Agenda 02-10-2026; 2 - Presentation of Fee Study for Emergency Services, Planning & Inspections, and Environment, Agriculture, Parks and Recreation (DEAPR)

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9 Hourly Rates A cost-of-service study is comprised of two basic elements: ♦ Hourly rates of staff providing a given service. ♦ Time spent providing the service. The product of the hourly rate calculation multiplied by the time spent yields the cost of providing the service. The hourly rate methodology used in this study builds indirect costs into County staff hourly salary and benefit rates to arrive at fully burdened hourly rates. Fully burdened hourly rates are a mechanism used to calculate the total cost of providing services. Total cost is generally recognized as the sum of the direct cost together with a proportionate share of allowable indirect costs. The proper identification of all costs (e.g., labor, operating expenses, department administration and countywide support) as "direct" or"indirect" is crucial to the determination of the total cost of providing services. Direct costs are typically defined as those that can be identified with a specific service or activity. These include the labor of people working directly on the service associated with the fee, as well as any materials or supplies used to provide the service. Indirect costs are those that support more than one program area and are not easily associated with specific activities. Examples of indirect costs are: ♦ Salaries for departmental administrative and support staff. ♦ Training and education time. Public counter and telephone time. ♦ Some service and supply costs. ♦ Countywide overhead costs from outside of the department, as identified in County's cost allocation plan. MGT's hourly rate calculation methodology includes the following: ♦ Personnel Services Analysis - Each staff classification within the department or division is analyzed in the study. The first burden factor includes compensated absences such as vacation/holidays/sick leave days taken in a year's time. Staff classifications are then categorized as either direct (operational) or indirect (administrative or supervisory) labor. In some cases, a classification will have both direct and indirect duties. The total indirect portion of staff cost is incorporated into hourly overhead rates. ♦ Indirect Cost Rate - A ratio of indirect cost to direct labor (salaries plus benefits) is established based on three elements of indirect cost: o Indirect Labor - Includes compensated absences, administrative and supervisory staff costs. o Other Operating Expenses - Other operating expenses are either directly associated with a fee for service activity or are included as an indirect or overhead cost. Some examples of operating expenses that are directly allocated to a particular fee for service are professional services expenses or supplies that are used specifically for that fee for service. Most other operating expenses are classified as indirect costs and are allocated across all fees for service as overhead. o External Indirect Allocations - This represents the prorated portion of countywide overhead from the County's cost allocation plan that is allocated across all fees for service as overhead. ♦ Fully Burdened Hourly Rates -This incorporates all the elements that comprise the hourly rates used in the cost analysis. MCIT PAGE 5