The goal of every government agency, both large and small, is to deliver the finest services to their communities in the most efficient, cost-effective manner. For over 30 years, MGT Financial Services experts have provided governments across the nation with the tools and expertise needed to meet that goal. Our nationally recognized experts are trusted colleagues to hundreds of government officials, managers, and decision makers. We are the leading experts in government cost allocation, direct and indirect program costs analysis, identifying current and potential user fees, or maximizing recoveries from state-mandated, or federal programs, our services are characterized by the exceptional results achieved by our clients.
Cost Allocation Plans
Cost allocation plans (CAP) are essential tools for public agency fiscal management. Your agency’s goal should be to establish and maintain well-documented and defensible plans that can be used to recover indirect administrative costs in a variety of internal and external contexts. MGT is a nationally recognized specialist in developing cost allocation plans and assisting our clients with CAP implementation. Our staff can help you fairly and equitably distribute the costs of your agency-wide central services using government-developed guidelines. MGT’s Financial Services consultants have prepared hundreds of 2 CFR Part 200 cost plans (previously known as OMB A-87 or 2 CFR Part 225) and full-cost allocation plans to calculate the indirect costs of supporting federally funded grant services and enterprise funds
Indirect Cost Rate Proposals
Our consultants prepare indirect cost rate proposals (ICRPs) that calculate department or divisional overhead costs for hundreds of organizations. Based on expenditure data, federal cost principles, staff input, and department organization, we develop a percentage rate of salaries and benefits that ensure full cost recovery for fees, billing rates, grants, and mandated cost claims.
User Fee Studies
MGT uses cutting-edge software to comprehensively analyze government services costs to help our clients determine fair and defensible user fees. Our approach provides local governments with the tools to review subsidy levels and forecast the revenue impacts of fee changes. MGT’s experts also can help identify and generate user-fee revenue streams from commonly provided services, such as from building department inspections and reviews.
Mandated Costs (SB 90)
In California, local agencies and school districts can seek reimbursement for their state-mandated costs. MGT is the preeminent leader in state-mandated cost consulting. The California State Association of Counties has partnered with MGT to run its SB 90 Service to promote and coordinate reimbursement of unfunded state mandates, provide training and technical assistance, represent counties with California administrative agencies on a wide-range of mandate issues, staff bi-monthly meetings, and conduct two annual training workshops to its 58 member counties and service members. We are the experts on how to identify, document, and claim costs and show our clients how to set up systems to track all eligible costs and receive larger, more defensible reimbursements.
Title IV (D) Claiming
We specialize in developing financial plans for Title IV-D child support agencies and assisting them to leverage federal funds for maximum resources. We can assist with the preparation of applications, monthly claiming, automated time accounting, and litigation involving audit defense.
Timekeeping and Timecard Scanning
MGT can help you keep your government agency running smoothly by developing and implementing automated timesheet systems that collect data for multiple cost objectives. Our systems provide you with calculations for periods of days, weeks, months, quarters, or years, and guarantee audit defense and your compliance with OMB A-87. Because every business is unique, we can customize your system to meet the needs of your business. Our timekeeping and timecard scanning systems create efficiencies that allow your agency to focus on the important work of governing and providing services.
Utility Rate Forecasting
MGT offers management consulting for electric, gas, water and wastewater utilities, and other enterprise funds. Since local agencies may not always receive sufficient warning about changes to your rates, MGT offers a custom tool that will enable you to quickly and easily quantify the effects of these changes and allow you to run projections and related analyses. We can help your agency determine the effect on your utility should your purchase power costs change or your fuel costs increase. We also can help you plan for a new major capital project for your water or electric utility.
Louisiana Division of Administrative Law
The Division of Administrative Law desired to charge state agency customers for the services it provides as a newly formed internal service fund. To ensure their billings would be considered allowable costs to any federal programs supported, the Division needed to establish a billing methodology consistent with the federal costing requirements of 2 CFR Part 200. The Division was experiencing problems with customers not having the ability to pay for services in excess of the amount.
