City Council Agenda Report
June 17, 2025
TO: Honorable City Council
FROM: Jesus M. Gomez, City Manager
BY: Jana Stuard, Director of Finance/City Treasurer
Jennifer Hernandez, Senior Management Analyst
SUBJECT: RESOLUTION NO. 25-21 - APPROVAL OF THE FISCAL YEAR 2025/26 COST
ALLOCATION PLAN
Background:
A Cost Allocation Plan (“CAP”) is a financial document that develops the methodology of identifying and distributing indirect costs incurred by internal service departments and applying those costs to operating departments and programs that benefit from these services. A CAP is also a necessary component in ensuring compliance with the Federal Office of Management and Budget Uniform Guidance (2 Code of Federal Regulations Part 200) which is required for the recovery of indirect costs in federal grant programs.
In June of 2023, City Council authorized an agreement with ClearSource Financial to conduct a User Fee Study and prepare a CAP to accurately and thoroughly identify indirect costs of providing internal services to operating departments.
The methodology utilized in the development of the CAP is a standard model designed to fairly distribute internal service costs to operating departments based on measurable usage or benefit.
It begins with the identification of internal service departments such as Human Resources, Finance, City Clerk’s, and Information Technology. Thereafter a compilation of prior year expenditures are reviewed to determine an allocation base which is then distributed as costs to the benefitting department.
This ensures fair and transparent assignment of costs that are based on actual service usage, allowing the City to identify the true cost of service and recover the indirect costs while also supporting the ability to make informed and accurate decisions in the allocation of resources.
City Council June 17, 2025
Resolution No. 25-21 - Cost Allocation Plan Adoption Page No. 2 1 3
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Fiscal Impact:
There is no fiscal impact with the recommended action.
Citizens Advised:
N/A
Strategic Plan 2023 Implementation:
The recommended action is consistent with the City of Norwalk’s 2023-2025 Strategic Plan Goal 3 of Creating and Sustaining a Resilient and Economically Prosperous City.
Recommended Action:
Staff Recommends City Council adopt RESOLUTION NO. 25-21 – A RESOLUTION OF THE
CITY COUNCIL OF NORWALK APPROVING THE COST ALLOCATION PLAN FOR FISCAL YEAR 2025-2026.
Attachments:
Resolution No. 25-21