florida department of financial services...dec 23, 2013 · i. executive summary 2 a. background...

Florida Department of Financial Services Uniform Chart of Accounts

Cost Estimate Report

December 23, 2013

kpmg.com

Table of Contents

I. Executive Summary 2

A. Background and Purpose 2

B. Scope and Approach 2

C. Survey Results 5

II. Background and Purpose 9

A. History 9

B. Objectives 9

III. Scope and Approach 10

A. Identify Reporting Entities 10

B. Methodology 11

C. Communication 19

IV. Survey Results 21

A. Local Government Entities – Water Management Districts, Cities and Municipalities, Counties, and Special Districts 21

B. Education Entities – Colleges, Universities and School Districts 31

C. State of Florida – Department of Financial Services 37

D. Transmission of General Ledger Data to Department of Financial Services 40

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

© 2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Florida Department of Financial Services Uniform Chart of Accounts Cost Estimate Report


I. Executive Summary

A. BACKGROUND AND PURPOSE The 2011 State of Florida (State) Legislature passed Senate Bill 1292 requiring that a mechanism be provided for obtaining detailed, uniform reporting of government financial information to promote accountability and transparency in the use of public funds. To accomplish uniform reporting, Chapter 215.89, Florida Statutes requires the State’s Chief Financial Officer (CFO) to propose a Draft Uniform Chart of Accounts (UCOA) to establish uniform reporting requirements for all units of the government that include state agencies, local governments, educational entities and entities of higher education (collectively known as Reporting Entities). The Florida Department of Financial Services (DFS), led by the CFO, proposed a Draft UCOA to meet the legislative requirements. By January 15, 2014, the CFO is required to present the UCOA to the Governor, the President of the Senate, and the Speaker of the House of Representatives. In addition to the UCOA, the CFO was tasked with identifying the estimated statewide cost impact for the UCOA adoption and implementation.

DFS engaged KPMG, LLP (KPMG) to determine the statewide cost impact of a UCOA adoption and implementation, which requires the collection and validation of cost estimates from the Reporting Entities.

B. SCOPE AND APPROACH KPMG’s approach included three primary workstreams:

Survey Development: Utilized Key Survey technology to develop an electronic survey for more than 2,271 Reporting Entities. Developed a Survey Template designed to gather the required financial information and cost estimates from the Reporting Entities in a cost-efficient manner.

Data Collection: Monitored the survey collection process and provided reports on response rates, reporting entity completion rates, pending incomplete surveys, and dates and times of completions.

Data Analysis and Validation: Analyzed and validated cost estimate data as received from Reporting Entities during the survey process.

For purposes of this project, there are 2,271 Reporting Entities responding to the survey (DFS represented 35 state agencies in a single survey response resulting in 2,305 Reporting Entities) which can be logically separated into three Reporting Entity Types and eight Reporting Entity Categories:

Local Government – 2,158 local governments consisting of cities and municipalities, counties, special districts, and water management districts

Education Organizations – 112 education organizations consisting of colleges, universities, and school districts

State Agencies –35 state agencies represented by DFS in 1 survey

B-1 Survey Approach

KPMG developed a web-based survey tool to administer the electronic survey for the 2,271 Reporting Entities. The survey tool was delivered by email to the Reporting Entities, and was also accessible through a web-link on DFS’ Chart of Accounts Project website. KPMG utilized Key Survey technology to administer the survey to the Reporting Entities. Key Survey provides a robust, sophisticated platform with fully customizable solutions and unique functionality.



KPMG designed the survey to capture Reporting Entity cost estimate information through numerous multiple choice questions, pre-loaded lists, and open response sections. The survey also contained open response sections for Reporting Entities to provide additional details on cost assumptions or general commentary on complying with the UCOA.

B-2 Survey Communication

KPMG maintained extensive communication with DFS and the Reporting Entities to enhance survey awareness and understanding. KPMG conducted the following communication activities related to the survey:

UCOA Project Website – KPMG assisted DFS in adding project-related communication to DFS’ Chart of Accounts Project website. Communication items included an overview of the UCOA Cost Estimate project, anticipated frequently asked questions (FAQ’s), as well as contact information for key DFS personnel.

Notification – KPMG’s communications team assisted DFS in sending multiple email notifications to the Reporting Entities communicating the survey timeline, contact information and link to the survey tool. KPMG attached a link to FAQ’s to the email distribution to assist the Reporting Entities in completing the survey. For entities that DFS did not have an email address, DFS sent a letter notifying the Reporting Entities of the survey process. Other notifications sent to the Reporting Entities included an initial survey awareness email sent prior to the survey launch, a survey launch email, and multiple survey completion follow-up reminder emails.

Government Support Organizations – KPMG worked with DFS and the Government Support Organizations to draft content to be incorporated into newsletters sent by the Government Support Organizations to the Reporting Entities. The Government Service Organizations included Florida Government Finance Officers Association (FGFOA), and the Florida Association of Court Clerks and Comptrollers (FACC). Newsletter content included general information about the UCOA Cost Estimate project, key project timeframes, DFS contact information, and web-link to the DFS Chart of Accounts Project website.

Webcasts – KPMG worked with DFS to coordinate and conduct three webcasts for the Reporting Entities to provide information about the project and a walk through of the survey example to assist entities in completing the cost estimate survey. The webcast also provided a forum for questions and answers. Each webcast was designed with 30 minutes of prepared DFS and KPMG remarks, and allowed 30 minutes for a questions and answers. More than 500 unique log-ons joined the webcasts.

Conference Presentations – DFS presented several presentations during the survey period.

B-3 Survey Pilot and Execution

KPMG conducted a survey pilot to test the survey process with identified Reporting Entities. KPMG piloted the survey with eight Reporting Entities representing all of the entity categories: city and municipality, county, special district, water management district, college, university and school district.

KPMG provided a one-week period for the eight pilot Reporting Entities to complete the survey. After the one-week pilot survey period, KPMG conducted a teleconference with each of the eight entities to obtain feedback on the survey tool regarding the overall survey experience, functionality, completion time, any issues encountered, and suggestions. KPMG received positive feedback with few recommendations to enhance clarity of certain questions. Based on the feedback from the pilot survey, KPMG adjusted certain survey questions to provide additional clarity, and streamlined certain questions to remove duplication.

After completing the survey pilot, KPMG launched the survey process. KPMG assisted DFS in distributing an email notification to the Reporting Entities communicating the survey timeline (open for six weeks), contact information and link to the survey tool. A link to FAQ’s related to the survey was included in the email that guided the Reporting Entities in completing the survey.

As the Reporting Entities completed the survey, the data was housed on a secure server. The KPMG team consistently monitored the survey collection process and provided weekly reports to DFS on response rates,



reporting entity completion rates, and pending incomplete surveys. Surveys were also received from several Component Units (CU’s) and Direct Support Organizations (DSO’s) that were not originally included in the initial notification.

B-4 Survey Responses

KPMG received 600 completed surveys – 474 surveys from primary governments and 126 surveys from related parties including CU’s, DSO’s, and County Constitutional officers. KPMG’s targeted response rate was15%, and achieved an actual response rate of 21%. The following graph shows the response rate for each of the eight Reporting Entity Categories based on the number of reporting entities in each group. The average response rate is 21%, due principally because of a 10% response rate of Special Districts. All other Categories had a response rate of at least 40%, with Colleges, Universities and School District response rates above 67%.

