23 Informational item onlyCITY COUNCIL AGENDA ITEM BRIEFING SHEET
Submittal Date:
7-24-2008
Council Date:
7-28-2008
Originating Department-
Finance
Presented By:
Gene Anderson
Agenda Item No.:
23.
RECOMMENDED MOTION:
None. This is an informational item only.
PoLicY IssvE(s):
Financial Management
BOARD/COMMISSION RECOMMENDATION:
NONE
E XHIBITS:
Full Cost Accounting Workbook
ACI'ION:
BUDGET INFO:
❑ Financial Report ❑
Minute Order
Expense
$NA
❑ Department Report
❑
Resolution
Budgeted Amt
$NA
❑ Presentadon
❑ Ordinance
y'I'D Actual
$NA
❑ Public Hearing
❑ Other
Acct Name
NA
Acct Number
NA
Fisc.AL NoTES:
None
REVIEWED AND APPROVED BY:
Z Administration Z City Qerk ❑ Community Development ❑ EMS/IT Z Finance ❑ Fire
❑ Municipal Court ❑ Legal ❑ Library ❑ Police ❑ Eng./Public Works ❑ Utilities
Revised 2/04/08
City of Paris 000186
•
Background:
The City of Paris has provided sanitation services for many years. In addition to residential pick up, city
sanitation services include street sweeping, brush pickup, a compost site, and post closure maintenance of
the City's old landfill.
An initiative petition was filed on June 10, 2005 with the City Clerk with the goal of preventing
privatization of residential trash pickup either by having the Council vote for an ordinance creating such a
restriction or calling for an election to decide the issue. An election was held September 10, 2005 with
citizens voting 1,072 to 737 not to privatize residential trash pickup. An ordinance to that affect was
passed on September 19, 2005 and the City was prevented from revisiting the issue for two years. The
ordinance states that the Public Works Department using City equipment and employees shall provide the
collection, handling, and disposition of all residential garbage, trash, and rubbish. The ordinance further
states that the Council shall set a monthly rate for residential garbage handling and disposition which rate
shall reflect the cost of such service which will include the component parts of employee cost, equipment
cost, landfill cost, and billing cost. The sanitation fee in 2005 was $14 per month and has not changed.
Should the City now vote to privatize residential pickup, it should be understood that some sanitation
expenses would continue, i.e. those related to street sweeping, landfill maintenance, compost site
operation, and brush pickup. Following the City Council's request, the City Manager directed that I
calculate the full cost of operating the City's sanitation deparhnent. With that goal in mind, I chose to use
the Municipal Solid Waste Services Full Cost Accounting Workbook for Texas Local Governments as the
methodology for making the calculation because it would be a generally accepted method for such
calculations. I have attached a copy of the workbook in its entirety. The workbook is designed to cover all
cost allocation possibilities i.e. residential pickup, commercial pickup, recycling, and other appropriate
programs. Since the city primarily does only residential pickup, I have made no attempt to allocate costs
to street sweeping or other minor cost areas. Likewise, I have not shown needless detail. For example,
salaries are shown lump sum as are related benefits. Therefore pages 18, 23, 26, 27, 31, 33, 39, 42, and 48
contain all of the necessary information.
For purposes of this calculation, I have used numbers from the current 2007-08 budget. There are 12 full
time positions and 50% of another position allocated to the Sanitation Department. Those positions are 10
solid waste collectors, 1 street sweeper, 1 supervisor, and %z of the Asst. Public Works Director. $23,000
is also budgeted for temporary help if needed. Three of the 10 collectors also spend part of their time
working at the compost site, running a second sweeper when needed, and doing brush pickup.
Below is additional information showing the full cost accounting sanitation rate, the resulting shortfall
because the rate remained at $14 per month, and the equivalent tax rate to cover the shortfall amount.
YEAR RATE SHORTFALL TAX RATE
05-06 $20.24 $603,083 3.15 cents
06-07 $18.43 $428,150 3.25 cents
07-08 $19.35 $517,067 3.71 cents
The primary reason for the drop after the 05-06 year was the reduction of the number of collectors. The
primary reasons for the increase in 07-08 were landfill costs, a cash payment on a lease agreement, and
indirect costs.
Also included in the attachment is a spreadsheet that gives an estimated breakdown of total sanitation
costs between collection costs, non-collection costs, and indirect costs. The allocation should be adequate
to allow Council to understand the overall picture of sanitation expenses.
r U0U1O I
April 1995
RG127 ' - ~
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TNRCC
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-i ipal Solid, Waste Services*. ~
. Mun c
Full'Cost Accounting Workbook' -
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• Municipal Solid W"aste Division .
printedon
recycled paper TEXAS NATURAL RESOURCE CONSERVATION COMMISSION
, , - -
i UUtJ10U
Municipal Solid Waste Services
Full Cost Accounting Workbook
; for
Texas Local Governments
Prepared by:
Reed-Stowe & Co., Inc.
101 West Sixth Street, Suite 225
Austin, Texas 78701
(512) 479-0991
and
Camp Dresser & McKee
801 Cherry Street, Suite 1130
Fort Worth, Texas 76102
(817) 429-9240
and
Yvette Thompson, P.E.
12770 Coit Road, Suite 1107
Dallas, Texas 75251
(214) 458-9388
April 1995
RG-127
0 000189
~ ~
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,
TNRCC,
John Hall, Chairman
Pam Reed, Commissioner
_ Peggy Garner, Commissioner
Dan Pearson, Executive Director
Authorization for use or reproduction of any original material contained in this
publication, i.e., not obtained from othersources, is freelygranted. The Commission
would appreciate acknowledgement.
Published and distributed
by the
Texas Natural Resource Conservation Commission
Post Office Box 13087
Austin, Texas 78711-3087
Copies of this document may be obtained from the Texas Natural Resource
Conservation Commission by contacting Publications at (512)239-0028.
The TNRCC is an equal opportuniry/aKrmative action employer. The agency does not allow discrimination on the
basis ot race, color, religion, national origin, sex, disabiliry, age, sexual orientation or veteran status. In compliance
with the Americans with Disabilities Act, this document may be requested in altemate formats by contacting the
TNRCC at (512)239-0010, Fax 239-0055, or 1-804REL4Y-TX (TDD), or by writing P.O. Box 13087, Austin, TX
78 71 7-3 087.
. 000190
TABLE OF CONTENTS
SECTION
PAGE
1. INTRODUCTION 1
A. Background
B. Goals Of The Worldbook
C. Benefits Of Full Cost Accounting And Using The Workbook
D. Comments Conceming The Workbook
II. THE FULL COST ACCOUNTING METHODOLOGY 3
A. Full Cost Accounting Defined
B. Cost Components _
1. Direct Costs
2. Indirect Costs
C. Other Revenue
III. HOW TO USE THE WORKBOOK s
A. Steps To Be Completed
B. Forms Provided In The Workbook
C. How To Use The Forms
Exhibit 1 Process Flow Chart
Exhibit 2 Data Collection And Form Flow Chart
IV. SUMMARY FORMS 9
A. Program Cost Summary (Form A)
B. Rate Calculation Summary (Form B)
C. Customer Class Cost Summary (Form C)
V. DETAILED COST INFORMATION FORMS
11
A.
Salaries, Wages & Benefits (Form 1)
11
B.
Vehicle Expense
13
Monthly Vehicle Expense Report (Form 2)
Annual Vehicle Expense Report (Form 3)
C.
Capita) Costs (Form 4)
15
D.
Other Direct Landfill Costs
18
Other Landfill Costs (Form 5)
Predevelopment And Construction Costs (Form 6)
Closure & Post-Closure Care Costs (Form 7)
E.
General Operation & Maintenance Costs (Form 8)
23
F.
Other Costs (Form 9)
25
G.
Indirect Costs
26
Method I: Internal Assessment Allocation (Form 10)
Method II: Employee Based Allocation (Form 11)
. 000191
p
H. Other Revenue 29
1. Weight And Volume Information 30
Monthiy Materials (Form 12)
Annuai Materials (Form 13)
J. Customer Class Costs - Detail (Form 14) 32
Vi. GLOSSARY 34
VII. ADDENDUM 35
Daily Truck WeighWolume Record
000192
I. INTRODUCTION
A. Background
In recent years there has been an increased focus upon the rising costs associated with providing
municipal solid waste services. Cities across the state, both large and small, have seen sign'rficant
increases in these costs. As a result, the 73rd Texas Legislature introduced and passed legislation
which required the Texas Natural Resource Conservation Commission (TNRCC) to conduct
demonstration projects and studies to help local governments and the private sector determine rates
that reflect the full cost of providing solid waste services. To meet this objective, in August 1994 the
TNRCC retained the project team of Reed-Stowe & Co., Inc.; Camp Dresser & McKee; and Yvette
Thompson, P.E. to develop a full cost accounting workbook for municipal solid waste services.
B. Goals Of The Workbook
The primary goal of the workbook is to provide the municipality with a system for collecting cost data
and establishing rates which reflect the full cost of providing solid waste services. While the workbook
focuses on collection, disposal, recycling and yard waste programs; the workbook may be used to
determine the costs associated with all of the city's solid waste programs. This would include the costs
associated with maintaining and operating the citys household hazardous waste program, used oil
collection program, used battery program, etc. The term "city" and "municipality" will be used
throughout the wor{dbook. However, the workbook will also prove beneficial for those counties,
governmental agencies and private operators that are attempting to establish cost of service based
rates.
A secondary goal of the workbook is to help the city in developing a comprehensive solid waste
management.plan. Once the municipality has determined the full cost of each solid waste program and
the rate per hoUsehold, it will be able to use this information to better evaluate the financial
performance of the various programs. With this information, the city can decide which programs will
provide the most benefit, given the municipality's financial resources.
The worksheets and methodology presented in this workbook offer a cost of service based approach
with regard to the development of solid waste rates. However, this workbook is not presented as the
only methodology which may be used to record solid waste costs and to calculate customer charges
and tipping fees. A city might determine that it is accurately capturing all of its solid waste costs using
a methodology and reporting format that is different from the one presented in this worldbook. In this
case the workbook can be used as a guide and reference tool.
It is not required that cities use this workbook in establishing their solid waste service,rates,
rather it is a tool that is being made available to cities that believe they will benefit trom using the
workbook to develop their solid waste customer charges and tipping fees.
