPMENT IMPACT FEES-AB 1600
'Lake Forest City of.Chino
. Lincoln City of Hemet
Lynwood City:.of Palmdale
Mammoth Lakes
Marina FINANCIAL ACCOUNTING
Montclair City Coachella Ind Coachella CRA
Morgan Hill City,of,Compton and Compton CRA
Pacific Grove City:of Cudahy.and Cudahy RDA
Palm Desert Cityof Fontana
Pismo Beach City of Garden Grove(Contribution In-lieu for Street Damage)
Rancho Mirage City of Hawthorne and Hawthorne RDA
Redlands City of La Mirada and La Mirada RDA
0 Rocklin City La Palma and La Palma CDC
Sand City . City of Morgan Hill
Santa Clanta City of Pacific Grove
Santa Monica City.of Rialto '
Solvang City.of South Gate
Truckee City of Taft and,Taft RDA
SPECIAL DISTRICTS City of Westminster
Carpinteria Sanitary District San Bernardino County City Managers(Booking Fees)
Cypress Parks&Recreation District
San Bernardino Mtn.Comm.Hospital District AUDITING
Summenand Sanitary District
City of'Arcadia
BOND ISSUES=CASH FLOWS. City of Bell
City of Banning Cityof Bellflower
City of Big Bear Lake City of,California City
City.of Chino and Chino RDA City of-Claremont
.City.of Coachella and Coachella RDA City ofCosta-Mesa
Cudahy;RDA Cityof Covina
City of El Segundo Cityof Duarte
City of Fontana City-of El Monte
City.of Hawthorne City of.Fillmore
City of La Mirada and La Mirada RDA CityiofHuntingtonPark
La Palma CDC CityofLynwood'.
City of Redlands City of
. City of Taft City of Oxnard
Visalia RDA • • City of;Rialto
Central Basin Municpal Water Dist.
HOUSING-AUTHORITY-SECTION8 Central&West Basin Water Replenishment Dist.
' City of Hawthorne County of Los Angeles-San Dimas`Civic Center Authority
City of South'Gate El Monte Chamber of Commerce
City of Norwalk Glendora L ovary%ithority
La Habra Heights Mutual Water Co.
. NEWLY INCORPORATED CITIES/TOWNS- Lynwood Chamber ofCommerce
PROPERTY TAX TRANSFERS San Dimas-Laverne Recreational Authority
American Canyon South East Recreation&Park District
Calimesa
•
ERIC S.JOHNSON
EDUCATION is
Bachelor of Arts-University ofiRedlands, Redlands,California
PROFESSIONAL EXPERIENCE
Revenue&Cost Specialists/Management Services Institute-Partner
_ .
(January 1990-Present) Provide general financial management assistance to municipalities,counties, and•specta
districts.
Unit Distribution-Customer Service.Representative
(Jul/1989-January 1990) Administered a distribution account for client and acted as a liaison between client and
their customers.
City of Redlands∎RedevelopmentAgency-Redevelopment Intern
(November 1987 'May 1989) Researched issues relate&to Redevelopment for the Director. Audited the Agency
budget. Researched-and reported on the Agency's 20% "set-aside" responsibilities for Low;& Moderate Income
Housing;
CLIENTS SERVED
MUNICIPAL.BUSINESS SYSTEM COST STUDIES PROPERTY TAX TRANSFER
City of,.Banning City,of American Canyon.
City,of Carlsbad Town of Truckee
City of.Corona
•Contra.Costa County GANN APPROPRIATION LIMIT'
City of Dublin;;OH • San Bernardino Mts.Community Hospital'.District 0
• City of Folsom Town of Truckee
City of Highland
City of Huntington Beach COST ALLOCATION PLAN
Imperial County City of Carlsbad ..
City.of La Puente Coachella ValleyAssociation of Governments
City Of Lincoln County'of;Cobb,GA
City of Lindsay City of Corona
City of Loma Linda City of Folsom
City of Long•Beach Marine Bureau City of La Puente
City of Milpitas City of Lynwood
City of Monterey County,of,San Bernardino Special Districts'
• City of Morgan Hill City of Santa Paula
City of Pico,Rivera City of Seaside .
City of Redlands' City'of Soiãna Beach .
City:of Rialto City of Thousand Oaks
City of Santa;Clarita City of Tracy
City of Santa Paula County of Tulare
City of Seaside
City ofSolanaBeach SOFTWARE TRAININGIINSTALLATION,
City of South Lake Tahoe. - . ,City of Carlsbad
City of Thousand Oaks' City of Carpinteria •
City of Tracy • City of Dublin,OH
Townof Truckee Imperial County
Ventura County Fire District City of Lake Havasu.City,AZ •
City of West Covina City of Lama Linda
City of West Jordan,Utah City:of Monrovia
City of Westminster - City of Red Bluff
_ City of Yuba City •• City of San Rafael
' City of South Lake Tahoe
Institute Of Public Affairs, Univ.Of So. Carolina
•
• SCOTT IAN THORPE
EDUCATION
Bachelor of Public Administration-San Diego State University
Master of Public Administration -California State University Fullerton
PROFESSIONAL EXPERIENCE
1 ue Present Principal Services Institute -Senior Vice.President
Revenue -Pies(1985-Present) in a municipal management services company providing diversified financial
services.
City of Brea-Management and Budget Manager.
(1984-1985) Responsible for development of budget preparation and;:management information reporting
systems. Created,and established a 50-workstation personal computer operation from acquisition,
placement, and maintenance of all equipment to initial and on-going training. Created a comprehensive
legislative program for reviewing'all state, and local legislation..
City of Anaheim -Management Auditor
(1979-1984) Assisted in the preparation of $350,000,000 annual budget. Provided centralized
management support and assistance of,line departments�with a°variety of services including work
measurement and management techniques program development, productivity improvement, internal
management audits, budget review/analysis, revenue forecasting and auditing, data processing systems
• development. Specialized in management assistance;to stadium, convention center, and golf operations.
Responsible for fiscal and management training sessions required of all city management staff.
City of Covina-Administrative Assistant to ttie City Manager
(1974-1979)Performed general program development with significant emphasis on the improvement of
the budget, legislative, public information, and agenda process systems. Conducted major annexation
study and effort.
City of Chula Vista-AdministratidetAide
(1973-1974)Completed City-wide Policyl'and Procedure Manual. Conducted operation reviews of long
term fire vehicle equipment purchases and'of the municipal bus system.