B-5 Data Analysis and Validation

KPMG conducted a preliminary analysis of the estimated cost for each of the 8 Reporting Entity Categories identified in the graph above. KPMG received responses from all entities for two categories (Universities and State Government). KPMG received responses from 2 of the 5 Water Management Districts and 24 of the 28 Colleges. For these four Categories, it was not necessary to stratify the populations to extrapolate an aggregate cost (see Section III.B.3 for further description on population strata). For the remaining four Categories (Cities and Municipalities, Counties, Special Districts, and School Districts), KPMG stratified the populations into either 3 or 4 “strata” to enable extrapolation by Reporting Entity Categories. The following table shows each Reporting Entity Type, Reporting Entity Category and associated strata.

0%

20%

40%

60%

80%

100%

43%

67%

10%

86%

100%

72%

100%

40%

21%

Response Rate Exhibit I-1



Reporting Entity Type

Reporting Entity Category Applicable Strata

Local Government Cities and Municipalities 4 layers organized by city/municipality size

Counties 3 layers organized by county size Special Districts 3 layers organized by revenue size Water Management Districts N/A

Education Organizations

Colleges N/A Universities N/A School Districts 3 layers organized by county size

State Government DFS N/A

KPMG organized the survey results based on Reporting Entity Type, Reporting Entity Category and then further organized by strata within each Reporting Entity Category to further group survey responses with similar characteristics (such as population or revenue).

KPMG analyzed the survey results to determine whether individual survey responses were outliers. KPMG used statistical analysis to summarize and analyze the cost estimate data. KPMG calculated a normal distribution of survey results and reviewed data outside of the first standard deviation of the mean within each strata. KPMG reviewed source data from the Reporting Entity’s survey to identify key factors (reported hours or rates) potentially contributing to cost estimates outside the normal distribution. KPMG further attempted to contact the entity to confirm or adjust the reported estimates within the response.

C. SURVEY RESULTS

C-1 Uniform Chart of Accounts Cost Estimate Calculation

The cost for an entity to comply with the UCOA requirements was calculated directly from the entity’s survey response. Each Reporting Entity provided:

A data transmission method from one of three options: o Manual crosswalk o Technology crosswalk o System modification

The type of resources they intend to use to develop the transmission method from one of three options: o Internal resources o Third party resources o Combination of both internal and third party resources

Each Reporting Entity also provided information detailing the cost to comply with reporting for:

Monthly operating costs for reporting for revenues and expenditure information Annual operating costs for reporting for balance sheet information Total operating and capital costs for transition

Responses were analyzed, reviewed by tier, and extrapolated to the population to calculate estimates for the total population. The cost estimate includes monthly recurring costs, additional annual recurring costs, and one time transition costs.

Exhibit I-2



C-2 Uniform Chart of Accounts Cost Estimate

The estimated costs to implement the UCOA are shown in the exhibits below. Cities and Municipalities, School Districts and Special Districts had transition costs higher than other entities. The estimated recurring and transition costs for Local Government Entities are:

The estimated recurring and transition costs for Educational Entities are:

Exhibit I-4

SchoolColleges Universities Districts Total

Monthly Costs 127,452$ 123,237$ 295,670$ 546,358$

Annualized Monthly Costs 1,529,423$ 1,478,841$ 3,548,036$ 6,556,300$

Annual Costs 395,834$ 197,384$ 2,007,004$ 2,600,221$

Total Recurring Costs 1,925,257$ 1,676,225$ 5,555,040$ 9,156,521$

Transition Costs 3,008,894$ 1,840,611$ 31,505,036$ 36,354,541$

Uniform Chart of Accounts ImplementationAnnual and Five Year Cost EstimateDetail by Type of Education Entity

Exhibit I-3

WaterCities and Special Management

Municipalities Counties Districts Districts Total

Monthly Costs 951,382$ 412,781$ 1,921,478$ 1,784$ 3,287,424$

Annualized Monthly Costs 11,416,578$ 4,953,368$ 23,057,736$ 21,408$ 39,449,090$

Annual Costs 2,583,363$ 2,383,990$ 6,394,302$ 1,784$ 11,363,439$

Total Recurring Costs 13,999,942$ 7,337,358$ 29,452,038$ 23,192$ 50,812,530$

Transition Costs 13,786,605$ 5,405,450$ 16,885,569$ 56,582$ 36,134,206$

Uniform Chart of Accounts ImplementationAnnual Cost Estimate

Detail by Type of Local Government Entity



The estimated recurring and transition costs for the State are:

The overall costs summarized by Reporting Entity Type are:

Exhibit I-5

State Agency LOGERCosts Costs Total

Monthly Costs 786$ 1,748$ 2,534$

Annualized Monthly Costs 9,432$ 20,976$ 30,408$

Annual Costs 1,787$ 40,320$ 42,107$

Total Recurring Costs 11,219$ 61,296$ 72,515$

Transition Costs 43,197$ 37,363$ 80,560$

Detail for DFS

Uniform Chart of Accounts Implementation

Annual Cost Estimate

Exhibit I-6

Local Education State of

Governments Entities Florida Total

Recurring Annual Costs 50,812,530$ 9,156,521$ 72,515$ 60,041,566$

One Time Transition 36,134,206$ 36,354,541$ 80,560$ 72,569,307$


Summary of Overall Costs



The average one time and annual recurring costs by Reporting Entity Type are:

$-$100,000 $200,000 $300,000 $400,000 $500,000

Average Cost by Reporting Entity

One-Time Annual Recurring

Exhibit I-7


II. Background and Purpose 9

II. Background and Purpose

The Florida Department of Financial Services (DFS) engaged KPMG, LLP (KPMG) to determine the statewide cost impact of a Uniform Chart of Accounts (UCOA) adoption and implementation, which requires the collection and validation of cost estimates from the Reporting Entities.

A. HISTORY The 2011 State of Florida (State) Legislature passed Senate Bill 1292 requiring that a mechanism be provided for obtaining detailed, uniform reporting of government financial information to promote accountability and transparency in the use of public funds. To accomplish uniform reporting, Chapter 215.89, Florida Statutes requires the State’s Chief Financial Officer (CFO) to propose Draft UCOA to establish uniform reporting requirements for all units of the government that include state agencies, local governments, educational entities and entities of higher education (collectively referred to as the “Reporting Entities”) to meet the legislative requirements. By January 15, 2014, the CFO is required to present the UCOA to the Governor, the President of the Senate, and the Speaker of the House of Representatives. In addition to the UCOA, the CFO was tasked with identifying the estimated statewide cost impact for the UCOA adoption and implementation.

B. OBJECTIVES KPMG administered an electronic web-based survey to collect, analyze, validate, and summarize UCOA cost estimates from Reporting Entities. Key project objectives include:

A formalized draft Project Plan and Methodology; Survey development and distribution to Reporting Entities; A summary of the audit/validation results

This report focuses on the cost estimate study and will help enable DFS to present a UCOA recommendation to the Governor, the President of the Senate, and the Speaker of the House of Representatives by January 15, 2014.



