HomeMy WebLinkAboutStaff Report 10183
City of Palo Alto (ID # 10183)
Policy and Services Committee Staff Report
Report Type: Action Items Meeting Date: 6/11/2019
City of Palo Alto Page 1
Summary Title: Status Update Fee Schedule Audit
Title: Staff Recommends the Policy and Services Committee Recommend the
City Council Accept the Status Updates on Recommendations From 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.
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Recovery Policy,” which can then be rescinded.
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3. CSD should work with the Administrative Services Department (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.
Discussion
The status of the two open audit recommendations is included in Attachment A.
Recommendation #1 was implemented in this review cycle and Recommendation #3 has
already been implemented. The Community Services Department anticipates that the
remaining recommendation should be completed by July 2019.
Attachments:
Attachment A: Status Update
Attachments:
Attachment A: Status Update
STATUS OF AUDIT RECOMMENDATIONS
FEE SCHEDULE AUDIT – ISSUED 2/4/17
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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 Response and Target Date
Current Status
(Complete, In
Progress, or
Not Started)
Implementation Update and Expected
Completion Date
Finding: Most Community Services Department (CSD) programs recover costs consistent with City policy; however, CSD does not c onsistently 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.
Completed March 2019 Management Update:
On October 16, 2018 the Council Finance
Committee approved updates to the User Fee
Cost Recovery Policy to explain the fees that
may recover more than costs. The muni fee
software, Questica, can support fees above
cost recovery. ASD will provide guidance on
workflow and procedure updates, where
applicable, to reflect this updated policy.
Questica procedures in the City’s U-Drive have
been annotated as well to help explain fees
that recover more than costs.
Expected Completion Date:
November 2018.
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
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
CSD Concurrence: Agree
Target Date: 7/1/2018
Action Plan: While we will begin
working on this in earnest,
In Progress March 2019 Management Update:
CSD and the Budget Office have completed
cost center alignments to account for
programs clearly under cost centers. CSD has
proposed several additional budget clean up
2 Community Services Department: Fee Schedule Audit
Recommendation
Responsible
Department(s) Original Response and Target Date
Current Status
(Complete, In
Progress, or
Not Started)
Implementation Update and Expected
Completion Date
centers with CSD programs. 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.
items that will take effect in SAP July 1, 2019.
Expected Completion Date:
July 1, 2019
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 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