05/13/1985 Meeting - Laserfiche WebLink

Home Browse Search

e e - identified by using the Federal indirect cost plan, which is reviewed by the Federal government every year for conformance with Federal guidelines and for equitable allocation of indirect costs. Mr. Deis said every City develops an indirect cost plan to recover overhead costs. For example, for an attorney's fee, the typical breakdown is about 30 percent direct costs and about 70 percent overhead costs. Mr. Deis said the first step in the cost plan is to divide all City divisions into two categories--central support (divisions that provide services to other City divisions) and operating (divisions that provide services to the general public). Mr. Deis described how indirect costs are allocated by department. He said total central support costs are added to department and divisional adminis- trative costs to come up with total indirect costs. Total indirect costs are divided by total direct costs to yield the indirect rate for every division within the City. The Maintenance Division of Public Works, which includes the regional treatment plant, has an indirect rate of 23.77 percent. Responding to Mr. Hansen's question, Mr. Deis said indirect costs are included in the current $6.30 rate. Mr. Deis said recovering indirect costs reimburses the general fund and the local sewer fund for overhead costs. Mr. Holmer asked about the range of indirect rates. Mr. Deis said departments varied, ranging from 60-100 percent for police to 15-20 percent for the lowest. He added that indirect rates for most departments run about 30-60 percent. Mr. Guenzler said those cities that do not include indirect cost reimburse- ments have made a decision to subsidize sewer service. He said he did not think that approach made sense for a regional facility. Ms. Bascom asked why rates were lower a few years ago. Mr. Guenzler said those rates had been suppressed and were depleting reserves. He also said the new treatment facility has higher standards and is more expensive than the old one. Mr. Gleason added that the facility has one of the most stringent stan- dards of any major regional plants in the country. Mr. Guenzler said a single dwelling charge of about $6 a month would allow balancing of revenues and expenditures, and he said the Wastewater Commission had recommended charging $4.50, with $1.50 to be made up by drawing down reserves over the next two years. Mr. Guenzler said they are hoping to improve upon the revenue requirement, but even if that does not occur, he said the reserves will still be sufficient for two more years without raising rates. Ms. Ehrman asked about the Countyls role and whether it has any indirect costs. Mr. Guenzler said the County has had some minor indirect expenses through its involvement with MWMC, but he added that direct activities were almost minuscule. MINUTES--City Council Dinner Session May 13, 1985 Page 3