Internal Services Fund

The establishment of an Internal Service Fund is recognized practice done by many local municipalities including Corvallis, Silverton, Albany, Stayton, Monmouth, Bend and many others. The State of Oregon sets parameters for the creation and usage of the Internal Service Fund HERE.

As an Oregon municipality we are bound by the totality of the Oregon Revised Statues and the Oregon Administrative Rules regarding the Internal Service Fund.

What is an Internal Service Fund?

Internal services are those responsibilities a government provides to support its own internal operations.

Here is how the Oregon Administrative Rules defines Internal Service Funds — To account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost-reimbursement basis.

Common examples of internal service include information technology, payroll, motor pool, budgeting, legal, accounting, and human resources.

Each of the following funds pay into the Internal Service Fund:

- General Fund
- Water Fund
- Gas Tax
- Public Safety Levy
- Wastewater Fund
- Library Levy Fund

ISF Breakdown

Calculation Method Used:

•Costs based on Human Resource functions - Costs are split based on department personnel as percent of total City staff.
Example: Library has 4 employees. The City has a total of 54 employees. 4 Employees divided by 54 Employees = 7.41%

- Expenses figured by this method:

City Manager’s Office

•Costs based on Expenditures - Costs are split based on a department's total expenses as percent of the City's total expenses.
Example: Public Works total expenses are $10,956,168. The City's total expenses are $17,287,783. $10,956,168 divided by $17,287,783 = 63.38%

- Expenses figured by this method:

City Attorney
Communications
City Audit
Contingency (required by City Policy)
Utility Billing (Water/Wastewater ONLY)
Public Works Admin Staff (PW Divisions ONLY)

•Costs based on other methods

Website
- Equally split across all departments: $3,255.00 = $814.00 per department/year.
Ordinances
- Equally split across all departments: $5,000.00 = $1,250.00 per department/year.
Finance Department
- Payroll
  - Calculated by actual check volume & cost to produce checks: $81.84 (bank expenses, computers, personnel time, software, utilities, and other de minimis costs)
    - Example: General Fund = (10 paid employees x 12 months) x $81.84 = $9,820.80
- Accounts Payable
  - Calculated by actual check volume & cost to produce checks: $81.84 (bank expenses, computers, personnel time, software, utilities, and other de minimis costs)
    - Example: Police Department - 569 checks in 2018 x $81.84 = $46,566.96