. 000193
C. Benefits Of Fuil Cost Accounting And Using The Workbook
In addition to the obvious benefit of developing solid waste rates that are cost of service based, there
are additional reasons why a municipality will benefit from using the worldbook to develop their solid
waste rates. They are as follows:
• The city will begin to develop a database that has been compiled using
a consistent methodology. This will ailow the city to easily identify any
trends with regard to increases in tonnage (e.g. solid waste,
recyclables, yard waste, etc.) and costs (e.g. salaries, fuel, repairs and
maintenance, debt service, etc.).
• The collection of data and development of a solid waste budget utilizing
a full cost accounting approach will aid the municipality in the
development of both short-range and long-range solid waste
management plans.
• Use of a full cost accounting approach to compile and present solid
waste cost data will enable the city to better explain to its customers
the costs associated with the citVs particular solid waste services.
• The compilation of solid waste cost data using a full cost accounting
approach will allow the city to examine various financial scenarios and
the resulting impact upon solid waste rates. "
D. Cornments Concerning The Workbook
The project team appreciates the time and effort expended by the cities and govemmental agencies
that assisted in the development of this worfdbook. We are confident that this workbook will be of
benefit to solid waste service providers throughout Texas, and it will help all service providers to better
manage their solid waste system. We welcome and encourage any comments or suggestions with
regard to the worfdbook and the full cost accounting methodology described herein. If you have any
questions or comments please contact:
Mr. David S. Yanke
Reed-Stowe & Co., Inc. -
101 West Sixth Street, Suite 225
Austin, Texas 78701
(512) 479-0991
. OOOIgjr'
II. THE FULL COST ACCOUNTING METHODOLOGY
A. Full Cost Accounting Defined
Full cost accounting is defined as the identification and inclusion of all direct and indirect costs
associated with the providing of a particular service or program. For purposes of this workbook, full
cost accounting will be discussed from a ratemaking perspective, which emphasizes a mod'rfied cash
basis. Many of the recent articles and presentations on full cost accounting have focused on the topic
from a financial reporting and enterprise fund accounting perspective, which utilizes an accrual basis.
If a ciry establishes customer charges utilizing an accrual basis it runs the risk of incurring a cash
shortfall. If a municipality wants to ensure the full recovery of all cash costs associated with providing
solid waste services, full cost accounting should be based on what is called a"modified cash basis."
The difference between the modified cash basis and accrual basis is that principal payments and cash
capital outlays are used instead of depreciation expense to recover capital costs. A comparison of the
two methods is detailed below:
Modified Cash Basis:
Salaries, Wages & Benefits
General O&M Costs
Vehicle Expense
Capital Costs
- Principal Payments
- Interest Expense
- Cash Capital Outlays
Predevelopment Costs
Closure & Post-Closure Care Costs
Accrual Basis:
Salaries, Wages & Benefits
General 0&M Costs
Vehicle Expense
Capital Costs
- Depreciation Expense
- Interest Expense
Predevelopment Costs
Closure & Post-Closure Care Costs
Because most cities budget and operate their solid waste utility on a cash basis, it is important that
rates be established on a cash basis to ensure the recovery of the cash costs associated with these
services. Use of the accrual basis in establishing solid waste rates could resuft in a potential under
recovery of solid waste revenues. For instance, ff a ciry has a transfer station which is being
depreciated over 30 years but is financed with a 20 year revenue bond, the bond's annual principal
payments will be greater than the annual depreciation expense. This will result in a cash shortfall for
the city in the early years and a surplus in the later years. In addition, 'rf the city's solid waste facilities
are financed with revenue bonds, there are typically coverage and reserve requirements. If these
coverage and reserve requirements are not incorporated into the revenue requirement, the city risks not
only a revenue shortfall, but the potential violation of loan covenants. The violation of these covenants
could result in the city either defaulting on its debt or at the very least, restricting the city from issuing
any new revenue bonds.
The use of the accrual basis to set rates also enters a level of uncertainry for the investment community
which is familiar with the establishment of municipal utility rates on a cash basis. This uncertainty could
adversely impact the city's debt ratings. The modified cash basis should aid the city in avoiding any
potential cash shortfalls while maintaining the financial integrity of the citys solid waste utility.
. 000195
The term „modrfied cash basis" is used because two signfficant costs that are unique to the operation of
a lanc}fili need to be recognized in the establishment of solid waste rates. These two expenditures are
predevelopment costs and closure & post-closure care costs. Since both of these costs are material in
nature they should be recognized during the I'rfe of the landfill versus being expensed when the costs
are incurred. These costs are discussed in greater detail in Section V. Detailed Cost Information Forms
(Other Direct Landfill Costs - Forms 5, 6 and 7).
B. Cost Components
Full cost accounting is defined as the "identification and inclusion of all direct and indirect costs
associated with providing a particular service." The first step in developing cost of service based rates
for the city's solid waste services is to determine what costs are to be included.
1. Direct Costs
Direct Costs are those expenditures which are specifically budgeted for solid waste services. They are
also directly and clearly attributable to the specific service performed. The use of an enterprise fund for
tracking and recording a city's solid waste costs will make the identification of direct costs easier.
However, even if a ciry records its solid waste costs in the general fund, these costs can usually be
identified using the city budget and supporting financial records. Examples of direct costs include:
Salaries, Wages & Benefits
Debt Service
Annual Cash Capital Outlays
General O&M Costs
Equipment O&M Costs
Professional Services
Utilities
Contract Services
Closure & Post-Closure Care Costs
Predevelopment Costs
The workbook will provide the means to calculate not only the direct costs associated with the city's
solid waste utility, but also the direct assignment and allocation of these costs between individual solid
waste programs, such as collection, disposal, recycling and yard waste. The wor{dbook separates direct
costs into the following six sections:
Salaries, Wages & Benefits Other Landfill Costs
Vehicle Expense General O&M Costs
Capital Costs Other Costs
2. Indirect Costs
The full cost for a municipal solid waste program cannot be calculated without taking into account the
indirect costs associated with the program. Indirect costs represent services which are provided to the
city's solid waste operations by other departments within the city. Indirect costs are those that relate to
administrative or general services that are shared by many departments within a municipality. Indirect
costs include such services as:
Administration/City Manager
Central Purchasing
Finance Department
Accounting/Billing
Ciry Council
Legal Department
Personnel Administration
City Engineer
Management Information Systems
General Insurance
1 000196
There are several accepted and commonly used methods for allocating indirect costs to a city's solid
waste utility. Provided in the worldbook is a description of two allocation methodologies. The city may
use either of these methodologies to allocate indirect costs to fts solid waste utility (See Section V.
Detailed Cost Information Forms, Indirect Costs - Forms 10 and 11). A municipality is not required to
use one of the indirect cost allocation methodofogies presented in this worfdbook. However, the
municipality should develop an allocation methodology that accurately captures the indirect costs
associated with the city's solid waste programs. If a c'rty presently has an allocation methodology in
place, they need only to verify that it is a fair and equitable methodology.
C. Other Revenue
Once the city has identified its direct and indirect costs, the city must account for any special revenues
generated by the citys solid waste programs. These special revenues may include revenues from the
sale of recyclables, interest income and miscellaneous income. These revenues are then subtracted
from the direct and indirect costs in developing cost of service based rates. These revenues will be
discussed in greater detail in Section V. Detailed Cost Information Forms, Other Revenue.
. 000197
111. HOW TO USE THE WORKBOOK
A. Steps To Be Cornpleted
The purpose of the wor{dbook is to assist the municipality in developing cost of service based rates for
the city's solid waste programs. The workbook was designed as a tool to assist the municipality in
capturing the necessary financial and volumetric data that will allow the city to calculate solid waste
rates (e.g. customer charges, tipping fees, etc.) that reflect the full cost of providing the various solid
waste programs (e.g. collection, disposal, recycling, yard waste, etc.).
There are five steps that the city must follow in order to calculate its cost of service based solid waste
rates
Step 1. The city must identify all direct costs associated with
the city's solid waste services.
Step 2. The city must identify all indirect costs associated with
the city's solid waste services.
Step 3. Using the cit/s financial records, the city must directly
assign and/or allocate the solid waste costs (identified
in Steps 1& 2) to the solid waste programs which are
the beneficiaries of these expenditures.
Step 4. If applicable, the city must allocate the program costs
identified in Step 3(e.g. collection costs, disposal costs,
etc.) among the citys solid waste customer classes
(e.g. residential, commercial, etc.)
Step 4 is only necessary when the city serves more
than one customer class.
Step 5. The final step is to calculate the citys user f-ees.
The workbook will provide the city with the necessary forms to complete these five steps. Once the city
has completed these steps, the city will then be able to identify the cost of each solid waste program
offered by the city, as well as the cost per customer served (see Exhibit 1).
Depending on how the city is presently recording its solid waste costs and volumes, the city may not
have to use the wor{dbook to complete all five steps. For instance, 'rf the ciry records its direct and
indirect solid waste costs in a solid waste enterprise fund, then the city does not need to use the
workbook to complete Steps 1 and 2. Since every city is unique, each city will have to review the
entire workbook and then determine which forms in the workbook should be used to calculate the
city's solid waste rates.
. 000198 . 000011
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B. Forms Provided In The Workbook
The worfdbook is constructed in such a manner that there are three summary forms and fourteen data
collection forms that may be used by the city to compile its detailed cost and volumetric data. Forms A
and B and Forms 1-13 may be used to determine the cost for each of the city's solid waste programs.
