Case Study

City of Minneapolis, Minnesota
Comprehensive Fee and Cost Allocation and Recovery Assessment
Public Safety, & Public Works

The City of Minneapolis retained PFM to conduct an activity- based costing assessment of its development related activities in order to fulfill a state mandate to document service fees. For Phase I of this project, PFM conducted interviews with more than 70 city staff members and identified 115 development related "elements" or cost objects for which a fee was charged or could be charged. PFM also evaluated the fully loaded costs for each of these elements and created an Excel-based analysis model.

For Phase II, Minneapolis hired PFM to expand and extend the use of activity-based costing both to fulfill the state mandate and to achieve greater cost recovery. In addition, the City requested that PFM facilitate City staff in determining an appropriate allocation among the Development, Regulatory Services, Fire and Public Works Departments for development-related revenue. The project involved four distinct activities: 1) updating the model; 2) determining the appropriate revenue allocation among the different departments; 3) developing greater cost recovery initiatives; and 4) converting the Excel-based model to the City's new software, SAS Activity Based Management. PFM has also provided training to allow the City to take over updates of the model.

PFM also worked with the City to identify or create 72 new initiatives to achieve substantially more revenue through greater cost recovery. The City prioritized 30 of these initiatives to be analyzed and developed for budget adoption.