Cost Accounting in Local Government

Next Steps After a Fee Update

So you have just updated your fees and you are justifiably proud of this accomplishment.  Now, what’s next?  You could just rest on your laurels and then scramble around in five to ten years when you are forced to update your fees again.  Or you can take proactive steps to make that inevitable process in five or so years less painful for everyone involved.  Here are some possible things you can do on an annual basis to make your next fee update go even smoother:

Update your Cost Allocation Plan.  This is especially important if you have administrative allocations to enterprise or other revenue funds so that your allocations are defensible and accountable.   This is required if you have an OMB Cost Allocation Plan that you are using for administrative charges to grant funds.

Update your Fully Allocated Hourly Rates.  This is important to do if you have a lot of development fees that are charged against deposits.  But it is also important for charging out other actual cost services and if you want to know the full costs for any new services, which leads me to…

Calculate new service costs (and fees) when the services are developed.  Don’t wait for the full fee update to add new fees and identify changes.  If you are keeping your fully allocated hourly rates up to date, it is very easy to match that up with the time detail to calculate the service cost.  By giving departments this opportunity, it keeps them thinking about new ways to recover costs and increase revenues.  After all, a Fee Study is a snapshot in time.  This allows you to keep the shutter open a little bit longer.

Do a fee collection audit on new fees.  Once new fees have been established, go back to those departments in four to six months to insure that the fee is being collected correctly and coded to the right account.  This is also a good way to make sure that the people actually collecting the fees are aware that the fee schedule changed and are using the correct fees.

These are just a few ways that you can stay on top of your service costs and fees in between full fee updates.

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