III. Scope and Approach

To meet DFS’s needs, KPMG’s scope included three primary workstreams:

Survey Development: Utilized Key Survey technology to develop an electronic survey for more than 2,000 Reporting Entities. Developed a Survey Template designed to gather the required financial information in a cost-efficient manner.

Data Collection: Monitored the survey collection process and provided reports on response rates, reporting entity completion rates, pending incomplete surveys, and dates and times of completions.

Data Analysis and Validation: Analyzed and validated cost estimate data as received from Reporting Entities during the survey process.

KPMG analyzed survey data using the Statistical Package for Social Sciences (SPSS). KPMG organized the survey results based on Reporting Entity Category and then further organized by strata within each Reporting Entity Category to further group survey responses with similar characteristics (such as population or revenue). KPMG used statistical analysis to summarize and analyze the cost estimate data according to multiple strata. Within each stratum, KPMG calculated the normal distribution of survey results to identify outlier data or data outside of the first standard deviation from the mean. KPMG conducted further analysis to adjust or confirm outlier data with the applicable Reporting Entity.

A. IDENTIFY REPORTING ENTITIES For purposes of this project, there are 2,271 Reporting Entities responding to the survey (DFS represented 35 state agencies in a single survey response resulting in 2,305 Reporting Entities) which can be logically separated into three Reporting Entity Types and eight Reporting Categories:

Local Government – 2,158 local governments consisting of cities and municipalities, counties, special districts, and water management districts

Education Organizations – 112 education organizations consisting of colleges, universities, and school districts

State Agencies –35 state agencies represented by DFS in 1 survey.

Local Government entities follow uniform accounting procedures promulgated by DFS in the Uniform Accounting System Manual. Many of the Reporting Entities also have affiliated Component Units (CU’s) or Direct Support Organizations (DSO’s). These entities will be required to report CU or DSO financial information separately from the Reporting Entity at the CU or DSO entity level.

During the planning process, DFS and KPMG identified a population of Reporting Entities’ CU’s and DSO’s that needed to be included in the survey process. DFS did not have a comprehensive list of these Component Units and Direct Support Organizations. KPMG believed that certain primary governments would not provide the underlying detail chart of accounts for these entities. To capture the cost of these entities, the survey instructions requested the Reporting Entity to identify any outside organizations with separate general ledger information that are part of the Reporting Entity’s annual financial reporting. The Reporting Entity was then requested to either add any incremental costs or forward a separate survey to the CU or DSO.

UCOA

Survey Development

Data Collection

Data Analysis and

Validation

Exhibit III-1



B. METHODOLOGY KPMG utilized the following five-phased approach to accomplish the project objectives:

KPMG leveraged the use of technology and effective survey analysis to achieve desired outcomes with consideration of the State’s allocated resources for this project. The three key phases (Survey Development, Data Collection, and Data Analysis & Validation) of the methodology are discussed in further detail in the sections below.

B-1 Survey Development

1. Survey Technology

The project administered an electronic survey to 2,271 Reporting Entities. To accomplish this task KPMG used a web-based survey tool. The survey tool was delivered via email to Reporting Entities, and was also accessible through a web-link on DFS’ Chart of Accounts Project website.

KPMG utilized Key Survey technology to administer the survey to the Reporting Entities. Key Survey provides a robust, sophisticated platform with fully customizable solutions and unique functionality. KPMG developed a survey template with advanced logic that presented questions based on the responses given to the previous questions. KPMG used the following survey tool capabilities throughout this project:

Configured survey questions as mandatory or optional

Enabled Reporting Entities to start a survey, save, and return to complete at a later time

Created standard survey data and questions with multiple choice questions, preloaded lists and free response for commentary

Configured the design of the survey template to include the DFS logo

Allowed survey questions to branch based on predefined paths (such as Crosswalk option versus Modify Financial System option)

Provided access to real-time built-in survey completion statistics (e.g. how many have started or completed)

Extracted survey responses in various file formats Distributed survey through email and DFS Chart of

Accounts Project website

I. Project Kick-Off & Planning

II. Survey Development

III. Data Collection

IV. Data Analysis & Validation

V. Report Production & Presentation

Project Management and Communications



2. Survey Development

The Survey collected the following information:

Reporting Entity Category Contact information Financial information Cost estimate information

Assumptions or comments significant to the cost estimate information

Statutory requirements that would be prohibitive in modifying the Reporting Entity’s existing financial accounting system to the UCOA reporting structure

3. Survey Pilot

Working with DFS on the survey technology and specifications, KPMG built the survey to achieve the agreed upon requirements. After the initial build, KPMG conducted a survey pilot to test the survey process with identified Reporting Entities. KPMG piloted the survey with eight Reporting Entities representing all of the entity categories surveyed: city and municipality, county, special district, water management district, college, university and school district.

KPMG provided a one-week period for the eight pilot Reporting Entities to complete the survey. After the one-week survey period, KPMG conducted a teleconference with the eight entities to obtain feedback on the survey tool regarding the overall survey experience, functionality, completion time, any issues encountered, and suggestions.

KPMG received positive feedback with few recommendations to enhance clarity of certain questions. Based on the feedback from the pilot survey, KPMG adjusted certain survey questions to provide additional clarity, and streamlined certain questions to remove duplication. KPMG also removed a question from the pilot survey related to an entity’s productivity rate based on pilot feedback and discussions with DFS. KPMG instead applied a standard productivity, or capacity rate in the cost estimate calculations.

B-2 Data Collection

After completing the survey pilot and pre-launch activities, including developing and finalizing the survey and drafting communication materials, KPMG commenced activities to launch the survey process. DFS distributed an email notification to the Reporting Entities communicating the survey timeline, contact information and link to the survey tool. A link to FAQ’s was attached in the email that guided the Reporting Entities in completing the survey.

As the Reporting Entities completed the survey, the data was housed on a secure server. The KPMG team consistently monitored the survey collection process and provided weekly reports to DFS on response rates, reporting entity completion rates, and pending incomplete surveys.

KPMG used a six-week survey period for Responding Entities to complete the survey. While the link to the survey remained active, KPMG monitored the number of surveys started and completed. At the half-way mark of the survey period, KPMG identified the Responding Entities that had either not started the survey or had not completed the survey. Using the list provided by KPMG, DFS sent survey reminder emails to the identified Reporting Entities in an attempt to increase the survey response rate.



KPMG received 474 primary government responses from the population of 2,271. A distribution of surveys received is as follows:

The following graph shows the response rate by Reporting Entity Category. The average response rate is 21%, due principally to a Special District response rate of 10%. Besides Special Districts, all other Categories had a response rate of at least 40%, with Counties, Colleges, Universities and School District response rates above 65%.

0%

20%

40%

60%

80%

100%

43%

67%

10%

86%

100%

72%

100%

40%

21%

Response Rate Exhibit III-3

Exhibit III-2

CategoryCities 177 415 43%

Counties 44 66 67%

Special Districts 162 1,672 10%

Water Mgmt 2 5 40%

Colleges 24 28 86%

Universities 12 12 100%

School Districts 52 72 72%

State Agency * 1 1 100%

474 2,271 21%

* One survey response included the costs for the 35 State Agencies

Survey Response

Total by Category

Response Rate

Uniform Chart of Accounts ImplementationSurvey Response Rate and Count by Reporting Entity



B-3 Data Analysis and Validation

KPMG’s data analysis team began to analyze and validate cost estimate data as received from Reporting Entities during the survey process. The survey data was exported from the survey tool and analysis was conducted using the SPSS.

