Transcript Internal Service Funds

ISF Workshop
Presenters:
Auditor – Controller / Treasurer – Tax Collector
Information Technology Services
General Services
Risk Management
Central Warehouse
Internal Service Funds
What is an Internal Service Fund (ISF)?
A governmental centralized service that provides
services or products on a cost-reimbursement
basis to other governmental units or external
users with a break-even motive.
To qualify as an ISF the predominant users of
the services or products must be the
government itself.
Internal Service Funds
ISF vs. Central Service Department
The ISF is a central service department that
recovers costs via cost reimbursement as services
and/or products are provided via invoicing or direct
billing.
The non-ISF central service department recoups
costs via direct billing and via the Cost Plan (A-87)
for non-billed costs for services and/or products
allocated to departments based upon the level of
service provided to each department.
Internal Service Funds
• General Methodology
The Internal Service Fund accumulates all costs
related to operating the ISF and allocates those
costs over the number of productive units (goods
or services) to be provided to determine a per
unit cost of production.
Total Costs/Service Units = Cost per unit
Internal Service Funds
• How are ISF rates calculated
I. Service Level
- Determine the appropriate service level
necessary to meet the projected demands of
user departments
Example:
- Number of vehicles required to meet
transportation demand of user departments
Internal Service Funds
• How are ISF rates calculated (cont’d)
II. What elements are included in the rates?
A. Operational Costs
- Salary and benefits of ISF Personnel
- Operational Expenses – service and supplies
- Allowable Indirect Costs (department)
- Allowance for Replacement Costs
- A-87 Costs (other central service department costs)
- Working Capital / Operating Reserve – 60 day avg)
B. Retained Earnings from Prior Year
- Unreserved surplus or deficit from the prior year
(Note: Retained Earnings reserved for a specific purpose are not
included in the rates, i.e. replacement vehicles, building
improvements)
Internal Service Funds
• How are ISF rates calculated (cont’d)
Internal Service Funds
Rate Calculation Example
ISF Operation:
Fleet Service ISF for a 10 vehicle fleet unit
Operational Assumptions for Fiscal Year: (upcoming):
Number of Vehicles in Fleet Operations
10
Number of miles driven Per vehicle (avg)
30,000
Number of vehicles scheduled for service
60
(Vehicles are serviced every 5,000 miles)
Vehicles replaced per year
1
Staff required to manage Fleet operations:
2
Cost assumptions:
Personnel:
Salary and benefits ( 2 staff)
$60,000
Operations:
Fuel
Oil
Insurance
Parts
Indirect Overhead Costs (A-87)
Replacement Cost
28,000.00
1,600.00
12,000.00
3,500.00
1,800.00
25,000.00
Total Cost
$131,900
ISF Rate:
$131,900/300,000 miles =
$ 0.44 per mile
Internal Service Funds
• Application of ISF Rate
The ISF will charge the users for their services
and/or products the calculated ISF rate by either
invoicing the user or preparing a journal voucher
billing for the service and/or product.
Internal Service Funds
• Mid-Year Rate Review/Adjustment
The ISF should review their current level of
activity to determine if their activity level is above
or below the estimates used to calculate the ISF
rates.
The ISF rates should be adjusted at mid-year if
the activity level is materially different from the
estimates.
Internal Service Funds
• Why adjust ISF rates at Mid-year?
A. Service activity > Service Estimates
The ISF will be collecting more revenue than
estimated and the rates should be adjusted to
reflect this additional revenue.
The additional revenue should create additional
net income that should be used to adjust rates
downward to reflect the reduced cost of service
on a per unit basis.
Internal Service Funds
• Why adjust rates at Mid-year? (cont’d)
B. Service Activity < Service Estimates
The ISF will be collecting less revenue than
estimated and the rates should be adjusted to
reflect this lower than anticipated revenue.
The reduction in revenue should cause a net
loss and rates should be adjusted upward to
offset the lost revenue that reflects an increased
cost of service on a per unit basis.
Internal Service Funds
Internal Service Funds
Mid-Year Analysis
Cost assumptions:
Personnel:
Salary and benefits ( 2 staff)
Component Unit Breakdown:
ISF Rate:
$
$
60,000
Operations:
Fuel (25 miles/gallon)
Oil
Insurance
Parts
Indirect Overhead Costs (A-87)
Replacement Cost
28,000.00
1,600.00
12,000.00
3,500.00
1,800.00
25,000.00
Total Cost
$131,900
ISF Rate:
$131,900/300,000 miles = .
0.44 per mile
$0.44 per mile
Variable Cost:
Fuel
Oil
Parts
Total VC/mile
Fixed Cost:
Salary and Benefits
Insurance
Indirect Overhead
Replacement Cost
Total FC/mile
Total Cost/mile
Cost per
Estimated Estimated
mile
Cost
Miles
$
0.09 $
28,000
300,000
0.01
1,600
300,000
0.01
3,500
300,000
0.11
33,100
$
0.20
0.04
0.01
0.08
0.33
0.44 $
60,000
12,000
1,800
25,000
98,800
131,900
300,000
300,000
300,000
300,000
Internal Service Funds
Internal Service Funds
Mid-Year Analysis
(a)
Base-line Usage (estimate)
(b)
Miles per
Miles at Midmonth
year
25,000
150,000
(c)
(d)
=(a) * $.44
(e)
(f)
(g)
(h)
= (a) * $.11
=(d) -(e)
= $98,800/12 = (f) - (g)
Miles at
Variable Cost
Gross
Fixed
Net
Year-end Revenue/Mo Expense/Mo Margin/Mo
Cost/Mo
Income/Mo
300,000 $ 11,000.00 $ 2,758.33 $ 8,241.67
8,233.33 $
8.33
Actual activity > baseline
30,000
180,000
360,000
13,200.00
3,310.00
9,890.00
8,233.33
1,656.67
Actual activity < baseline
20,000
120,000
240,000
8,800.00
2,206.67
6,593.33
8,233.33
(1,640.00)
Mid-Year Rate adjustment: Activity level >
Total Fixed Cost for year
$
Total Fixed Cost consumed at mid-year
Total Fixed Cost left for year
Less: Additional Net Income (1st half)
Fixed Cost to be allocated
$
baseline usage
98,800.00
(49,400.00)
49,400.00
9,940.00 ($1,656.67 * 6)
39,460.00
Estimated number of miles for 2nd half of year
(6 * 30,000 miles)
Total Fixed Cost/mile for 2nd half of year
($39,460 / 180,000)
$
0.22
New ISF Rate per mile (.11 VC + .22 FC)
$
0.33
Proof:
First 6 mo activity
Second 6 mo activity
Variable
Miles per
Cost
Gross
month
Revenue/Mo Expense/Mo Margin/Mo Fixed Cost/Mo Net Income
30,000 $ 13,200.00 $ 3,310.00 $ 9,890.00 $ 8,233.33 $ 1,656.67
30,000
9,886.67
3,310.00
180,000
6,576.67
8,233.33
(1,656.66)
Internal Service Funds
• Why adjust rates at Mid-year? (cont’d)
A. Authoritative Guidelines
1. A-87, Cost Principles for State, Local, and Indian
Tribal Governments recommends that ISF rates be
reviewed semi-annually and adjusted as
necessary.
