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HomeMy WebLinkAboutResponse to Diamond Bar User Fee RFP.pdf Proposal for City Wide User Fee Study City of Diamond Bar December 14, 2023 Aurpon Bhattacharya, PMP, CGFM, CSA, CSM Managing Director, Cherry Bekaert Advisory LLC P 703.581.2492 E aurpon.bhattacharya@cbh.com Christian Fuellgraf Partner, Cherry Bekaert Advisory LLC P 614.446.5438 E christian.fuellgraf@cbh.com 3800 Glenwood Avenue, Suite 200, Raleigh, NC 27612 cbh.com Proposal for the City of Diamond Bar, CA Contents A. Cover Letter ...................................................................................................................................................... 1 B. Project Team ........................................................................................................................................................ 4 Key Personnel .................................................................................................................................................................... 4 Organizational Structure .................................................................................................................................................. 11 C. Firms Experiences/References ..................................................................................................................... 12 Firm Overview & Brief History ........................................................................................................................................ 12 Statement of Qualifications ............................................................................................................................................ 13 References ....................................................................................................................................................................... 15 D. Project Understanding and Approach: ........................................................................................................ 16 Overview ........................................................................................................................................................................... 16 Project Understanding...................................................................................................................................................... 17 Approach ......................................................................................................................................................................... 19 E. Cost of Services ............................................................................................................................................. 21 F. Insurance ........................................................................................................................................................ 22 G. Consultant Service Agreement .................................................................................................................................. 26 Proposal for the City of Diamond Bar, Ca 1 A. Cover Letter December 14, 2023 City of Diamond Bar, CA (“the City”) City Manger Department 21810 Copley Drive., Diamond Bar, CA 91765 To: City Manger Department Cherry Bekaert (“Cherry Bekaert” or the “Firm”) is pleased to submit this proposal for a comprehensive user fee study for the City of Diamond Bar, CA. Properly understanding revenue streams and recovering costs is pivotal for the City to meet the increasing demand of its residents for high-quality city services and facilities with transparency and accountability for fees charged. In an environment of large budget deficits, reductions in government spending and pay-as-you-go rules for new spending, governments are increasingly seeking fee-for-service funding arrangements as a means to finance, secure and scale government programs. However, government entities face significant statutory and regulatory constraints and limitations that restrict their ability to operate. Critically, the intent of Government- charged fees is to recover cost, not to make a profit. Governmental services and related fees are often politically contentious, so the approach to developing full cost of services must be transparent, defensible and subject to regular review. Cherry Bekaert has a comprehensive approach to user fee studies and cost allocation, combining over 200 years of combined fee setting experience with deep governmental accounting and cost accounting knowledge that the City can use to better inform your budgeting process. We understand the City needs to better understand the full and varied cost of its City programs and services by:  Developing and preparing a detailed fee for service and cost recovery model that identifies and evaluates the various costs associated with each program/service and establishes a framework for user cost recovery based on prevailing best practices and market data.  Examining whether a reasonable relationship exists between the cost of providing the services and the current service fees, while ensuring applicable statutory regulations are met.  Assisting the City in developing data collection worksheets, allocation bases, indirect cost pools, and methods of distributing costs for appropriateness and to identify alternative methodologies which may favorably impact cost recoveries.  Preparing a final, legally-defensible report and providing electronic copies to the City staff. Our approach includes:  Collaborating with selected staff to develop/understand the project scope, deliverables, purpose, uses and goals of the City’s user fee study so it will be both accurate and appropriate for the needs of the City and your constituents.  Developing a project schedule within the framework of the City’s normal work routines.  Conducting interviews with staff to gain an understanding of the City's programs/service, processes and existing user fee mode, and to collect data pertaining to the study.  Leveraging our legacy as a government-focused CPA firm to provide a user fee model that stands up to the rigorous requirements and potential scrutiny that such programs could be called upon to answer.  