Penticton council reviewing overhead cost spending at RDOS

City analyzes RDOS

Penticton city council’s dive into the Regional District of Okanagan-Similkameen's transparency on its charges to member communities for millions of dollars worth of internal overhead costs will have staff presenting their findings in a report on Tuesday, comparing the RDOS to three other regional districts.

Coun. Frank Regher brought forward the motion at a council meeting in February, stating that he felt there was a “gross lack of transparency and certainly following through on existing policy,” in regards to the billing practices.

The RDOS’ finance manager, Jim Zaffino, stated in response that board members approved what had been put in place.

The report titled “City Review of RDOS Overhead Cost Allocations” compares the practices of four regional districts’ administration overhead allocation methods.

Staffs recommendation is for council to share the results of the report with the RDOS, along with a request for the Board to develop a general principle for allocating overhead costs for service provision and request the RDOS Board direct the RDOS staff to undertake a thorough and comprehensive review of their current overhead allocation practices.

The Regional District of East Kootenay (RDEK), Regional District of Central Okanagan (RDCO), Regional District of North Okanagan (RDNO) were analyzed along with the RDOS.

A comparison of the four regional districts administration overhead allocation methods revealed that there are varying methods utilized in each. The RDCO and RDNO both allocate the majority of their administration overhead by the formula method, while the RDEK and the RDOS allocate the majority by tax assessment.

In staff’s report, they found that the RDOS’ operating budget showed that “Penticton, Princeton, Penticton IB and Electoral Areas A, H, & I are charged substantially more than the average”, paying between 24 to 28 per cent, while Oliver and Keremeos are charged significantly lower than the average, relative to their net operating budgets, paying six to seven per cent.

“This shows that some Municipalities/Electoral Areas are being charged more administration and may be subsidizing other Municipalities/Electoral Areas. To fairly distribute costs, Municipalities/Electoral Areas should be charged based on utilization of the overall administrative services,” the report stated.

Recommendations are to use these opportunities to align the costs of services more closely to those receiving the services, based on practices in other regional districts.

Suggestions from city staff move for the RDOS board to request their staff perform a in-depth review of their current overhead allocation and the best practices identified to determine which are not already being done, and where feasible the can make changes.

The full report and findings will be presented to council on Tuesday.

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