2. California State Controller’s Office “Handbook of
Cost Plan Procedures for California Counties”
states that ISF’s should prepare and examine its
financial condition at least midway through each
fiscal year and if a material profit or loss is
projected the billing rates should be adjusted.
Internal Service Funds
•
Why adjust rates at Mid-year? (cont’d)
3.California State Controller’s Office
“Accounting Standards and Procedures for
Counties” states that if the ISF’s mid-year
results indicate either a substantial income or
loss for the year rates should be adjusted at
that time.
4. Current year rates do not reflect prior year actual
“net income” or “net loss”
Internal Service Funds
• ISF Reserves (Fund Balance / Retained Earnings)
vs. Cash
A. Reserves
1. Operating Reserve
Provides for 60-day cash liquidity to complete
the revenue earning process from providing
the service and/or product to collection of
payment.
2. Designated Reserve
A designation for a specific purpose of the ISF
such as replacing equipment, vehicles or
building remodels.
Internal Service Funds
• ISF Reserves (Fund Balance / Retained Earnings)
vs. Cash
3. Operating Reserve = Working Capital
Reserve
a. The term operating capital reserve is typically
used by staff in the County of Fresno to mean
Working Capital Reserve.
b. Working Capital Reserve
The ISF may establish and maintain a
reasonable level of working capital reserve. A
reasonable working capital reserve is
considered to be the amount required to pay
for up to 60 days of average cash expenses.
Internal Service Funds
• ISF Reserves (Fund Balance / Retained Earnings)
vs. Cash
B. Cash
– The most liquid asset held by the ISF
Does not correlate to fund balance on a 1:1
basis as fund balance can be represented by
inventory, equipment, and so forth.
C. Fund Balance formula
Assets – Liabilities = Fund Balance
Internal Service Funds
• ISF Reserves (Fund Balance / Retained Earnings) vs.
Cash
D. ISF Loans
An ISF may make loans only to other County funds subject to the following
restrictions:
1. Loan must be recorded as an account receivable in the ISF’s financial
records;
2. Loan must be repaid with interest and interest computed at the same rate that
the ISF would have earned had the loan not been taken place;
3. Loan period must not exceed 36 months;
4. Loan must not impact adversely on the ISF’s current cash requirements;
5. Loan must be included in the measurement of the ISF’s assets for any actuarial
purpose; and
6. Loan agreement must include a clause that permits the ISF to demand
accelerated repayment of all or any part of the loan if its cash requirements
so dictate.
(Source: SCO Handbook of Cost Plan Procedures for California Counties
Internal Service Funds
• Considerations for using an ISF
A. Transparency
The rate development process should openly
disclose the projected units of service and/or
product to be provided with the projected
expenditures (type and dollar amount)
necessary to provide the service and/or
product.
Internal Service Funds
• Considerations for using an ISF (cont’d)
B. Efficient use of Resources
The use of an ISF segregates financial
reporting for ISF operations from the rest of
the Central Service Departments that should
enhance responsiveness to changes in
demand.
Internal Service Funds
• Considerations for using an ISF (cont’d)
C. Requires Long-Term Planning
The ISF should consider the cost of repairing
and/or replacing equipment in the development
of rates.
Allows the operation to plan for retirement of
ISF assets.
Internal Service Funds
•
Considerations for using an ISF (cont’d)
D. Better Management and Control
The development of rates provides a tool to
compare ISF rates to comparable services
provided by the private sector for competitive
analysis.
E. Aids management in identifying where
operational inefficiencies may be:
- inefficient output per unit of input
- cost effectiveness of inputs to generate output
- cost structure of inputs
Internal Service Funds
• Potential Limitations of using an ISF
A. Lack of Flexibility
The ISF may not be able to adjust rates
timely to reflect changes in demand
- demand nature of users
(in tight budgetary times users may postpone
use of services and/or products until later in the
budget year thus giving a “false” demand
reading at mid-year)
Internal Service Funds
• Potential Limitations of using an ISF (cont’d)
B. User uncertainty about ISF Rates
The user department is unable to estimate
ISF rates from year to year for their
budgeting/planning purposes as many ISF
input variables are not readily available or
projectable:
- salary and benefits changes
- ISF staffing level
- reserve level
- demand from other users
Internal Service Funds
• Potential Limitations of using an ISF (cont’d)
C. Potential for “excess reserves”
The management of the ISF may develop rates
with an aggressive replacement/repair program
but not spend the reserves in accordance with
program terms thereby accumulating reserves in
excess of what is required to operate the ISF.
The users of the ISF would have then been
overcharged for the services and/or products
received.
Internal Service Funds
• Potential Limitation for using an ISF (cont’d)
D. Lacks economy of scale
The ISF may be unable to provide
competitive rates as compared to the private
sector due to a smaller customer base and/or
product volume.
Internal Service Funds
• Review of ISF rates
A. Auditor-Controller/Treasurer-Tax Collector
(ACTTC)
1. Review the rates for reasonableness of:
- input costs
- output estimates
- methodology used to allocate costs
Internal Service Funds
• Review of ISF rates (cont’d)
B. Cost of review
The cost of each review depends on the complexity and
accuracy of the rate study prepared by the ISF. The ISF
can assist with an efficient review by:
1. Preparing a thorough work document that:
– states the assumptions used to allocate overhead
– identifies the input costs with assumptions
– identifies the projected service and/or product
level with assumptions
– prepares support documents that are properly
cross-referenced and tickmarked
– formulas in spreadsheets should be documented
and easy to follow
2. Respond to questions timely
Internal Service Funds
• Review of ISF rates (cont’d)
C. ACTTC vs. External Auditor
1. Review Process
The review process will be essentially the
same as the cost accounting principles that
underlie rate development are
standardized
2. Cost Effectiveness
The cost effectiveness will depend upon:
a. experience of reviewer
b. cost structure of reviewer’s entity
c. adequacy of the ISF work documents
ISF Workshop
Information Technology Services
Department
Voice Communications
Information Technology
ITSD Wireless (Radio Shop)
PeopleSoft Operations
ITSD – Fund Composition
• Three separate Internal Service Funds (ISF)
• Four distinguishable services:
– Fund 1020 – IT Services and Network Operations
– Fund 1030 – PeopleSoft Operations
– Fund 1080 – Telecommunications
– Radio Operations (ITSD Wireless)
Each fund will be presented separately
ITSD – Fund 1020
Basic Services Provided
– Institutional network with secure government to government
connections.