For those cities that have more than one class of customers (e.g. residential, commercial, etc.), Form C
and Form 14 will help those cities to determine the program costs by customer class. Exhibit 2
provides a flow chart describing how the forms are used to develop a city's solid waste rates. The
following forms are included in the workbook:
Summary Forms
Form A Program Cost Summary
Form B Rate Caiculation Summary
Form C Customer Class Cost Summary
Detailed Cost Information Forms
Form 1 Salaries, Wages & Benefits
Form 2 Monthly Vehicle Expense Report
Form 3 Annual Vehicle Expense Report -
Form 4 Capital Costs
Form 5 Other Landfill Costs
Form 6 Predevelopment And Construction Costs
Form 7 Closure & Post-Closure Care Costs
Form 8 General Operation & Maintenance Costs
Form 9 Other Costs
Form 10 Indirect Costs - Methoo I: Internal Assessment Allocation
Form 11 Indirect Costs - Method Ii: Employee Based Allocation
Detailed Volume Information Forms
Form 12 Monthly Materials
Form 13 Annual Materials
Detailed Customer Class Allocation Form
Form 14 Customer Class Costs - Detail
7
• 000GO0
Eahibit 2
Texas Natural Resource Conservation Commission
Municipal Salid Waste - Full Cost Accounting Workbook
Data Collection And Form Flow Chart
Detailed Cost
Information Forms
Form 1 Salaries, Wages & Benefits
Form 2 Monthly Vehicle Expense R
Form 3 Annual Vehicle Expense Re
Form 4 Capital Costs
Form 5 Other Landfill Costs
Form 6 Predevelopment And
Construction Costs
Form 7 Closure & Post-Closure
Care Costs
Form 8 General Operation & Maint
Costs
Form 9 Other Costs
Form 10 Indirect Costs - Method I:
Internal Assessment Allocai
Form 11 Indirect Costs - Method II:
Employee Based Allocation
Form 14 Customer Class Costs -
Detail
Summary
Forms
Program Cost Summary Ctiustomer Class Cost Summary
000201
C. How To Use The Forms
After the city has reviewed the wor{dbook, it can then determine which forms need to be used to
calculate its solid waste rates. Form A, Program Cost Summary, will provide a breakdown of the citys
totai solid waste costs, by program. If the c'rty has a solid waste budget, it should be entered into Form
A, column A.
After identifying all direct costs, indirect costs and revenue offsets associated with a citys solid waste
utility, the city should allocate these costs by solid waste program (Step 3). Cities which already track
and record their solid waste costs by program will not need to use Forms 1-11. Those cities that have
not identified their solid waste costs by program can use Forms 1-11 to caiculate the cost of each solid
waste program. Based on the city's financial records, they may not need to use all of the detailed cost
information forms. For instance, a citys accounting system might track capital costs by program,
therefore they would not need to use Form 4, Capital Costs.
After identifying the costs for each of the city's different solid waste programs, the next step is to
allocate the costs by customer class (Step 4). This step may not need to be completed by all cities,
depending upon the types of solid waste programs offered by the city, as well as the types of
customers served. Typically, cities will not need to allocate program costs by customer class unless
they offer collection service to residential and commercial customers. To identify program costs, by
customer class, the city may use Form C and Form 14.
The forms in this workbook are designed to provide a generic process, so they can be used by a wide
variety of cities in Texas, all of which have different accounting and financial reporting requirements.
Based on a city's specific needs, it may decide to create its own supplemental forms.
■ 000202
IV. SUMMARY FORMS
This section of the workbook provides a brief d'escription of the summary forms and how the c'tty can
use these forms to identify the cost of each solid waste program and develop the appropriate customer
charges and tipping fees.
A. Program Cost Summary (Form A)
The Program Cost Summary Form will allow the city to determine the cost of each solid waste program
offered by the city. The beginning point for most cities will be Column A, where they will enter the
municipality's solid waste budget. Columns B-F will be used to determine the cost associated with each
of the city's solid waste programs. The specific program costs can be determined either from the citys
own financial records or by using Forms 1-11.
Those cities that provide solid waste services, but do not have a formal solid waste budget, can use
Forms 1-11 to determine the cost of each solid waste program. The city can then total the program
costs to arrive at the city's solid Waste budget. This situation may occur when a municipality's solid
waste se►vices are included in the general fund and the solid waste expendftures are not summarized
in a solid waste budget.
Finally, this workbook is being made available to cities in an attempt to help them ident'rfy all of their
solid waste costs. If during the completion of the worldbook a city discovers that their solid waste
budget does not reflect all of the solid waste costs actually incurred by the city, the workbook can be
used to assist in revising the ciry's solid waste budget to reflect the full cost of providing these services.
B. Rate Calculation Summary (Form B)
The Rate Calculation Summary Form will be used to determine the appropriate customer charges and
tipping fees that will allow the city to recover the cost of providing solid waste services to fts customers.
Lines 1-3 will be used to calculate rates for each solid waste program offered by the c'rty, provided that
program has only one class of customers. If the city has more than one customer class for a particular
solid waste program, then lines 4-6 will be used to calculate the rates.
Proqram Rates (lines 1-3)
If the city has only one customer class and a standard billing unit for all customers of a particular solid
waste program, then lines 1-3 of Form B can be used to calculate the appropriate rate. The program
cost data compiled in the Program Cost Summary (Form A, line 22) will be divided by the appropriate
number of billing units to arrive at the cost per household or container.
Customer Class Rates (lines 4-6)
If the city prov'tdes a solid waste program which has more than one customer class, then the rates must
be determined using lines 4-6 of Form B. An example of such a service would be 'rf the city offered
residential collection service (using standard 30, 60 and 90 gallon containers) and commercial collection
service (using 4, 8 and 12 cubic yard containers). In this case the city wlll use the program cost data
compiled In the Customer Class Cost Summary (Form C, line 22) and divided by the appropriate billing
units to arrive at the rates for residential and commercial customers.
w 000203
If a city is establishing rates for residential customers, these rates are usually calculated "per
household." If a city is establishing rates for commercial customers that use the larger commercial
containers, these rates are usually determined based on the size of the container and frequency of
pickups. Each city will need to determine the appropriate billing units for each of the solid waste
services offered to its customers (e.g. $ per household, $ per container, $ per ton, $ per gallon, etc.).
a city provides oniy residential service and divides its program costs (Form B, line 1) by number of
households served (Form B, line 2) this will provide the annual cost per household for each program.
By summing the annual costs per household for each program, the city can then determine the total
annual cost per household for all solid waste services. An example is as follows:
Collection
Disposal
Recycling
Total
Total Full Cost
$1,000,000
$1,250,000
$750,000
$3,000,000
Billing Units
18,000
18,000
18,000
18,000
(households served)
Annual Cost Per Billing Unit
$55.56
$69.44
$41.67
$166.67
The annual cost per househoid is $166.67. In order to recover the full cost of providing these
services, the city will need to establish a monthly customer charge ot $13.89 ($166.67 / 12
months). - "
The rates calculated in this example assume the city will bill its residential customers a flat monthly
charge per household for solid waste services. In other words, all customers pay the same amount. In
the past few years variable rates or "Pay-As-You-Throw" rates have become increasingly more
commonplace in the United States. Variable rate fee structures are just now beginning to be
implemented by a few cities in Texas. While relatively few cities in Texas have put in place a variable
rate fee structure, they are gaining attention because the rate structure encourages res'tdents to
minimize the amount of waste they generate. Using a variable rate structure, the more garbage a
household generates the larger that customer's garbage bill. While a description of how to develop
variable rates is beyond the scope of this workbook, use of this workbook will allow the city to
determine its full cost of providing solid waste services. This information can then be used to assist the
city in developing variable rates for its solid waste services. ,
C. Customer Class Cost Summary (Form C)
The Customer Class Cost Summary will only be used by those cities that offer a solid waste program to
more than one customer class. This form is similar to the Program Cost Summary (Form A), with the
exception that this form is used to assign costs between customer classes, instead of between
programs. Once these costs have been assigned, the city may then use Form B, lines 4-6 to calculate
the solid waste rates, by customer class.
10
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Tegas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
m
Service Provider:
Date Prepared:
Fiscal Year:
. R C D
T•__~ /~_.J~ /Ll.
MSW PROGRAM:
Program Cost
Gti~stomer Classes
(From Form A)
Residential
Commercial
Other
u.. v..... ~ _
t Salaries, Wages & Benefits
Z Vehicle Expense _
3 Other '
i Long Term Debt Payment
i Short Term Debt Payment
i Cash Capital Outlays
7 Extraordinary Cash Outlays
3 Other Landfill Costs
) Contractual Disposal Service (c)
) Sub-Total
l General0&M
Indirect Cosis (b):
14 Total Indirect Costs
lf
lE
li
lE
1S
2f
2]
vtnrr nrvcnur ju./.
Interest Income
Sale of Recyclables
Miscellaneous Revenues
Equipment Salvage Value
Other
Total Other Revenue
Total Full Cost (Lines 13+14-21)
(to Form B, Line 4)
Notes:
(a) This form should be completed for each solid waste program that has more than one class of customers.
(b) Calculated using Form 14.
(c) For those cities that have contracted to dispose of their solid waste at a privaie landfill or at a landfill
operated by a private waste management company, the annual amount paid should be entered here.
nnn2n7
`
V. DETAILED COST INFORMATION FORMS
A. Salaries, Wages & Benefits (Forrn 1)
This form is designed to summarize a city's detailed direct labor and employee benefit costs in an
annual format which may then be assigned to the city's various solid waste programs. The purpose of
this form is to capture the salaries, wages and benefits of only those employees who work exclusively
within the city's solid waste department. Tihe form will include the costs associated with both fuil time
and part time empioyees. The form is not to be used to capture the salaries, wages and benefits
associated with personnel such as the city manger, director of finance, etc. These salaries, or portions
thereof, will be captured in the indirect cost allocation forms as calculated using either Form 10 or 11.
The city will need to complete one Salaries, Wages & Benefits Form for each of the city's solid waste
programs. For instance, 'rf the city has three solid waste programs (collection, disposal and recycling),
the city should complete this form for each program. This will allow the city to clearly identify the
salaries, wages and benefits associated with each solid waste program. If the city's annual budget
already provides salaries, wages and benefits by program, the city does not need to use Form 1.
Instead, the city may sirnply enter the salaries, wages and benefits by program, directly from the
city's budget on to the Program Cost Surnmary Form (Form A, line 1).
Employees who perform duties for more than one program should designate such information when
filling out their detailed timesheets. Distinctions should be made between different solid waste
programs, as well as between residential and commercial customer classes, if applicable.
Data to be entered into Form 1 is as follows:
• Service Provider: Name of city, government agency, or private
operator completing the worldbook.
• Date Prepared: Date the form is completed.
• Fiscal Year: Record the fiscal year which applies.
• Program: Record the name of the solid waste program. The ciry should fill out one
Salaries, Wages & Benefit Form for each of the city's solid waste programs.
e Employee: Enter the name or other identification of each employee who works on this
program.
. Total Wages: Record each employee's annual wages including overtime, bonuses and
other monetary compensation. (Some of these items may need to be estimated.)
• Benefits: Include FICA, vacation/sick leave, workers compensation, unemployment
insurance, retirement contribution and other pertinent benefits. These costs can be
developed on an individual employee basis or using a composite factor depending on
the type of records kept by the municipality.
