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Six of the nine ordinances Marietta City Council had on its agenda Thursday night were first readings of cost allocation transfers to the General Fund.
That may not be a familiar concept to many, but the accounting world considers it a viable way to track indirect costs and pay for certain things in one large batch, rather than small individual ones from departments. It's an economy of scale that saves on paying one large contract for a service instead of lots of little contracts.
There were no emergency measure passages Thursday, since council members Mike Scales and Bill Farnsworth were absent and emergency-measure legislation requires at least six of the seven members to be present.
The first readings on cost allocation included Ordinance 340 (22-23), establishing an overall plan for allocation of indirect costs incurred by the Water Revenue Fund, The Sanitary Sewer Fund, The Street Maintenance and Repair Fund, the Fire Department Levy Fund and the Capital Improvement Fund.
They all had specific amounts to be directed to the General Fund:
≤ Capital Improvement Fund, $92,852;
≤ Streets Department Fund, $369,726;
≤ Fire Levy Fund, $52,858;
≤ Water Department Fund, $340,988; and
≤ Sewer Department Fund, $303,403.
As an example, the Water Department Fund has its own money designated in the city budget, and it spends that on a variety of needed repairs, equipment, and new infrastructure. It even pays some of its own bills that are specific only to the water department. But it doesn't directly pay for a number of other services it uses, such as payroll, information technology, building maintenance, tracking water bill payments or consulting with the engineer's office or the law director's office for advice on a proposed project.
Instead, those costs are tracked and the Water Department Fund reimburses the General Fund for them. This is done yearly, with cost allocation transfers such as the ones authorized by council Thursday night. The costs are directly related to the water department but the services are supplied by "indirect" employees, ones who work for the city but not in the water department.
Thursday's legislation dealt with paying the 2023 cost allocations before the new budget process begins for 2024. The money isn't "new" money that has been spent, but money the departments have known all along would need to be paid back to the General Fund before the end of the year. Cost allocations for 2024 will be specified soon for the upcoming year's budget.
Not every financial entity uses indirect cost allocation. It's a choice that can be made but it is not required. The City of Marietta contracted this past year with a professional service, De Novo, to compute the cost allocations for each department.
The company spent time interviewing the employees in every department, identifying the tasks they did for their own departments and the tasks they performed for other departments. De Novo staff held a Zoom presentation with council members last fall to present their findings and explain their calculations.
Director of Budget and Purchasing Mitch Dimmerling said the work the last company did to create cost allocation transfers for the city lasted 15 years, "and I'll be very happy to see this one go 10 years before it needs to be updated."
Nancy Taylor can be reached at ntaylor@newsandsentinel.com