Using our cost modeling and management accounting experience to help the City effectively incorporate cost model information into the budgeting and planning process. Proposal for the City of Diamond Bar, Ca 2 Why Cherry Bekaert Many consulting firms can offer the City the requested services. However, we believe that Cherry Bekaert is a uniquely powerful option for the City based on our:  Cost Management Leadership: Our practice includes multiple Robert A. Bonsack Award winners for distinguished contributions in Government cost management. Our professionals bring insight into new program tools and techniques to support your continued advancement in cost management; we have contributed to advancements in the field through Consortium for Advanced Management International (CAM-I) publications and presented on cost management at numerous national and international conferences and forums. They have been published in the Journal of Cost Management, the Public Budget & Finance Quarterly Journal, and our work has been used to establish Management Accounting Guidelines. We also have deep experience developing budgeting and planning systems and processes for our clients. This experience ranges from simple budgeting to complex Planning, Programming, Budgeting, and Execution (PPBE) processes. Our approach to Government fee setting is based on the following fundamental beliefs and concepts: o Full cost. Fees should be established to recover the full cost of providing the services for which a fee is levied, which inter- and intra-entity costs. o Future period costs. To avoid unnecessary resource constraints on fee-supported organizations, fees should be established based on future period costs. o Performance-based budgets. Fees should be established based on an organization’s future period budget requirements at a given level of performance. To the greatest extent possible, workload forecast should be based on expected demand, and budgets should be built on operational processes that are analyzed, measured and/or reengineered to meet specified performance levels. Future budgets should be built to meet expected future workload and resourced at a level that will enable the organization to fulfill the program demand at a given level of performance. o Fairness. Cost assignments and pricing decisions should be fair, and fees should reflect the cost to provide the specific services. Cross subsidization should be avoided to the greatest extent possible. o Value. In addition to fairness, fees should consider the value of the benefit being received by users and reflect the value derived from the services provided. o System independence. As maintained in regulatory guidance, fee analyses do not require the development of a new cost accounting system. o Compliance. Fee setting should be auditable, defensible, enable transparency and compliant with Office of Management and Budget regulations for governing internal controls.  Government Accounting and Accounting Expertise: Cherry Bekaert has made significant investment and commitment to working with the public sector; having one of the largest government practices allows our professionals to focus on governmental accounting and auditing and deliver valuable experience our clients are accustomed to expect. We regularly help California public sector clients implement new Governmental Accounting Standards Board (GASB) Statements, maintain compliance with new/changing guidance and meet Government Finance Officers Association (GFOA) certificate program award criteria through high-quality Annual Comprehensive Financial Reports. By incorporating robust pre-planning, significant industry expertise, technology solutions and demonstrated best practices, we make our engagement process efficient, flexible and easy-to- navigate. Our Firm offers the City an unmatched depth of practical knowledge in the effective application of current standards. This includes the GASB, U.S. General Accounting Office’s Government Auditing Standards, Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and State Single Audit Implementation Act. Proposal for the City of Diamond Bar, Ca 3  Commitment to Client Service: Simply put, we value the relationships that we form with our clients over time. We establish our client relationships based on our core values of mutual respect, uncompromising integrity, and a passion for excellence in all that we do. Our Client Promise, depicted below, demonstrates our steadfast commitment to delivering superior client service. As the City seeks to ensure compliance and maximize revenue, it’s critical to have a reliable and consultative professional services partner who understands you, communicates proactively and will be there when you need support. We will continue to provide integrated, forward-looking solutions, combining industry expertise with a full range of services and our commitment to maintain a mutually beneficial relationship. We will be your trusted advisor and “go to” for questions and concerns as they arise. By design, our local and Firm-wide teams work in partnership to deliver all services. Finally, and most importantly, we believe that your team will truly enjoy working with our team! Our Firm’s vision is to make a difference for our people and our clients. This begins with building strong relationships between our professionals and our clients based on trust, mutual respect, uncompromising integrity and a shared passion for excellence in all that we do. Thank you for your consideration of our proposal. If you have any questions or would like additional information, please feel free to contact us directly. Sincerely, Aurpon Bhattacharya, PMP, CGFM, CSA, CSM Managing Director, Cherry Bekaert Advisory LLC Christian Fuellgraf Partner, Cherry Bekaert Advisory LLC Please Note: “Cherry Bekaert” is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards. Cherry Bekaert LLP is a licensed CPA firm that provides attest services, and Cherry Bekaert Advisory LLC and its subsidiary entities provide business advisory and non- attest services. For more details, visit cbh.com/disclosure. Proposal for the City of Diamond Bar, Ca 4 B. Project Team Key Personnel The professionals responsible for the City's engagement brings specialized knowledge in the unique accounting, auditing, operational, finance and compliance issues you face, and the cost allocation services industry knows the people on our team. For over two decades, our professionals have been industry leaders in the field of cost allocation and now as a part of Cherry Bekaert, we are growing our practice to better serve clients like the City through innovative and cost-efficient processes and technologies that deliver on our Client Promise. We commit to provide timely and helpful responses to time sensitive questions; your engagement team is available to you year-round. Below is a summary of each team member's responsibilities in this engagement and work experience. Further details on their qualifications are included in the bios, which begin on the following page. Staff Responsibilities Work Experience Nicolie Lettini, MBA Director, Cherry Bekaert Advisory, LLC  Project Management  Client Facing Support  Methodology Setting  Review for Compliance  Tier 2 Data Analysis  Cognizant Agency Negotiation  Buncombe County, North Carolina  State of Oregon  City of Los Angeles, California  City of Glendale, California  County of Contra Costa, California  County of