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Policy Manual - Enterprise Funds Indirect Costs - 1
Policy Manual - Enterprise Funds Indirect Costs - 1
of Provincetown
Financial Policies and Procedures Manual
14. Enterprise Funds Indirect Costs Policy
Purpose:
To provide town policy for the calculation of indirect costs charged to the Water (WEF) and
Wastewater (WWEF) Enterprise funds. A variety of town departments, including DPW, provide
support functions to the enterprise funds. The assessment of an overhead charge is necessary
to compensate the General Fund for services rendered in support of the enterprise funds.
Policy:
Each year prior to the start of the budget preparation the Finance Director shall prepare a
statement of indirect costs based on the procedures listed below. The indirect cost estimates
shall be based on the current year’s budget. The statement of indirect costs shall be provided
to the Public Works Director for inclusion in the following year budgets.
The basic formula for assessing general fund overhead charges to the WEF and WWEF accounts
should remain consistent from year to year; however, the methodology should be reevaluated
each cycle and subsequently adjusted on an as‐needed basis to most accurately reflect the
actual costs incurred by the general fund in supporting the WEF and WWEF funds. The support
needs of the WEF and WWEF accounts are dynamic. The General Fund overhead charge
methodology accordingly needs to be continually reviewed in the spirit of assigning reasonable
and fair allocable charges from the general fund to the WEF and WWEF.
Procedures:
DPW Staff
The salary for the Public Works Director, Deputy Director and Operations Director shall
be split between the Public Works Administrative Budget, the Water Enterprise Fund
(WEF) and the Wastewater Enterprise Fund (WWEF). They are not included in the
calculation of indirect costs.
The DPW Director shall provide an estimate of the time the DPW mechanic spends on
WEF and WWEF vehicles and the DPW mechanic’s salary shall be pro‐rated based on
that estimate.
The vehicle repair and maintenance costs shall be pro‐rated based on an estimate
provided by the DPW Director.
Other Town Staff
The Finance Director shall estimate the amount of time spent by each department in
support of each enterprise fund.
Each department’s budget shall be allocated accordingly to each enterprise fund based
on the percentages determined in the first step.
Enterprise Funds Indirect Costs
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Town of Provincetown
Financial Policies and Procedures Manual
14. Enterprise Funds Indirect Costs Policy
Employee Benefit Costs
The Finance Director shall determine the total number of current and retired employees
enrolled in the town’s health insurance program and the number of WEF and WWEF
current and retired employees enrolled in the town’s health insurance program.
The Finance Director shall determine the percentage of employees enrolled for both the
WEF and the WWEF.
The finance director’s office shall total the following employee benefits:
1. Health Insurance
2. OPEB Contribution (if any)
3. Life Insurance
4. Dental Insurance
5. Worker’s Compensation Insurance
6. Employee Assistance
7. Retirement Assessment
The total employee benefits amount shall be multiplied by the employee percentage
determine in the previous step to determine the employee benefit costs to be allocated
to the WEF and WWEF.
The Medicare allocation shall be based on budgeted enterprise fund payroll costs
multiplied by the current Medicare rate and shall be charged directly to the enterprise
fund.
Vehicle Insurance
Vehicle insurance shall be charged to the WEF and WWEF based on the number of
vehicles in each fund divided by the total vehicles owned by the town.
Adopted by the Provincetown Board of Selectmen on February 26, 2018. 3‐0‐0
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