Uniform Chart of Accounts Cost Estimate Calculation

The cost for an entity to comply with the UCOA requirements was calculated directly from the entity’s survey response.

Each Reporting Entity provided:

A data transmission method from one of three options: Data Transmission Method Description

Manual Crosswalk Manually crosswalk financial information from the existing chart of accounts to UCOA reporting structure

Technology Crosswalk Use technology to automate the crosswalk process from the existing chart of accounts to the UCOA reporting structure

System Modification Modify existing financial accounting system and chart of accounts to mirror the UCOA reporting structure

The type of resources they intend to use to develop the transmission method from one of three options:

Resource Type Description

Internal Resources Reporting Entity staff

Third Party Resources Third Party service provider

Internal/Third Party Resources (Both)

Both Reporting Entity staff and Third Party service provider resources

KPMG used survey time and expense data by Resource Type to calculate cost estimates per Reporting Entity. KPMG then attributed the cost estimates to the appropriate Data Transmission method as reported in each Reporting Entity’s survey. In addition to each Reporting Entity identifying Data Transmission method, and Resource Type, the Reporting Entity provided information detailing the cost to comply with reporting for:

One time operating and capital costs for transitions Monthly operating costs for reporting for revenues and expenditure information Annual operating costs for reporting for balance sheet information

Exhibit III-4

Exhibit III-5



KPMG’s cost calculations for the three resource classes is explained below: Internal Resources KPMG multiplied the hourly rate for each internal staff position by the number of hours for each work effort (one time, monthly and annual), adjusted for a fringe rate, if requested by the entity, and adjusted for a capacity factor of 89%. The capacity factor is a measure of productive employee time. The 89% capacity factor is based on an estimated 28 days (224 hours) out of the office each year for a combination of holidays and paid time off. After the conclusion of the pilot survey process, it was decided that this rate would be included in each calculation. Third Party Resources Reporting Entities could provide fixed fee or time and material information for using Third Party resources. For fixed fee estimates, KPMG added the reported costs for each work effort (one time, monthly and annual). For time and materials estimates, KPMG multiplied the hourly rate for each third party resource by the number of hours for each work effort (one time, monthly and annual). KPMG also added any reported one time costs or travel costs for each work effort to the calculated amounts. Both KPMG added the cost calculations for the Internal Resources and Third Party Resources when a Reporting Entity Indicated using “Both” resource types.

KPMG conducted a preliminary analysis of the estimated cost for each of the Reporting Entity Types by Reporting Entity Category. The cost estimates were aggregated by Reporting Entity Category. KPMG received responses from all entities within two of the Reporting Entity Categories (Universities and State Government). KPMG received responses from 2 of the 5 Water Management Districts and 24 of the 28 Colleges. For these four Categories, it was not necessary to stratify the populations to extrapolate an aggregate cost. For the remaining four Categories (Cities and Municipalities, Counties, Special Districts, and School Districts), KPMG stratified the populations into either 3 or 4 “strata” to enable extrapolation by Reporting Entity Category. The following table shows each Reporting Entity Type, Reporting Entity Category and associated strata.

Reporting Entity Type

Reporting Entity Category Applicable Strata

Local Government Cities and Municipalities 4 layers organized by city/municipality size

Counties 3 layers organized by county size Special Districts 3 layers organized by revenue size Water Management Districts N/A

Education Organizations

Colleges N/A Universities N/A School Districts 3 layers organized by county size

State Government DFS N/A KPMG used a stratified sampling methodology to determine whether we received a representative sample by strata.

KPMG received 601 completed survey responses, including a response from DFS. The survey data also included a response from a regional planning commission that was not included in the distribution of surveys. It was not a part of the identified reporting categories and has been excluded from analysis, resulting in a total of 600 surveys used to estimate the cost of the UCOA.

Exhibit III-6



As illustrated in Exhibit III-7, the survey database includes responses from 474 primary governments and 126 responses from related parties. The related parties include CU’s, DSO’s and County Constitutional Officers. The related party governments are added to the respective primary government to determine the total cost for the primary government sample. The total cost for the primary government, including the related party entities, is the basis for the cost extrapolation. Exhibit III-7 breaks out the survey responses by strata, or tier. The tiers for each Reporting Entity Category are further explained in Section IV Survey Results of this report.

KPMG received a response from 474 primary government Reporting Entities, allowing the survey data to achieve the intended confidence interval.

Exhibit III-7

Related

Tier 1 Tier 2 Tier 3 Tier 4 Total Party

Cities and Municipalities 1 6 53 117 177 5

Response Rate 100% 55% 66% 36%

Counties 6 16 22 44 44

Response Rate 100% 94% 51%

Special Districts 5 3 154 162 -


Water Management Districts 2 2 -

Response Rate 40%

Colleges 24 24 8

Response Rate 86%

Universities 12 12 26

Response Rate 100%

School Districts 6 15 31 52 43


State 1 1

Response Rate 100%

474 126

Total Survey Responses used in the UCOA Cost Estimation 600

UCOA Survey ResponsesResponse by Strata



As identified earlier in the approach, KPMG used statistical analysis to summarize and analyze the cost estimate data according to four strata. Within each Reporting Entity Type and strata, KPMG calculated a normal distribution of survey results and conducted further analysis on data outside of the first standard deviation from the mean.

KPMG normalized data collected and conducted the statistical analysis for each Reporting Entity Type and associated strata. For collected data falling into the second or third standard deviations, KPMG’s data analysis team conducted additional analysis to validate the cost estimates reported. KPMG utilized the following data validation process for cost estimates where further analysis was required:

Analyzed financial cost estimates provided by each Reporting Entity, as well as the underlying assumptions made by the entity in preparation of the estimates

Compared personnel effort estimates (hours) of each Reporting Entity to the other entities within the strata (for Manual Crosswalk, Technology Crosswalk and Financial System Modification)

Compared salary information by classification of each Reporting Entity to the other entities within the strata

Compared fringe benefit rate multipliers of each Reporting Entity to the other entities within the strata

Compared technology costs (one time acquisition cost and annual licensing fees) of each Reporting Entity to the other entities within the strata (for Technology Crosswalk option)

Compared in-house personnel crosswalk costs of each Reporting Entity to the other entities within the strata

Compared third-party crosswalk costs of each Reporting Entity to the other entities within the strata

Compared overall total crosswalk costs of each Reporting Entity to the other entities within the strata

Compared technology modification/upgrade costs of each Reporting Entity to the other entities within the strata (for Financial System Modification option)

Compared in-house personnel cost estimates for COA redesign within the financial system of each applicable Reporting Entity to the other entities within the strata (for Financial System Modification option)

Conducted an analysis of the results from the comparisons (above) and attempt to correlate cost estimate information to Reporting Entity type, size, and financial information reported

Reviewed applicable cost related commentary

From the data analysis activities identified above, KPMG identified the Reporting Entities that reported cost estimates that inconsistent with the other entities within their strata population. For these Reporting Entities, KPMG followed-up with each entity to better understand the cost estimates provided. If the Reporting Entities chose to revise their cost estimates during the follow-up process, KPMG re-ran the statistical analysis to determine their revised position on the normal distribution curve. KPMG analyzed the distribution curve to identify the average annual rate. In addition, KPMG identified any key areas observed for the Reporting Entities outside of the normal distribution curve.

