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<br />8. Indirect Cost Allocation - All City funds will include transfers to and receive <br />credits from other funds for general and administrative costs incurred. The most <br />predominant fund that receives credits from other funds is the General Fund. The <br />General Fund receives credits for bearing such costs as administration, legal <br />counsel, finance, personnel, data processing, engineering and other costs. An <br />independent third-party will conduct an indirect cost allocation study annually to <br />determine the credits received. <br /> <br />9. Enterprise Fund Rates - The Director of Finance and the Department Directors of <br />each Enterprise Fund will review rates annually to ensure sufficient coverage of <br />operating expenses, meet the legal restrictions of all applicable bond covenants, <br />and provide for an adequate level of working capital. <br /> <br />10. Franchise Fees - The Electric Fund mld Water and Wastewater Utility Fund will <br />include franchise fees as a component of utility rates. A 10% Electric Fund and a <br />9% Water and Wastewater Utility Fund franchise fee are levied on gross sales. <br />The City will aim to reduce these franchise fees to equal those charged to <br />investor-owned utility franchises operating within the City. Currently, the City <br />levies a 5% franchise fee to investor-owned utilities. <br /> <br />II. Intergovefllll1ental Revenues (Federal/State/Local) - All potential grants will be <br />examined for matching requirements and the source of the matching <br />requirements. These revenue sources will be expended only for intended purpose <br />of grant aid. It must be clearly understood that operational requirements set up as <br />a result of a grant or aid could be discontinued once the term and conditions of the <br />project have terminated. <br /> <br />12. Revenue Monitorim! - Revenues actually received will be compared to budgeted <br />revenues by the Director of Finance and variances will be investigated. This <br />process will be summarized in the appropriate financial report and reported to the <br />City Manager and City Council. <br /> <br />City of San Marcos financial Policy - Revised April 2004 <br /> <br />Page 5 <br />