– Enterprise applications – email and internet.
– Secure Desktop environment .
– Application hosting and database support.
– Secure Data storage, backup and recovery.
– Consultant services – analysis, programming, application
design, technology planning and project management.
– Security services and appropriate use investigations.
– HIPAA security administration.
ITSD – Fund 1020
Service Metrics
Service metrics for last year:
10,228 calls for PC support
436 printers repaired
7,938 Security requests
Completed HIPAA, Medi-Cal and CERTNA audits
121 PC forensic investigations completed
3,529 application support requests completed
8.2 million transactions are processed on the network each day
6,000 connections are blocked by our Firewalls each minute
5.2 million emails are processed monthly
4.5 million spam emails blocked each month
120,000 virus or malware instances were blocked each month
ITSD – Fund 1020
How are service levels determined?
• Service Level Agreements.
• Customer requests for specific services.
• Mandated requirements either for a single
customer or countywide.
• Downtime avoidance.
• Risk avoidance.
• Technology driven changes.
• Ability of the customer to fund services.
ITSD – Fund 1020
Types of Costs
• Rate Recovered Costs (89%):
– Those costs specific to the production of a
service or function which can be purchased
by a customer.
• Direct Costs (11%):
– Those costs which are charged directly back
to a customer. No overhead is added to direct
costs. Most common direct costs are for
hardware or software requested by the
customer.
ITSD – Fund 1020
How are rates calculated?
• Cost Estimation:
– Historical costs are reviewed.
– New estimates are obtained where costs are not
set contractually.
– License levels are reviewed and adjusted based
on input from customers.
– Costs are accumulated in cost centers that
represent specific services.
– New functions or changes are estimated with a
cost benefit completed for 1(+) useful life cycle.
ITSD – Fund 1020
How are rates calculated? (cont.)
• Rate Calculation:
– Costs are accumulated in Cost Centers.
– Indirect costs are added to the Cost Center
based on the percentage of overall cost in that
Cost Center.
– Resultant total cost within a Cost Center is
divided by the metric associated with the service
that Cost Center represents calculating the rate
for that Cost Center.
ITSD – Fund 1020
What are rate metrics?
• With each service is associated a cost center
and a rate metric.
• Rate metrics are relative to the service and
indicate a measure of how costs are incurred.
• Customers can determine how many of a rate
metric they wish to purchase each month, thus
providing some control of their IT costs.
• The simplest example is an I-Net login.
ITSD – Fund 1020
Rate Example
• I-Net login - $4.85 / person / month
• Recovers costs for 1 security position, 1 help desk
position, related software and 2% of ITSD indirect
costs.
• Costs associated with establishing and
maintaining logins total $369,397 for FY 09/10.
• 6,348 logins times 12 months is 76,176 per year.
• $369,397 divided by 76,176 is $4.85 / month.
ITSD – Fund 1020
Why are historical costs used to calculate the rates?
• Historical costs and metrics in addition to projected
costs are the basis for overall budget and cost
recovery rate development.
• Historical costs are adjusted by changes to policy
or practices, new quotes from vendors, changes in
the type of services and other various influencing
factors.
• Historical costs on their own are not a strong
enough base for accurate cost recovery.
ITSD – Fund 1020
Cost Allocation to Customers
• Direct Costs are fully allocated to the customer
without additional overhead or processing charge
– pass through costs.
• Rated costs are allocated based on the rate
metrics used by the Department.
• All costs are billed monthly in arrears unless it is a
one time annual payment.
• Each month reflects the changes customers
requested in the previous month.
ITSD – Fund 1020
Cost Containment
• Return On Investment (ROI) analysis at each
acquisition / replacement milestone.
• Lease / Purchase to spread costs across useful
life.
• Useful life analysis to avoid high repair costs and
emergency replacement costs.
• Energy efficient equipment and facilities.
• Aggressive negotiations with software vendors.
• Monitor expenses and revenues closely.
ITSD – Fund 1020
Cost Containment (continued)
• Work closely with customers to eliminate
unnecessary licenses, features.
• Leverage Open Source tools to replace
commercial software where risk allows.
• Plan beyond the budgetary cycle and include long
range goals that coincide with industry directions.
• Avoid “Bleeding Edge” technology and the “WOW
Factor” – trust the numbers instead.
ITSD – Fund 1020
Cost Containment (continued)
• Fixed cost challenges:
– Rent
– Power
– Software Applications
– Labor
• Variable cost challenges:
– Software Licenses
– Hardware costs
– Rental personal computers
ITSD – Fund 1020
Overview of reserves held by ISF?
Reserves for Fund 1020 as of August 12, 2009 = $5,927,031
Allocated as follows:
$ 950,000
$1,300,000
$ 431,468
$3,245,563
$5,927,031
excess retained earnings.
designated for Data Center Infrastructure upgrades.
designated for replacement UPS, Data Center and 21st Floor.
operating capital reserve.
Total
• Target for 60 day operating capital reserve: $3,616,438
• This analysis is based on actual cash available as of August 12th.
• Cash is monitored daily and depending on payments in process and
relationship to billing cycle, total on hand will vary.
ITSD – Fund 1020
How are reserves managed by the ISF?
• Excess reserves are returned through rate
reductions and any shortage in reserves are
collected through rate increases.
• Designations should be used for major capital
expenditures with the replacement cost collected
over the useful life of the capital asset.
• Cash on hand is monitored daily to detect trends
that result in negative end of year balances. Early
action is imperative to offset revenue shortfalls or
expense overages.
PeopleSoft Operations - Fund 1030
Basic Services Provided
• Operates and Maintains the enterprise wide
Human Resources and Financial Management
System.
• Human Resources system provides payroll and
employee benefits support.
• Financial system processes all financial
transactions for the County and some non-County
organizations.
PeopleSoft Operations - Fund 1030
Basic Services Provided FY 09
•
•
•
•
•
•
•
•
•
205,238 paychecks.