The Division also desired the ability to maintain the billing methodology with its own staff in future years, and to educate its customer agencies about the billing methodology and procedures.
MGT interviewed organization staff and gathered financial and operational information for the Division to gain a full understanding of their service offerings. Using the information gathered, MGT developed a billing methodology and cost allocation model consistent with the federal costing requirements of 2 CFR Part 200 that determines billing rates and projections of costs by service and by customer.
To address the issue of customer payment issues due to unplanned increases in service where budgetary authority didn’t exist, MGT developed a fixed billing process whereby customer agencies knew their annual bill in advance, and any true-ups to actual cost were handled through adjustments in future years’ billings.
MGT provided training to Division of Administrative Law staff on the use and implementation of the methodology, as well as providing training to the customer agencies to ensure they fully understood how their bills for service were being calculated.
The billing methodology developed by MGT was successfully implemented by the Division of Administrative Law and approved by the U.S. Department of Health & Human Services, Cost Allocation Services Division as part of the State’s annual Statewide Cost Allocation Plan.
The Division of Administrative Law staff was able to successfully update the billing rates in future years, and their client satisfaction was increased due to the transparency of the rate determination process.
Arizona Office of the Governor
The Arizona Office of the Governor operates federal grant programs and desired to recover indirect costs spent in support of those programs. To accomplish this, the Office of the Governor is required to prepare an indirect cost rate proposal and receive federal approval of their indirect cost rate.
MGT gathered financial and operational information about the Office of the Governor. Using this information, and relying upon the 2 CFR Part 200 federal costing regulations, MGT classified all costs as indirect, direct, and unallowable and prepared a federally compliant indirect cost rate proposal. The indirect cost rate proposal was submitted to the U.S. Department of Justice for review and approval.
MGT successfully negotiated the indirect cost rate proposal with the U.S. Department of Justice and received approval of the indirect cost rate in the form of a negotiated indirect rate agreement. Using the approved indirect cost rate, the Office of the Governor is able to claim indirect costs associated with the $11 million of federal grant programs it operates annually.
City of Burbank, California
Article XIIIB, Section 6 of the State Constitution requires the State to reimburse California local agencies for costs incurred via compliance with specific mandated programs. Reimbursable departments and programs include law enforcement, public health, elections, and city clerk functions. The City called on MGT experts to assist them with this process looking for a turn-key approach to the state mandated cost claiming process.
The scope of requirements varies with each city. In the case of Burbank, their objectives included:
- Maximizing reimbursement for mandated programs.
- Ensuring all eligible programs are filed.
- Ensuring all State deadlines are met.
- Filing all claims in accordance with claiming instructions and forms.
- Reducing field audit risk.
- Improved tracking of costs, payments, documentation and support of claims.
- Providing easy access to a complex process.
- Understanding the legislative impact to reimbursement.
The City of Burbank truly benefited from MGT’s approach to maximize the amount of state reimbursement through SB 90 claiming, while making the entire process simple for city management and staff. In the area of State mandate cost claims, MGT professionals offer the best, most experienced consulting staff, as well as the highest level of service available.
MGT was able to fulfill all requested objectives. Because California local government agencies are now being asked to provide more services with fewer resources than at any other time, we are finding it is in the best interest of each agency to maximize the opportunities for revenue generation and retain methods for protecting revenue received. With a managed claim process and other important implementation, general fund revenue generation will be significant.
City of Healdsburg, California
The City of Healdsburg is a full service city situated in the California wine country. The City had never previously conducted a comprehensive fee study. Suspecting that many fees were not recovering the full cost of service provision and recognizing that many recent State requirements have resulted in additional costs that were not reflected in the existing fee structure, they contact MGT for assistance.
The City was interested in accurately reporting the true cost of providing various fee-related services, and exploring the possibility of modifying current fees to better reflect the increasing cost of providing services over time.
The analysis was guided by several requested services to:
- Calculate the fully burdened cost of providing user fee services.
- Identify creative fees employed by other cities that can be adopted by Healdsburg.