• Total Wages & Benefits: Combined Wages and Benefits for the employee..
11
, 000208
• Proportion of Time on this Program: Record percentage of time that employee spends
working on this program. After completing the Salaries, Wages & Benefit Forms for
each program, make sure for any individuals whose time was allocated between
different programs that the percentages total to 100%.
Wages and Benefits this Program: This entry is calculated by muftipfy'ing the "Total
Wages and Benefits" column by the "Proportion of Time on this Program."
The salaries, wages and benefits for each program are then totalled at the bottom of Form 1 and
entered on the Salaries, Wages & Benefits line of the Program Cost Summary for each respective
program (Form A, line 1).
12
. 00020'y
Form 1 ;
Tegas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
Service Provider: C ,'T Gr.s
Date Pre ared: 'F- - a ~
Fiscal Year:
Program:
lr,%rat
Total Proportion of
Wages & Time on Wages and Benefits
- 000210
B. Vehicle Expense (Forms 2 and 3)
The purpose of the vehicle expense forms is to assist the city in budgeting its annual costs associated
with operating and maintaining equipment for each of the cit}fs solid waste programs. These costs
include parts, supplies, fuel, and all labor involved in the maintenance and repair of the citys solid
waste vehicles. There are a number of inethods which the city may use to track and record these
costs: 1) the use of an internal services fund; 2) the use of some other financial reporting system within
the city; or 3) the use of Forms 2 and 3.
The workbook will provide a brief overview of the first two accounting methods and a more detailed
description of Forms 2 and 3. If the city has a current vehicle cost reporting system that allows
them to budget vehicle expenses, and identify which solid waste program(s) uses the vehicle, the
city will not need to use Forms 2 and 3. For those cities that do not have a system in place to
track and record vehicle costs by solid waste program, Forms 2 and 3 will help cities to identify
these costs.
1) Internal Services Funds
Prior to determining the city's vkhicle costs for each solid waste program, the city should first review the
process it is currently using to record vehicle costs. Many cities use an internal services fund to track
and record the costs associated with purchasing and maintaining its fleet of city vehicles. This
equipment is then "leased" to the individual departments within the city. If the city tracks and records
all vehicle costs (purchases, repairs, fuel, etc.) through the use of an intemal serv'tces fund, the city will
probably not have to use Forms 2 and 3 to determine vehicle costs. Once the internal services fund
has determined the annual costs associated with each of the city's solid waste vehicles, the only
remaining step is to identify which vehicles, or portions of vehicles are associated with spec'rfic solid
waste programs. The city can then determine the vehicle costs associated with each solid waste
program.
2) Other Financial Reporting Systems
While a city may not have an internal services fund, it may still utilize a financial reporting system that
allows the city fo track costs associated with each vehicle. As long as"the system is capable of
recording the costs associated with each vehicle and the city can determine which solid waste
program(s) uses the vehicle, the city will not have to use Forms 2 and 3.
3) Forms 2 and 3
For a city that has not historically tracked vehicle expenses, by vehicle, Forms 2 and 3 may be used to
determine these costs. Form 2 will need to be filled out monthly for each solid waste program. For
instance, using Form 2 the city's collection program will list each piece of equipment that is used in the
collection of solid waste, including equipment that is partially used (example: 50% collection, 50%
recycling). After completing a Form 2 for each of the citys solid waste programs, the city will have the
total monthly fuel, repair labor, parts and supplies, outside costs, and lease costs associated with each
vehicle in a solid waste program. The annual vehicle cost for each program is calculated by completing
Form 2 on a monthly basis for each solid waste program and then recording the monthly costs on Form
3. This will provide the city with what it costs on an annual basis to own and operate its fleet of solid
waste vehicles by program. This figure may then be used as a basis to determine the amount of
vehicle expenses which will be budgeted for each solid waste program. The budgeted amount may
then be entered on Form A, line 2.
If the cost associated with the purchase of vehicles is included in the internal services fund or on
Forms 2 and 3, make sure these same costs are not included on the Capital Costs Form (Form 4)
to avoid "double-counting" the purchase costs of any vehicles.
13
, 000211
Forms 2 and 3 have the following entries:
• Service Provider: Name of city, government agency, or private operator completing the
worldbook.
e Date Prepared: Date the form is completed.
• Month: The month for which this report applies.
e Program: The program for which the form is being completed.
• Vehicle ID: Number or other identification for the specific vehicle.
• Fuel: Total fuel costs.
• Repair Labor: Costs of all labor charges for repair.
0 Parts/Supplies: Cost of all parts and fluids used for repair and maintenance.
~ Outside Costs: Any external repair services required.
• Lease Cost: If the city purchases its vehicles through an intemal services fund and the
financing costs are not recorded on the Capital Costs Form (Form 4); the city should
record the monthly "lease cost" in this column.
. Total Monthly Costs of Vehicle: This column provides a total of the
monthly costs incurred for each vehicle.
• Percent of Use in Program: The proportion of time that the vehicle is
used by each of the citys solid waste programs. For most vehicles
"100%" will be entered in this blank. However, if a vehicle is used 50%
by collection and 50% by recycling, then 50% should be entered for this
vehicle on the Form 2 which is completed for the collection program, as
well as the Form 2 which is completed for the recycling program.
• Total Monthly Program Costs of Vehicle: The result of multiplying
"Total Monthly Costs of Vehicle" by the "Percent of Use in Program."
This dollar amount represents the proportion of the vehicle costs which
are associated with this particular solid waste program.
• Total Monthly Vehicle Expense by Program: The total monthly vehicle
expense by program is totalled at the bottom of Form 2. The monthly
totals are then entered on Form 3 to arrive at the annual vehicle costs
of each program.
14
.
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,
Tezas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
Service Provider:
Date Prepared:
Month
Fiscal Year:
PIOg,T2ri1: ef ~ ~Q P 9 ~ ~
Total Monthly Vehicle
Expense bv ProQram
January
February
March
April
May ,
June
July
August
September
October
November
December
Annua( Vehicle Eapense by Program
. 000214
C. Capital Costs (Forrn 4)
Providing municipal solid waste services requires that equipment, facilities and land_be purchased and
used. Some of the "smaller' asset purchases are often financed with "cash capital outlays." In these
instances, the assets are paid for with cash, rather than through the issuance of debt. Larger capital
purchases such as land, the construction of facilities, and the purchase of some types of equipment are
usually funded with debt.
Cash capital outlays are used as a"financing vehicle" by most solid waste utilities and are often
relatively constant from one year to the next. As such, the historical cash capital outlays of a municipal
solid waste program service can often be used to predict future cash capital outlays. Financing larger
expenditures with debt allows the ratable collection of funds over the life of the asset.
Since most municipalities operate on a cash basis, this workbook uses what is called a'mod'rfied cash
basis" to ensure the establishment of cost of service based solid waste rates. Using annual principal
and cash capital outlays in lieu of depreciation expense is an important difference between the modified
cash basis and the accrual basis. The modified cash basis is preferred in the development of cost of
service and rate design studies,-since the purpose of these studies is to capture the full "cash" cost of
providing the solid waste service on an annual basis. As mentioned earlier in the workbook, there are
situations where the use of depreciation expense in the establishment of solid waste rates would
generate insufficient cash revenues on an annual basis to recover the debt service associated with an
asset.
As mentioned in the Vehicle Expense Section (Forms 2 and 3), many municipalities use an internal
services fund to purchase and maintain equipment. These funds purchase the required equipment and
then "lease" it to the other city departments using a depreciation factor. This is an acceptable
methodology, with the lease payment used in lieu of debt service, especially since these assets are
often purchased with cash instead of debt. For purposes of this wor{dbook, the internal services fund
"lease cost" appears on the workbooks Vehicle Expense Form (Form 2), in anticipation of the same
internal services fund also providing maintenance and repair activities as well.
If a solid waste program plans to purchase a major piece of equipment without using debt, or an
internal services fund, its impact on "cash capital outlays" will be significant at the time of purchase and
not acceptable from a rate design viewpoint. In this special case an amortization factor should be used
in order to recoup the cash outlay ratably over the life of the asset. This situation is referred to as an
"extraordinary cash outlay" on Form 4. In this case, the annual cost of the asset is determined by
dividing the purchase price by the forecasted service I'rfe. Salvage values, when realized, will be
recorded in the "Other Revenue" section of Form A, Program Cost Summary.
Form 4, Capital Costs, is a form that can help a city determine the annual capital costs needed for each
solid waste program by considering the annual cash outlays and debt service associated with each
program. The city will need to complete a Capital Costs Form for each of the cit/s solid waste
programs. This will allow the city to clearly identify the capital costs associated with each solid waste
program.
Form 4 has the following entries:
Service Provider: Name of city, government agency, or private
operator completing the worldbook.
• Date Prepared: Date the form is completed.
15
. 000215
• Fiscai Year: Record the fiscal year that applies.
e Rrogram: The solid waste program that the debt service and cash outlays support.
• Long Term Debt Payment:
■ Debt Issue - The date and size of the bond issue.
■ Total Principal and Interest (P&I) Annuai Amount - The total annual
payment (principal and interest) for the specified bond. Depending on
the payback schedule this number can change from year to year or
remain constant. In addition, applicable coverage and revenue
requirements should be included for revenue bonds.
■ Percentage To Program - The proportion of assets related to this
program as a percentage of the entire debt issue. A description of the
funded assets should be specified in the bond issue. If the level of
detail is insufficient to develop a percentage, estimates should be made
with original purchase prices.
■ Program P&I Annual Amount - Calculated by muttiplying the "Total P&I
Annual Amount" by the "Percentage to Program."
■ Year Debt Expires - This is the final year of debt service associated
with the bond issue. This column is not used in the capital cost
anatysis but is ident'rfied to facilitate subsequent reporting. Early debt
payoffs and/or refinancings will need to be considered in future report
development.
• Short-Term Debt Payment:
■ Debt Issue - Description of warrant or short-term lending instrument.
■ Total P&I Annual Amount - Annual payment for debt issue.
■ Percentage To Program - PerceMage of principal which was identified
for assets used by this program. These short-terrn debt issues are
normally passed by city ordinance. The original ordinance should have
a description of the assets it was to be used for. Make estimates as
necessary to develop percentage.
■ Program P&I Annual Amount - Calculated by multiplying the "Total P&I
Annual Amount" by the "Percentage to Program."