890,535 Financial transactions (journal, voucher, & deposits).
7,548 employee benefit statements.
Upgraded HR system from 8.9 to 9.0
Archived oldest three years of selected HR data.
New self service functions (address, phone and contact info).
New drill-down functionality for selected reports.
Clean-up of old asset data and improved asset reporting.
Implemented automated interfaces with all employees benefit
providers.
PeopleSoft Operations - Fund 1030
Basic Services Provided FY 09 (cont.)
• Provided support for pending legal actions.
• Eliminated centralized printing of PeopleSoft
reports.
• Automated distribution of financial system reports
to outside entities via email.
• Support for the FY10 Budgeting process.
• Implemented automated support and reporting for
mandatory and voluntary furlough, etc.
• Implemented a new leave plan.
• Improved data security for outside interfaces.
PeopleSoft Operations - Fund 1030
How are service levels determined?
• Meeting mandated accounting changes such as
tax updates.
• Meeting payroll and bank deposit deadlines.
• Completing benefits enrollment in a timely manner.
• Working with Auditor, Personnel, CAO and
Purchasing to meet day to day processing needs.
• Working with customer departments to meet a
variety of their needs.
PeopleSoft Operations - Fund 1030
How are rates calculated?
• Rate Recovered Costs (100%):
– All costs are recovered via two rates, one for
Human Resources and one for Financial.
– Costs are primarily labor, software and ITSD
rated expenses.
– Costs from ITSD are Board approved rates as
provided to all customers. No other ITSD
overhead is included in PeopleSoft costs.
PeopleSoft Operations - Fund 1030
How are rates calculated?
Human Services Rate:
• Total HR costs divided by the total number of
pay checks generated in the previous year.
Financial Management System Rate:
• Total Financial costs divided by the total number
of transactions (journals, vouchers and deposits)
from the previous year.
PeopleSoft Operations - Fund 1030
Cost Allocation to Customers?
Human Services Costs:
• Actual number of pay checks generated in the
previous month billed in arrears.
Financial Management System Rate:
• Actual number of transactions (journals, vouchers
and deposits) processed in the previous month,
billed in arrears.
PeopleSoft Operations - Fund 1030
Cost Allocation to Customers? (cont.)
Organizations other than County Departments use
the PeopleSoft Financial system. These
agencies are billed using the same rates on
paper bills.
Schools and Cemetery Districts are mandated to
use Fresno County Treasury. By statute we
cannot charge them for their share of the cost
and must carry the cost as a general fund
obligation.
PeopleSoft Operations - Fund 1030
Overview of reserves held by ISF?
Reserves for Fund 1030 as of August 12, 2009 = $1,099,300
Allocated as follows:
$ 600,000 designated for upgrade of Financial Management System
$ 499,300 operating capital reserve
$1,099,300 Total
• Target for 60 day operating capital reserve: $ 461,000
• This analysis is based on actual cash available as of August 12th.
• The total cash on hand will be reduced by making two large
payments for annual software licenses in the next 60 days.
Telecommunications - Fund 1080
Basic Services Provided
•
•
•
•
•
•
•
•
Comprehensive voice communication system.
Integrated IVR, call tree and voice mail services.
Cellular phone administration.
Network Fax services.
Voice and Data infrastructure wiring.
Voice network management.
Live County Operators.
Contract Management for voice related services
and materials.
Telecommunications - Fund 1080
Service Metrics
• Administer 1,353 cell phone accounts
• Approx. 10,000 phone lines in 250 locations (includes emergency and alarm
lines, does not include Sheriff’s Dispatch lines)
• Number of calls for service 2,113
• Point-of Sale devices: 150
• FAX machines: 927
• M/A/C: 703
• Number of WATS (800) Number calls 9,636
• Setup for 3 Elections: phone banks (40 to 100 telephones) and 40 cell
phones
• JJC Courthouse: 300+ telephones, MAGEC: 50+ telephones, Fowler Library
• Abandoned locations closed down: 10+ sites and 100+ telephones
• IVR Systems: 4 (CUBS, Jury, Elections & HEAT)
Telecommunications - Fund 1080
What is recovered by rates?
• Rate Recovered Costs (47%):
– A single rate recovers labor, phone system
maintenance, depreciation and all indirect costs.
• Direct Costs (53%):
– Commercial phone bills, cellular phone costs,
long distance charges and cabling costs are all
charged back directly to the customer who
incurred the cost. No overhead is added to
direct costs.
Telecommunications - Fund 1080
How are rates calculated?
• Single rate is based on Equivalent Units (EU)
which is an averaging process based on original
cost.
• Original cost of the phone equipment, divided by
$100 gives an equivalent unit or EU number.
• All rate recovered costs are divided by the total
number of EU, giving the cost recovery rate.
• The rate is applied monthly in arrears to all
phone equipment in service the previous month.
Telecommunications - Fund 1080
How can customers impact their costs?
• Phones can be disconnected.
• Phone models can be changed, single line to
multi line, etc.
• Monitor long distance costs.
• Review cell phone bills.
• Eliminate unused or underused phones.
• Remind staff to use 5 digit dialing for in County
calls.
Telecommunications - Fund 1080
Overview of reserves held by ISF?
Reserves for Fund 1080 (voice only) as of 8/12/09 = $4,465,468
Allocated as follows:
$4,531,592 Equipment depreciation.
$ (66,124) Operating capital reserve.
$4,465,468 Total
• Target for 60 day operating capital reserve: $ 687,960
• This analysis is based on actual cash available as of August 12th.
• The operating capital negative balance reflects the payment of $650,000
in CalNet II phone bills not yet billed back to Customers.
• Cash is monitored daily, total on hand will vary.
ITSD Wireless (Radio Shop) - Fund 1080
Services Provided
• Maintain enterprise wide microwave based
radio network.
• Procure, configure, install and support mobile,
hand held and fixed base radios.
• Support EMS and Sheriff Dispatch locations.
• County wide pager system.
• Radio frequency compliance and planning.
• Contractual support for Madera County Sheriff
radios.
ITSD Wireless (Radio Shop) - Fund 1080
Services Metrics
Maintain and service:
3,000 Mobile and portable radios
33 fixed locations for receivers, transmitters and microwave
80 base stations and 350 receivers
1,500 pagers
19 licensed, 12 un-licensed microwave paths
Emergency Radio System at 8 Hospitals
Paramedic Ambulance to Hospital call in network
Maintain 120 FCC Licenses
Active in the First Responder Interoperability effort:
APCO – Associated Public Safety Communications Officers
PSRSPC – Public Safety Radio Strategic Planning Committee
CALSIEC – Calif. Strategic Interoperability Executive Committee
FUAWG – Fresno Urban Area Work Group
ITSD Wireless (Radio Shop) - Fund 1080
How are service levels determined?
