HomeMy WebLinkAbout03. (Handout) Presentation of Overhead Rate Evaluation Study�Wlp
Evaluation Study
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+ Present study objectives and backgrounI
* Discuss methodology and approach
Present • recommendations
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Study Objectives
-> Audit the District's current model for developing overhead rates
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The District currently calculates an Overhead Rate in order to
account for administrative operating expenses and indirect
support such as administration and management, payroll, etc.
+ This rate is primarily applied to:
4 Developer's fees and charges (Plan Reviews, Inspections, etc.)
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Overview of District Methodology
On, The District currently calculates its overhead rate based on the
following components:
average for workers compensation, medical,
dental,
+ Non-Work Hours: This component accounts
available o r year District staff.
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Discussion of Rate Components (11
Salary, wages, and benefits associated with Administrative division and
departmental Directors and support staff.
4 OPEB, retiree premiums, accrued compensation, etc.
4 Administration and Engineering Division operating costs (utilities, repairs &
maintenance, materials ♦ supplies,
Other adjustments such as vehicle and building depreciation and HOB
maintenance
All costs included in this component are based on actual auditel
expenditures.
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Discussion of Rate Components (2)
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Workers compensation, unemployment, medical, dental life insurance and
retirement costs associated with all District employees.
4 All costs included in this component are based on budgeted expenditures.
4 Vacation, sick leave, holidays, admin leave, birthdays, and compensated
time off.
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Last year the District overhead rates
to stabilize the overhead rate for external customers, while
achieving cost recovery • internal customers.
Ou Three-Year Average— was applied to external billings and was
based on the average of the previous three year internal full cost
Internal Full Cost Recovery — was applied to Capital Projects,
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ltvervieW ofStudy Results-
The District's current methodology for calculating an overhead
rate is in compliance with state and federal guidelines, as well
as generally accepted accounting principles.
4 Inclusion of costs such as retiree premiums, OPEB, depreciation, etc. are
allowable under OMB guidelines.
The District's use of multiple overhead rates is consistent wit,17-
other jurisdictions and is a common practice.
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While the District's current methodology is in complianc
certain opportunities for improvement exist: I
Utilize audited actual expenditures for the calculation • the Employee
Benefits component in order to • consistent with the Admin Overheat'
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4 Allocate the OPEB costs associated with active and retired employees to
their respective divisions as direct, and premiums associated with retirees
as indirect.
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