■ Year Debt Expires - This is the final year of debt service associated
with the bond issue.
16
w QOlJ21V
e Cash Capital Outlays:
■ Description - Cash Capital Outlays are generally described in the city's
budget. If insufficient detail is available at the budget level, estimates
must be made and/or supporting analysis used.
■ Purchase Amount - Dollars identified for each group of capital
expenditures.
e Percentage To Program - Percentage of each capital expenditure which
is to be used by this solid waste program. Again, detail must be located
or estimated to develop this percentage.
■ Program Annual Amount - Calculated by muftiplying "Purchase Amount"
by the "Percentage To Program."
If a large group of program assets is budgeted to be purchased from cash capital
outlays, which is considi~red outside the course of normal operations, an amortization of
this expenditure may be used to avoid "rate spikes." The following entries are used in
this situation:
• Extraordinary Cash Outlays
■ Description - Large capital assets budgeted to be purchased wfth cash.
■ Purchase Amount - Estimated or actual purchase price.
■ Expected Life - Number of years the equipment is projected to remain
in service.
■ Amortized Annual Amount - Purchase price divided by expected life.
Any salvage value realized at the end of the asset's life will be 'tncluded
in Other Revenues (Form A, Program Cost Summary).
■ Retirement Year - Date the piece of equipment is forecasted to be
taken out of service. This column is included to facilitate subsequent
reportings.
17
. 00021 %
Tegas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Work~ b~ ok
Service Provider:
Date Prepared:
Fiscal Year:
Program:
Long Term Debt Payment
Percentage Program P& I Year Debt
Debt Issue Annual Amount To Program Annual An►ount txpires
Total (1)
Short Term Debt Payment
Total P& I Percentage Program P& I Year Debt
Debt Issue Annual Amount To Program Annual Amount Expires
Total 0)
Cash Capital Outlays
rPurchase Percentage ~o~~
ror^
DescriPtion Amount To Program Aru►ual Amount
y
< S-' Ya a
s `
` ~ F". Qts T
/
%3 rtv~k.~
8t8
4161
do'lo
`f6 Sr8
Total
(1)
Extraordinary Cash Outlays
sp p;< kw~
~ 7, 53P, tf O~ a c ke r
P~-rV~K
/
Purchase Expected Amortized Retirement
T ;fp (Voarc) AriIlllal Arilount YP,ar
Descnpuon
Total (1)
(1) To Form A, Lines 47
■ 000218
D. Other Direct Landfili Costs (Forms 5, 6 and 7)
Lancffill management has become an increasingly complex business. Landfill operators are faced with
closure costs, environmental monitoring, predevelopment costs, construction costs, not to mention the
costs associated with the day-to-day operation of a landfill. While the costs of salaries, vehicles,
general O&M, etc. are captured using the other forms provided in the workbook, there are certain costs
which are unique to the operation of a landfill. Three forms have been spec'rficalfy developed to
address these costs. Form 5 Other Landfill Costs may be used to record the annual costs incurred in
operating a landfill. Daily cover and leachate collection are examples of some of the costs which may
be recorded on Form 5. In addition, Predevelopment and Construction Costs" and "Closure & Post-
Closure Care Costs" may be calculated using Forms 6 and 7, respectively. The totals on Forms 6 and
7 are then brought forward and recorded on Form 5, lines 11 and 12. Once Form 5, Other Landfill
Costs, has been completed, the total cost on line 16 is recorded on the Program Cost Summary Form
(Form A, line 8, column C.)
Note: If predevelopment and construction costs are already included on the Capital Costs Form
(Form 4), these costs should Aot be included on Form 5. If these costs are recorded on both
forms, this will resuft in an overstatement of disposal costs.
Other Landfill Costs (Form 5)
Data to be entered into Form 5 is as follows:
~ Service Provider: Name of city, government agency, or private
operator completing the workbook.
• Date Prepared: Date the form is completed.
• - Fiscal Year: Record the fiscal year that applies.
• Site: Physical location of the landfill, name or permit number.
~ Operating Costs: The annual costs of operating the lancffill should be
recorded on lines 1 through 9. These costs should not include
salaries, wages & benefits; vehicle expenses; general O&M; or any
other costs which are already recorded elsewhere using the forms
provided in the worldbook. To do so would result in an overstatement
of the city's disposal costs.
Annualized Predevelopment and Construction Costs: These costs are
calculated on Form 6 and should be brought fonrvard and entered on
this line. This line may be $0 'rf these costs are fully captured in the
Capital Costs Form (Form 4).
Closure and Post-Closure Care Costs: These costs are calculated on
Form 7 and should be brought forward and entered on this line.
Total: Sum lines 10 and 15. This is the city's annual Other Landfill
Costs and should be recorded on Form A, line 8, column C.
18
. 000219
Tezas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
Service Provider:
Date Prepared:
Ftiscal Year:
Site:
Operating Costs:
1 Cover Material
2 Laboratory Testing
3 Pernuts '
4 Gas Collection
5 Leachate Collection & Disposal
6 Engineering
7 Legal
S Regulatory Fees (i.e. TNRCC Fees)
9 Other _ L-G tJ f,'/( f~ z s
10 Sub-Total
11 Annualized Predevelopment and Construction Costs
(From Form 6, Line 20)
12 Closure and Post-Closure Care Costs
(From Form 7, Line 19)
13 Other
14 Other
15 Sub-Total
16 Total
S o,-_ o I
~SO 7Q
(to Form A, Line 8)
w 00OGGIv!
Predevelopment And Construction Costs (Form 6)
Form 6 is used to record those costs which are incurred during the planning and construction of the
citys landfill. Because these costs are material in nature, it is important that they be recognized during
the life of the landfill. By developing rates which recognize these costs over the life of the landfill, the
city ensures that all users of the landfill share equally in its construction. As mentioned earlier, 'rf these
costs or a portion of them are already included in the capital costs (Form 4), they should not be
included on Form 6 to avoid double-counting these costs.
Data to be entered into Form 6 is as follows:
• Service Provider: Name of city, government agency, or private
operator completing the workbook.
• Date Prepared: Date the form is completed.
• Fiscal Year: Record the fiscal year which applies.
• Site: Physical location of the landfill, name or permit number.
• Predevelopment Costs: The predevelopment costs associated with the
development of the city's landfill should be recorded on lines t through
6. If these costs are already included in capital costs (Form 4), leave
this section blank.
• Construction Costs: The construction costs associated with the
construction of the city's landfill should be recorded on lines 8 through
16. If these costs are already included in capital costs (Form 4), leave
this section blank.
• ' Total Predevelopment and Construction Costs: Sum lines 7 and 17.
e Expected Landfill Lrfe (years): Number of years the landfill is expected
to remain open.
0 Annual Cost: This cost should be calctilated by dividing total
predevelopment and construction costs by the expected life of the
landfill. The Annual Cost is then recorded on Form 5, line 11.
19
. 000221
Tegas Natural Resource Conservation Commission
Municipal 5olid Waste - Full Cost Accounting Workbook
Service Provider:
Date Prepared:
Fiscal Year:
Site:
Predevelopment Costs:
1 Engineering and Design
2 Pemuting
3 Legal
4 Land Purchase
5 Administrative
6 Other
7 Total Predevelopment Costs
Construction Costs:
8
Earthwork
9
Liner System
10
Leachate System
11
Gas Venting
12
Scale System
13
Landscaping
14
Construction Engineering
-15
Other
16
Other
17 Total Construction Costs
18 Total Predevelopment and Constructioa Costs
19 Eapected Landfill Life (years)
20 Annual Cost (Line 18 Divided by Line 19)
o
(to Form 5, Line 11)
0 000222
Ciosure & Post-Closure Care Costs (Form
This form is used to determine the annual lanctfill closure and post-closure care costs. With the
enactment of Subtitle D these costs have become a much more significant part of the overail cost of
operating a landfill. Once a city's closure and post-closure care costs are estimated, 'rf a c'rty is going to
establish cost of service based solid waste rates, it should include this cost in the city's tipping fees
and/or customer charges. It should be noted that cities are required to recalculate the closure and
post-closure care costs each year, which can resutt in this cost increasing beyond its original estimate.
Because of the materiality of this cost, it is recommended that cities use Form 7 to assist them in
recovering this cost through the inclusion of this expense in their tipping fees and customer charges.
Form 7 recognizes that the closure of a landfill is completed in a series of phases over the I'rfe of the
landfill. Therefore, closure costs are re-calculated annually for each phase of the landfill that is
currently receiving waste. The amount of closure costs that need to be recovered in the tipping fee is
determined as follows:
Estimated closure costs - Amount alreadY reserved
Expected number of years until funds are required
A simpl'rfied example will show how this amount may be calculated annually:
Assume that a city's closure costs are estimated at $300,000 for a phase that will close in three years.
In the first year $100,000 will need to be recovered through tipping fees and set aside for closure costs
($300,000 / 3 years =$100,000). Assume that in the second year the estimated closure costs have
risen 3%. Closure costs are now estimated at $309,000. The city will need to recover $104,500
through tipping fees in the second year to set aside for closure costs ($309,000 -$100,000) / 2 years =
$104,500. In the final year, assuming costs again increase 3%, the closure costs are now estimated at
$318,270. In the third and final year the city will need to recover $113,770 through tipping fees and set
this amount aside for closure costs ($318,270 -$204,500) / 1 year =$113,770.
Post-closure care costs will be calculated in the same manner as closure costs, however they will be
calculated over the life of the landfill, as opposed to just a phase of the landfill. Once the annual
closure and post-closure care costs are calculated they are then added together and recorded on Form
7, line 19. This amount is then forvvarded to Form 5, line 12.
It is not required by law that cities in Texas establish a cash reserve in recognition of these closure and
post-closure care costs. Cities are only required to satisfy the financial assurance requirements (Title
30, Texas Administrative Code, Chapter 330, Subchapter K) and recognize this liability in their financial
reports. However, from a ratemaking standpoint this is a known and measurable cost which cities are
going to incur in the future and which is created by the current users of the landfill. Therefore, it is
recommended that cities include this annual cost (as calculated using Form 7) in their current tipping
fees, so as to begin recovering the closure and post-closure care costs from the users of the landfill
which are the generators of this future liability. The portion of the tipping fee associated with the
closure and post-closure care costs could then be deposfted by the city in a reserve account.