Riverside, California Aurpon Bhattacharya, PMP, CGFM, CSA, CSM Managing Director, Cherry Bekaert Advisory LLC  Oversight  Fee Setting/Cost & Performance Management  Business Intelligence & Data Analytics  Digital Strategy & Transformation  Mecklenburg County, North Carolina  US Patent and Trademark Office  Office of Personnel Management  Department of Interior  Department of Transportation  Department of Veteran Affairs  US Census Bureau Stephanie Ratajczak Senior Associate, Cherry Bekaert Advisory LLC  Data Analysis  Data Input  Reporting  Buncombe County, North Carolina  State of Oregon  City of Los Angeles, California  City of Glendale, California  County of Contra Costa, California  County of Riverside, California Christian Fuellgraf Partner, Cherry Bekaert Advisory LLC  Business Process Engineering  Digital Transformation  Enterprise Resource Planning (ERP)  Grants Management & Grants Management Systems Proposal for the City of Diamond Bar, Ca 5 Nicolie Cass Lettini, MBA Director, Cherry Bekaert Advisory, LLC Ms. Lettini is a nationally recognized, industry leader in indirect cost allocation and total cost of service studies. Ms. Lettini’s ability to interpret complex language into simple, understandable principles has allowed her to be a champion for those that do not understand the value of indirect cost calculations and its impact in funding projects and programs for the public good. Ms. Lettini developed the cost allocation software and leads the integration of the newest platform for indirect cost calculation and full cost recovery. For over twenty-two years, her whole career has been dedicated to indirect cost calculation and full cost recovery. She has prepared over 850 complete cost allocation plans and cost of service studies nationwide in various size State and Local governments. Ms. Lettini is considered a subject matter expert in the field of cost allocation and indirect cost. Multiple federal and state agencies rely on her expertise and interpretation of how to apply 2 CFR part 200 regulations to cost categories. She has provided training to federal and state auditors as well as local government agencies about the understanding of regulations and preparation of cost allocation plans. Ms. Lettini has worked with the Bridgespan, Ford Foundation, Hewlett Foundation, MacArthur, Open Society, and Packard Foundation come up with regulations for indirect cost calculation for nonprofits receiving funding from both government agencies and foundations. She was asked to sit on this panel based on her extensive government regulation knowledge in this topic of 2CFR part 200 guidelines and indirect cost calculation. She is working with them in coming up with the regulations and then further implementing this process across hundreds of thousands of nonprofits across the country to ensure their sustainability. She also is working directly with the White House OMB to revise the current 2 CFR part 200 guidelines. Her deep experience in Cost Allocation Plans, Indirect Cost Rate Proposals and User Fee Studies includes:  Maximizing reimbursement for clients, spending extra time to make sure clients understood not only the process but also what the indirect cost plan can bring to their organization.  Working with agencies of all sizes to maximize their General Fund reimbursement of services performed both internally and externally.  Helping numerous agencies take general fund departments and convert them to Internal Service Funds so they could get full cost recovery for services performed.  Successfully defending 100% of submitted cost plans and indirect cost rate proposals through the audit process with federal and state agencies while managing to save almost $1 Billion dollars in allowable cost from being thrown out due to incorrect interpretation to the 2 CFR part 200.  Uncovering hundreds of millions of dollars in missed reimbursements for clients through the preparation process.  Leading a team in managing customers on the platform and ensuring maximum cost recovery for each of our clients by continued education and assistance.  Helping clients understand the true cost of grants direct and indirect cost so that agencies can make better strategic decisions about whether to go after a particular grant or what it is costing to provide a given grant.  Developing a cloud-based software for calculation of cost allocation plans and indirect cost rate proposals (ICRP) that simplifies the cost allocation plan process. Proposal for the City of Diamond Bar, Ca 6  Working with federal, state, and local agencies both from the preparing and auditing sides to ensure the cloud- based system had all necessary components. The software system is user centric designed to streamline the preparation process and to assist the auditors in the auditing process of these cost plans and ICRP’s.  Working with strategic partners like Bridgespan, NGMA, Human Services Counsel, Impact Foundry, GuideStar, GFOA, CSMFO and many others to help educate agencies from both sides of the audit and preparation of cost allocation to better understand the regulations (2 CFR part 200) and how to use the cost plan to maximize reimbursement. Education, Certifications and Training  B.S. Managerial Economics, University of California, Davis 2001  M.B.A in Accounting, California State University, Sacramento 2009  Certificates from Management Concepts in: Fundamentals of Overhead and other Indirect cost; Developing & Monitoring Indirect F&A Cost Rate proposals under CFR part 200; Cost Principles for Federal Grants: 2 CFR part 200 (subpart E) and FAR 31.2 Proposal for the City of Diamond Bar, Ca 7 Aurpon Bhattacharya, PMP, CGFM, CSA, CSM Managing Director, Cherry Bekaert Advisory LLC Government & Public Sector Advisory Services As a Managing Director in Cherry Bekaert's Advisory practice and Government & Public Sector (GPS) industry group, Aurpon solves complex business problems and leads client engagements. He leverages technology and analytics to make data-driven decisions and transform data visualization for his clients. By combining his supportive leadership style and refined business development skills, Aurpon successfully serves government and public sector, professional services and technology clients. Relevant Experience Aurpon has led many client engagements in data-driven decision making, budgeting and performance management to reflect the full cost of products and services in numerous federal agencies, including many in the transportation and aerospace spheres. Additionally, he has led numerous portfolio management, program management and project management engagements. Prior to joining Cherry Bekaert, Aurpon was a partner in the financial transformation arm of a global management consulting firm, during which he led the cost, performance and foundational analytics practices. Aurpon