Internal city department charges such as technology costs, vehicles, and insurance are accounted for in separate funds called Internal Service Funds. Internal Service Funds are a type of fund used by governments to provide services to our own City service units. The purpose of these funds is to aggregate all costs in a central fund to obtain economies of scale, develop rates to charge to all funds, and bear the cost of any unanticipated expenditures throughout the year. For example, the Fleet fund purchases and maintains the City’s fleet of vehicles. The Fleet fund makes purchases based on City standards and practices. Fleet maintains a replacement schedule and replaces vehicles according to the needs of the organization. Because replacing the vehicle is part of the monthly cost, when a new vehicle is needed the service unit does not have to pay for the vehicle out of their budget.
This is a common practice amongst governments across the United States in order to provide a centralized location to view all costs of this type and to provide an even, consistent charge to funds for services rendered. Costs for Internal Service Fund activities are calculated by staff on an annual basis.
