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City of Sunnyside
Cost Allocation Plan
Purpose/General Statements
The purpose of this cost allocation plan is to summarize, in writing, the methods and procedures
that the City of Sunnyside will use to allocate costs to various funds, projects, grants, contracts
and agreements. The City of Sunnyside shall comply with all laws and regulations in calculating
and receiving full cost recovery for services rendered to other funds. Costs shared resources
must be allocated fairly. Cost allocation is a method to identify and allocate indirect costs.
Direct costs are those costs directly associated with a special project/cost objectives or fund.
Indirect costs are those costs incurred for a common or joint purpose benefiting more the one
cost objective in more than one fund, but which are not readily assignable to a specific fund.
Guidelines and Authority
The following policy shall guide account and cost allocation. The Washington State Auditor’s
Office prescribes the accounting and report procedures for local governments in the State of
Washington under RCW 43.09.200. RCW 43.09.210 provides, in part, as follows: separate
accounts shall be kept for each department, public improvement, undertaking, institution, and
public service industry under the jurisdiction of every taxing body.
All service rendered by, or property transferred from, one department, public improvement,
undertaking, institution, or public service industry to another, shall be paid for at its true and full
value by the department, public improvement, undertaking, institution, or public service industry
receiving the same, and no department, public improvement, undertaking, institution, or public
service industry shall benefit in any financial manner whatever by an appropriation or fund made
for the support of another.
The statue does not provide specific guidance on how “full value” is to be determined. Although
RCW 35A.33.122 states: Whenever any code city apportions a percentage of the city
manager’s, administrators, or supervisor’s time, or the time of other management or general
government staff, for administration, oversight, or supervision of a utility operated by the city, or
to provide services to the utility, the utility budget may identify such services and budget for
reimbursement of the city’s current expense fund for the value of such services.
The Federal Office of Management and Budget (OMB) Circular A-87
OMB Circular A-87 establishes cost principals for State, local, and Indian Tribal Governments
for determining costs for Federal Awards. Items 5 of the Circular states that, “The principals are
for determining allowable costs only.” In defining allowable costs, the Circular provides a
definition of allocable costs at Attachment A, paragraph C.3.a, “A cost is allocable to a particular
cost objective if the goods or services involved are chargeable or assignable to such cost
objective in accordance with relative benefits received.” The Circular further outlines costs that
are allowable for charging the Federal government and distinguishes those that are specially
excluded from recovery.
