Title
Facilities, a division of the Chief Administrative Office, recommending the Board approve and authorize the Chair to sign a Fiscal Year 2024-25 budget transfer increasing operating transfers from the Accumulated Capital Outlay (ACO) Fund to the General Fund, and increasing salaries and benefits appropriations in the General Fund, allowing an accounting change to maximize cost recovery through the Countywide Cost Allocation Plan. (4/5 vote required)
FUNDING: ACO Fund.
Body
DISCUSSION / BACKGROUND
Facilities staff perform work on various capital facilities projects that are recorded in the ACO Fund. Currently, salary and benefit costs for these projects are recorded directly in the ACO Fund via the payroll process. During a recent review of the Cost Plan, a problem was identified whereby the current methodology results in reduced cost recovery through the Countywide Cost Allocation Plan (Cost Plan). The Cost Plan is used to support the recovery of costs for central service functions, including Facilities, from departments with non-discretionary funding sources, such as state or federal grants.
The recommended budget transfer will allow for the Fiscal Year 2024-25 salary and benefit costs incurred on capital projects to be transferred to the General Fund, and then reimbursed by the ACO Fund. The result will reflect no net changes to the General Fund, as the increased salary expenses will be offset by a transfer in from the ACO Fund. The recording of these costs in the General Fund will positively impact the Facilities Division Cost Plan calculations for Fiscal Year 2024-25.
The division will be bringing forward additional changes at a later date to correct the FY 2025-26 budget to ensure the highest level of cost recovery for ACO projects.
ALTERNATIVES
If this accounting change it not recorded in Fiscal Year 2024-25, there will be a low or negative cost allocation for one of the Facilities Cost Plan functions, affecting the recovery received in Fiscal Year 2026-27.
PRIOR BOARD ACTION
N/A
OTHER DEPARTMENT / AGENCY INVOLVEMENT
The methodology change has been developed in coordination with the Auditor-Controller's Office.
CAO RECOMMENDATION / COMMENTS
Approve as recommended.
FINANCIAL IMPACT
This accounting change has no immediate net financial impact, and will increase recovery through the Cost Plan in Fiscal Year 2026-27, as the cost plan recovery occurs on a two year lag.
CLERK OF THE BOARD FOLLOW UP ACTIONS
Forward executed budget transfer for processing.
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Laura Schwartz, Assistant Chief Administrative Officer