TO:
Honorable Mayor and Members of the City Council
THROUGH:
John Jalili, Interim City Manager
FROM:
Bruce Moe, Finance Director
Henry Mitzner, Controller
Steve Charelian, Revenue Services Manager
SUBJECT:Title
Contract with Matrix Consulting Group to Perform a Cost Allocation Plan and Comprehensive User Fee Study in the Amount of $38,000 (Finance Director Moe).
APPROVE
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Recommended Action
RECOMMENDATION:
The Finance Subcommittee and staff recommend that the City Council approve a contract with Matrix Consulting Group to perform a cost allocation plan and comprehensive user fee study for a total cost of $38,000.
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FISCAL IMPLICATION:
Funds totaling $40,000 are included in the FY 2013-2014 Finance Department budget for the cost allocation plan and comprehensive user fee study. The cost of the project is $38,000.
BACKGROUND:
In 2010, the City conducted its most recent cost allocation plan and user fee study, which identified the labor involved in providing each discreet service, and assigned the fully-burdened rate (i.e. direct labor costs as well as indirect costs) for each City position involved in service delivery. The purpose of the cost allocation plan is to ensure that the City is utilizing comprehensive overhead rates in the accounting of the true cost of providing various City services, as well as maximizing the recovery of General Fund indirect costs from identified enterprise and other chargeable funds.
City Council adopted a policy that we review and update the fees periodically. A new user fee study will examine all of our user fees (located in our Resolution of Fees) and provide us with updated costs of providing the services. With limited abilities to raise revenues, it is becoming increasingly important that we fully recover our costs for the services we provide when appropriate. These revenues typically go to the General Fund for use in funding safety, recreation, building and other services.
DISCUSSION:
A Request for Proposal was issued for the Cost Allocation Plan and User Fee Study. The City received nine proposals from the following firms:
Magna Sol Corporation
Matrix Consulting Group*
Capital Accounting Partners
Willdan Financial Services*
NBS*
ClearSource
Sotomayor & Associates
BPR Concepts
MGT of America*
* Interviewed
The proposed cost of services by these firms ranged from twenty-five thousand dollars ($25,000) to five hundred eleven thousand six hundred dollars ($511,600). Discounting the latter proposal, costs ranged from $25,000 to $55,000.
A panel consisting of the Finance Director, City Controller and Revenue Services Manager selected four firms (indicated above) to interview (Finance Subcommittee member Mayor Pro Tem Powell was scheduled to participate but was unable to due to illness). Those interviews led to two companies for a second interview. Finally, Matrix Consulting Group was selected for interview by the full Finance Subcommittee (City Treasurer Tim Lilligren, Mayor Pro Tem Powell and Councilmember D'Errico), which took place at their March 11, 2014 meeting,
Upon completion of the interview with Matrix Consulting Group, the Finance Subcommittee and staff concurred that Matrix possesses the experience and abilities to successfully complete the project. Further, their references from other clients for similar studies and scope of work were excellent. As a result, the Finance Subcommittee and staff recommend that City Council award a contract to Matrix Consulting Group to perform the Cost Allocation Plan and User Fee Study.
The Cost Allocation and User Fee Study is labor intensive and will take approximately 6 months to complete. It includes individual interviews by Matrix with many City employees from all departments engaged in the delivery of City services (Finance staff also attend each interview for guidance). It will also include review of accounting data and allocation methods. Study deliverables include detailed reports as well as analytical models (and Finance staff training) which will allow the City to periodically update the fees without the need for a complete study. Finally, the study will ensure compliance with State laws such as Proposition 218 and Proposition 26.
CONCLUSION:
The Finance Subcommittee and staff recommend that the City Council approve a contract with Matrix Consulting Group to perform a cost allocation plan and comprehensive user fee study for a total cost of $38,000.
Attachments:
1. Matrix Consulting Group Proposal
2. Consulting Contract
Recommended Action