• Customer support needs.
• Interaction with customers on response times.
• Comparison of rates and services to commercial
providers.
• Mandated changes to the communications
environment.
• Technology changes outside the normal refresh
process.
• Ability of customers to fund services.
ITSD Wireless (Radio Shop) - Fund 1080
How are rates calculated?
• Rates are based on a specific service.
• Costs relative to that service are accumulated.
• Accumulated costs are divided by the metric
associated with that specific service.
• Rates based on hardware metrics may contain
depreciation costs where appropriate.
• Resultant rate is billed monthly in arrears for
actual use.
• Labor is billed hourly to the customer who
incurred the work.
ITSD Wireless (Radio Shop) - Fund 1080
Overview of reserves held by ISF?
Reserves for Fund 1080 (Radio Shop only) as of 8/12/09 = $320,459
Allocated as follows:
$
0 Equipment depreciation is in transition.
$ 320,459 Operating capital reserve.
$ 320,459 Total
• Target for 60 day operating capital reserve: $ 341,265
• This analysis is based on actual cash available as of August 12th.
• Depreciation reserve was still being calculated at the time of this
publication due to the recent transfer of the Radio Shop to ITSD.
• Cash is monitored daily.
ITSD
Directions
What we want to change:
• Combine like functions from each ISF.
• Standardize budget and billing.
• Lease purchase across useful life for equipment if cost
effective.
• Merge Voice, Data, Radio and Video networks where
efficiency can be improved and costs avoided.
• Replace existing phone system with new technology to reduce
operational costs and improve efficiency.
• Increase emphasis on IVR, conference call and video
technology to harvest savings.
ITSD
Directions (cont.)
Challenges:
• Narrow Band conversion Federal Mandate 2012 and 2018.
• Windows XP to Windows 7, skipping Vista.
• Increased security requirements - NIST.
• Disaster Recovery Site for County Data Center.
• Complete the infrastructure updates at the County Data Center.
• eDiscovery implications.
• Internet and Social Networking.
Opportunities:
• Thin client desktop.
• Disaster Recovery Site.
• Increased use of wireless technology.
• Energy saving equipment and energy management practices.
ISF Workshop
General Services
Fleet Services
Facility Services
Graphic Communication Services
Security Services
Fleet Services Internal
Services Fund
Fleet Services ISF
Services Provided
•
•
•
•
Maintenance and repair of vehicles & equipment
Acquisition of vehicles & equipment
Fueling stations
Motor pool rentals
Fleet Services ISF
Service Level
• User department requests for vehicles/equipment
• Mandated and regulatory requirements
– Fuel tank replacement and inspections
– Equipment retrofit (CARB)
– Smog checks
• Technological changes
Fleet Services ISF
Service Level
Miles driven by rate class (FY 2007-08)
Rate Class
A02
A03
A06
T01
T02
T03
T04
V02
V03
V04
Description
Mid Sized Autos
Full Size Autos
Hybrid Vehicles
Compact PU
1/2 ton PU
3/4 ton PU
1 ton PU, 4x4 3/4, 3/4 Utility
Minivan
3/4 ton Van
1 ton Van
Motor pool requests (FY 2007-08)
–
Total Request for Motor Pool Vehicles
–
Total Number of Days Vehicles were Out
FY 07-08
3,784,340
714,547
154,895
770,143
1,640,491
463,723
530,761
812,086
116,180
417,733
3,826
15,386
Fleet Services ISF
Rate Calculation & Allocated Costs
Two major elements:
A. Mileage/Meter Rate
• Maintenance
• Inventory Purchases (repair and maintenance parts)
• Fuel - This line item is 33% of the Fleet Services
budget that is driven by market conditions/cost and
fluctuations which is not a controlled cost.
B. Fixed Rate
• Includes all other operational costs: data processing
services, small tools, and PeopleSoft charges, etc.
• Fleet Services utilizes the Producer’s Price Index to
compute monthly inflation rate (recommended in an
audit by the Auditor/Controller)
Fleet Services ISF
Rate Calculation & Allocated Costs
Costs are allocated to user departments based
on usage, i.e. number of vehicles assigned,
miles driven, motor pool requests, etc.
Fleet Services ISF
Rate Calculation & Allocated Costs
Rates calculated based on:
• Historical costs (accumulated by shop)
• Anticipated program changes
• Contract increases
• Cost increases for uncontrollable
commodities, i.e. fuel
• Service levels as requested by user
departments
• Cost accounting principles and methodology
• 100% recovery of operational costs
Fleet Services ISF
Rate Calculation & Allocated Costs
Historical vehicle/equipment costs (FY 2005-06 – FY 2007-08)
Rate Class
A02
A03
A06
T01
T02
T03
T04
V02
V03
V04
Description
Vehicles
Mid Sized Autos
525
Full Size Autos
97
Hybrid Vehicles
17
Compact PU
89
1/2 ton PU
150
3/4 ton PU
41
1 ton PU, 4x4 3/4, 3/4 Utility
51
Minivan
130
3/4 ton Van
19
1 ton Van
66
Deprec
453,920
85,250
58,316
81,977
152,547
54,342
98,298
127,391
7,574
75,229
Misc
27,658
4,524
192
2,220
2,728
814
1,421
3,577
241
1,331
Parts
149,265
37,734
22,310
90,029
223,573
92,208
72,241
112,360
17,319
97,412
Labor
Total
497,023 1,127,865
117,473
244,983
13,519
94,336
83,958
258,183
178,241
557,089
62,659
210,022
65,589
237,549
133,033
376,362
18,209
43,344
93,211
267,183
Fleet Services ISF
Rate Calculation & Allocated Costs
Fuel costs for FY 2004-05 - FY 2008-09
Gallons
Fiscal Year Dispensed
FY 04-05
1,839,902
FY 05-06
1,776,514
FY 06-07
1,784,721
FY 07-08
1,780,779
FY 08-09
1,604,129
Average Cost/Gallon
Cost
Unleaded Diesel
$3,908,969
2.14
2.08
$4,657,867
2.62
2.65
$4,586,829
2.59
2.48
$5,431,990
3.00
3.17
$4,777,365
2.97
3.15
Fleet Services ISF
Cost Reductions
What departments can do?