OTHER ACCOMPLISHMENTS
ABC Elementary School District Closure.Project-Enrollment Projections
Charter Oak.Unified School District Closure:Committee-Board Appointee
Lecturer on various municipal government/management topics.
PUBLICATIONS
"Financing Capital Improvements"; Journal American Water Works Association, August, 1991,;pages 50-52
"Impact Fees: Practicat.-Guide for Calculation and Implementation", Journal of Urban Planning and
Development,Vol. 18, No. 3, September, 1992, pages 106-118
•
SCOTT I.THORPE
(continued) •
CLIENTS SERVED
DEVELOPMENT,IMPACT FEES MBSYSTEM COST STUDIES(Cont.) '
. City,of.Upland,CA
City of.Barstow,CA City of West Covina,CA
Brigham City Corporation,UT County of Ventura,CA, Fire District
City of Carpinteria,:CA • : County of Imperial;CA
,City of Chino, ll MBS'SOFTWARE INSTALLATION/TRAINING
City ofCoachella,CA -
City of Corona,CA, City of,Bend,OR
City of;Folsom,.CA . City ofKennewick,WA
City of,Glhoy;CA;Review of Existing DIFs City of Taft;CA
City of;Her`net„CA
City of Highland„CA ', MASTER FACILITY PLANS!CIPS '
City of Lake Havasu City,AZ ' City of Big Bear Lake,CA(5/10 year)'
City of.Lemoore;;CA• . Brigham City,Corporation;UT
Town.of,Mamrnoth Lakes;CA „ . City.of Carpinteria,CA
City of Morgan Hill,CA City of Chino,CA
North Ogden City,UT City of Corona;CA
Town of Paradise;>CA City of Folsom,'CA
City.of.Reediey,CA City of Highland,CA
City,of;Rialto,CA City of Lake Havasu City;AZ .
City.of Riverside;•CA,City-wide Town of Mammoth Lakes,CA
City.of Riverside„CA,Fire Services North Ogden City,UT'
City of Riverside,CA,,Parks&'Operations Services -Town ofParadise,CA
City:'of Sedona;AZ City of Sedona-AZ
City of Selma,CA City of Selma,CA
City of Sierra Madre,CA South,Jordan City,UT
SANBAG • South Ogden City;UT
County of San Bernardino,CA City of Tracy,CA,Public Facilities
City of Scotts Valley,CA ., •. West Jordan City,UT
• South Jordan City,UT - - .
Soutn'•Ogden City;UT -
City,of<Tracy,CAPublic Facilities MISCELLANEOUS.PROJECTS
West Jordan City,UT' city-of Azusa, CA - Bldg. Plan Checldinspection Process
City of Tulare,CA Review
City of.Colton,CA-:Utilities Collection Procedural Manual
MUNICIPAL-BUSINESS SYSTEMCOST STUDIES City of Fontana,CA-General&•Departmental Overhead;Plan
City'of Azusa;CA City of Hemet CA-Supplemental OW Public Peril Report
City of,Banning,.CA 'City of Highland,CA-:Capital Financing Plan
City of Brea,CA City of.Highland,CA:Fee and Rate Schedule
City.of Bend,;OR City of Lake Havasu City;AZ Capital;Financing;Plan
City of.Carpinteria;CA .Las Angeles Fire/Police.Retirement System--Fiscal Review.
City of Carson,CA City of.Redlands,CA-Corp Yard Debt Financing Cost Dist.
City of Chino„CA City of'Redlands, CA-Solid Waste Collection/Landfill Rate
City.of.Corona,CA Study
City of Cotati,CA Cltyof.Redlands,CA-Street Sweeping,Rate Study
City Of Fontana,CA City of Port Hueneme CA Revenue Search.
City of.Hespena,CA _ ,San Bernardino County, CA, Special Dist: Office, Finance
City of Highland,CA - _ Review
City of Kennewick,WA - South Lake Tahoe;CA-Transfer of.Custody Cost Verification
' City of Lake Elsinore,CA Town of Windsor,CA-Long RangeCapital Financing Plan ,
City of Long Beach;CA,''Madne Bureau
City of Lynwood, CA•
City of Ontario,CA, Fire Department - MUNICIPAL CODE REVIEWS.
City of:Porterville,CA `City. of,Milpitas-Business License Ordinance Review, •
City ofRancho Mirage;CA City.of Pico Rivera-Business License Ordinance Review
City of Redlands;CA
City of Rialto,CA •
City of.Rocklin,CA INTERNATIONAL MANAGEMENT TRAINING'
City of Shafter,CA Slovenia'Ministry of Local Affairs(municipal.services)
South Jordan City;UT Philippine Ministry of Economic and Capital Development •
City of Taft,CA ' .
•
AXIMUS -
Petaluma, California
• . ,PROPOSAL FOR .
COST ALLOCATION.PLAN AND
• . -USER FEE'STUDY
-
.•^ ,f
AXIMUS
! 4.aa
Helping Government Serve The People •
•
.. Submitted:
' December.18, 2000
Dq
• `' AXIMUS
'€;;-1-'-• Helping Government Serve:.The People
Mr. William Thomas December 16, 2000
Director of Finance
. City of Petaluma
P.O: Box 61 •
Petaluma, CA 94953
Re: Cost Plan and User Fee Study Proposal
Dear Bill,
•
I appreciated the opportunity to talk with you recently about the opportunity to provide the
City of Petaluma with a comprehensive cost of services study. As you know DMG-
MAXIMUS has provided the City with several services over the years, including a cost
allocation plan several years ago.
I believe that Petaluma could'significantly benefit from the preparation of a Cost Plan and Cost
of Service (Fee) Study by DMG-MAXIMUS. We are ready to begin work on this project upon
approval of this proposal. Please feel free to contact me at (916) 485-8102 if you wish to
discuss any additional details. We look forward to'continuing our relationship with you and
• the City of Petaluma.
Enclosed for your review is an example of a cost allocation plan;and user fee study.
Sincerely,
RICHARD L. PEARL
Vice President
•
Attachments
•
•
4320 Auburn Boulevard, Suite 2000 • Sacramento, CA 95841 • 916.485.8102 • FAX 916.485.0111
Cost Allocation Plan and User Fee Study Proposal
Petaluma, California
• 'TABLE OF CONTENTS!
