Updated: Sep 15
If you use a Cost Allocation Plan (CAP) to recover General Fund costs from your Enterprise Funds, then it’s time to start thinking about updating that CAP for the 2012-13 budget year. If you do it during the relatively calm period after the auditors leave and before the budget process starts, then you will be ahead of the game and have those numbers ready for next year’s budget.
If you haven’t updated your CAP in a number of years then whatever allocations you are using are outdated and most likely recovering an inadequate amount. You are leaving money for the General Fund on the table.
If you are using direct budgetary allocations of staff instead of a CAP to recover these costs then you are losing the cross-allocations that should go with those staff. For instance, if you are allocating part of the Public Works Director to the Water Fund, you are probably only allocating that position’s salary and benefits. But by using this method you are losing all of the other support costs related to that position. Those costs will stay in the General Fund but would be picked up using a CAP.
If you are transferring money from your Enterprise Funds to the General Fund without a CAP, either through use of in-lieu fees or by a percent of revenues, then you are most likely running afoul of Proposition 218’s requirements about substantiating transfers from Utility funds. This could create a legal problem for your Agency.
In conclusion, if you are using a CAP for recovery of General Fund costs from your Enterprise Funds, then it is time to start thinking about updating that CAP. If you are not using a CAP to do so, then you should really start doing so for the reasons listed above. Otherwise you are either leaving money on the table or you are exposing yourself to a citizen lawsuit.