• Return underutilized vehicles/equipment
• Ensure semi-annual maintenance is performed
• Monitor/control miles driven and fuel consumption
by reviewing monthly billings
Fleet Services ISF
Reserves
• As of 6-30-09, there was $6,702,878 held in reserves to
support fixed asset purchases and operations.
$ 2,032,700
$ 2,098,178
$ 2,572,000
$ 6,702,878
Designed for fixed asset purchases
Equipment depreciation
Operating capital reserve
Total
• Target for 60 day operating capital reserve: $2,572,000
• Cash is monitored daily and depending on payments in
process and relationship to billing cycle, total on hand will
vary.
• Departments are billed on a monthly basis in arrears
Graphic Communication Services
Internal Services Fund
Graphic Communication Services ISF
Services Provided
•
•
•
•
•
Postal services
Countywide messenger mail service
Graphic design services
Central printing
Copy services
Graphic Communication Services ISF
Service Level
•
User department requests for postal services,
Countywide messenger mail service, graphic
design services, central printing and copy
services
•
Technological changes
Graphic Communication Services ISF
Service Level
•
Postage expense based on user department postage needs
– FY 2007-08
$2,039,649
– FY 2008-09
$2,015,300
– Postal increases:
• May 2007 $.02
• May 2008 $.01
• May 2009 $.02
• May 2010 $.02 - $.04
•
Number of copies requested by user departments
– FY 2007-08
6,500,000
– FY 2008-09
8,500,000
– Copy costs:
• FY 2007-08 County $.029 Kinko’s $.04 plus tax
• FY 2008-09 County $.030 Kinko’s $.04 plus tax
• FY 2009-10 County $.026 Kinko’s $.04 plus tax
Graphic Communication Services ISF
Service Level
•
County messenger mail service stops
– FY 2008-09
267 locations
– FY 2009-10
137 locations
– In FY 2009-10, the method in which charges
to user departments for County messenger
mail services changed to a per stop charge.
User departments were able to consolidate
stops based on their needs.
Graphic Communication Services ISF
Rate Calculation
Rates calculated based on:
• Historical costs (accumulated by type of service)
• Anticipated program changes
• Contract increases
• Cost increases for uncontrollable services, i.e.
postage
• Service levels as requested by user departments
• Cost accounting principles and methodology
• 100% recovery of operational costs
Costs are allocated to user departments based on usage
Graphic Communication Services ISF
Cost Reductions
What departments can do?
• Monitor/control services requested by reviewing
the monthly billings
Graphic Communication Services ISF
Reserves
• There currently is $66,000 in reserves held by Graphic
Communication Services. In 2003, a PeopleSoft interface
error occurred, which resulted in a deficit of $689,290. A
deficit recovery plan was established in conjunction with
the Auditor-Controller to reduce the deficit. As of August 1,
2009, the deficit has been eliminated.
• Target for 60 day operating capital reserve: $677,157
• Cash is monitored daily and depending on payments in
process and relationship to billing cycle, total on hand will
vary.
• Departments are billed on a monthly basis in arrears
Facility Services Internal
Services Fund
Facility Services ISF
Services Provided
• Operations and maintenance of County facilities
necessary to preserve its fixed assets
• Janitorial services in County owned and many
leased facilities
• Custom services such as remodeling, modifications
and furniture moves
• Voice and data cabling as requested through ITSD
Facility Services ISF
Services Level
• Requirements to preserve and maintain County
facilities and equipment
– Preventive maintenance
– Repairs for infrastructure/equipment failures
– Replacement of infrastructure/equipment as
recommended by manufacturer and industry
standards
• Mandated requirements
– Permits
– Load Tests
• Technological changes
• User department requests for extra services
Facility Services ISF
Services Level
•
Basic Services
– Structure
- Plumbing
– Utilities
- Basic janitorial
– Pest Control
- Window washing
– Maintenance painting
- Generators
– Fire extinguishers
- Elevators
– Basic locksmith
- Damage in common areas
– Fire sprinklers
- HVAC
– Maintenance floor replacement
– Safety issues – spills, hazardous situations, security
•
Extra Services
– Remodeling
– Furniture moves
– Services beyond basic janitorial
– Inmate Damages
– Cabling requests from ITSD-Communications
– Replacement of lost or unrecovered keys and rekeying due to unrecovered
keys, etc.
Facility Services ISF
Rate Calculation & Allocated Costs
Rates calculated based on:
• Historical costs (accumulated by facility/campus)
• Anticipated program changes
• Contract increases
• Cost increases for uncontrollable services, i.e.
utilities
• Service levels as requested by user departments
• Cost accounting principles and methodology
• 100% recovery of operational costs
Facility Services ISF
Rate Calculation & Allocated Costs
• Costs are allocated to user departments based
on facility and, for multi-use facilities, square
footage of occupied space. Costs associated
with services provided to leased facilities are
charged through direct billings to user
departments.
Bldg
610
610
610
Square % sq ft of
Dept. Footage BLDG
A
9,801
4.75%
B
9,801
4.75%
C
1,999
0.97%
Labor
31,683
31,683
6,462
Debt
service Plaza Energy
Material Utilities Janitorial project
25,207 30,495
9,812
8,804
25,207 30,495
9,812
8,804
5,141
6,220
2,001
1,796
Total by
Bldg.
106,000
106,000
21,620
Facility Services ISF
Cost Reductions
What departments can do?
• Monitor/control extra services requested, such
as increased level of janitorial services
• Practice energy conservation
• Plan in advance for relocation/vacancies
• Review monthly billings
Facility Services ISF
Reserves
• There are currently no reserves held by Facility Services. As
a result of budget constraints, it was determined that it would
be inappropriate to increase rates to user departments for
operating and replacement reserves. Future budgets will
include recovery for such reserves. In FY 2009-10, $175,000
was budgeted in the Interest and Miscellaneous Expenditures
budget for emergency repairs.
• Target for 60 day operating capital reserve: $4,045,817
• Cash is monitored daily and depending on payments in
process and relationship to billing cycle, total on hand will
vary.
• Departments are billed on a quarterly basis in advance
Security Services
Internal Services Fund
Security Services ISF
Services Provided
• Security of County facilities/grounds and
employees
• County parking program
• Centralized County identification badge services
• County high security access control system
• Transport services for LPS conservatees
Security Services ISF
Service Level
• Requirements to provide security services for County
facilities/grounds and safety of employees
• Mandated requirements
– Fire/intrusion monitoring, alarm maintenance and repair
– Fire inspections/drills
• Technological changes
• User department requests for extra services
– Additional security services, i.e. security officers posted
at stations as requested by user departments
– New requests for installation and activation of security
access control system
– Transport services for LPS conservatees
Security Services ISF
Rate Calculation & Allocated Costs
Rates calculated based on:
• Historical costs (accumulated by type of service)
• Anticipated program changes
• Contract increases
• Service levels as requested by user
departments
• Cost accounting principles and methodology
• 100% recovery of operational costs
Security Services ISF
Rate Calculation & Allocated Costs
• Costs are allocated to user departments based
on facility and, for multi-use facilities, square
footage of occupied space.