BACKGROUND 1
Summary 1
Cost Plan Rationale for Petaluma- 1
Fee Study Rationale for Petaluma 1
DMG-MAXIMUS 2
PROJECT DESCRIPTION 4
PROJECT SCOPE AND DELIVERABLES 4
Proposed Scope 4
Exclusions and Limitations 4
Proposed Deliverables 5
PROJECT COST AND SCHEDULE 5
Proposed Cost 5
Proposed Cost for Each Fee Service Category 5
Reduced Study Cost Scale 5
Project Payment Schedule 5
Potential Project Schedule
METHODOLOGY AND APPROACH 6
CONCEPTUAL STUDY FRAMEWORK 6
Cost Allocation Plan 6
•
i
December 18, 2000
Cost Allocation Plan and User Fee Study Proposal
PetalumaCalifornia
117:11111111 WEO IKONS V meaty
User Fee Analysis 7
Public Policy Matrix 8
. Public Policy Fee Matrix 9
•
• OVERVIEW OF OUR APPROACH 10 i
WORK PLAN 11
1 Summary 11.
Specific Tasks`to be Performed 11,
WorkplanFlexibility 15
STAFFING PLAN 15
Summary • - :15 .
Project;Roles 15
Project Staff 16
City Staff Requirements • 18
CONCLUSION • 19
Summary, -_ ._ 19
References and Staff Qualifications , ' 19.
Proposal Approval 20
December 18, 2000
Cost Allocation Plan and User Fee Stud?
Petaluma, California
• • 113ACKUROUND
Summary
Like most cities and counties in the United States, the city of Petaluma would benefit from an
increase in revenue through improvements in the efficiency, appropriateness, effectiveness,
and understanding of some Of',the tools used to collect revenues. DMG-MAXIMUS can help
the city of Petaluma address this issue. We propose to conduct full-cost and OMB A-87
citywide cost allocation plans, and a cost of service "user fee" study for the city.
This proposal describes the benefits the city will receive from these studies, as well as the
services we will provide to accomplish the city's goals and objectives.
Cost Plan Rationale for-Petaluma
By using our rigorous approach;professional staff, and proprietary software,:a.DMG-MAXIMUS
cost allocation plan will detail the appropriate administrative support costs to each city
department. We normally prepare a full cost plan for internal charging and a separate plan that
fully complies.with OMB Circular A-87 for claiming federal and state grants and other external
revenues. The benefits of a.quality'cost plan include:
• • Ability to charge federal sand state grants (SB. 90, CDBG, gas tax, Section 8 Housing) to
maximize recoveries through inclusion of indirect costs..
• External and objective support internal charging, which can reduce criticism and mistrust
within the City.
• Enhanced cost recovery for'central service depattiuents-and functions.
• Opportunities to increase revenue.
• The cost allocation plan' usually pays for the cost of the entire study, due to the
additional allocations of general fund costs to externally funded programs and other
opportunities.
Fee Study Rationale far Petaluma,
We understand that the City has not formally-or rigorously' reviewed is. user fees in many
years. The increased cost of providing services over time, without a corresponding increase in
fees, typically causes an under-recovery of costs. Furthermore, without a complete cost
allocation plan,the fees most likely do not include all of the applicable'costs. Finally, the city
may be inadvertently overcharging for services, .which:contravenes the traditional government
concept of charging only up to the full cost of the'service,provided. These three factors will
cause a fee schedule to be obsolete. Consequently, Petalurrfa'Would likely benefit a great deal
from a current review and recalculation of the user fees; by recovering a greater percentage of
your costs, and more fully understanding the true cost of providing certain services.
•
Page 1 of 20 December 18. 2000
_ Cost Allocation.Plan and User Fee Study
Petaluma, California'
Just like the cost-recovery ability of a cost plan, our experience shows that user fee studies
normally result in the same situation—the legitimate increases in fees made possible by the true •.'
calculation of costs often exceeds the cost "of the fee study, by as much as five times.annually.
This benefit is above and beyond any additional tangible and intangible benefits you would
receive, including:
•
. • • ,Knowledge of the full cost of fee-related services
• Knowledgeof the current subsidy or over-recovery of the cost of fee-related services.
• • Comparison of;fees<levels with other jurisdictions.
• Identification ofopportunities for additional revenue. •
• Identification of potential new fees for services.
•
DMG-MAXIMUS cost of service studies are uniformly implemented because of our attention
to the social, economic and political impacts of our analysis. •Our numbers are totally •
supportable, our recommendations are realistic and implementable, and we add value to the
study bycontrasting the client's fee schedule With other comparable cities,
DMG-MAXIMUS
As the largest, firm in the United States specializing in local government- consulting, DMG-
MAXIMUS has long been pre=eminent in preparing cost allocation plans and cost of service
studies. We also provide a wide range of other fiscal and management .consulting: services.
DMG-MAXIMUS has,35 offices and more than three hundred consultants:nationally.
DMG-MAXIMUS, originally known,as David,M. Griffith and Associates, Ltd., was founded in
1976 In May 1998 David M. Griffith and. Associates,. Ltd. merged with. MAXIMUS, Inc.
• DMG-MAXIMUS is recognized as the leading firm providing a broad range of management,
financial, operational, and human resource consulting services to local rand estate governments
• throughout the country. Our clients include over 2;000 governments, universities, and other
public sector and.not-for-profit organizations.
Consultants of DMG-MAXIMUS have been.called.upon to examine virtually every facet of local
government'operations.. 'Major public sector services offered by DMG-MAXIMUS include:
• Cost allocation and indirect overhead;rates
• Cost of Service:analysis (activity-based costing,.fee for service, user fee, etc,)'
• Revenue enhancement (impact fee;,analysis, TOT audits, revenue maximization)
• Operations improvement and performance measurement •
• Fleet;managementconsulting. • ,
o Internal Service'>fundanalysis
• Executive tree ruitment
• Franchise fee/transient occupancy tax audits
•
•
Page 2iof 20 - December 18, 2000
_ Cost Allocation.Plan and User Fee Study
• Petaluma, California
•
• State Controll"er's Report preparation (California)
State mandated cosrrecovery (California SB 90)
The DMG-MAXIMUS Western Region is headquartered in Sacramento, California, with
additional offices in Oakland;. Irvine (Southern California), Portland (Oregon) and Denver,
Colorado. There are 35 professionals in the Western Region.
Our goal is to provide the best 'possible service in order to meet the City's needs while
maintaining the professional integrity of the product: We;built our.cost of service practice on
the:foundation that we continue to be the most knowledgeable and technically advanced company
that provides these services. We not only have extensive experience in cost plan and user fee
studies, but also have been.leaders in the,development of software specific to these applications.
We believe that we set the standard in activity based cost analysis for local agencies.