- Provide the City’s management with the information required to make informed pricing decisions.
- Advise the City regarding potential fee policy issues, strategy, implementation, and appropriate fee resetting/review practices.
- Forecast potential revenue impacts of the new fees.
Looking to ensure that all objectives were met, MGT’s professionals:
- Applied fully burdened labor rates to time requirement estimates and annual workload figures.
- Reviewed cross check results to ensure data validity.
- Benchmarked existing and proposed fees against those charged by neighboring jurisdictions.
The study found that a majority of the City’s fees were set below the actual cost of providing services. Most fees were recalibrated to full cost levels. However, the Council chose to subsidize select fees, which were determined to have public benefit or where a full cost fee would substantially reduce participation. The project culminated in the institution of a master fee schedule that fully complies with Proposition 218 and all applicable State and local fee laws. The new master fee schedule resulted in a 36 percent annual revenue increase.
City of Vista, California
Vista, full service city located in San Diego County, California, had not conducted a study of their fees since 2002. This simple fact was bringing about question as to the validity of its valuation-based fee structure. In addition, the City suspected the factors it was using to determine construction valuation were low and it recognized that many recent State requirements such as Green Building and ADA requirements were resulting in additional processing costs that were not reflected in their existing fee structure. The City wanted to accurately report the true costs of providing building inspection and plan check services, and adjust its fees to reflect these costs.
MGT’s analysis was guided by several requested services to:
- Research and recommend a legally defensible, user-friendly fee structure.
- Calculate the fully burdened cost of providing building inspection and plan check services.
- Ensure all proposed fees comply with Proposition 218, California Attorney General opinions, and the 2007 California Building Code.
- Recommend a method of annually adjusting fee levels.
- Forecast potential revenue impacts of the revised fee schedule.
MGT’s methodology included:
- Apply fully burdened labor rates to time requirement estimates and annual workload figures and ensure drive time and issue resolution efforts are included.
- Incorporate a fair share of front counter costs into fees.
- Benchmark existing and proposed fees against those charged by other cities in San Diego County.
MGT recommended increasing low valuation fees while reducing several high valuation categories. As a result of this action Vista’s valuation fee structure now reflects actual processing costs. All valuation data were updated to match the new International Code Council (ICC) categories. Additionally, several changes were recommended to make the fee schedule more user-friendly, including institution of several flat fees (residential reroofs, pools, etc.) and collapsing four construction types into one. The new fee schedule is fully defensible and resulted in a 39 percent annual revenue increase.
County of Jefferson, Colorado
Jefferson County, Colorado officials were managing various federal and state programs that included numerous health and human services programs. They also were operating various funds, programs, and activities outside of the General Fund such as districts, enterprise funds, internal service funds, and special revenue funds. Because the State of Colorado reimburses a large portion of the direct costs associated with these programs and also reimburses a portion of the centralized indirect costs associated with programs such as accounting, human resources, and information technology, officials in Jefferson County brought in MGT to help ensure they were being reimbursed in full for all eligible costs.
The following objectives were included for the annual work plan:
- Prepare an annual OMB A-87 compliant cost allocation plan subject to state and federal audit and approval.
- Prepare an annual Full Cost (GAAP) allocation plan subject to internal and external audit and approval.
- Defend and negotiate as required the annual OMB A-87 cost allocation plan with state and federal officials.
- Provide education, assistance, and support to County personnel.
By utilizing a proven methodology that has been reviewed and accepted by state agencies, federal cognizant agencies, internal auditors, and external auditors in multiple states, MGT experts applied OMB Circular A-87 and GAAP principles into a systematic, yet flexible, multi-step approach to raise the accuracy and acceptance of cost allocation plan results.
Since enlisting MGT’s assistance, Jefferson County has maximized appropriate indirect cost reimbursements from both cost allocation plans within internal and external deadlines. These reimbursements represent a significant and measurable revenue source for the General Fund. Additionally, the Full Cost allocation plan was applied to the County’s annual budget process to help identify the true cost of operating every department, division, and program.