KPMG did not audit information provided by Reporting Entities and does not express an opinion on any financial information as defined in FS Chapter 473. This project is not intended to be an audit, examination, attestation, special report or agreed-upon procedures engagement as those services are defined in AICPA literature applicable to such engagements conducted by independent auditors.



Additional Data Analytics

KPMG’s approach was based on an anticipated survey response rate of 15%. The planning and communication effort resulted in a favorable overall response rate of 21%, excluding component unit responses. KPMG used statistical analysis to summarize and analyze the cost estimate data. KPMG calculated a normal distribution of survey results and reviewed data outside of the first standard deviation of the mean. KPMG’s planned approach was to validate up to 125 survey responses. To concentrate effort on the largest outliers, KPMG sampled all responses in excess of two standard deviations above the mean. KPMG selected a sample of 25 below the mean. No responses fell two standard deviations below the mean. KPMG performed additional procedures including contacting the entity to confirm or adjust the estimates within the response.

KPMG validated over 159 responses. The responses validated included 81 samples of the high cost estimates and 78 samples of the low cost estimates. KPMG also validated responses from the special districts and the component units responses from the contacts listed for more than one entity. KPMG was successful in collection of 136 entities and noted changes to 81 entities based on discussions with the survey respondent. Exhibit III-9 illustrates the number of adjustments made by adjustment type: number of work hours or staff (Full-Time Equivalency (FTE’s)), fringe rate, or other costs (i.e. duplicate costs reported).

Exhibit III-9

Hours/ FTE

Fringe Rate

Other Costs None Total

City 9 1 13 23

College 1 2 3

County 4 6 10

School District 1 11 12

Special District 2 59 3 22 86

University 1 1 2

15 60 6 55 136

Data Validation Impact on Survey

Exhibit III-8

ValidatedNo

Response TotalCity 23 4 27

College 3 4 7

County 10 5 15

School District 12 5 17

Special District 86 5 91

University 2 2

136 23 159

Data Validation



Reporting Data Analysis and Validation Results

Based on the activities conducted above, KPMG reported a summary of our analysis to DFS. The summary included the following elements reported by strata (and Reporting Entity category within each strata):

List of Reporting Entities that completed the survey

List of Reporting Entities reporting cost estimates for Manual Crosswalk, Technology Crosswalk and Financial System Modification

List of Reporting Entities reporting cost estimates within one standard deviation from the mean (and therefore no further analysis was required)

List of Reporting Entities reporting cost estimates outside one standard deviation from the mean (in which KPMG conducted further analysis and validation activities)

List of Reporting Entities KPMG conducted follow-up communication and results (whether or not the entity revised their cost estimate). For those entities remaining two or more standard deviations from the mean, KPMG reported discrepancies identified during the analysis, validation and follow-up process.

Recap of methodology used to further analyze and validate the Reporting Entities where further analysis was required

Summary of the cost estimates reported (in total, and for Manual Crosswalk, Technology Crosswalk, and Financial System Modification option)

Summary of calculated cost estimates (in total, and for Manual Crosswalk, Technology Crosswalk, and Financial System Modification options)

C. COMMUNICATION Effective communication from KPMG to DFS, the Government Support Organizations (GSO’s) and the Reporting Entities was critical to the project’s success before the survey launch, during the survey administration process and during the data analysis and validation activities. KPMG conducted the following communication activities during the survey period.

C-1 UCOA Project Website

KPMG assisted DFS in adding project-related communication to DFS’ Chart of Accounts Project website. Communication items included an overview of the UCOA Cost Estimate project, webcasts, anticipated frequently asked questions (FAQ’s), as well as contact information for key DFS personnel.

C-2 Notification

KPMG’s communications team assisted DFS in sending multiple email notifications to the Reporting Entities communicating the survey timeline, contact information and link to the survey tool. KPMG attached a link to FAQ’s to the email distribution to assist the Reporting Entities in completing the survey. For entities that DFS did not have an email address, DFS sent a letter template notifying the Reporting Entities of the survey process. Other notifications sent to the Reporting Entities included an initial survey awareness email sent prior to the survey launch, a survey launch email, and multiple survey completion follow-up reminder emails.

C-3 Government Support Organizations

KPMG worked with DFS and the GSO’s to draft content to be incorporated into newsletters sent by the GSO’s to the Reporting Entities. Newsletter content included general information about the UCOA Cost Estimate project, project timeframes, DFS contact information, and a web-link to the DFS Chart of Accounts Project website. GSO’s included:

Florida Association of Counties Florida Association of Court Clerks



Florida Government Finance Officers Association Florida League of Cities

C-4 Webcasts

KPMG worked with DFS to coordinate and conduct three webcasts for the Reporting Entities to receive additional information about the UCOA Cost Estimate project and provide a forum for questions and answers. Each webcast was designed with 30 minutes of prepared DFS and KPMG remarks, and allowed 30 minutes for questions and answers. The Webcasts were held on the following dates with the number of unique log ins indicating the attendance:

September 16, 2013 216 unique log ins September 23, 2013 178 unique log ins October 3, 2013 144 unique log ins

C-5 Help Desk Activities and Statistics

DFS provided a “Help Desk” available to Reporting Entities during the survey period to answer questions about the survey or webinars. DFS received 79 phone calls and 251 emails.



IV. Survey Results

This section presents the results of the UCOA Survey and explains how the extrapolations were used to populate cost estimates for all government entities subject to the UCOA legislation. KPMG summarized the results into three types:

Local Government Entities – Cities and Municipalities, Counties, Special Districts, and Water Management Districts

Education Entities – Colleges, Universities and School Districts State Government

This section summarizes the survey stratification, results, data validation and analysis and extrapolation for each category within the type of governmental entity. Within each of the three types, KPMG aggregated the ongoing and nonrecurring extrapolated costs. Finally, KPMG aggregated the cost for all three of the types in Section IV – C1. of this report.

A. LOCAL GOVERNMENT ENTITIES – WATER MANAGEMENT DISTRICTS, CITIES AND

MUNICIPALITIES, COUNTIES, AND SPECIAL DISTRICTS

A-1 Cities and Municipalities

DFS provided KPMG with a list of 415 Cities and Municipalities in the State of Florida. The population and revenues of these entities are of a broad range.

Cities and Municipalities Tier Structure and Responses

Cities and municipalities range from very small populations to very large populations and revenues. KPMG analyzed the cities and municipalities comparing ranges of revenues and populations to determine an appropriate grouping of cities and municipalities. The two largest cities in Florida using these characteristics are: 1) the consolidated governments of the City of Jacksonville and Duval County (2013 estimated population of 832,000) and 2) the City of Miami (2013 estimated population 420,000). Pursuant to the responses and the population of the entities KPMG stratified the population into four tiers, as follows:

Tier 1 – Because the City of Jacksonville has characteristics of both a city and a county, we put the City of Jacksonville in a tier by itself.

