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Step 3: Cost Allocation Plan Development a) Central Service Department Interview I'n1paration: After the central city financial and operational data is gathered, PRM interview forms will be completed. PRM interview forms are developed with questions related to staffing lists, actual salary level, staff titles, department expenditure report detail, development of pre-interview questions, etc. The completion of interview forms prior to the City department interviews will facilitate I) a professionally conducted streamlined interview, and 2) a thorough and complete understanding of city processes. b) Central Service D~entallnterviews: Central service or "allocating departments" are interviewed to ensure that costs are spread in a manner that reflects: the work that was done; the departments that benefited, and which allocation bases are proper - all key principles stated throughout OMB A.a7. While PRM staff will bring a background of knowledge and ideas to these interviews, it is also important to listen to department stafl's who understand more about their particular area of expertise. Examples of departments interviewed will include building maintenance, accounting. management and budget, purchasing. etc. In addition, any internal services funds (ISF) that charge for services will be interviewed with emphasis on ensuring indirect costs are allocated accurately so that they can be included in the full cost analysis when calculating ISF rates. Ii c) Department Personnel Staff Analysis: Departmental Staffing Analysis (PSA) worksheets will be completed utilizing information gathered in the initial interviews. The PSA provides a basis for the distribution of departmental costs into departmental functions. During our interviews with central service departments, we will discuss each person's assignments and duties. Using timesheets, assignments, or interview notes, we will determine what percentll&e of each person's time should be divided into departmental functions. This information will be entered into the PSA worksheets to define departmental functions. Once staff members and their corresponding salaries are distributed to functions, other department costs, such as materials and supplies, will also be distributed into the same functions or cost pools. This process takes a departmental budget unit and breaks it into functional cost pools, which can then be allocated throughout the city using a meaningful allocation base. d) Departmental Cost Distribution: This schedule allocates the departmental costs of the central service department and any "incoming COsts" being allocated from other central service departments. At this point, the PRM software takes an added step usually not considered in other cost allocation plan software. No other software has the ability to analyze, display and allocate the indirect costs of each central service department in such detail. This detail facilitates review, explanation and audit, leading to reduced errors and re-runs of reports. e) Developinr Allocation Bases: After the departmental functions are created, and costs are distributed across functions, a separate meaningful allocation base will be selected that best reflects the benefit each department in the city receives from the various services. For example, in accounting. once the payroll functional cost pool is developed, an allocation base will be selected to distribute the payroll cost to all departments that benefit from the payroll service. Using OMB A.a7 as a guide, the allocation base must reflect a connection between the service provided and the service received. An example for payroll could be the number of paychecks issued per department during the fiscal year - in other words _ the more paychecks the department received, the more payroll cost is allocated. Public Resource Management Group, LLC PI~M City of Pleasanlon Proposal 19