DIM-MAXIMUS is a large. firm. The size and breadth of our firm is advantageous to our
clients because of our capability to provide virtually seamless;consulting service covering many
disciplines. The firm, however, has never forgotten its roots or the reasons for its continued
growth, which is based on individualized service, quickly and professionally provided. •
DMG-MAXIMUS is the leader in providing user fee cost analysis services to local
governments in the nation. With hundreds of fee study 'clients and many years of experience,
• we can expertly and efficiently prepare a user fee analysis for Petaluma. Specific highlights of
our experience include: .
• Experience with Indirect'Cost Allocation Plans and Cost Recovery. DMG-MAXIMUS
consultants prepare cost allocation plans annually'for over 1,500 state„ local, and special
district government agencies. Our,California office has produced hundreds of cost plans.
This experience with so many different jurisdictions enables DMG-MAXIMUS consultants
to quickly and -accurately analyze agency operations and determine the most beneficial
method(s) for recovering indirect costs. Furthermore, DMG-MAXIMUS consultants
perform all necessary,data collection tasks and work tominimize staff disruption.
e Experience with user fee studies. Our Western Region has performed'over 75 user fee
studies since 1983. The studies were for clients whose population size ranged between 8,000
up to 500,000.
• Implementation. The best study is of no value if it is not implemented. A hallmark of our
approach is that positive things happen: (1) city"management and the community recognize
the impact of user fee services on the general fund, and (2) based on the former, your city
council can increase fees and reduce or eliminate user fee.subsidies.
"Page 3 of 20 - December 18, 2000
_ Cost Allocation Plan and User Fee Study
Petaluma. California •
PROJECT SCOPE'.AND DELIVERABLES •
Proposed Scope
• •
The DMG-MAXIMUS study will include two costallocatton plans (full-cosband.A-87), and an
analysis of the following fee for service .areas;_, planning, engineering, building and safety,
police; fire, and recreation. For building and safety, DMGMAXIMUS will provide its Nexus
model analysis. Building and safety fee schedules have traditionally been implemented based
•on building valuation and the Uniform Building Code fee schedules. This format is in question
due to the fact that there is no,discernable relationship between the fee schedule and the
services provided. DMG-MAXIMUS has 'developed a new schedule based on the cost of
providing services to specific categories, i.e. single'fam ilyresidences (tract, custom),retrofits,
commercial (by category) industrial (by category), etc. We believe this is the most legally
defensible format for a.political jurisdiction.
Exclusions and Limitations
It is important to also note the exclusions from our proposed services. DMG-MAXIMUS
study will not include:,a review of any taxes or impact fees. . Regarding impact fees, we':have.
performed many of these studies for cities in many `states, and would be pleased to offer a
separate proposal for the city's consideration in this area, at the city's direction.
Proposed Deliverables
DMG-MAXIMUS will provide:
•
• A series of worksheets illustrating the appropriate allocations of central services costs
to other Petaluma departments; s
• A cost of service fee analysis, showing the full,cost of providing the services (allowable
fee levels), the current fee amounts, arid'the"resultant current.Petaluma fee subsidies.
• A summary report documenting our findings and, at Petaluma's request, a presentation
to the city council to explain our methodology and findings.
•
•
•
Page 4 of December 1'8,.2000
_ Cost Allocation Plan and User Fee Study
Petaluma, California
• PROJECT COST AND SCHEDULE
Proposed Cost
The most efficient, cost-effective, and beneficial user fee study approach is to eneage DMG-
MAXIMUS to complete a comprehensive cost allocation plan (full cost and OMB A-87) and
user fee study for the entire city (following departments: planning, engineering, building and
safety, police, fire, recreation). The full cost for this project will be $50,000 plus a maximum
of $3,500 in expenses. Please note that our cost of-service studies traditionally return at least
five times the project's,cost, annually..
These fees incorporate all proposed,consultant labor and expenses,: including the cost for two
presentations to the city council. Additional'consulting services and presentations are available
on a time and actual expense basis.
We propose the following paymentschedule'for convicted project tasks:
Project Payment Schedule
• Milestone I % of Total'Cost
:Draft Cost Plan 25%
• Draft Fee Analysis 40.%
• Final Cost,Plan 255
Final Fee Analysis 10% ..._.
• TOTAL 100To
Potential Project Schedule
With good cooperation from a city,, 'DMG-MAXIMUS can complete a cost plan/user fee study
project in four months from contract execution.
•
•
Page 5 of 20 December 18, 2000
•
Cost Allocation Plan and User Fee.Studi:
Petaluma, California
Io, ., • 1 • ® lt . i�•1, h • 'J
•
CONCEPTUAL STUDY FRAMEWORK
The. DMG-MAXIMUS fee and charges analysis, includes two distinct components: the cost
allocation plans, and the user fee(fee for-service) analysis.
Cost Allocation.Plan
A cost allocation analysis 'distributes ,central service and other administrative support.costs to
the users of those services. Typical central service providers include finance, city manager,
purchasing; facility maintenance, personnel, city attorney, and other functions providing
services to other city agencies. The list is sometimes expanded to include departmental
administration, such as public works administration, community development administration,
and other functions that have only a limited breadth of services. •
The objective of this analysis is to provide information to help the city determine the full costs
•
of providing"line'? services. The cost plan identifies the,indirect/overhead allocations to be
added to a program's: direct costs: The combination of -direct costs and the, indirect costs
identified in the Cost Allocation Plan comprise the;total program costs. The DMG-MAXIMUS
approach allows management to see how much it,costs to provide public and internal services. .
This information is helpful in addressing internal charging issues, as well as enabling the
evaluation of-privatization and contract services issues. A Cost Allocation Plan is essential for
the development:and.consideration of costs-included in a Fee Study.
Other uses of the;plan include:
• Charging indirect overhead to federal and state grants (e-g., SB 90, CDBG, Housing
• (Section 8), and Gas Tax).
• Charging external agencies and funds their fair share of support costs (e.g.,
redevelopment agencies and enterprise funds).
•
The cost `allocation methodology followed by DMG-MAXIMUS, (double step down, cross
allocation)is derived from the federal government's guidelines for cost allocation: OMB A-87.
Specifically, the,format is the most rigorous of the four allowable formats, and we believe it
provides the best, most defensible results. The, methodology is 'approved by the California
State Controller's.Office for inter-governmental .cost claiming: The DMG-MAXIMUS system
produces specific allocations from the central service departments to user operations, but we •
can also•use`the system to create percentage overhead rates for users. This information can
help the city develop burden rates and full-cost productive hourly rates.