Tier 2 – The next eleven largest cities and municipalities have a 2013 estimated population between 140,000 and 800,000 and with a similar scope of operations.

Tier 3 – Eighty cities and municipalities with 2013 estimated populations between 25,000 and 140,000 and with generally similar characteristics.

Tier 4 – The remaining 323 cities and municipalities with 2013 estimated populations less than 25,000.

The survey responses included 177 from cities and municipalities in Florida. The survey responses also included 4 component units that were added to their primary government for aggregation. The total city and municipality

Exhibit IV-1

Total Sample FactorTier 1 1 1 1.0000 Tier 2 11 6 1.8333 Tier 3 80 53 1.5094 Tier 4 323 117 2.7607

415 177

City ResponsesExtrapolation



response rate for the survey was 43%. KPMG calculated extrapolation factors based on dividing the total tier population by the tier responses received. KPMG used the extrapolation factors to project survey response costs to the entire tier population.

As explained in Section B.3 above, the following is a summary of the data transmission methods and resource types selected by the City and Municipality survey respondents.

Data Transmission Manual Technology Modify 69 36 72 Resources Type Internal Third Party Both 102 10 65

Cities and Municipalities Data Validation and Analysis

KPMG reviewed the survey responses received by calculating the estimated costs for compliance with the UCOA requirements. KPMG used data collected from the Cities’ and Municipalities’ surveys and calculated the estimated nonrecurring one time costs, recurring monthly costs for revenue and expense accounts, and annual costs for balance sheet accounts.

KPMG calculated the mean and standard deviations for monthly recurring, annual recurring, one time transition and total costs. KPMG selected survey responses with costs outside the accepted deviation for further analysis. For entities outside of the normal distribution, we performed the following:

KPMG analyzed the detail data points provided in the survey response to determine the data points that caused the response to be outside of the normal distribution.

KPMG prepared a list of questions to discuss with the person who submitted the survey. KPMG contacted individual noted in the survey response by phone to confirm or adjust the survey

responses.

The Cities and Municipalities surveys required further review of 27 responses. The results of data validation and analysis included 17 entities that did not require a change and 10 entities that required adjustment to the submitted survey responses as directed by the entities. After the changes were updated, the costs were extrapolated to the tiered population and estimated costs were projected to the entire city and municipality population.

Exhibit IV-2

One Time Monthly AnnualTier 1 1,037,774$ 28,864$ 33,434$

Tier 2 1,601,513$ 43,452$ 68,313$

Tier 3 3,455,746$ 242,667$ 751,711$

Tier 4 1,664,988$ 172,626$ 467,287$

7,760,020$ 487,609$ 1,320,745$

City and Municipality SurveysSurvey Response Costs



Cities and Municipalities UCOA Cost Extrapolation

KPMG estimated the total costs for the Cities and Municipalities by multiplying the survey response costs by the respective extrapolation factor. The extrapolation factor is determined by dividing the count of tier survey responses received (sample population) by the tier total population in order to estimate the costs associated with the UCOA implementation.

Exhibit IV-3

Total Average Total Average Total AverageTier 1 1,037,774$ 1,037,774$ 28,864$ 28,864$ 33,434$ 33,434$

Tier 2 2,936,106$ 266,919$ 79,662$ 7,242$ 125,240$ 11,385$

Tier 3 5,216,220$ 65,203$ 366,289$ 4,579$ 1,134,658$ 14,183$

Tier 4 4,596,504$ 14,231$ 476,566$ 1,475$ 1,290,032$ 3,994$

13,786,605$ 951,382$ 2,583,363$

City and MunicipalityExtrapolated Cost

One Time Monthly Annual



A-2 Counties

There are 67 counties in the State of Florida. Duval County is part of a consolidated government with the City of Jacksonville. For purposes of this project, Duval County was included in the responses that are aggregated with Cities and Municipalities leaving 66 counties that comprise the County totals.

County Tier Structure and Responses

Counties range from very small populations to very large populations and revenues. The population and revenues of Florida Counties range from Miami-Dade County with a 2013 estimated population of 2,583,000 to Liberty County with a 2013 estimated population of 8,500. To extrapolate the results of the survey to an estimate for all Counties, KPMG grouped the Counties into three tiers. Pursuant to the responses and the population of the entities KPMG stratified the population into three tiers, as follows:

Tier 1 – Six counties with 2013 estimated populations greater than 925,000. The five largest counties all have populations in excess of one million. (Miami-Dade, Broward, Palm Beach, Hillsborough, Orange, and Pinellas) The next largest county’s estimated 2013 population is 643,000.

Tier 2 –The next seventeen largest counties have a 2013 estimated population in excess of 200,000 and have a similar scope of operations (Lee, Polk, Brevard, Volusia, Pasco, Seminole, Sarasota, Marion, Manatee, Collier, Lake, Escambia, Osceola, St. Lucie, Leon, Alachua, and St. Johns).

Tier 3 – The remaining 43 counties have 2013 estimated populations less than 200,000 and have generally similar characteristics.

The responses to the county survey were tiered based on population which correlates to the revenues of the entity. The survey population of the county primary government is 66. KPMG received surveys from 44 county governments or 67% of Counties. KPMG calculated extrapolation factors based on dividing the total tier population by the tier responses received. KPMG used the extrapolation factors to project survey response costs to the entire tier population.

In addition to the 44 surveys from County Governments, KPMG received surveys from 44 component units. Of the 44 component unit surveys received, 28 were from County Tax Collectors. County Tax Collectors are typically one of five (in addition to Property Appraiser, Clerk of Courts, Supervisor of Elections, and Sheriff) constitutional officers in County Government. No other type of constitutional officer accounted for more than 4 surveys. The Tax Collectors separately reached out to DFS and shared their perspective on the UCOA process. Due to the high number of Tax Collector survey responses received, KPMG separated them from the other component units and extrapolated the cost estimates for the Tax Collectors and added their cost to the County totals. Exhibit IV-5 shows the Tax Collector survey response costs. As mentioned above, the Tax Collector costs are included in the County totals.

Exhibit IV-5

One Time Monthly AnnualTier 1 26,243$ 3,651$ 4,429$

Tier 2 171,920$ 22,733$ 41,734$

Tier 3 289,970$ 42,395$ 196,444$

488,133$ 68,779$ 242,607$

County Tax Collector SurveysSurvey Response Costs

Exhibit IV-4

Total Sample FactorTier 1 6 6 1.0000

Tier 2 17 16 1.0625

Tier 3 43 22 1.9545

66 44

County ResponsesExtrapolation



As explained in Section B.3 above, the following is a summary of the data transmission methods and resource types selected by the County survey respondents.


County Data Validation and Analysis

KPMG reviewed the survey responses received by calculating the estimated costs for compliance with the UCOA requirements. KPMG used data collected from the County surveys and calculated the estimated nonrecurring one time costs, recurring monthly costs for revenue and expense accounts, and annual costs for balance sheet accounts.

KPMG calculated the mean and standard deviations for monthly recurring, annual recurring, one time transition and total costs. KPMG selected survey responses with costs outside the accepted deviation for further analysis. For entities outside of the normal distribution, KPMG performed the following:



responses.