also managed over $20 billion worth of sales and designed his service line's go-to-market strategy. In addition to leading over 100 professionals in his service line, Aurpon pioneered their first service catalog and financial management analytics tool to further growth. Education M.P.A. in Public Affairs, Indiana University B.A. in Political Science, Wabash College Areas of Expertise  Financial Transformation  Cost & Performance Management  Business Intelligence & Data Analytics  Digital Strategy & Transformation Civic Involvement  Distinguished Alumni Council, O'Neill School of Public & Environmental Affairs - Indiana University  Dean's Advisory Council, Luddy School of Informatics - Indiana University  Diversity & Inclusion Council, Luddy School of Informatics - Indiana University  Ascend - Greater Washington Chapter Proposal for the City of Diamond Bar, Ca 8 Christian Fuellgraf Partner, Cherry Bekaert Advisory LLC Advisory Services Government & Public Sector Industry Leader Christian has 10 years of state government experience and more than 22 years of public sector consulting experience. As a consultant, he provided organizational improvement and planning, grant management, financial management, project oversight and independent verification and validation (IV&V) services. He also provided technical leadership and budgeting expertise to senior C-suite clients of large and small government organizations, non-profits and NGOs. Relevant Experience Christian's consulting roles have been dedicated to serving the senior executive leadership of complex public sector organizations in the United States, Canada and across the globe. Christian has helped numerous State & Local government clients with process improvement, operational and capital budget process and modernized budget systems, as well as ERP systems. He served in senior roles with PWC, IBM, SAP, Gartner Consulting and Grant Thornton. He has significant experience supporting risk and grant management projects, most recently serving as a co-lead for grants management at a Big 5 firm, including CARES Act and ARPA projects. In this role, he had direct client delivery responsibility for multiple clients as well as oversight and quality assurance duties for all related projects in the WCLUT and local government market. Prior to consulting, Christian held several staff and senior staff positions, including deputy chief of staff, in the Office of the Governor of Ohio. He also served as the President of the County of Ohio Controlling Board, Deputy Director and Acting Director of the Ohio Office of Budget and Management (OBM). Education B.A., Economics and Political Science – Capital University, Columbus, Ohio Areas of Expertise  Business Process Engineering  Digital Transformation  Enterprise Resource Planning (ERP)  Grants Management & Grants Management Systems  IT Strategy  Public Sector Budgeting & Budget Systems  State & Local Government Proposal for the City of Diamond Bar, CA 9 Paul Folkers Senior Manager, Cherry Bekaert Advisory LLC Government & Public Sector Advisory Paul brings 30 years of local government leadership and consulting experience. This includes 28 years as assistant administrator for two cities and two counties in the Washington, DC region and State of Florida ranging in population from 50,000 to 950,000 and budgets from $31 million to $4 billion. Paul served as Assistant Chief Administrative Officer of Montgomery County, Maryland with responsibilities supporting Technology Services, Health and Human Services, Environmental Protection, Intergovernmental Relations, Public Information, County Attorney and Community Use of Public Facilities. He also served on the Board of Directors of the District of Columbia Water and Sewer Authority as a member of the Finance and Budget Committee. More recently Paul served as Assistant City Manager with the City of Gainesville, Florida overseeing Public Works; Transit; Parks, Recreation & Cultural Affairs; Fire Rescue, Emergency Management and Communications. Paul worked closely with elected officials, City staff, the community and the University of Florida to build a stronger, more responsive organization better able to achieve community goals. Paul's mission throughout his career has been to improve government services and community quality of life. Paul supports the modernization, growth and development of local government capabilities to most effectively and efficiently serve their residents. Paul's focus is on maximizing the return on existing and new IT investments while planning for the future in a realistic and achievable manner. He helps position organizations for growth and changes in technology while improving outcomes, services and customer satisfaction. This includes assisting local governments in becoming smarter in their use of data to drive better decisions and results, facilitating continuous improvement while helping to enable employee empowerment. Education BA in Political Science, Local & State Government Concentration, Ohio State University MPA Urban Management Concentration, Indiana University Areas of Expertise  Strategic Planning  Performance Management  Organizational Transformation (creating modern, agile, and adaptable organizations) Professional & Community Involvement  International City/County Management Association (ICMA)  Past President, Maryland City/County Management Association Proposal for the City of Diamond Bar, CA 10 Stephanie Ratajczak Senior Associate, Cherry Bekaert Advisory LLC Government & Public Sector Advisory Services Stephanie has spent the last ten years of her career creating cost allocation plans and indirect cost rates for clients, while helping to make cloud-based platforms for cost allocation planning easier for consultants. She has worked on over 250 cost allocation plans and continuously built her knowledge on the 2 CFR Part 200 and allocation methodologies, including how they apply in different agencies. ROI realized by her clients include:  Commonwealth of Puerto Rico, Department of Economic Development $14 million  County of El Paso, CO $16 million in reimbursements Education, Certifications and Training B.A. Psychology, University of New Haven, 2009 Relevant Experience As a Cost Plan Analyst:  Provided support services for Cost Allocation Plans, Indirect Cost Rate Proposals and User Fee Studies  Provided support services for cloud-based platform clients Proposal for the City of Diamond Bar, CA 11 Organizational Structure Below is an organizational structure for the key personnel assigned to the City: Below is the percentage of total hours by key personnel for the 16-week project timeframe. This timeframe is subject to client timely delivery of information necessary for preparing the cost allocation plans. The Staff Associate from Cherry Bekaert will be determined following