•
•
•
Page 6'of2.0 December 18:2000
_ Cost Alideation Plan and User Fee Study
Petaluma, California
• In the cost plan, we subdivide each central service into discrete missions, or functions, then
distribute indirect costs to each user of service based' on`proportionate. usage. While the
detailed cost plan document tends to be voluminous, we. also prepare summary schedules
(located at the front of the report) to enable easier reading and understanding of the outcomes.
The remaining sections provide the distribution methodology and work papers. There are no
hidden allocations or accounting tricks, so both the providers of services and the receivers of
those services,can analyze the data and ultimately feel comfortable that they were treated fairly
in the distribution.
User Fee Analysis
•
A DMG-MAXIMUS User Fee Study determines the full cost of services offered by the city for
which user:fees are currently being charged or could be charged. We compare the full cost of
the services to the agency's fee schedule to determine the amount of subsidy (or occasionally,
overcharge). DMG-MAXIMUS can also assist in understanding economic issues related to
fees, such as elasticity of demand, and we can provide information on what other jurisdictions
charge for similar services. With the additional knowledge from our study, the City can make
informed decisions concerning appropriate fee adjustments to increase revenues or ensure that
charges are consistent with costs:
The underlying rationale to charge:full cost for user fees is simply this: the city is providing a
• distinct service or product to a business or individual that is gaining_a monetary, emotional, or
recreational benefit. Equity principles suggest that others who :do not receive the benefit
should not subsidize individuals or businesses that do receive-the benefit. For example, why
should a long-term resident living downtown contribute towards a subsidy to a developer
• opening up a new subdivision on the edge::of town?
Historically, cities generally did not stress subsidy issues, since there were alternative tax
avenues or sufficient resources available to fund government services. With increasing service
demands and reductions in state and federal contributions;,revenue-related issues have come to
the forefront—and subsidies impact revenues. We recognize, however, that there are
circumstances and programs that may warrant a subsidy, such as youth, senior, and
disadvantaged recreation programs, certain, classifications of code enforcement, library
services, etc. The issue of fees and subsidies is, basically, a public policy consideration. The
city ultimately needs to decide which fees and services to subsidize, and DMG-MAXIMUS can
provide the information necessary to make an informed decision.
To clarify.the concept, DMG-MAXIMUS developed a service/benefiting agent matrix to help
place the subsidy issue in proper context. The. matrix shown on the following page presents
the conceptual basisfor typical fees and potential subsidies:
•
Page 7 of 20 December 18, 2000
_ Cost Allocation Plan and User Fee Study
Petaluma, California
PUBLIC POLICY MATRIX
WHO BENEFITS ' TYPE OF SV C TAX V. FEES E,
1 V V Community Public > 100% Taxes •
V. W
Primarily the
Mostly taxes &
Comm. w/ some > Public/Private some fees
indiv . benefit
Prim aPrimarily 'the
,Private/Public some fees &
utdiv,.:w/ sonic some taxes
Comm. benefit
V
Individual •
Benefit Private > 100% Fees
The matrix on the followingTage addresses typical fee issues in detail for selected hypothetical.
fees:
II
Page 8 of 20 December-18, 2000
_ Cost Allocation plan n and User Fee Study
Petaluma, California
PU3LIC, POLICY NEL MATRIX)
Priv/Individual Mostly.Private/ Mostly Public/ Public
FEE: Oriented: , Some Public: Some Private:. Oriented:
'CURR. FULL RECM % .'RECM Si. RECM % RECM %
DEPARTMENT/FEE FEE. COST FEE Subs. ' FEE Subs. FEE Subs. FEE Subs.
PLANNING
Conditional Use Permit --1,500 21500. _ 2.500 0%
Lot Line Adjustment 850 1,250. 1,250 0%
Tentative Map 2,500 4,000 4,000 0%
Design Review 500 1,000 800 20%
Environ.. Impact Review 3,000 6,000 6,000. 0%
Appeal 25 800 100 90%
General Plan Update 0 125,000 0 100%
CODE ENFORCEMENT
Apartments(>4) 0 1,500 1,500 0%
Private Residences 0 300 200 33%
Restaurants 750 1,000 •l,000 0%
ENGINEERING
Street Cut 35 90 90 0%
Tentative Map 850 1,225 1,225 0%
• Public Right of Way 0 600.. 300 50%
Plan Check 1,000 1,400 1,400 0%-
RECREATION
Adult Sports — -
Tennis 2 5 4 20%
Dance Classes 30 40 35 13%
Trips 30 60 40 33%
Youth/Seniors
Tennis 2 5 - 3 40%
Trips 20 40 25 37%
Golf 10 30 "25 17%
The city can develop this matrix using information from the DMG-MAXIMUS Fee Study to
help decide`appropriate fee levels and subsidies. DMG-MAXIMUS believes that construction
of the matrix is important in generating acceptance of fee for service cost recovery levels by
the city council and community/business groups. Through this visual perspective, the rationale
for cost recovery becomes clear and defensible.
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_ Cost Allocation Plan and User Fee Stud,
Petaluma, California
OVERVIEW OF OUR APPROACH •
•
There are five aspects of our approach that we believe are most significant:
i. Interactive Work Program - The DMG-MAXIMUS approach is-to work closely with
management and.,staff to produce an analysis of cost of services and revenues that is
thoroughly understood and verifred;by city staff. To this end, we repeatedly review our
analyses and findings with staff, elicit their input, and draw upon their intimate
knowledge of city operations. This is not to:say that there may not be a`divergence of•
opinion at the recommendation stage. Our,goal, however, is to provide.the client:with ,
the best information and•statistics possible. Final implementation decisions, of course, •
retrtainwith any leaders.
2. Experienced Team - DMG-MAXIMUS has been in existence nationally since 1975 and
in California since 1979. Our Western Region management team has decades of
experience. Most DMG-MAXIMUS consultants have been with the firm .more than
five years and all on-site consultants have significant experience in achieving the goals
Petaluma wishes to accomplish with this project.
3. Proven Methodology - DMG-MAXIMUS has produced thousands of cost plans,for all
sizes of cities and co unties. We are the recognized experts in-this field, both locally •
and nationally. We have also produced over:75 user fee studies in California, and'at •'
least an-;equal.number in other states: Our systems'have been time-tested: Of4critical
importance, however, is that our ;consultants are proven:in their particular fields, of !
experience. We get the job done--to our clients' complete satisfaction.
4. Computerized Support - DMG-MAXIMUS will utilize two integrated computer
systems m,'the study. DMG-MAXIMUS developed-its first automated cost allocation
plan system in the•late 1970's, and-has consistently updated that„model. Our system is
in use in hundreds'of;governmental organizations. DMG-MAXIMUS' user-fee model -
FASTR isaalsoaunique in that,.it specifically targets the cost of providing services, and
measures the results from alternative fee strategies.