Cities that own and operate landfills under the small arid landtill exemption should be aware that
they are not exempt from complying with landfill closure and post-closure care requirements.
20
- 000223
For cities that desire additional information concerning this issue, please refer to:
1. Title 30
Texas Administrative Code
Chapter 330, Municipal Solid Waste
Subchapter K: Financial Assurance
and
2. Statement No. 18 of the Governmental Accounting Standards Board
Accounting for Municipal Solid Waste Lancffill Closure and Postclosure Care Costs
August 1993
Data to be entered into Form 7 is as follows:
• Service Provider: Name of city, government agency, or private
operator completing the workbook.
• Date Prepared: Date the form is completed.
• Fiscal Year: Record the fiscal year which applies.
• Site: Physical location of the landfill, name or permit number.
• Date of Cost Estimate: Date Closure and Post-Closure Costs were last
estirnated.
• Phase 1 Closure Cost: The ciry's estimated cost of closure for Phase 1
of the landfill. (This same cost estimating methodology is used for
Phase 2, or however many phases the landfill will ultimately close.)
0 Less Amount Already Reserved For Closure: Amount of money
already reserved by the city to pay for closure costs.
~ Net Remaining Closure Costs: Phase 1 Closure Cost" less "Amount
Already Reserved For Closure" (line 1- line 2).
• Expected Number of Years Until Funds Are Required: Number of
years until the phase is closed.
• Annual Cost For Phase 1 Closure: Calculated by dividing "Net
Remaining Closure Costs" by "Expected Number of Years Until Funds
Are Required." (Same calculation is done for Phase 2, or however
many phases the landfill will ultimately close.)
• Total Annual Closure Costs: The summation of the estimated annual
closure costs for all phases of the landfill presently receiving waste.
• Post-Closure Care Costs: The city's estimated post-closure care costs
for the landfill.
21
- 000224
e Less Amount Already Reserved For Post-Closure: Amount of money
already reserved by the city to pay for post-closure care costs.
• Net Remaining Post-Closure Costs: "Post-Closure Care Costs" less
"Amount Aiready Reserved For Post-Closure" (line 14 - line 15).
• Expected Number of Years Until Funds Are Required: The number of
years until the city closes the landfill.
• Annual Post-Closure Care Costs: "Net Remaining Post-Closure Costs"
(line 76) divided by "Expected Number of Years Until Funds Are
Required" (line 17).
• Total Annual Closure & Post-Closure Care Costs: Line 13 plus line 18.
This amount is then recorded on Form 5, line 12.
22
w 000225
Tegas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
Service Provider:
Date Prepared:
FSscal Year:
Closure Costs (1):
1 P6ase 1 Closure Cost
2 Less amount already reserved for closure
3 Net remaining ciosure costs (Line 1- Line 2)
4 Expected number of years until funds are required
5 Annual cost for phase 1 closure (Line 3/ Line 4)
6 Phase 2 Closure Cost
7 Less amount alreacty reserved for ctosure
8 Net remaining closure costs (Line 6- Line 7)
9 Expected number of years until funds aze required
10 Annual cost for phase 2 closure (Line 8/ Line 9)
Total Annual Closure Costs:
11 Phase 1
12 Phase 2
(I,ine 5)
(Line 10)
13 Totat
Post-Ciosure Care Costs:
(Line 11 + Line 12)
14 Post-Closure Care Costs
15 Less amount already reserved for post-closure
16 Net remaining post-closure costs (Line 14 - Line 15)
17 Expected number of years until funds are required
18 Annual Post-Closure Care Costs (Line 16 / Line 17)
Site:
Date of Cost Estimate:
$
$
$
years
~ per year
$
$
$
years
$ per year
$ Fer year
$ ler year
$ per year
$ ~}S o o2J
$
$ y-57oao
years
Ki4f per year
19 Total Annual Closure and Post-Closure Care Costs: $ S o7o per year
(Line 13 + Line 18) (to Form 5, Line 12)
Note:
(1) Recognizing that closure may be carried out in a series of phases at the landfill. For an example of
how fees may be established to recover closure and post-closure care costs please refer to the
example on p. 20 of this workbook
w 000226
E. General Operation & Maintenance Costs (Form 8)
This form is used to compile the General Operation & Maintenance Costs (General O&M) which are
spec'rfically budgeted in the City's solid waste budget. Examples of Generai 0&M include office
supplies, utilities, small equipment purchases, lease payments (other than those included in the Vehicle
Expense Form), insurance (other than that which is included in the Salaries, Wages & Benefits Form),
travel and training, and outside payments for services.
The first step in assigning General O&M costs to the city's solid waste programs is to group the costs in
two categories, "Directly Assignable Costs" and "Allocated Costs." "Directfy Assignable Costs" are
those costs which can be directly associated with a particular program, or which are allocated based on
a professional standard or educated estimate. For instance, engineering fees might be directly
assignable to the city's landfill operations. Other costs might be assigned based on the city staff's
familiarity with a particular expenditure. For example, public education costs associated with the
distribution of pamphlets might be assigned between the collection, recycling and yard waste programs
based on the staff's knowledge of how the funds were expended.
However, there are some costs ihat will be unclear even to ciry staff as to how they should be allocated
among the city's solid waste programs. In this case, these General O&M costs should be allocated to
the city's solid waste programs based on a composite of the direct costs as summarized on Form A,
line 10. For instance, 'rf 50% of the direct costs on Form A, line 10 are related to the city's collection
program, and the city has $100,000 in General O&M costs that cannot be directly assigned, then 50%,
or $50,000, of these costs should be allocated to the collection program.
Form 8 is used to determine the amount of General O&M Costs associated with each of the ciys solid
waste programs. This is accomplished in a two step process: first by identifying all of the directly
assignable costs and assigning them to the appropriate solid waste programs; and second, by taking
the remaining General O&M costs that are not directly assignable and allocating them to the solid
waste programs based on a composite of the solid waste utilitys direct costs (Form A, line 10). The
entries on the worksheet are described below:
• Service Provider: Name of city, government agency, or pr'tvate
operator completing the worfdbook.
• Date Prepared: Date the form is completed.
• Fiscal Year: Record the fiscal year which applies.
• Directly Assignable Costs: Those costs which can be directly assigned to a prograrn or
which can be allocated based on professional standards or educated estimates.
■ Account Number - Entered, ff applicable.
■ Description - Description of the cost (e.g. engineering fees, etc.).
■ Total Cost - Annual cost for the particular General O&M cost.
■ Program Category - Enter amount of costs directly assignable to solid waste
programs (e.g. Collection, Disposal, Recyclin g, Yard Waste and Other). The
total of these five columns should equal the number entered in the "Total Cost"
column.
23
. 000227
a
■ Total Dollar Amount - Summation of directly assignable
costs, by program and in total.
~ Aliocated Costs: Those General 0&M costs which cannot be directly assigned and
must instead be allocated based on percentages developed from the direct costs which
are summarized on Form A, line 10.
■ Allocation Percentage - Calculated by summing the
data on Form A, lines 1 through 9 and entering it on
Form A, line 10. Using the data on line 10, calculate
the percentage of direct costs associated with each
program as a percentage of the total direct costs. This
percentage is then entered on Form 8, line 11.
■ Account Number - Entered, if applicable.
■ Description - Description of the cost (e.g. copier service, etc.).
■ Total Cost - Annual cost for the particular General O&M cost.
■ Program Category - Assigned by multiplying "Allocation Percentage" (Form 8,
line 11) by the "Total Cost" column for each separate cost item.
■ Total Dollar Amount - Summation of allocated costs, by
program and in total.
• Total General O&M Costs Per Program: Sum of totals in "Directly Assignable Costs"
and "Allocated Costs" groups (lines 10 and 18). This amount is then entered on Form
A, line 11.
24
. 000228
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F. Other Costs (Form 9)
This form is used to compile any additional costs associated with the city's solid waste department that
do not readily fall into one of the prior cost categories. It may be of use 'rf a unique category of costs is
incurred. The directions for Form 9 are identical to the directions for General Operation & Maintenance
Costs (Form 8). Please refer to the General Operation & Maintenance Costs section for specific
directions.
Once the Other Costs are calculated on Form 9, they are entered on Form A, line 12.
25
- 000230
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w 000231
r• N M'~t V1 ~O l"~ 00
G. Indirect Costs (Forms 10 and 11)
Indirect costs represent services which are provided to the c'rty's solid waste department by other
departments within the c'tiy. In order to develop cost of service based rates, an aceurate allocation
methodology must be developed in order to assign a portion of these indirect costs to the citys solid
waste department.
There are several accepted and commonly used methods for allocating indirect costs. For purposes of
the worldbook, two methodologies are explained in detail. However, cities may use other methods to
allocate indirect costs as long as they reilect the cost incurred to provide the service(s) to the solid
waste utility.
Method I: Internal Assessment Allocation (Form 10)
This methodology requires that each department providing support services to the solid waste
utility determine the percentage of their total costs associated with providing service to the solid
waste utility. For instance, the purchasing department might determine its level of support
service provided to the solid waste utility based on the percentage of purchase orders
processed for solid waste programs as a percentage of total purchase orders processed. In the
finance department, costs could be allocated on a proportion of financial transactions. The
engineering department could allocate costs based on the total number of hours spent on solid
waste activities as a percentage of total hours in the department.
This methodology will also allow the allocation of department costs based on'interviews
with individuals in the department who may be able to better determine what
percentage of their time is spent on solid waste activities. Form 10 provides a
framework to support the internal assessment methodology.
Service Provider: Name of ciry, government agency or private operator
cornpleting the workbook.
• Date Prepared: Date the form is completed.
Fiscal Year: Record the fiscal year that applies.
Part 1- Indirect Costs Allocated to the MSW Department _
• Department: List the departments that provide support services to the city's
solid waste department (e.g. Purchasing Department, Finance Department, etc.)
• Departmental Budget: Enter the annual budget for each department.
• Percentage Attributable to Solid Waste Department: Based on the ctty's own
internal assessment, determine the percentage of the budget which would be
attributable to the solid waste department.
• Dollar Amount Attributable to Solid Waste Department: Column 2 multiplied by
Column 3.
26
- 000232
Part 2- Allocation of indirect Costs to each MSW Program
• Program: Enter the name of each solid waste program in this column.
• Direct Costs: Enter the total direct costs for each program in column A(Enter
directly from Form A, line 13).