Security Services ISF
Cost Reductions
What departments can do?
• Monitor/Control extra services requested by
reviewing monthly billings
Security Services ISF
Reserves
• As of 6-30-09, there was $289,686 held in Reserves, which
is about 20 days of operating capital reserve
• Target for 60 day operating capital reserve: $815,750
• Cash is monitored daily and depending on payments in
process and relationship to billing cycle, total on hand will
vary
• Departments are billed on a quarterly basis in advance
RISK MANAGEMENT
INTERNAL SERVICE FUND
RISK MANAGEMENT ISF
• Administers:
–
–
–
–
–
–
Workers’ Compensation
General Liability
Medical Malpractice
Unemployment Insurance
Vehicle, Property and other insurance programs
Group Health, Prescription, Life, Disability, Deferred Compensation and
other benefit programs
• Maintains PeopleSoft Human Resource
Management System (HR/Benefits)
• Directs County Safety Program
Risk Management Program Allocation
Total 2009-10 Budget $102.5M
(in millions)
Health Programs,
$76.7
Benefit
Administration, $1.2
General Liability, $5.6
Unemployment Ins.,
$1.0
All Other, $1.1
Workers'
Compensation, $16.9
RISK MANAGEMENT
RETAINED EARNINGS/(DEFICIT) SUMMARY
ESTIMATED 6-30-09
80.0
70.0
60.0
50.0
(IN MILLIONS)
40.0
30.0
20.0
10.0
(10.0)
Workers'
Compensation
Unemployment
Ins.
General Liability
Benefit
Administration
Health Programs
(20.0)
(30.0)
Reserve
Net Assets
Retained Earnings/(Deficit)
All Other
Total
Risk Management Program Allocation
Total 2009-10 Budget $102.5M
(in millions)
Health Programs,
$76.7
All Other, $1.1
Benefit
Administration, $1.2
General Liability,
$5.6
Unemployment Ins.,
$1.0
Workers'
Compensation,
$16.9
WORKERS’ COMP. PROGRAM
Services Provided
• Coordinate management of workers’
compensation claims between departments and
third party administrator (TPA).
• Monitor TPA to ensure effective service delivery.
• Review and recommend settlement proposals.
• Assist departments in the interactive process for
industrial and non-industrial conditions.
Outcomes
Prevent injuries to County employees; Mitigate costs where injuries do
occur; Facilitate proactive resolution of all claims in order to get injured
employees back to the level of productivity experienced prior to the
occurrence of any injury.
COST REDUCTION EFFORTS
WORKERS’ COMPENSATION
• Loss Prevention Training (ergonomic, Defensive
Driving, etc.)
• Proactive On-site Safety Inspections to assist
departments in identifying and resolving issues
• Proactive approach in determining AOE/COE issues
• Proactive Claims Management
• Triennial WC & Safety Coordinator Meetings
• Continued Updating of Intranet Site
WORKERS’ COMPENSATION
ALLOCATED PROGRAM COSTS
• Salaries and Benefits (6 positions)
• Operating Services and Supplies
• Direct Program Services and Supplies
– Claim Costs (disability, medical, legal,
administration)
– Self Insured State Assessment
– Excess Insurance Coverage (SIR $500,000)
WORKERS’ COMPENSATION
FUNDING POLICY
• Approved by Board on 4-29-03
• Fully fund each year’s estimated
claims/program cost
• Adopt a flexible “confidence level” to
permit annual program funding within a
confidence range of 75% to 85%
• Amortize deficit over 10 year period
WORKERS’ COMPENSATION
FUNDING POLICY
Due to the downturn in the economy and overall financial
hardships facing the County, the Board has waived the funding
policy the last three fiscal years as shown below:
• 2007-08
75% Conf. Level
recovery
Actuarial
• $18.1
Adopted
• $14.2
• $18.8
• $14.6
• $20.1
• $16.7
, no deficit
• 2008-9
70% Conf. Level, no deficit recovery
• 2009-10
75% Conf. Level, $1M deficit recovery
WORKERS’ COMPENSATION RATE
CALCULATION
• Annual Actuarial Study is performed to
determine Countywide Charge
• Departmental Allocations are based on 80%
historical incurred claim costs (7 yrs) and a 20%
exposure component – consistent with the State
Controller guidelines
• Total incurred cost per claim is capped at
$50,000 to minimize significant departmental
rate fluctuations resulting from a single large
claim
Risk Management Program Allocation
Total 2009-10 Budget $102.5M
(in millions)
Health Programs,
$76.7
Benefit
Administration, $1.2
All Other, $1.1
Unemployment Ins.,
$1.0
General Liability,
$5.6
Workers'
Compensation,
$16.9
GENERAL LIABILITY PROGRAM
Services Provided
•
•
•
•
•
Manage tort claims for damages against County.
Coordinate cases with defense attorneys.
Maintain case reserves to reflect true exposure.
Ensure compliance with Claims Filing Statute.
Represent County in settlement negotiations and
court proceedings.
Outcomes
Educate departments on safe and appropriate work practices in order to
prevent claim accrual; Mitigate costs where claims do occur; Facilitate
proactive and effective resolution of all claims.