contract award: Percentage of Project Hours by Phase Nicolie Lettini Stephanie Ratajczak Cherry Bekaert Staff Associate (TBD) Aurpon Bhattacharya 40% 20% 35% 5%  Project Management  Client Facing Support  Methodology Setting  Review for Compliance  Tier 2 Data Analysis  Cognizant Agency Negotiation  Data Analysis  Data Input  Reporting  Data Analysis  Data Input  Reporting  Oversight Proposal for the City of Diamond Bar, CA 12 C. Firms Experiences/References Firm Overview & Brief History Ranked among the largest assurance, tax and advisory firms in the U.S., Cherry Bekaert provides guidance and support that helps our clients move forward to reach their organizational goals. “Cherry Bekaert” is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards. Cherry Bekaert LLP is a licensed CPA firm that provides attest services, and Cherry Bekaert Advisory LLC and its subsidiary entities provide business advisory and non-attest services spanning the areas of transaction advisory, risk and accounting advisory, digital solutions, cybersecurity and tax. We exercise a deliberate curiosity to know our clients’ industries and work collaboratively to create shared success. For more details, visit cbh.com/disclosure. For more than 75 years, global corporations, public/private businesses and the public sector have relied on Cherry Bekaert to guide them forward. We focus on several core industries, including Government & Public Sector, and while the WCLUT may not know our Firm yet, the cost allocation services industry knows the people on our team. For over two decades, our professionals have been industry leaders in the field of cost allocation and now as a part of Cherry Bekaert, we are growing our practice to better serve clients like the WCLUT through innovative and cost-efficient processes and technologies that deliver on our Client Promise. Headquartered in Raleigh, North Carolina, Cherry Bekaert serves clients across industries in all 50 U.S. states and internationally. With more than 1,850 associates, we have the depth of experience and specialized talent to address any financial situation and offer the highest caliber of personal attention, responsiveness, and accessibility that our clients expect and deserve. Cherry Bekaert provides a unique alternative to other national, regional, and local firms. Clients choose us to be their professional services firm primarily because we provide the depth of knowledge, resources and experience of a national firm, but with a local firm’s focus on service. Our Government & Public Sector Advisory and Assurance practice bench strength provides Cherry Bekaert the wealth of deployable resources needed to ensure your engagement is performed efficiently, accurately and on your schedule. Cherry Bekaert has been in business for more than 75 years, formed in 1947 in Wilmington, North Carolina, led by Harry Cherry. Charles Bekaert and William Holland joined the Firm in 1952 and 1953 respectively. The Firm moved to the Richmond, Virginia area in 1988, eventually relocating the corporate headquarters to Richmond from Charlotte in 1991. In February 2013, Cherry Bekaert & Holland launched a strategic rebranding initiative under the new name of Cherry Bekaert LLP. As part of the rebranding, Cherry Bekaert introduced its new tagline, "Your Guide Forward." On June 30, 2022, Cherry Bekaert announced that Parthenon Capital (“Parthenon”), a leading growth-oriented private equity firm, has made a strategic investment in the Firm’s business advisory practices. This investment will help enhance the Firm’s offerings in its core practices, accelerate the Firm’s growth plans, expand the range of digitally driven, industry- Proposal for the City of Diamond Bar, CA 13 aligned offerings to our clients, and advance the Firm’s commitment to continually improving the experience of our people. As of June 30, 2022, Cherry Bekaert LLP, a licensed CPA firm, provides attest services and Cherry Bekaert Advisory LLC provides business advisory and non-attest services. In August 2023, Cherry Bekaert completed an acquisition transaction with MCM CPA & Advisors LLP (MCM), a large regional accounting and advisory firm headquartered in Louisville, Kentucky, providing highly specialized services to a broad range of clients. MCM is the Southeast region’s eighth-largest accounting service provider based on Accounting Today’s Top 100 Firms ranking with ~370 employees and approximately $72 million in annual revenue. Vault Top Ranked Awards  Most Prestigious Accounting Firms: Accounting professionals across the nation rank the prestige of the firms they compete against.  Vault Accounting 25: The VAULT ACCOUNTING 25 is compiled using a weighted formula that reflects the issues accounting professionals care most about, combining quality of life rankings (such as culture, satisfaction, work/life balance, and compensation) with overall prestige.  Best Accounting Firms in Each Practice Area: Accountants across the nation rate the top firms in their practice areas. Statement of Qualifications In an environment of large budget deficits, reductions in government spending and pay-as-you-go rules for new spending, governments and agencies are increasingly seeking to borrow private sector management philosophies. This includes exploring, establishing and expanding user fees, working capital funds and other fee-for-service funding arrangements as a means to finance, secure and scale government programs. Government entities face significant statutory and regulatory constraints and limitations that restrict their ability to operate. Critically, the intent of Government-charged fees is to recover cost, not to make a profit. Governmental services and related fees are often politically contentious, so the approach to developing full cost of services must be transparent, defensible and subject to regular review and this is critical to developing cost allocation plans and successful Negotiated Indirect Cost Rate Agreements (NICRAs). The following critical factors should be considered:  Full Costs. All relevant costs must be identified and included to achieve full cost, including expected future costs and imputed costs.  Funding. Organizations typically need to recover the full cost of the program, including non-cyclical costs and investments.  Outdated Indirect Costs. Extended time between indirect cost and allocation reviews can result in stakeholder concerns and negative impact on government programs and services Proposal for the City of Diamond Bar, CA 14  Transparency. Lack of understanding of fees were determined can lead to greater resistance to fee changes.  Defensibility. Costing methods and results must be logical, acceptable and compliant with statutory requirements and fee setting standards.  