• Percentage of Totai MSW Direct Costs: Divide the Direct Costs for each
program (Column A) by the "Total MSW Direct Costs" at the bottom of Column
A, line 20.
• Total From Part 1($ Amount): Enter the total "Dollar Amount Attributable to
Solid Waste Department" (Column 4, line 13) on each line in Column C.
e Indirect Cost to Program: Multiply Column B by Column C to determine the
indirect cost associated with each of the c'rry's solid waste programs. This
amount is then entered on Form A, line 14, for each solid waste program.
Method 11. Employee Based Allocation (Form 11)
This allocation is based on a ratio of solid waste employees to total municipal employees. The
subsequent allocation to individual programs is accomplished by identifying the number of solid
waste employees associated wfth each solid waste program.
• Service Provider: Name of city, government agency or private operator
completing the workbook.
• Date Prepared: Date the form is completed.
• - Fiscal Year: Record the fiscal year which applies.
Part 1- Budgets for Departments Providing Indirect Service to Solid Waste Department
• Department: List the departments which provide support services to
the city's solid waste department (e.g. Purchasing Department, Finance
Department, etc.)
• Department Budget: Enter the annual budget for each department.
Part 2- Indirect Costs Allocated to the MSW department
• Solid Waste Employees: Enter the total number of solid waste employees on
line 14. Part-time employees should be added as a fraction (e.g. 1/2, 1/4, etc.).
• Total Municipal Employees: Enter the total number of municipal employees on
line 15. This number should include all municipal employees, both full-time and
part-time employees.
• Ratio of MSW Employees to Total: Divide line 14 by line 15.
27
. 000233
• Amount Ailocated to MSW: Total from Part 1, (ine 13 multiplied by the
percentage in Part 2, line 16.
Part 3- Allocation of Indirect Costs to each MSW Program
• Program: Enter the name of each solid waste program in this column.
• Solid Waste Employees by Program: Enter the total number of solid waste
employees associated with each spec'rfic solid waste program. Part-time
employees should be added as a fraction (e.g. 1/2, 1/4, etc.).
• Percentage of Total MSW Employees: Div'ide the number of MSW employees
for each program (Column A) by the "Total MSW Employees" at the bottom of
Column A, line 24. (Note: "Total MSW Employees" should equal the number of
solid waste employees from Part 2, line 14.)
• $ Amount from Part 2, Line 17: Enter the total dollar amount from Part 2, Line
17 on each line in Column C.
• Indirect Cost to Program: Multiply Column B by Column C to determine the
indirect costs associated with each of the city's solid waste programs. This
amount is then entered on Form A, Line 14, for each solid waste program.
28
w ooo23'Z
% of Total
Dept.
Budget
Budget Allocation
Council
$
89,025
0.0042554
$
378.84
Manager
$
218,825
0.010460
$
2,288.87
Attorney
$
359,928
0.017205
$
6,192.39
Clerk
$
125,351
0.005992
$
751.07
Finance
$
454,299
0.021715
$
9,865.31
Pub.Wks.
$
139,331
0.006660
$
927.95
Garage
$
302,893
0.014478
$
4,385.36
Gen. Exp
$
1,057,586
0.050553
$
53,463.65
$
78,253.45
Total GF budget
$
20,920,534
Water Billing
1645422
0.333333
$ 548,473.45
Grand Total
$ 626,726.90
- 000235
Tezas Natural Resource Conservatioa Commission
Mun.icipal Solid Waste - Full Cost Accounting Workhook
Service Provider:
Date Pre ared: - a -o ~
Ftiscal Year: p 7- OV
S Amount
% Attributable
Attributable to
De artment
De artmental Budget
to Solid Waste De t.
Solid Waste De t.
1
2
3
4
5
6
7
8
9
10
11
12
1-11 14)
13
TOTAL r~~, i07 oZ~
(To Part 2, Column C)
~ R C D
Program
14
15
16
17
18
19
20
Total from
Direct Costs
% of Total MSW
Part 1
Indirect Cost to
(From Form A, Line 13)
Direct Costs
Amount)
Pro am (BxC)
Collection
Disposal
Recycling
.
Yard Waste
Other
-
♦ r
Total MSW Direct CostsI I iuv% I k 1V
. 000236
Tezas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
Service Provider:
Date Pre ared:
Fiscal Year:
1
1
1
1
14 Solid Waste Employees
15 Total Municipal Employees
16 Ratio of MSW Employees to Total
17 Amount Allocated to MS W
E----d~(Line 14 divided by Line 15)
(Total from Part 1 multiplied by Line 16)
A
Program
B
C
D
Solid Waste % of Total MSW $ Amount From Indirect Cost to
Employees by Program Employees Part 2, Line 17 Program (BxC)
18
19
20
21
22
23
24
Collection
Disposal
Recycling
Yard Waste -
Other
Total MSW Employees 100% (To Form A, Line 14)
. 000237 ' Departmental
Department Budget
H. Other Revenue
Sources of other revenue for the cit/s solid waste utiliry are listed on Form A, Lines 15 through 20.
These revenues include interest income, revenues generated from the sale of recyclables,
miscelianeous revenue and the salvage value of any equipment soid by the city's solid waste utility.
These revenues should be recorded as a revenue offset in the determination of the city's cost of
providing solid waste services.
Where revenues can be directly assigned to a solid waste program they should be recorded as a
revenue offset to only that program. For instance, the sale of any recyclables should be recorded as a
revenue offset to the recycling program (Form A, Line 16,. Column D). For those revenues which
cannot be clearly identified with a particular solid waste program, they should be ailocated among the
programs based on a composite of the program's direct costs (Form A, Line 13).
29
- 000238
I. Weight and Volume Information (Forms 12 and 13)
Weight and volume information is critical if a municipality wants to establish cost of service based rates
for its customers. Examples of solid waste programs that rely on volume or weight based billing units
include commercial service with different sizes of bulk containers; lancffill service provided to other
municipalities; special services such as demolition debris disposal; and variable rates for residential
service (customer charges are typically established based on the size of container used). Additionally,
weight and volume information will prove to be valuable when implementing new programs, projecting
usage, and evaluating capacity.
Many cities already have in place a reporting system that records and tracks the cvs solid waste
stream. However, for the city that does not have a reporting system in place, Forms 12 and 13 can be
used by the city to track the amount of solid waste, recyclables, yard waste, etc. generated by the city
on an annual basis. Many different methods for gathering this information are possible and a
municipality must determine what type of reporting system will best meets its needs. At a minimum, a
detailed accounting of the source, amount, and type of waste handled at each facility should be
recorded.
Monthly Materials (Form 12)
This form provides a monthly summary to consolidate the amounts of waste handled at each of the
city's facilities. It is important that outside source waste (e.g. waste from another municipaliry) be
designated separately so as not to include it in the city's waste stream. If a signfficant amount of
outside waste is handled, separate detailed recards should be maintained on the volume and type of
outside waste handled. The city may wish to establish a separate customer class under the solid waste
disposal program for this particular user(s). These schedules along with the daily schedules should be
kept on file to provide historical records of the city's waste stream. Depending on the manner in which
the city calculates its customer charges and tipping fees, the information gathered on Forms 12 and 13
may be used to calculate the city's solid waste rates on Form B.
(If the city desires a report to track detailed daily waste stream activity, a Daily Truck WeighWolume
Record is attached as an addendum to this worldbook. This form will feed daily activity directly to Form
12 which then summarizes the materials collected on a monthly basis.)
Data to be entered into Form 12 is as follows:
• Service Provider: Name of city, government agency or private operator
completing the worldbook.
• Date Prepared: Date the form is completed.
o Month/Year: Month and year for which the data is being collected.
• Units: An entry for units is available if different units are used for
various categories of waste (e.g. tons, cubic yards, etc.)
• Residential Solid Waste: The amount of solid waste collected from the
city's residential customers during that month.
• Commercial Solid Waste: The amount of solid waste collected from the
30
m 000239.
city's commerciai customers during that month.
• Recyciables: The amount of recyclables collected from the citys solid
waste customers during that month.
• Yard Waste: The amount of yard waste collected from the citys solid
waste customers during that month.
• Outside Sources: The amount of solid waste collected from sources
outside the city during that month. Depending on the number of
haulers and type of waste collected, the crty will want to consider
possibly recording this data in greater detail (e.g. by hauler, type of
waste, etc.)
• Other: For any other types of waste.
• Totais: Once the columns are summed the city then has a detailed
record which describes the types of waste generated on a monthly
basis.
Annual Materials (Form 13)
This form is a summary of the Monthly Materials Forms (Form 12). This form will provide the city with
an annual materials summary report that details the amount of waste generated, by customer class
(e.g. residential, commercial and outside city). The report will also summarize the amount of
recyclables and yard waste collected on an annual basis. The city can then use this information to aid
in calculating the city's cost of service based rates (on Form B). Finally, this information will allow the
city to develop a database which will aid the city in identifying any trends with regard to decreased
waste generation per capita, increases in recycling, participation in the cVs yard waste collection
program, etc.•
31
000240
Tezas Natural Resource Conservation Commission
Totals
Day
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Units:
Residential
Solid Waste
Commercial
Solid Waste
Recyclables
Yard
Waste
Outside
Source
Other
. 000241
Service Provider:
Date Prepared:
Year:
Units:
Month
January
February
March
April
May
June
July
August
September
October
November
December
Totals
Residential
Solid Waste
Commercial
Solid Waste
Recyclables
Yard
Waste
Outside
Source
Other
. 00024?
J. Customer Class Costs - Detail (Form 14)
Some cities may serve more than one customer class and need to calculate customer charges for each
customer class. Typically, cities will not need to allocate program costs by customer class unless they
offer collection service to residential and commercial customers. Recycling and yard waste programs
are usually structured to serve primarily residential customers. In this case, there is only one customer
class and the costs are borne entirely by the residential customers. The city will have to examine each
of its solid waste programs to determine the customer ciasses served.
For purposes of this workbook, the residential customer class consists of single famify home and mufti-
family units (typically four families or less). The non-residential customer class consists of commercial
businesses, multi-family units (larger than four families), industrial users, and govemmental entities.
The residential customer is assumed to use standard collection containers (30, 60, 90 gallon cans),
while the non-residential customer class consists of commercial containers (rypically 4 to 12 cubic yard
containers).
