OIG Tipline: (866) 448-4754 · e d u cat e d g u e ss t o e st im at e int e rnal o v e rh e ad U...
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Transcript of OIG Tipline: (866) 448-4754 · e d u cat e d g u e ss t o e st im at e int e rnal o v e rh e ad U...
JUNE 21, 2018
TO THE MAYOR, MEMBERS OF THE CITY COUNCIL, CITY CLERK, CITY TREASURER, AND RESIDENTS OF THE CITY OF CHICAGO:
TABLE OF CONTENTS
ACRONYMS
I. EXECUTIVE SUMMARY
II. BACKGROUND A. THE DEFINITION AND ROLE OF USER FEES
Revenue fromfee = $25
Subsidy from other City revenues = $75
City’s Full Cost to Provide Service = $100
B. CITY FEE REVENUE
C. THE CITY’S PROCESS OF PROPOSING, EVALUATING, AND SETTING FEES
Licenses, Permits,
Fines, and Charges for Services$3,355,910
35.7%
Federal/State Grants
$745,603
7.9%
Miscellaneous$420,170
4.5%
Taxes
$4,884,700 51.9%
III. OBJECTIVE, SCOPE, AND METHODOLOGY
A. OBJECTIVE
B. SCOPE
C. METHODOLOGY
D. STANDARDS
E. AUTHORITY AND ROLE
IV. FINDINGS AND RECOMMENDATIONS
A. THE CITY’S FEE POLICY DOES NOT INCORPORATE GFOA’S RECOMMENDED ELEMENTS.
B. THE CITY CONDUCTED FULL-COST ANALYSES FOR ONLY 3, OR 3.3%, OF 91 FEE PROPOSALS SUBMITTED IN THE PREVIOUS 5 BUDGET CYCLES.
61
2
19
30
14
0
10
20
30
40
50
60
70
Fee Proposals Submitted Fee Proposals with
Supporting
Full-Cost Analyses
Fee Proposals Enacted into
Ordinance by City Council
Proposal amending existing fees Proposal creating new fees
C. THE CITY DOES NOT REGULARLY REVIEW AND UPDATE ALL FEES.
D. THE CITY DOES NOT ENGAGE IN LONG-TERM FORECASTING WHEN EVALUATING FEES.
E. THE CITY PROVIDES LIMITED OPPORTUNITIES FOR PUBLIC FEEDBACK AND DOES LITTLE TO PROMOTE PUBLIC AWARENESS REGARDING FEES.
RECOMMENDATIONS
MANAGEMENT RESPONSE43
A. OBM POTENTIALLY OVERESTIMATED THE NET ANNUAL COST OF RESIDENTIAL REFUSE COLLECTION BY $45.2 MILLION, OR 18.5%.
OBM used budgeted costs instead of
actual costs
Overestimated direct BOS
personnel costs by $17.4 million
OBM assumed Bureau of Sanitation (BOS)
employees spend 100% of time on RRC instead of
85%
Overestimated BOS fringe benefits by
$11.7 million
OBM double counted workers
compensation costs in fringe benefit
calculation
Overestimated direct BOS non-
personnel cost by $4.7 million
Overestimated administrative
support within DSS by $2.0 million
OBM miscalculated the proportion of
DSS’s budget allocated to RRC
OBM’s indirect cost calculation
duplicated costs captured by direct
cost analysis
OBM’s indirect cost calculation included
non-RRC costs
Overestimated indirect costs by
$9.4 million
Total potential overestimation of $45.2 million
B. THE CITY UNDERESTIMATED THE NET ANNUAL COST OF VEHICLE BOOTING BY $1.0 MILLION, OR 18.3%.
Overestimated direct personnel
costs by $557,831
DOF used budgeted costs instead of
actual costs
Overestimated fringe benefit costs
by $255,941
Underestimated equipment purchase and repair costs by
$106,111
Underestimated vehicle maintenance and fuel costs by
$109,896
DOF omitted the airport booting
contract
DOF made an educated guess to estimate internal
overhead
Underestimated contractual costs by
$700,966
Underestimated booting costs by $1.0 million
DOF omitted vehicle maintenance
costs
Underestimated Citywide indirect costs by $941,178
DOF used out of date fuel data
RECOMMENDATIONS
MANAGEMENT RESPONSE
V. APPENDIX A: GFOA RECOMMENDATIONS FOR ESTABLISHING GOVERNMENT CHARGES AND FEES
VI. APPENDIX B: CITY FINANCIAL AND BUDGETARY POLICIES
VII. APPENDIX C: CITY OF SAN DIEGO, CALIFORNIA USER FEE POLICY
VIII. APPENDIX D: REVENUE ORDINANCE HEARING AGENDA
IX. APPENDIX E: OBM’S RESPONSE LETTER
MISSION
AUTHORITY