Cost of Fee Services. Allowable costs need to be allocated to individual fee services. Our approach is based on the following fundamental beliefs and concepts:  Full cost. As described by statutory and Federal Accounting Standards Advisory Board guidance and the Code of Federal Regulations (2 CFR Part 200) in the absence of statutory exceptions, fees should be established to recover the full cost of providing the services for which a fee is levied. Full cost includes allocating indirect costs appropriately to direct costs. Leveraging Cost Allocation Plans is aligned with best practices and GAAP to allocate indirect costs. This approach ensures the indirect cost methodology is defensible and auditable.  Fairness. Cost assignments and pricing decisions should be fair, and full cost should reflect the cost to provide the specific services. Cross subsidization should be avoided to the greatest extent possible.  Value. In addition to fairness, cost of services should consider the value of the benefit being received by users and reflect the value derived from the services provided.  System independence. As maintained in regulatory guidance, Cost Allocation Plans do not require the development of a new cost accounting system.  Compliance. Cost Allocation Plans should be auditable, defensible, enable transparency and compliant with Office of Management and Budget regulations for governing internal controls. At Cherry Bekaert, our Government & Public Sector (GPS) team has a deep understanding of the complex challenges federal, state and local governments and public sector organizations face in the area of cost management. We help organizations transform and modernize to meet these challenges and to work in new ways. We use a digital environment with data-driven practices to increase the efficiency and effectiveness of your operations and teams, enabling a better focus on the achievement of your strategic objectives. Our experts have nearly 200 years of combined experience designing, building, and managing cost models for large and complex organizations, including experience with the Departments of Veterans Affairs, Defense, U.S. Army, U.S. Navy, Transportation, Homeland Security, Energy, State, Interior, Agriculture, and Justice, as well as State agencies including State of Oregon, State of Maryland, and State of North Carolina. In addition to Federal and State agencies, most relevant would be our work with local governments such as City of Ontario, Burbank, Glendale, Los Angeles and others in California. This experience in all levels of government bring a unique perspective of the different approaches for fee-for- service calculations and approaches to maximizing revenue where possible. Critically, we are committed to the City’s success and a mutually-beneficial, long-term relationship. Our Firm’s vision is to make a difference for our people and our clients. This begins with strong relationships based on trust, mutual respect, uncompromising integrity and a shared passion for excellence in all that we do. We view teamwork and partnership as a critical underpinning of the smooth alignment of activity required in complex consulting engagements. We maintain continuity in leaders and key professionals from year to year because we believe team stability enables the best knowledge sharing and solution development. Proposal for the City of Diamond Bar, CA 15 References Contact Persons Jennifer Becker Firm Name City of Burbank, CA Email Address jbecker@burbankca.gov Total Invoiced Amount $37,000 (Cost Allocation Plan and IT Cost of Service Study) Project Duration Annually since FY 2007 List of staffs involved Nicolie Lettini, Stephanie Ratajczak Contact Persons Firm Name Email Address Total Invoiced Amount Project Duration List of staffs involved Contact Persons Firm Name Email Address Total Invoiced Amount Project Duration List of staffs involved Proposal for the City of Diamond Bar, CA 16 D. Project Understanding and Approach: Overview Historically, cost allocation and indirect cost planning have often been seen as an ancillary matter in the face of the many challenges and obligations that government managers must handle. But as governments continue to navigate budget cuts and revenue shortfalls, it's important to keep in mind that every dollar counts. Indirect costs and cost allocation play a huge role in the way the City captures reimbursements and improves transparency and accountability to your constituents and communities. Unfortunately, reporting on true costs in one report is hard to do; departments such as utilities, public works, planning, public safety and others often operate in silos, only focusing on their own individual financial information. This leads to significant disconnect about the true cost of services government-wide. Additionally, fee-for-service fees have been coming ever more critical to the sustainability of municipalities. Without accurately reflecting full cost of service, agencies are left to subsidize critical public services that are expected and necessary to run everyday operations. An accurate user fee becomes one of the most important steps to properly budget for future revenues and un-anticipated shortfalls. State and local governments are the first to feel the effects of economic downturn, and failure to capture true costs of services can result in:  Missing revenue opportunities by not capturing reimbursements.  Unknowingly subsidizing funding with grants.  Lack of transparency to the public. In an unpredictable economic environment, having the right cost allocation plan in place can help you save on costs and even find new funding opportunities; by maximizing grant funding with a comprehensive cost allocation plan and indirect cost rates, governments can come out stronger in the years ahead. Fundamental components of comprehensive user fee calculations include:  Understanding of existing fee schedule and what if any fees need to be added.  Proper allocation of staff and tasks to each individual fee and how they are calculated.  