It is important to note that if a city provides collection service to residential and commercial customers,
but both classes use the traditional 30, 60 or 90 gallon containers, the city can usually treat all
customers as one class. Distinct customer classes are created only when customers have different
usage and volume characteristics, causing their cost of service to differ. In this case, since both
residential and commercial customers use the same type of container, they will most likely have similar
usage characteristics.
How to Calculate Rates For Different Customer Classes
If a city has more than one customer class, the methodology described in Example #1 should be
used. The only exception is if a city's disposal program (e.g. landfill) provides service to more
than one customer class. In this case the methodology in Example #2 should be used.
Example #1
A city calculating cost of service based rates for different customer classes will start with Form A. For
instance, if the city provides collection service to both residential and commercial customers, the city
will need to allocate the Collection Program Costs (Form A, Column B) between these two customer
classes. The same methodology that was used to allocate costs between solid waste programs will be
used to allocate costs between customer classes.
Step 1. The collection program costs (Form A, Column B) will be entered on Form C, Column A.
Step 2. The next step will be to directly assign and/or allocate the program costs between the
residential and commercial customer classes. To complete this direct assignment and/or allocation of
costs, the city will use Form 14, Customer Class Costs - Detail. Those costs which can be directly
assigned to the residential or commercial customer classes should be ident'rfied. The remaining costs
will be allocated based on a composite of the directfy assigned costs.
For instance, to identify the Salaries, Wages & Benefits for each customer class, the city will need to
review Form 1 Salaries, Wages & Benefits, which was completed for the Collection Program. The city
will need to determine which of the individuals worked on commercial routes versus residential routes.
Most cities will identify by route number the crews and equipment which are operating each week. This
information will also identify if the crews and equipment are operating on a residential or commercial
route. This information can then be used to allocate labor costs between the different customer
classes.
32
w QOO2~J
r
This same methodology will be used to allocate the remaining costs between customer classes. Form
14 summarizes the costs which the city will need to directly assign and/or allocate between customer
classes. While Form 14 will most likefy not provide sufficient room for the ciry to complete its customer
class allocations, the form does provide a layout of the costs that need to be distributed between the
different customer classes, and the methodology for determining the costs for each customer ciass.
Note: If the city did not use any, or only used some of Forms 1-11 to complete the calculation
of its program costs, the c'tty will need to review its solid waste budget and financial
records to determine whether they provide sufficient detail to assign and/or allocate
program costs by customer class. If the city's financial records do not provide sufficient
detail, it may choose to use some or all of Forms 1- 11, depending on the c'rty's
records.
Example ##2
If the c'tty has more than one customer class which utilizes the city's landfill, the disposal rate is
calculated in a different manner than in Example #1. To calculate rates for the city's disposal
program the city does not use Form 14. Instead, the rates are calculated as follows:
The total cost of the disposal program is divided by the tonnage received at the landfill, to establish a
tipping fee per ton. To calculate the residential customers annual cost for the disposal program, the
number of tons generated by residential customers is multiplied by the tipping fee to determine the total
annual disposal costs for residential customers. This dollar amount is then divided by the number of
households to arrive at the annual disposal cost per household. Commercial customers would have
their cost calculated in the same manner, except their cost would be per container." This same
methodology would be used if the city recorded its waste in cubic yards.
33
w 000244
1
(Page 1 of 5)
Tegas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
Service Provider:
Date Prepared:
Fiscal Year:
Program:
Columns A and B are taken directly from Form 1)
s B C _ D - E
Salaries,
Customer Classes
Employee
Wages &c Benefits
Residential
Commercial
Other
Total (To Form Q)
' Annual vehicte expense may be calculated by determining the annual costs of each
vehicle associated with the solid waste program for which rates are being established.
This information may be gathered from the cit}rs internal services fund or by summing
the "Total Monthly Program Cosfs of Vehicle" from Form 2 for 12 months and using this
information to develop a budgeted amount in annual vehicle expense for each vehicle.
This amount would then be assigned to the appropriate customer classes.
t..
.
r 000245
Vehicle Annual Vehicle Customer Classes
Identificatiun T Eapense Residential Commercial Other
(Page 2 of 5)
Tegas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
Service Provider:
Date Prepared: '
Fiscal Year:
Program: I
(Columns A and B are taken directly from Form 4)
B C D E
Long Term
Program P&I
Customer Classes
Debt Issue:
Annual Amount
Residential
Commercial
Other
Short Term
Program P&I
Customer Classes
Debt Issue:
Annual Amount
Residential
Commercial
Other
Total (To Form C)
Cash Capital Outlays
Program
Customer Classes
Description:
Annual Amount
Residential
Commercial
Other
Total (To Form C)
Eatraordinary Cash
Amortized
Customer Classes
Outlays:
Annual Amount
Residential
Commercial
Other
IV 000246
I .
(Page 3 of 5)
Tezas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
Service Provider:
Date Prepared:
Fyscal Year:
Program:
( Other Direct Landfill Costs - Forms 5, 6, and 7)
Other Direct Landfill Costs are related solely to the citys disposal program. Because
Form 14 is not-needed to allocate disposal program costs between customer
classes, these costs are not shown on this form. To allocate disposal program costs
among customer classes refer to Example #2 on page 33 of this workbook.
(General O&M is taken directly from Form 8)
Total Cost for the
Customer Classes
Description
Program
Residential
Commercial
Other
Allocation
Percentage (1) 100%
Total (To Form P
(1) This percentage is calculated based on a composite of the city's direct costs as sub-totaled on Form C, line 10.
For instance, if 50% of the direct costs on Form C, line 10 are related to the residential customer class, then 50%
is entered on this line under residential. 50°/a of the General O&M costs are then allocated to the residential
customer class.
w 000247
(Page 4 of S)
Tezas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
Service Provider:
Date Prepared:
FSscal Year:
Program:
(Other Cost is taken directly from Form 9)
Total Cost for the
Gustomer Classes '
. Description
Program
Residential
Commercial
Other
Allocation
Percentage (2) 100%
(2) Other costs are allocated among customer classes in the same manner as are General O&M costs (Form 14, Part 5).
' (The indirect cost for the program is taken directly from Form C, Line 14, Column A)
Total Indirect Costs I
1 For the Program
Direct Costs (from Form C)
Program Residential Commercial Other
2 Di rect Costs
(From Form C, Line 13)
3% of Direct Costs by Customer Class
(calculated using data on Line 2)
Indirect Cost for the Program Multiplied by
4 the Customer Class Direct Cost %
(Line 1 multiplied by Line 3)
(to Fo rm C)
, 000248
(to Fo rm G) (to r orm
1
(Page 5 of 5)
Tezas Natural Resource Conservation Commission
Municipal Solid Waste - Full Cost Accounting Workbook
Service Provider:
Date Prepared:
Fisca! Year:
Program:
(Other Revenue for the Program is taken directly from Form C, Lines 15-20, Column A)
Total Revenue for the
Customer Classes (3)
Description
Program
Residential
Commercial
Other
(3) These revenues should be direetly assigned where possible. If they cannot be directly assigned, they should
be allocated among customer classes based on a composite of the direct costs associated with each customer
class (Form C, Line 13).
4 000249
VI. GLOSSARY
The following terms are used in the workbook:
1. Accrual Basis: Follows the revenue realization principle that revenue is recorded when
earned, and uses the matching principle to indicate that expenses may be incurred and
matched against revenue even though no cash ouiflow has occurred.
2. Allocated Costs: Those costs which are allocated based on a composite of the direct
costs as identified in the worfkbook.
3. Customer Charge: A fee, typically monthly, which is charged to solid waste customers
for the provision of particular solid waste services (e.g. collection and disposal,
recycling, yard waste collection, etc.)
4. Directly Assignable Costs: Those costs which can be directly associated with a
particular program, or which are allocated based on a professional standard or
educated estimate.
5. Modified Cash Basis: The modified cash basis recognizes debt service and cash
capital outlays instead of depreciation expense to recover capital costs.
Predevelopment costs and closure and post-closure care costs are recognized over the
life of the landfill versus being recognized only when cash is expended.
6. Solid Waste Program (or Service): A specific solid waste activity that utilizes a
particular set of equipment, facilities, labor or other resources to provide a spec'rfic
service. Examples of solid waste programs include collection, disposal, recyclin g, yard
waste. and household hazardous waste. ("Solid Waste Program" and "Solid Waste
Service" are used interchangeably throughout the worldbook)
7. Solid Waste Utility: Refers to the city's solid waste organization. This may be a
department or division within the city; however, for purposes of the wor{dbook it is
defined as the "Solid Waste Utility."
8. Tipping Fee: A fee for disposing of solid waste at a landfill, transfer station or material
recovery facility. The fee is usually stated in dollars per ton or dollars per cubic yard.
34
- 00(1250
VII. ADDENDUM
Daily Truck Weight/Volume Record
This form is to be used at each facility (e.g. landfill, transfer station, material recovery facility, etc.)
operated by the city. A new form should be used each day in order to track the daify activity at the
citys transfer station(s), landfill or material recovery facility.
Note: If the city records waste collected at its transfer station using this "Daily Truck
Weight/Volume Record," and also records that same waste at its fandfill using a separate "Daily
Truck Weight/Volume Record," the city must make sure the data is not double-counted when
compiling these daily reports into the monthly summary report (Form 12). This would result in an
over statement of the waste actually disposed of by the city.
Data to be entered on the form is as follows:
• Service Provider: Name of city, government agency or private operator
completing the wor{dbook.
• Date: Date trucks deliver the materials.
• Site: Location of the facility receiving the solid waste or recyclable materials.
• Truck Identification: Hauler, truck number or other identification.
0 Time: Time of delnrery.
• Source:
■ Program Category: The program that generated the
solid waste or recyclable materials. _
■ Outside Source: Used to ident'rfy solid waste delivered
from outside the municipality.
• Waste Type: Type of waste or recyclable materials.
• Weight In: Scale weight as vehicle enters site.
• Weight Out: Scale weight as vehicle leaves site.
• Net Weight Delivered: The net weight of waste delivered.
• Totals: The column total for tons of materials delivered.
35
- 000251.
a '
Tezas Natural Resource Conservation Commission
_ _
Truck Program Outside Waste Weight Weight Net Weight
Identification Time Category Source Type (1) In Out Delivered (2)
Totai
Notes:
(1) Types HH Residential Solid Waste T Tires
C Commercial Solid Waste y Yard Waste
R Recyclables
Cp Composting
(2) If materials are not weighed, enter the estimated volume of each truck in this column.
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