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HomeMy WebLinkAbout7.b. Administrative Fee PolicyEXECUTIVE SUMMARY FOR ACTION CITY COUNCIL MEETING DATE: November 19, 1991 AGENDA ITEM: AGENDA SECTION: Administrative Fee Policy New Business PREPARED BY: May, Director AGEND(ft Jeff Finance ATTACHMENTS: Copy of Administrative Fee Policy F-3 =AP6VED 'VIY: Attached for your consideration is a policy regarding the charging of administrative fees to all funds. The purpose of the policy is to assign the costs of providing administrative services to each appropriate City fund and to reimburse the General Fund of the City for these costs. Staff has worked with our auditors in achieving a fair and equitable way to charge other funds for costs, that historically, the General Fund has paid. In talking to other communities, it was discovered that most communities do charge other funds in some form or another. The problem that we found was that nobody has any policy in writing that covers their procedures. We felt that it was appropriate to put our ideas in writing so that we have a guide in the future that will enable us to consistently and fairly charge other funds for the administrative costs that are paid by the General Fund. The resulting document is before you for your consideration and approval. RECOMMENDED ACTION: Motion to approve Administrative Fee Policy F-3. COUNCIL ACTION: November 19, 1991 CITY OF ROSEMOUNT POLICY TITLE: ADMINISTRATIVE FEE POLICY POLICY NUMBER: F - 3 PROPOSED BY: ADMINISTRATION DATE APPROVED BY CITY COUNCIL: PURPOSE The purpose of this policy is to explain the assignment of the costs of providing administrative services to each appropriate City fund. These Services and Costs Include: Maintenance of Cash Maintenance of Accounting Records Management of Receipts and Disbursements Auditing Services Associated Overhead Costs: Electric Utility Gas Utility Phone Utility Refuse Utility Building Maintenance Labor Operating supplies Computer Operations The Administrative Fee for each fund was calculated based upon the average market rate being paid to outside consultants by Rosemount for similar services. This amount was then increased two and one- half times to reflect the additional services outlined within as well as the associated overhead costs. For each fund, the base fee remains constant or is increased dependent upon the level of administrative services it requires. The specific dollar amount that will be charged to the various accounts will be presented to the City Council for adoption, by resolution, each year as part of the budget process. r The administrative fee is applied as follows: (additional levels will be added as warranted) 1 Fund is charged the City basic flat fee. Funds include: Paid -Up Debt Service Bond Fund MSA Fund Severance and Retirement Fund Diamond Path Project Fund Water and Sewer CIP Program Fund Water and Sewer Core Funds Active Debt Service Funds 2 Fund is charged double the City basic flat fee. The administrative work for this type of fund is estimated to be approximately double of that required for a basic flat fee fund. Funds Include: Five Year CIP Program Park Improvements Fund 5 Fund is charged five times the City basic flat fee This type of fund demands a much greater volume of administrative work requiring several employees. In addition, the overhead for this type of fund is higher. Funds Include: Economic Development Authority/ Port Authority Fund National Guard Armory Project Fund Enterprise Funds OTHER A four percent (0) administrative fee is charged to construction projects.