HomeMy WebLinkAboutStaff Report 9340
City of Palo Alto (ID # 9340)
Policy and Services Committee Staff Report
Report Type: Action Items Meeting Date: 6/21/2018
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Summary Title: CSD Fee Schedule Audit and Status Updates
Title: Staff Recommendation That the Policy and Services Committee
Recommend the City Council Accept the Status Update of the Community
Services Department Fee Schedule Audit
From: City Manager
Lead Department: Community Services
Recommendation
Staff recommends the Policy and Services Committee recommend that the City Council accept
the attached Status of Audit Recommendations resulting from the City Auditor’s Community
Services Department Fee Schedule Audit.
Background
The City Auditor’s Office issued an audit, the Community Services Department (CSD) Fee
Schedule Audit on February 14, 2017. The full audit report can be found here:
https://www.cityofpaloalto.org/civicax/filebank/documents/55243.
The audit objective was to determine if department fees cover the cost of services to ensure:
Financial sustainability of CSD programs;
Customers pay the appropriate share of service costs, including direct costs and the
indirect cost rate related to the service;
City programs are subsidized in accordance with the City’s cost recovery policy and that
the financial impact of subsidies on total cost recovery is clear.
The City Auditor made three recommendations to strengthen the department’s cost recovery
procedures and processes for monitoring program costs. The key recommendations were:
1. The City Manager’s Office should coordinate with the City Attorney’s Office and the
Administrative Services Department to revise the City’s cost recovery policy and
Questica budget system procedures to clarify which fees are not subject to laws limiting
fees to cost recovery.
2. CSD should create a procedure to implement the City’s User Fee Cost Recovery Level
Policy and incorporate relevant and useful elements from its existing “Class Cost
Recovery Policy,” which can then be rescinded.
3. CSD should work with the Administrative Services Department (ASD) and the
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Information Technology Department to configure SAP or include a requirement for the
proposed new enterprise resource planning system to align cost centers with CSD
programs.
Discussion
The status of the two open audit recommendations is included in Attachment A.
Recommendation #3 has already been implemented. The City Manager’s Office, Administrative
Services Department, and Community Services Department anticipate that the remaining two
recommendations should be completed by November 2018.
Attachments:
Attachment A: Status Update
Attachment A
STATUS OF AUDIT RECOMMENDATIONS
FEE SCHEDULE AUDIT – ISSUED 2/4/17
Page 1
The City Manager has agreed to take the following actions in response to the audit recommendations in this report. The City Manager will report
progress on implementation six months after the Council accepts the audit report, and every six months thereafter until all recommendations have been
implemented.
Recommendation
Responsible
Department(s) Original Target Date and Response Status
Implementation Update and Expected
Completion Date
Finding: Most Community Services Department (CSD) programs recover costs consistent with City policy; however, CSD does not consistently apply its cost
recovery policies and procedures
1. The City Manager’s Office should
coordinate with the City Attorney’s Office
and the Administrative Services
Department to revise the City’s cost
recovery policy and Questica budget
system procedures to clarify which fees
are not subject to laws that limit fees to
cost recovery; modify the cost recovery
categories to allow for fees that recover
more than costs, based on market rates;
and configure the Questica budget
system to support setting fees to recover
more than 100 percent of costs when
appropriate.
ASD Concurrence: Agree
Target Date: 6/30/2017
Action Plan: ASD staff will coordinate
with the CMO, City Attorney and
departments to revise and implement
the recommendations.
Not started June 2018 Management Update:
No change, ASD anticipates it will update this
policy by Fall 2018.
Expected Completion Date:
November 2018.
November 2017 Management Update:
ASD and the CMO expect to begin the policy
and procedure update shortly and will likely
complete this recommendation by Fall 2018.
3. CSD should work with ASD and the
Information Technology Department to
configure SAP or include a requirement
for the proposed new enterprise
resource planning system to align cost
centers with CSD programs.
CSD Concurrence: Agree
Target Date: 7/1/2018
Action Plan: While we will begin
working on this in earnest, realistically,
we anticipate that we will not fully
implement this recommendation for at
least two budget cycles. We are
currently working with ASD to better
align CSD’s Cost Centers in SAP with
our individual lines of business. We
expect we will complete much of this
recommendation by 7/1/2017 but that
there will be additional clean up in the
next budget year.
In Progress June 2018 Management Update:
No change. Staff have identified several
clean-up items to further improve cost center
alignment to programs. Staff will complete
these clean-up actions over the next several
months.
Expected Completion Date:
November 2018.
November 2017 Management Update:
CSD has worked with Budget Office staff to
better align cost centers with CSD programs.
Staff have already updated cost centers for
the Children’s Theatre and Human Services
2 Community Services Department: Fee Schedule Audit
Recommendation
Responsible
Department(s) Original Target Date and Response Status
Implementation Update and Expected
Completion Date
and are in the process of updating Recreation,
Teen Programs, and Cubberley. Staff have
also reviewed CSD staff assignments to
ensure that positions are assigned to the
appropriate cost centers. Staff anticipates
that this review of staff and budget by
program should be substantially complete
this fall but will likely require clean-up at the
beginning of FY 2019.
Expected Completion date: 11/1/18