Josephine County Internal Service Fund ISF Overview Presented

Josephine County Internal Service Fund (ISF) Overview Presented at Weekly Business Session March 4, 2015

Internal Service Fund Internal services are those responsibilities a government provides to support its own internal operations. Common examples of internal services include information technology, payroll, motor pool, budgeting, legal, accounting, and human resources. Certain management objectives are served by creating a system to assign prices for the use of these internal services, which are then assessed to the departments that use the services. However, there is a cost to develop and maintain internal pricing systems. Governments must weigh the benefits of an internal services costing system against the cost and complexity of system design choices.

Indirect Cost – Cost Accounting � What is Indirect Cost? ◦ Indirect costs are costs used by multiple activities, and which cannot therefore be assigned to specific products, services, geographical regions, customers, or other cost objects. � Indirect costs are needed to operate the business as a whole. � Source: http: //www. accountingtools. com/questions-and-answers

Indirect Costs – Similar Terms � Indirect costs incurred in manufacturing operations are known as manufacturing overhead, while indirect costs incurred in the general and administrative area are known as administrative overhead. � Indirect Overhead is any overhead cost that is not part of manufacturing overhead. � Source: http: //www. accountingtools. com/questions-and-answers

Indirect Costs – Similar Terms � Thus, indirect overhead is not directly related to a company's production of goods or provision of services to customers. � Examples of indirect overhead costs are: ◦ ◦ ◦ ◦ Accounting, auditing, and legal expenses Administrative salaries Information technology Office expenses, postage and printing Research and development Telephone expenses Rent and Utilities ◦ Source: http: //www. accountingtools. com/questions-and-answers

Yeshiva University Albert Einstein College of Medicine � Facilities & Administrative (indirect) costs are those institutional costs, which are not readily identifiable with a particular project or activity but nevertheless are necessary for the general operation of the institution and the conduct of the activities it performs. � In theory, all such costs might be charged directly; practical difficulties, however, preclude such an approach. Therefore, they are usually grouped into a common pool and distributed to those institutional activities, which benefit from them through the expedient of an indirect cost rate. � Source: http: //www. einstein. yu. edu/administration/finance. aspx? id=245

Yeshiva University Albert Einstein College of Medicine � � A Facilities & Administrative (indirect) cost rate is simply a device for determining fairly and expeditiously, within boundaries of sound administrative principles, subject to governmental regulations, that proportion of an institution's costs, which should be borne by each of its projects or activities. The Facilities & Administrative (indirect) cost rate is the ratio between the total allowable Facilities & Administrative (indirect) costs of an institution and some direct cost base, such as the modified total direct costs (MTDC) base required by the Federal government. In order to recover its allowable indirect cost pool of expenses, an institution must allocate and collect its proportionate share from every project being performed by the institution. Source: http: //www. einstein. yu. edu/administration/finance. aspx? id=245

City of Gresham Indirect Cost Rates Year Ended June 30, 2012 -13 For Use During Fiscal Year 2012 -13

� Board Josephine County ISF Departments of County Commissioners – 18% � Finance – 19% � Human Resources – 12% � Information Technology – 28% � Communications – 8% � County Legal Counsel – 14% � Property Management – 1% � GIS – self-supporting � Law Library – self-supporting

� Step Josephine County ISF Methodology 1 – Calculate ISF amount by taking ISF Budgets less revenue offsets. � Step 2 – Allocate ISF amount proportionally to Operating Funds based on Personal Service and Materials & Service budget (excluding Capital and pass-through payments). � Step 3 – BCC sets ISF rate as percentage (currently 10%).

Questions & Comments Email to aohare@co. josephine. or. us