Fully Burdened rates to reflect the full cost of service to include: o Indirect Costs: Costs that have been incurred for common or joint objectives and cannot be identified with a particular final cost objective, such as facilities and administration. o Cost Allocation Plan: A tool used to calculate the indirect costs of departments like finance, Human Resources, IT, facilities or other central support departments that distribute services to receiving departments. A cost allocation plan can be used for: o Reimbursement for services from non-General fund operations (those that are covered by taxpayer dollars) within an agency. o Calculating the indirect cost for user fees related to services so this can be included in front- facing reports to the public. Proposal for the City of Diamond Bar, CA 17 By understanding true costs, you can:  More effectively recover costs from users  Properly allocate indirect costs among the agencies benefiting from these services and budget correctly  Pursue grants more strategically rather than taking on grants that end up costing more than you actually get However, managing cost and budgeting data in disparate spreadsheets and older Excel models makes it difficult to track spend within and across departments. Additionally, traditional processes like this fail to help you capture the true costs of services such as motor pools, computer centers, purchasing and accounting, which are provided to operating agencies on a centralized basis. But since federally supported awards are performed within individual operating agencies, governments must continually identify and assign these central service costs. Failure to capture these costs can mean missing out on revenue through grants and other funding opportunities. More importantly, it can also mean lack of transparency and accountability to citizens by not providing the full picture of how their tax dollars are being spent. Cherry Bekaert’s team has a deep understanding of the complex challenges local governments and public sector organizations face in comprehensive user fee calculation to include cost allocation and cost management. We help organizations transform and modernize to meet these challenges and to work in new ways. We use a digital environment with data-driven practices to increase the efficiency and effectiveness of your operations and teams, enabling a better focus on the achievement of your strategic objectives. Project Understanding Fees are often politically contentious, so the method used to calculate the fee must be transparent, defensible and subject to regular review. Leveraging decades of fee setting and fee study experience, we will review the Comprehensive Park, Recreation and Open Spaces Master Plan and consider the following factors for the City's user fee study:  Funding: Fee-based organizations typically need to recover the full cost of the program, including non-cyclical costs and investments  Outdated Fees: Extended time between fee reviews can result in stakeholder concerns and negative impact on revenue  Transparency: Lack of understanding of fees were determined can lead to greater resistance to fee changes  Defensibility: Costing methods and results must be logical, acceptable and compliant with statutory requirements and fee setting standards  Full Cost: All relevant costs must be identified and included to achieve full cost, including expected future costs and imputed costs  Cost of Fee Services: Allowable costs need to be allocated to individual fee services  Reserve: Determining and maintaining the appropriate reserve size for fee programs with a reserve  Profitability: Understanding significant losses for products/services or increased sales but decreased profits  Pricing: Competitors products or services seem to be priced unrealistically low Our approach to Government fee setting is based on the following fundamental beliefs and concepts:  Full cost: As described by statutory and Federal Accounting Standards Advisory Board guidance, and in the absence of statutory exceptions, fees should be established to recover the full cost of providing the services for which a fee is levied. Full cost includes inter- and intra-entity costs.  Fees built on future period costs: To avoid unnecessary resource constraints on fee-supported organizations, fees should be established based on future period costs.  Performance-based budgets: Fees should be established based on an organization’s future period budget requirements at a given level of performance. To the greatest extent possible, workload forecast should be based on expected demand, and budgets should be built on operational processes that are analyzed, measured and/or Proposal for the City of Diamond Bar, CA 18 reengineered to meet specified performance levels. Future budgets should be built to meet expected future workload and resourced at a level that will enable the organization to fulfill the program demand at a given level of performance.  Fairness: Cost assignments and pricing decisions should be fair, and fees should reflect the cost to provide the specific services. Cross subsidization should be avoided to the greatest extent possible.  Value: In addition to fairness, fees should consider the value of the benefit being received by users and reflect the value derived from the services provided.  System independence: As maintained in regulatory guidance, fee analyses do not require the development of a new cost accounting system.  Compliance: Fee setting should be auditable, defensible, enable transparency and compliant with applicable regulations for governing internal controls. Critically, we are committed to the City's success and a mutually-beneficial, long-term relationship. Our Firm’s vision is to make a difference for our people and our clients. This begins with strong relationships based on trust, mutual respect, uncompromising integrity and a shared passion for excellence in all that we do. We view teamwork and partnership as a critical underpinning of the smooth alignment of activity required in consulting engagements. We maintain continuity in leaders and key professionals from year to year because we believe team stability enables the best knowledge sharing and solution development. Proposal for the City of Diamond Bar, CA 19 Approach Our methodology, depicted below, is organized into a distinct series of thorough analyses that are required to develop fees in a government environment. At the inner core of the methodology is the organization or program for which a fee study is conducted. The middle ring of the methodology presents the six major steps – the critical analyses and phases – that comprise our fee methodology and, at a base level, must be performed to develop a performance-based, sustainable fee aligned with our stated philosophy. The outer ring of the methodology graphic depicts relationships, or links, to other management initiatives or firm services that are related to or can be supported by the work performed to develop fees. These related services can be performed in conjunction with a fee study to bolster, augment or complement the fee development process or serve as strategic tie-ins to help define opportunities for follow-on sales, depending on your needs. Importantly, these links should not be viewed as static; they can and should be tailored to reflect the needs, realities and sensitivities of any particular fee-based organization. The steps of our methodology interlock to form the foundation of a performance based organization. Government and Public Sector Fee Setting Methodology Proposal for the City of Diamond Bar, CA 20 An important aspect of our approach is leveraging an experienced team to critically