The County surveys, including Tax Collectors, required further review of 15 responses. The results of data validation and analysis included 11 entities that did not require a change and 4 entities that required adjustment to the submitted survey responses as directed by the entities. After the changes were updated the costs were extrapolated to the tiered population and estimated costs were projected to the entire County population.

Exhibit IV-6

One Time Monthly AnnualTier 1 418,252$ 32,526$ 26,429$ Tier 2 2,821,949$ 154,123$ 1,597,673$ Tier 3 1,017,565$ 110,767$ 337,691$

4,257,766$ 297,416$ 1,961,794$

County SurveysSurvey Response Costs



County UCOA Cost Extrapolation

KPMG estimated the total costs for the Counties by multiplying the survey response costs by the respective extrapolation factor. The extrapolation factor is determined by dividing the count of tier survey responses received (sample population) by the tier total population in order to estimate the costs associated with the UCOA implementation.

.

Exhibit IV-7

Total Average Total Average Total AverageTier 1 418,252$ 69,709$ 32,526$ 5,421$ 26,429$ 4,405$ Tier 2 2,998,321$ 176,372$ 163,755$ 9,633$ 1,697,528$ 99,855$ Tier 3 1,988,878$ 46,253$ 216,499$ 5,035$ 660,033$ 15,350$

5,405,450$ 412,781$ 2,383,990$

One Time Monthly AnnualExtrapolated Cost

County

A-3 Special Districts

The Department of Financial Services provided KPMG with a list of 1,672 Special Districts in the State of Florida. These Special Districts include:

Community Development Districts (CDD’s) Authorities (e.g., Utility Authorities, Health and Hospital Authorities, Aviation Authorities, Sports Authorities,

Port Authorities, Housing Finance Authorities, Housing Authorities, Transit Authorities) Fire Control Districts, Library Districts, Soil & Water Conservation Districts, Mosquito Control Districts Redevelopment Agencies

Special District Tier Structure and Responses

These Special Districts have a wide variation of size, service delivery and staffing. CDD’s include large entities with professional staff as well as small entities that use the services of a professional management company that manages multiple Special Districts. Two management companies that completed the UCOA Survey manage 10 and 59 Special Districts respectively. To extrapolate the results of the survey to an estimate for all Special Districts, KPMG grouped the Special Districts into three tiers. Pursuant to the responses and reported annual revenues of the entities KPMG stratified the population in three tiers as follows:

Tier 1 – Twenty-seven Special Districts reported FY2012 revenues greater than $100,000. Tier 2 – The next 24 largest Special Districts reported FY2012 revenues in excess of $50,000. Tier 3 – The remaining 1,621 Special Districts reported FY2012 revenues up to $50,000.

The total response for the Special Districts was 162, or 10% of the 1,672 Special Districts. However, one survey response included the effort for 10 CDD’s and included them as a single line item. KPMG increased the total

Exhibit IV-8


Tier 2 24 3 8.0000

Tier 3 1,621 163 9.9448

1,672 171

ExtrapolationSpecial District Responses



surveys submitted to reflect all 10 CDD’s as submitting a response for extrapolation purposes. KPMG calculated an extrapolation factor based on dividing the total tier population by the tier responses received. KPMG used the extrapolation factor to project survey response costs to the entire tier population.

As explained in Section B.3 above, the following is a summary of the data transmission methods and resource types selected by the Special District survey respondents.


Special District Data Validation and Analysis

KPMG reviewed the survey responses received by calculating the estimated costs for compliance with the UCOA requirements. KPMG used data collected from the Special Districts surveys and calculated the estimated nonrecurring one time costs, recurring monthly costs for revenue and expense accounts, and annual costs for balance sheet accounts.




responses.

The Special Districts surveys required further review of 91 responses. The results of data validation and analysis included 27 entities that did not require a change and 64 entities that required adjustment to the submitted survey responses as directed by the entities. After the changes were updated the costs were extrapolated to the tiered population and estimated costs were projected to the entire Special District population.

Special District UCOA Cost Extrapolation

KPMG estimated the total costs for the Special District by multiplying the survey response costs by the respective extrapolation factor. The extrapolation factor is determined by dividing the count of tier survey responses received (sample population) by the tier total population in order to estimate the costs associated with the UCOA implementation.

Exhibit IV-9


Tier 2 68,418$ 3,439$ 6,298$

Tier 3 1,599,414$ 183,283$ 581,221$

1,747,905$ 199,917$ 691,926$

Survey Response CostsSpecial District Surveys



A-4 Water Management Districts

There are five water management districts in the State of Florida. They are as follows:

Northwest Florida Water Management District South Florida Water Management District Southwest Florida Water Management District St. Johns River Water Management District Suwannee River Water Management District

Water Management District Tier Structure and Responses

Due to the small size of the entity population a single tier was utilized to review the entity responses. Two of the five entities responded – Northwest Florida Water Management District and St. Johns River Water Management District. KPMG calculated an extrapolation factor based on dividing the total tier population by the tier responses received. KPMG used the extrapolation factor to project survey response costs to the entire tier population.

As explained in Section B.3 above, the following is a summary of the data transmission methods and resource types selected by the Water Management District survey respondents.


Exhibit IV-11


5 2

ExtrapolationWater Management District Responses

Exhibit IV-10

Total Average Total Average Total AverageTier 1 432,397$ 16,015$ 71,255$ 2,639$ 563,795$ 20,881$

Tier 2 547,345$ 22,806$ 27,514$ 1,146$ 50,385$ 2,099$

Tier 3 15,905,827$ 9,812$ 1,822,709$ 1,124$ 5,780,121$ 3,566$

16,885,569$ 1,921,478$ 6,394,302$

Extrapolated CostSpecial District




Water Management District Data Validation and Analysis

KPMG reviewed the survey responses received by calculating the estimated costs for compliance with the UCOA requirements. KPMG used data collected from the Water Management Districts surveys and calculated the estimated nonrecurring one time costs, recurring monthly costs for revenue and expense accounts, and annual costs for balance sheet accounts.

KPMG calculated the mean and standard deviations and noted that neither of the two surveys received were outside of normal distribution.

Water Management District UCOA Cost Extrapolation

KPMG estimated the total costs for the Water Management District by multiplying the survey response costs by the respective extrapolation factor. The extrapolation factor is determined by dividing the count of tier survey responses received (sample population) by the tier total population in order to estimate the costs associated with the UCOA implementation.

Exhibit IV-13

Total Average Total Average Total AverageTier 1 56,582$ 11,316$ 1,784$ 357$ 1,784$ 357$

56,582$ 1,784$ 1,784$

Water Management DistrictsExtrapolated Cost


Exhibit IV-12

One Time Monthly AnnualTier 1 22,633$ 714$ 714$

22,633$ 714$ 714$

Water Management District SurveysSurvey Response Costs



A-5 Aggregate Costs for Local Government Entities

The following chart summarizes the aggregate costs for local government for the estimated recurring monthly costs for revenue and expense accounts, the estimated recurring annual costs for balance sheet accounts and the estimated nonrecurring one time costs.