5. Realistic Pricing - DMG-MAXIN1US' strategy has always been to provide exceptional' •
service at a fair price. We are in•the Nevada marketplace for the longterm. A client
well'served will return for future=engagements.
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• Page 10;of 20 December 18. 2_000
Cost Allocation Plan and User Fee Study
Petaluma, California
• WORK PLAN •
Summary
DMG-MAXIMUS will initially construct' the cost allocation plans, as the full cost plan is
necessary to identify the full ,costs to include. in the cost of service/fee 'study. We will then
separate all costs and revenues within the various.fee-related departments, and other appropriate
functions into tax-based and fee based groupings. Within the latter; we will then identify and
calculate the full cost of all existing fees within the departments under study: Additionally, we
will calculate the full cost of potential fees for these departments based on experience gained from
, previous engagements.
•
At the:conclusion of the above.analysis we will prepare a report of our findings and present fee
recovery recommendations. The report will include current fees, recovery levels as a percentage
of full costs, full costs, recommended fees, and remaining ;subsidy. We can provide a fee
schedule and plan, as well as assist the city'with-an,implementation strategy.
The following section describes'the specific tasks that DMG-MAXIMUS will perform in order to
accomplish the goals of this study.
Specific Tasks to Be Performed
• Task 1: Project Initiation
In our first task we will carry out those activities:required to begin the engagement in a
manner that will ensure timely and successful project completion. The specific
activities include the following:
s Meet with the Finance Director,and other appropriate city representatives to discuss
the goals, objectives, and overall• scope of the engagement. Our designated Project
Manager will represent DMG-MAXIMUS in this initial,meeting. It is important.that
individuals who will be'most directly concerned with the ultimate engagement results
represent the city,
•
e Based upon this meeting; we will finalize the scope Of the engagement. Any
significant variations will be documented'in writing and provided`.to the city.
e Establish project liaison requireinents.
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• Page 11 of 20 December 18, 2000
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_ Cost Allocation Plan and User Fee Study
Petaluma, California
•
Task 2: Develop Cost Allocation Plans •
DMG-MAXIMUS will prepare,two cost allocation plans:
•1. A Full Cost central 'service cost•:allocation,plan for use in determining-overhead.
charges to all city programs for primary use in calculating full costs,in the User
Fee Study, and .
•
2. An OMB A-87 plan for use in intergovernmental grants.
The DMG-MAXIMUS cost allocation plan methodology is a double step down, cross
• allocation methodology, which is the most rigorous and comprehensive of the distribution
options contained in Federal Circular" OMB A-87 (the "bible" of cost allocation
distribution systems). Our OMB A-87 plafs'adhere to the 1996 revised guidelines.
•'Task 3: Develop Schedule of Service Areas to Be Analyzed •
DMG-MAXIMUS will develop- a schedule of current and potential, fee-for-service
activities. , Our experience in working with many other cities will aid in the
development'of potential fee"services.
Task 4: Develop•Direct Service Costs •
For each fee-for-service activity (or a non-revenue producing service for' which a fee
could be imposed), DMG-MAXIMUS will develop the direct, costs of providing the
service:
Direct costs generally include the salaries and benefits of those individuals actually
performing the service and any services and supplies that can be,directly attributable-to the
service., To the extent possible, we identify as many costs as possible as direct and treat
the appropriate,remaining costs as indirect. Based upon_our extensive experience, we
know that most supervisory and service and supply costs will be treated as indirect costs.
In any case, a hallmark of the DMG-MAXIMUS approach is a fully substantiated .cost
analysis.
For building-related fees, we will,identify service costs on an occupancy basis (residential
dwelling, restaurant, retail store, commercial high rise, 'etc.) and calculate the direct cost •
on a square footage basis. This methodology would replace the UBC rate tables'as a
charging mechanism. We believe this methodology produces a stronger nexus between
permit/plan"check fees and costs.
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Cost Allocation Plan and User Fee Study
Petaluma, California
Task 5: Distribute Department/Program:Overhead Costs
•
• DMG-MAXIMUS will distribute indirect costs to each service or activity. In general,
these costs reflect supervision occurring at the department/division/program level and
associated services and supplies. Our approach to this distribution depends on the
complexity of the governmental unit being analyzed. The overall distribution of costs
is accomplished using our FASTR System. This system is the most comprehensive
tool available to analyze governmental servicetosts.
Task 6: Match Service Revenue with Service Costs
We will match the total cost of each service with the fee revenue received from each
service. In its basic-form, the.resulting table illustrates.thetotal tax subsidy or the revenue
surplus generated by each service. This table provides a departure point for use in fee
discussions.
Task 7: Review Cost; Revenue, And Subsidies With Departments •
The cost, revenue, and subsidy analyses developed by DMG-MAXIMUS are based on
• information supplied by city departments. In Task 7, we return to each department to
review the preliminary results.; We believe this to be_an;extremely important step, as it is
the departments that,must ultimately be comfortable with our cost analysis and methods.
Based upon the departmental reviews, we malce appropriate changes.
Task 8: Conduct Comparative Survey
To complement the cost analysis, DMG-MAXIMUS will compare select fees to those of
up to five similar jurisdictions. This comparative survey will establish an indicator of the
range for. fees being charged by other comparable cities. Cities often want to know how
current and proposed fees compare to neighbors whewmaldng pricing decisions.
•
Task 9: Review Cost And Revenue Relationship With City Management
Once we reach consensus with departments that the analysis portrays reality, we will
review results with management. Cities usually find it desirable to eliminate subsidies,
but there are issues to consider-before making fee adjustments:'
• It may not be politically feasible-to raise a particular!fee. . •
e It may not be legal-to raise aparticular fee.
e An undesirable social consequence may result. from raising a.particular fee (e.g., a
•
group may be excluded.from:a desired service).
Page 13 of 20 - December 18;2000
_ Cost Allocation Plan and User Fee Study
Petaluma, California
o An
undesirable economic consequence may'result (e.g., a fee increase may result in •
less revenue due to decreasing demand). •
Based upon these discussions and DMG-MAXIMUS' experience; we will formulate
.appropriate recommendations:
•
Task 10: .ReviseAnalysis/Recommendations
Based on our discussions with senior management, we will make appropriate revisions to
the study and/or our recommendations.
