City Council Meeting Date: September 13, 2016
To: Mayor and City Council
City Administrator
From: Melanie Lammers, Finance Director
Title
Explanation of Internal Service charges breakouts
Body
Action Requested:
The Northfield City Council will receive information explaining how the internal service charges work for our internal service funds.
Summary Report:
Every year, we budget revenue for our two internal service funds by charging the expense to several funds throughout the City. Attached I have included the breakout for 2015, 2016, and 2017 from our IT fund. You can see in the report how the charges for IT haven’t increased greatly, but the allocation among funds/departments changes every year. For IT, we use the amount of services from the prior year to determine the allocation for personnel costs. We take the total equipment from each area and allocate out the operating costs of the department. The insurance fund is similar, but the formula is a little more complex.