City Council Agenda Report
July 7, 2026
TO: Honorable City Council
FROM: Jesus M. Gomez, City Manager
BY: Jana Stuard, Director of Finance/City Treasurer
Jennifer Hernandez, Administrative Services Supervisor
SUBJECT: RESOLUTION NO. 26-43 - APPROVING THE COST ALLOCATION PLAN FOR FISCAL YEAR 2026-2027
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 CRF Part 200) which is required for the recovery of indirect costs in federal grant programs.
In June of 2025, the City approved the fiscal year 2025/26 CAP through Resolution 25-21, which accurately and thoroughly identified indirect costs of providing internal services to operating departments. It was the first time the City prepared and approved a CAP.
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, which allows 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.
To ensure the CAP remains up-to-date and aligns with current expenditures and organizational structures, it is recommended that the City update the plan annually. Annual updates ensure that
City Council July 7, 2026
Resolution No. 26-43 - FY 26-27 Cost Allocation Plan Page No. 2 1 4
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all indirect costs are accurately identified and allocated based on the most recent financial and operational data, maintaining compliance with federal requirements and supporting the City’s ability to maximize cost recovery opportunities. Regular updates also enhance transparency, improve budgeting accuracy and provide decision-makers with reliable information regarding the full cost of delivering City services.
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 Recommend City Council adopt Resolution No. 26-43, A RESOLUTION OF THE CITY
COUNCIL OF THE CITY OF NORWALK APPROVING THE COST ALLOCATION PLAN FOR FISCAL YEAR 2026-2027.
Attachments:
Resolution No. 26-43