Task I1: Develop Implementation Strategy
A principal objective of the DMG-MAXIMUS approach to all of our engagements is to
facilitate positive change. We will work with,senior staff to develop an appropriate and
effective implementation strategy that will reflect Petaluma's needs. We will work
with the city to address on-going;.maintenance of the study results.
Task 12:• Prepare and Provide.Draft Report
DMG-MAXIMUS will provide•;our project•report to department heads in"draffform. This
•
step offers an opportunity to•discuss individual recommendations in detail Based upon
these discussions, we will modify the draft report as required.and.submit•it in,final form.
Task 13: Present Final Report
The product from the proposed engagement is' often controversial.. We 'believe it is •
extremely important that all parties fully understand the basis for and,rationale behind the
project findings and recommendations. To this end, DMG-MAXIMUS is committed to
providing.all interested parties with an;understanding" of our approach:and results. This
,. . typically requires:
i .
9'
•A presentation to management with, less emphasis on_ detailed methodology, and
greater emphasis on the irnpact'of recommendations and''implementation strategies.
• • ♦ Engagement presentation to the:city council to provide an overview,of the'project and
its,findings andto:answer anyquestions.concerning'the project.
•
Task.14 Project.Close Out
Page 14 of 20 December 18, 2000
_ Cost Allocation Plan and User Fee Study •
•
Petaluma, California •
At'the end of the project, we will perform those activities necessary to ensure successful
project completion, including:
e Answer remaining questions and explain outstanding issues, and •
• Discuss update requirements and strategies. •
Workplan Flexibility
•
Tasks 1-14 discussed above summarize: the activities necessary to accomplish most cost plan
and fee study projects. However, we remain flexible throughout the engagement, which
allows us to modify this approach,to meet the unique circumstances experienced by each client.
Consequently, if this work plan„does•not specifically meet your needs, we will work with you
to revise our approach to fully accomplish the goals of this project.
STAFFING PLAN.-
i
Suniniary
The preparation of central service cost allocation plans and comprehensive user fee studies is a
primary DMG-MAXIMUS service;to.local,government. Consequently, DMG-MAXIMUS is able
to assign a team of knowledgeable, experienced consultants:to the engagement.
Specific areas of expertise of our-proposed project team include:
• Governmental cost accounting
• Knowledge of governmental service°:delivery within each of the departments analyzed i•
• User fee service structure and service type in other local governments
• Development of presentations for councils,boards, and the general public
Project Roles
Our Staffing Approach will include the following team members:
• Project Director -- The project director's role is to provide project oversight. This
includes developing project schedules, assuring that adequate staffing resources are
provided when needed, and reviewing project work products. The DMG-MAXIMUS
project director is available at all times to assist in the resolution of,any problems.
• Project Manager'- The project manager is responsible for the day-to-day supervision of
• the engagement. The project manager will participate directly in departmental interviews,
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Cost Allocation Plan and User Fee Study
Petaluma. California
fee'identification, cost development, and report preparation. The project manager will be •
responsible for.apprising the City of progress on an on=going basis.
•. Support. Consultants - A cost allocation plan/user fee study requires significant data
acquisition and manipulation. DMG-MAXIMUS will assign support staff to ,assist the
Project Manager in this effort.
•
We will staff the Petaluma project with consultants from our Western Region. Our'Sacramento,
Irvine, and Denver locations have the resources and expertise to best service this project. We
will not utilize the services of any other firms. DMG-MAXIMUS will provide.a°team of highly
skilled consultants'for i.Petaluma's study.
. Project Staff
The following section describes the project team and their respective roles. The professional
summaries illustrate the,extensive experience of the consultants that will allow us,to.bring•this
project to a successful. conclusion. Specific staffing; below the project manager level will
depend upon the start date of the Petaluma engagement.
Project Director: Richard Pearl, Vice President
As a principle officer in the• firm, Mr. Pearl will be involved with contract negotiations,
general project oversight, and marshal appropriate,company resources to complete the
project in an expeditious.and quality fashion. Mr. Pearl has managed;and directed hundreds of
cost analysis projects during his career with DMG-MAXIMUS. He has been with the firm
since 1976.
Project Manager and Lead Consultant Jeff'Wakefield Senior Manager
Jeff Wakefield•will serve as the:Project Manager. Mr. Wakefield brings a rich combination of
significant project management and technical experience to the project. He has managed
dozens.of cost allocation and cost of service/fee studies for'government clients. He is a detail-
oriented and hands-on project manager who excels in communicating with clients. His
'responsibilities will include 'development of the overall project plan, communication and
coordination with City representatives, and' organization and direction of the Project Team.
An important goal of the Project Manager is to maintain the Project Team as a cohesive:group
and provide a consistent approach:and voice to the City. Frequent communication between the
consultant and the City will be critical to the successful completion of this project', and. the
Project Manager will fulfill this responsibility as well.
• Mr. Wakefield will also'serve as the Lead,Consultant for this study. He.is aiSenior Manager in
our financiaL,services division in the Sacramento office. He specialties in cost allocation plans' _
and rate studies. Mr. Wakefield .has been involved in the preparation of many cost allocation
Page'16 of 20 December 18, 2000
_ Cost Allocation.Plan and User Fee Study
Petaluma. California
plans and has managed the, preparation of rate studies for many cities and counties.
• Representative clients include: Stockton, Anaheim, Richmond, Long Beach, and Santa Barbara
County.
•
Technical onsultant Pool: Various Consulting Staff
The Project Manager and Support Consultant will provide most of the work necessary to
complete this project. In an.effort to maximize project efficiency and minimize cost, the
Project Manager may also .utilize .a pool of highly' skilled and experienced Technical
Consultants. Our intention is to match.specific skills andabilities to the appropriate tasks and
project elements. The pool includes, but is not limited to, the following consultants:
Thomas J. Moore is a Manager in the financial services division of ,DMG-MAXIMUS. Since
joining us in 1997 he has,worked on:a°•wide variety of cost of:services;studies at the local and
state government level. Mr. Moore has participated in many-;rate calculation studies. The
most recent study was with the County of Sacramento to analyze the rate calculation
methodology for the Office of Communication and Information. Technology. Mr. Moore
conducted a detailed analysis of a Street Maintenance Division within a city's public works
department. The Street Maintenance Division study made recommendations related to items
and services that should be directly or indirectly charged to service recipients. Mr. Moore
An worked closely with one of our city clients to analyze their printing services. The key to the
study was the development of the cost per copy rate. The analysis factored„in labor, materials,
and equipment costs on a per.copy basis then'compared this cost to'..that of local vendors. Prior
to joining DMG-MAXIMUS he worked with public entities developing software. Mr. Moore
holds a Bachelors of Science in Business Administration with a concentration in Finance and a
Masters of Business Administration, both from California State University, Sacramento.
