Practice Areas:  Cost Allocation and Rate Setting   (Return to Practice Areas)

User fees can be an important source of revenue. However, they also place new demands on your organization. Effectively setting and implementing user fees and rates requires an understanding of direct and indirect cost allocation and capital financing strategies. The large volume of data required must be well documented and easily updated, so that fee adjustments become routine. Many agencies that adopt policies to recover the full cost of providing certain services fail to implement those policies due to the time and complexity involved in calculating and allocating costs. Cost allocation is also important in determining charges for contracts and recoveries under federal programs.

NewPoint Group provides a full range of Cost Allocation and Rate Setting services to help you allocate costs and recover them through user fees:

• Developing cost recovery strategies
• Developing a fee inventory
• Identifying the full cost of direct and indirect services
• Applying cost allocation methodologies to recover indirect costs
• Calculating capital cost depreciation
• Developing cost accounting systems, activity-based cost allocation programs, and inter-departmental billing systems
• Surveying other agencies' fees
• Estimating fee recovery potential
• Analyzing legislative and regulatory guidelines.

NewPoint Group's experience in developing and conducting cost and rate studies covers a wide range of federal, state, and local government agencies. Our California rate-setting studies are done in the context of Proposition 218 and AB 1600. We have extensive cost and rate setting expertise within three specific functional areas: heath and welfare; integrated waste management; and water and wastewater.

NewPoint Group also has developed rate structures for unique programs of individual agencies, relying on our rate setting methodology and process. For example, NewPoint Group has performed rate setting work for the telecommunications industry on behalf of the California Public Utilities Commission in the nature of a complex performance measurement and incentive plan to deregulate the local telephone market. As another example, NewPoint Group has unique rate setting experience with municipal mobile home rent control and the firm has performed over twenty city and county mobile home rate setting projects.

In the field of integrated waste management, NewPoint Group has developed a proprietary solid waste rate setting process and methodology manual currently used by a number of local governments to adjust refuse collection rates. We have conducted numerous refuse rate reviews, cost studies, and financial and economic analyses for local government clients, as well as cost-recovery studies for container recycling programs.

In the behavioral health field, NewPoint Group developed the cost report forms and methodology used by the California Department of Mental Health to obtain federal Medi-Cal reimbursement for specialty mental health services provided by county mental health plans in California. NewPoint Group also developed the rate setting methodology used to establish maximum reimbursement rates for these same services. Given our extensive knowledge of this specialized area, we have prepared cost reports and conducted numerous fiscal analyses for local behavioral health organizations.

Return to top of page