examine your operation and any existing model designs and processes, and providing targeted, actionable recommendations to enhance your cost management and fee setting approach. Fee setting programs require the ability to assess, ideate and invent new solutions as situations and objectives change. Our practitioners bring the ingenuity to adapt and invent in new or unplanned situations; we thrive in the “unknown” because we enjoy challenges that require innovation and test our ability to solve new problems. Our reward is seeing how our clients learn through the process and realize cost to value. Key activities, deliverables and timing for the engagement are summarized below: Activity Deliverable Timing Review rules and guidance to ensure compliance with fee setting requirements, including the cost recovery philosophy proposed in the City Review of existing guidance memo 2 weeks Leveraging best practices in Activity Based Cost Management (ABCM), review existing cost model, activity dictionary and fee structure, including the fully-loaded cost. This cost information will serve as the basis for the fee recommendations and address the goals/objectives of items 1-15 in the RFP, . Scope of Services. Detailed activities include:  Define cost objects  Define activities and activity drivers  Define resources and resource drivers  Analyze existing systems that affect fees  Determine if any fees should be added to fee scheudle  Compile all relevant cost/financial data, such as personnel costs, personnel benefits, supplies and equipment, contractor costs, etc.  Collect driver and workload data, including labor distribution information  Review existing cost model against best practices  Incorporate cost information, along with other relevant criteria, to review fees  Work with program areas to understand factors that drive demand in service areas and where fees might need to be adjusted, then review and analyze demand history (applications, assignments, etc.) against those factors to identify patterns which would help refine the demand forecast.  Determine Fully burdened rates to assure full cost of service recovery Cost Model Findings 10 weeks Recommend draft cost recovery policy/model. This section will address RFP Scope of Services items 15-18 Draft Recommended Cost Recovery Policy/Model 3 weeks policy/model item 19. Policy/Model Prepare briefing materials for internal and external stakeholders, including text, reports and charts to present to the City Council/Administration which includes Scope of Services items 20-21 Final Brief 2 weeks Our experience with similar engagements also provides us with a tested management approach that incorporates adequate internal control, provides the requisite level of quality oversight, ensures delivery to project schedules, and brings qualified personnel who will be able to support the City for the long term. Proposal for the City of Diamond Bar, CA 21 E. Cost of Services Cost Proposal Details Cost Proposal Details We understand and appreciate your desire for professional service providers who are not only highly qualified, but who are also cost-conscious and cost-effective about the work they perform. We are mindful that cost is always a consideration in selecting a professional services firm. Accordingly, we have structured our fee based on our strong desire to develop a mutually rewarding, long-term relationship. Our fees are generally based on the time required to complete the work at our established billing rates, plus clerical and computer charges and out-of-pocket expenses. Our fees are also based on other factors such as the complexity of the work, the skill required, time limits, the experience and abilities of our personnel, and the value of the services rendered. The pricing contained herein will remain valid and binding for a period of 180 days from the date and time of the bid opening. Additional Details  Please Note: “Cherry Bekaert” is the brand name under which Cherry Bekaert LLP and Cherry Bekaert Advisory LLC, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards. Cherry Bekaert LLP is a licensed CPA firm that provides attest services, and Cherry Bekaert Advisory LLC and its subsidiary entities provide business advisory and non- attest services. For more details, visit cbh.com/disclosure.  Future year increases beyond the fee commitment shown will be adjusted to annual cost of living increases, assuming there are no significant changes to the scope of work and engagement.  A change in fees will apply should the scope of work change significantly. Should this occur, or there is a change in scope because of a change in your operations, we would meet with you to obtain your agreement on any increase in the fee ranges before proceeding.  These fees represent our good faith estimate based upon our experience and current understanding of your company and scopes of work. If we have misunderstood the scope requirements or company structure in any way, we are happy to reassess fees and present an updated cost proposal. Start Up Costs The proposed fees do not include the additional time we expect to establish our understanding, get introduced with your personnel and set up our workpapers and permanent files. This effort typically amounts to 15 – 25% more hours in the first service year. We will absorb this additional time as an investment in the long-term relationship. Out-of-Scope Services We encourage open lines of communication throughout the year as part of our services. Generally, we do not bill for routine telephone consultations. However, should a matter require major research or services not included above, we will bill for these services at established hourly rates as rendered. Before beginning any additional work outside the scope of this proposal, we will discuss anticipated fees with your management to obtain understanding and approval, as well as any anticipated discount based on the timing and complexity of the service. Fixed Fee for Service The total fixed fee for the development of the Comprehensive User Fee Analysis for the City will be $45,000 (forty-five thousand dollars). In addition to this a fee not to exceed $5,000 will be added on a use basis for onsite training and meetings. Proposal for the City of Diamond Bar, CA 22 F. Insurance The Firm maintains adequate insurance coverage to meet the needs of the State. We have placed our professional liability insurance with a national carrier and our current limits of coverage are satisfactory for this engagement. Below are our current policies: Proposal for the City of Diamond Bar, CA 23 G. Proposal for the City of Diamond Bar, CA 24 H. Proposal for the City of Diamond Bar, CA 25 Proposal for the City of Diamond Bar, CA 26 G. Consultant Service Agreement The City’s Consultant Services Agreement terms and conditions are agreed upon.