Joseph P. Stimac is a Manager in our Sacramento office, specializing in financial accounting,
cost allocation, and revenue projections for cities, counties, and special districts. Recent
projects include the development of a database used in creating GASB 34 compliant financial
reports, a revenue forecasting study for the San Francisco Planning Department, and a
projection of maintenance costs in the City of Paso Robles, CA. During his tenure with
DMG-MAXIMUS he has prepared •cost allocation analyses for' the California cities of
Vacaville, South San Francisco, Santa Maria, and Paso Robles, and for the Colorado counties
of Routt, Moffat, Gunnison, and Saguache. Prior to joining DMG-MAXIMUS Mr. Stimac
worked in the banking industry and also designed a database used in an environmental study of
the Great Basin for the University of.California at Davis. He received,a BA and BS from
Aquinas College with majors in accounting, business administration, and philosophy. In 1997
he completed a Master- of Arts degree in analytical philosophy from the Claremont Graduate
School.
• Luis M. Garcia is a Senior Consultant in our financial services .division in the Denver.
Colorado office. He has worked in cost allocation, user fee practice and has assisted on
Page 17 of 20 December 18, 2000
- Cost Allocation Plan and User Fee Study
Petaluma, California
several special projects. Mr. Garcia has, worked on special projects' including,.a ten-year
budget forecast for Rincon Valley Fire Protection District, an efficiency and productivity study
for the Pasadena Police Department Records Division, and a performance measurement study
for the City of Santa Clara. Mr. Garcia has assisted in the preparation of cost allocation plans
for several California cities and special districts. These projects include cost' plans for
Temecula,• Richmond, Citrus 'Heights,.. Mountain 'View, Morro Bay, and Santa Rosa
Communications Center; fee studies for;the cities of Temecula and Richmond. Prior to joining
DMG-MAXIMUS he was a Senior Analyst in the Budget Division of Pima County, AZ. Mr.,
Garcia received his. Bachelor's degree in Political Science from the University of California,
Riverside. •
Melissa Gerrits is a Project Manager with DMG-MAXIMUS and has worked for DMG-
MAXIMUS'for five years. She is responsible for the "following projects:. cost allocation plans,
State Controller annual city. transaction reports, indirect. cost rate prop osals and trial court
funding claims. ' .Ms. :Gerrits has prepared cost allocation plans for Alpine County, Inyo
County, Modoc.County, Mono County, Nevada County, San Benito County, Sierra County,
Tuolumne County, Yuba County, the City of.San Fernando, and the City of Woodland.
Iris Ho is a'Manager=in the financial services division in the Sacramento office. Over the last
four years she participated in cost allocation plans, user fee studies, jail rate studies, state
controller's report preparation, and indirect cost rate proposals for various counties and cities.
Representative clients include Alameda, .Beverly Hills, ,Burbank, Calexico, Culver. City, El •
Centro, Hawthorne, Hayward, Lathrop, Roseville, Salem, Sam Clemente, San Fernando,
Stockton, and Ventura. Her prior `experiences included financial:statement compilation and
audit, financial analysis, job costing system implementation, and various tax preparations in
both areas,of public,accounting practice and.private sectors. Ms. Ho received both a Master's.
degree in Accounting and a Bachelor's degree in Computer Science from University of
Mississippi. She-also!passed the CPA.examination in 1995.
City Staff Requirements
With the highly experienced; team DMG-MAXIMUS will bring to this project, city staff
requirements are held to a minimum. Obviously, however, there is information only city staff
can is ther review and cr`itttlue o(data, assumptions,n ndare recommendations.Another necessary commitment
P
q p ndations. While we cannot project a
certain nuinber of hour's;commitment, we can assure:.the city it will not be burdensome.
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- Cost.Allocation Plan and User Fee Stud.
Petaluma. California
CONCLUSION'
Summary•
DMG-MAXIMUS is excited about the possibility of assisting Petaluma by completing Cost
Allocation and Cost of Service studies.. Our company motto is Helping Government Serve the
People. Based on our experience with other cities-and counties throughout the West, we
believe that Petaluma and its citizens would reap many benefits from these studies. Very
often, the additional revenues identified in our studies exceed the cost of the studies in the first
year. The additional revenue can help Petaluma provide greater services by reducing the
reliance upon limited general fund resources to fund other programs. The detailed cost
information resulting from the Cost. of Services Study can help management make more
informed and beneficial decisions regarding specific programs and services. Furthermore,
refined fees based on the actual cost of providing the services can help citizens better
understand and appreciate the fees they pay to their government.
DMG-MAXIMUS is prepared to provide these services through our professional and highly
skilled consultants, who will use our thoroughly tested and successful project approaches and
methodologies. We look" forward to the opportunity to provide these quality services to
Petaluma.
• References and Staff Qualifications •
. Our firm currently has more cities and counties under contract;imthe United,States to provide cost
plan and fee study services than all other firms combined. We believe we have achieved this
position of leadership through:
•
• Comprehensive responsibility for establishing an indirect cost recovery system.
• Guaranteed approval of our cost plans by federal and state representatives.
• Thorough knowledge of regulations pertaining to cost recovery and working
relationships developed in government at all levels.
• Quality "development of fee study methodologies and approaches through
consultation with governments, industry groups, and advocates.
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- Cost Allocation Plan and User Fee Study
Petaluma. California
You are welcome to contact any•of our clients in California;or elsewhere concerning our services, ,,
Specific references are:
City of Livermore:
Ms. .Monica Potter •
Director of Finance
• " 1.052 South Livermore Avenue • •
Livermore. CA 94550-4899
(925) 373-5163
is
City of
Mr. Robert Locke _
Director of Finance
City of mountain View
500 Castro Street
Mountain View; CA 94039-7540
(650),903=6316
II
City of.Moreno Valley
•
Mr. Steve Chapman
Director of Finance •
P.O. B6x•88005
Moreno Valley, CA 92552-0805 •
•
(909) 413-3075
Proposal Approval •
DMG-MAXIMUS is prepared to'provide the services described in this proposal. •
Approved for DMG-MAXIMUS: Date:
Richard Pearl,Vice President
DMG-MAXIMUS, . •
•
•
4320-Auburn-Boulevard, Suite 2000 •
Sacramento, CA 95841
(9.16) 485-8102
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Page 20 of 20 December 18, 2000