COST REDUCTION EFFORTS
GENERAL LIABILITY
•
•
•
•
•
•
•
Mandated Harassment Training
Loss Control Visits
Proactive Claims Management
Updated Risk Management Intranet Site
More Expansive Contract Review
Defensive Driving Training Program
Proactive On-site Safety Inspections to assist
departments in identifying and resolving issues
GENERAL LIABILITY ALLOCATED
PROGRAM COSTS
• Salaries and Benefits (5 positions)
• Operating Services and Supplies
• Direct Program Services and Supplies
– Claim Costs (judgments, settlements,
medical, legal, administration)
– Excess Insurance Coverage (SIR $750,000)
GENERAL LIABILITY
RATE CALCULATION
• Annual Actuarial Study is performed to
determine Countywide Charge
• Departmental Allocations are based on 80%
historical incurred claim costs (7 yrs) and a 20%
exposure component – consistent with the State
Controller guidelines
• Total incurred cost per claim is capped at
$50,000 to minimize significant departmental
rate fluctuations resulting from a large claim
Risk Management Program Allocation
Total 2009-10 Budget $102.5M
(in millions)
Health Programs,
$76.7
All Other, $1.1
Unemployment Ins.,
$1.0
Benefit
Administration,
$1.2
General Liability,
$5.6
Workers'
Compensation,
$16.9
BENEFITS ADMINISTRATION
SEVICES PROVIDED
• Personnel Processing
• Ancillary/Voluntary Benefits
BENEFITS ADMINISTRATION
SEVICES PROVIDED
PERSONNEL PROCESSING
• Personnel Records Management
• Personnel Transaction Approval
• Peoplesoft HCM Coordination
Outcome
Ensure accurate, timely personnel transactions and
benefits eligibility that comply with applicable County
policies and federal/state law.
BENEFITS ADMINISTRATION
COST CONTAINMENT EFFORTS
PERSONNEL PROCESSING
Personnel Records Management
• Online PAN/JCI Forms
• Department Query Access
• Enhanced Web Site
Personnel Transaction Approval
• Department Engagement/Education
• Exploring Third Party Services
Peoplesoft HCM Coordination
• Online Open Enrollment
• Increased Reporting/Access to Departments
BENEFITS ADMINISTRATION
SEVICES PROVIDED
ANCILLARY/VOLUNTARY BENEFITS
• Negotiated Benefits Administration
• Voluntary Benefits Administration
Outcome
Offering quality benefits for County employees,
attracting qualified candidates, and saving money for the
County and employees.
BENEFITS ADMINISTRATION
COST CONTAINMENT EFFORTS
ANCILLARY/VOLUNTARY BENEFITS
Negotiated Benefits Administration
• Online PAN/JCI Forms
• Department Query Access
• Enhanced Web Site
Voluntary Benefits Administration
• Department Engagement/Education
• Exploring Third Party Services
BENEFIT ADMINISTRATION
ALLOCATED PROGRAM COSTS
• Salaries and Benefits (5.5 positions)
• Operating Services and Supplies
• Direct Program Services and Supplies
– Advance Disability Retirement Payments
(reimbursed by retirement/employee)
BENEFIT ADMINISTRATION
RATE CALCULATION
• Total estimated cost to fund the program
for the upcoming year is calculated
• Total estimated cost is divided by the
projected number of positions
• The resulting benefit administration cost
per position is published in the CAO’s
Budget Instructions
• Retained Earnings/Deficits are returned or
collected over a 3 to 5 year time frame
Risk Management Program Allocation
Total 2009-10 Budget $102.5M
(in millions)
Workers'
Compensation,
$16.9
All Other, $1.1
Unemployment Ins.,
$1.0
General Liability,
$5.6
Benefit
Administration, $1.2
Health Programs,
$76.7
HEALTH ADMINISTRATION
SEVICES PROVIDED
• Health Insurance Eligibility
• Health Insurance Administration
Outcome
Provide quality, cost-efficient health insurance programs
to County employees, their dependents and retirees.
HEALTH ADMINISTRATION
COST CONTAINMENT EFFORTS
Health Insurance Eligibility
• Online Employee Enrollment
• Electronic Eligibility Feeds to Vendors
• Streamline Processes
• Third Party Administrator Consolidated Billing
Health Insurance Administration
• Dependent Eligibility Audit
• Explore Purchasing Coalition Options
• California Health Care Coalition
• Employee Engagement Project
HEALTH ADMINISTRATION
ALLOCATED PROGRAM COSTS
• Salaries and Benefits (6.5 positions)
• Operating Services and Supplies
• Direct Program Services and Supplies
– Health Plan Costs (Health, Dental, Vision,
Prescription, Mental Health)
• The total cost of health plans are a pass thru of actual costs
which are funded by employees and the County’s
contribution toward employee health plans (a prescription
rate is calculated by the Health Benefit Consultant to recover
estimated costs of the totally self insured prescription
program
• The total cost of health plans for retirees are entirely funded
by retiree participants
– Employee Assistance Program
– Health Benefit Consultant
HEALTH ADMINISTRATION
RATE CALCULATION
• Total estimated cost to fund the program for the
upcoming calendar year is calculated
• Enrollment of the County population and retirees
is separated by the number of employee only,
employee + spouse/children and employee +
family
• The resulting administration cost is allocated by
the breakdown listed above, where the rate
increases for employee + populations
• Retained Earnings/Deficits are returned or
collected over a 3 to 5 year time frame
RISK MANAGEMENT ISF
QUESTIONS
Central Warehouse ISF
Transitioning from ISF to General Fund
Central Service Program
Effective July 1, 2010
Central Warehouse ISF
Services
• Supply and distribution of 93 different paper
products and other supplies (gloves, can liners,
etc.)
• Annual inventory purchases of $1.2 million
• Secure warehouse storage of department items
• Rental on storage containers both on-site (34)
and off-site (4)
• Administer county-wide shredding contract
Central Warehouse ISF Costs
•
•
•
•
Annual Operating Budget of $1.44 million
Inventory Costs (75%)
Salaries and Benefits (12%)
GSA Services Costs - Fleet, Buildings and
Grounds, Facility Services (8%)
• Other ISF Costs - PeopleSoft, Data Processing,
Liability Insurance, etc. (3%)
• Other - (2%)
Why Transition the ISF to a General Fund
Central Service Program?
• The gradual reduction in the number of inventory
items carried by the Central Warehouse has
reached the point where it is no longer an
efficient use of resources to operate as an ISF.
• There are more cost effective means for
departments to order supplies directly from the
vendors.
• The Central Warehouse no longer meets the
requirements to function as an ISF.
Services to be Provided
as a General Fund Program
• Storage of departmental inventory items (paper
towels, janitorial supplies, toilet paper, copy
paper, envelopes, etc.)
• Shipping and receiving for the County
• On-request delivery of storage items to
departments
• Administer county-wide shredding contract
Projected FY 2010/11 Costs as General
Fund Program
• Warehouse Operation Expenses
$199,020
• Offsetting Warehouse Operation Revenues
($139,300)
• Net County Cost
$ 59,720
Central Warehouse Next Steps
• September 2009 - Departments notified that Central
Warehouse ISF is transitioning to Central Service
General Fund Program
• April 2010 - Purchasing adds departments to
current vendor contracts for inventory items
• May 2010 - Warehouse stops buying inventory
• July 2010 - Departments begin buying their own
supplies