Finance staff outline allocation-method impacts; board retains current approach for now

Finance staff Vickie Noel and Kieran Logan told the Klamath County Board of Commissioners on Feb. 12 that a change in the internal service allocation method would materially redistribute costs across departments and funds.

Noel presented examples showing the Treasurer's allocation rising from $562,180 to $713,131 under one allocation approach and, in a separate scenario that removes trust and agency funds, falling to $18,580. She said the roughly $700,000 swing would be absorbed mostly by special revenue departments and would leave some individual departments facing significant changes. "The new allocation method would not fully offset increased internal service fees with additional interest," Noel said, noting departments would not necessarily see a net benefit from the change.

Logan and Noel emphasized that impacts differ inside and outside the General Fund: outside the General Fund, Public Works would see the largest increase; inside the General Fund, Juvenile services would experience a substantial rise. The presentation included comparative tables and illustrations of different allocation assumptions and emphasized sensitivity to the chosen method.

Commissioners discussed whether to adopt the new approach immediately. The board concluded the projected changes were not significant enough to justify an immediate switch and agreed to retain the current allocation method for the FY2027 budget cycle, while leaving open the option to revisit the method in future budget work sessions.

The board did not take a formal roll-call vote on the change during the work session; staff were directed to keep the item available for future discussion if circumstances change.