Exhibit IV-14

WaterCities and Special Management

Municipalities Counties Districts Districts Total

Monthly Costs 951,382$ 412,781$ 1,921,478$ 1,784$ 3,287,424$

Annualized Monthly Costs 11,416,578$ 4,953,368$ 23,057,736$ 21,408$ 39,449,090$

Annual Costs 2,583,363$ 2,383,990$ 6,394,302$ 1,784$ 11,363,439$

Total Recurring Costs 13,999,942$ 7,337,358$ 29,452,038$ 23,192$ 50,812,530$

Transition Costs 13,786,605$ 5,405,450$ 16,885,569$ 56,582$ 36,134,206$

Detail by Type of Local Government Entity

Uniform Chart of Accounts ImplementationAnnual Cost Estimate



B. EDUCATION ENTITIES – COLLEGES, UNIVERSITIES AND SCHOOL DISTRICTS

B-1 Colleges

The Florida College System includes the following 28 colleges:

Exhibit IV-15

Broward College Chipola College

College of Central Florida Daytona State College

Eastern Florida State College Edison State College

Florida Keys Community College Florida Gateway College

Florida State College at Jacksonville Gulf Coast State College

Hillsborough Community College Indian River State College

Lake-Sumter State College Miami Dade College

North Florida Community College Northwest Florida State College

Palm Beach State College Pasco-Hernando Community College

Pensacola State College Polk State College

Santa Fe College Seminole State College of Florida

South Florida State College St. Johns River State College

St. Petersburg College State College of Florida, Manatee-Sarasota

Tallahassee Community College Valencia College

Florida College System

College Tier Structure and Responses

KPMG received surveys from 24 of 28 Florida Colleges. Due to the high response rate it was not necessary to tier the College population. KPMG calculated an extrapolation factor based on dividing the total tier population by the tier responses received. KPMG used the extrapolation factor to project survey response costs to the entire tier population.

As explained in Section B.3 above, the following is a summary of the data transmission methods and resource types selected by the College survey respondents.


Exhibit IV-16


28 24

College ResponsesExtrapolation



College Data Validation and Analysis

KPMG analyzed the survey responses received by calculating the estimated costs for compliance with the UCOA requirements. KPMG used data collected from the Colleges surveys and calculated the estimated nonrecurring one time costs, recurring monthly costs for revenue and expense accounts, and annual costs for balance sheet accounts.



KPMG prepared a list of questions to discuss with the person who submitted the survey. KPMG contacted individuals noted in the survey response by phone to confirm or adjust the survey

responses.

The College surveys required further review of 7 responses. The results of data validation and analysis included 6 entities that did not require a change and 1 entity that required adjustment to the submitted survey responses as directed by the entities. After the changes were updated the costs were extrapolated to the population and estimated costs were projected to the entire College population.

College UCOA Cost Extrapolation

KPMG estimated the total costs for the College by multiplying the survey response costs by the respective extrapolation factor. The extrapolation factor is determined by dividing the count of tier survey responses received (sample population) by the tier total population in order to estimate the costs associated with the UCOA implementation.

Exhibit IV-18

Total Average Total Average Total AverageTier 1 3,008,894$ 107,461$ 127,452$ 4,552$ 395,834$ 14,137$

3,008,894$ 127,452$ 395,834$

Extrapolated CostColleges


Exhibit IV-17

One Time Monthly AnnualTier 1 2,579,052$ 109,245$ 339,286$

2,579,052$ 109,245$ 339,286$

College SurveysSurvey Response Costs



B-2 Universities

The Florida University System consists of 12 universities including:

Florida International University New College of Florida

Florida Agricultural and Mechanical University University of West Florida

Florida Atlantic University University of Central Florida

Florida State University University of South Florida

Florida Gulf Coast University University of North Florida

Florida Polytechnic University University of Florida

Florida University System

University Tier Structure and Responses

Due to the small size of the entity population a single tier was utilized to review the entity responses. All 12 of Florida’s Universities submitted a survey response.

As explained in Section B.3 above, the following is a summary of the data transmission methods and resource types selected by the University survey respondents.


University Data Validation and Analysis

KPMG reviewed the survey responses received by calculating the estimated costs for compliance with the UCOA requirements. KPMG used data collected from the University surveys and calculated the estimated nonrecurring one time costs, recurring monthly costs for revenue and expense accounts, and annual costs for balance sheet accounts.

KPMG calculated the mean and standard deviations for monthly recurring, annual recurring, one time implementation and total costs. KPMG selected survey responses with costs outside the accepted deviation for further analysis. For entities outside of the normal distribution, KPMG performed the following:


KPMG prepared a list of questions to discuss with the person who submitted the survey.

Exhibit IV-19

Exhibit IV-20


12 12

University ResponsesExtrapolation



KPMG contacted the individual noted in the survey response by phone to confirm or adjust the survey responses.

The University surveys required further review of two of the responses. The results of data validation and analysis included one entity that did not require a change and one entity that did require an adjustment to the submitted survey response as directed by the entities. After the change was made, the cost calculations were updated.

University UCOA Cost Extrapolation

Since 100% of the universities submitted survey responses, it is not necessary to extrapolate the UCOA costs. The sum of the survey responses equals the total estimated one time, monthly and annual costs for Florida’s 12 universities.

Exhiit IV-21

Total Average Total Average Total AverageTier 1 1,840,611$ 153,384$ 123,237$ 10,270$ 197,384$ 16,449$

1,840,611$ 123,237$ 197,384$

One Time Monthly AnnualSurvey Response Costs

University Surveys



B-3 School Districts

There are 72 school districts in the State of Florida. Each of the 67 counties has a school district. In addition there are 5 other districts. They are as follows:

Florida Agricultural and Mechanical University Lab School Florida Atlantic University Lab School Florida School for the Deaf and Blind Florida State University Lab School University of Florida Lab School

School District Tier Structure and Responses

School Districts are structured and tiered based on the county populations. For Counties KPMG used three tiers.

The School Districts range from very small populations and revenues to very large populations and revenues. To extrapolate the results of the survey to an estimate for school districts, KPMG grouped the Districts into three tiers. Tier 1 includes the 6 Tier 1 counties plus Duval School District, which was included with the Duval County/City of Jacksonville consolidated government. The tiers are as follows:

Tier 1 – Included the six Tier 1 Counties plus Duval County School District. Duval County was included in the City and Municipality population because of the consolidated government of City of Jacksonville and Duval County.

Tier 2 – Included the 17 Tier 2 Counties. Tier 3 – Included the 43 Tier 3 Counties plus the 4 Lab Schools (FAMU, FAU, UF and FSU) and the Florida

School for the Deaf and Blind.

The responses to the school district survey were tiered based on population which correlates to the revenues of the entity. The survey population of the School Districts is 72. KPMG received surveys from 52 School Districts or 72%. KPMG calculated extrapolation factors based on dividing the total tier population by the tier responses received. KPMG used the extrapolation factors to project survey response costs to the entire tier population.

In addition to the 52 surveys from the School Districts, KPMG received surveys from 43 component units. KPMG noted that 27 of the 43 component unit survey responses were from the School District of Palm Beach County. All 27 Palm Beach School District component units were Charter Schools.

As explained in Section B.3 above, the following is a summary of the data transmission methods and resource types selected by the School District survey respondents.


Exhibit IV-22


Tier 2 17 15 1.1333

Tier 3 48 31 1.5484

72 52

School District ResponsesExtrapolation



School District Data Validation and Analysis

KPMG reviewed the survey responses received by calculating the estimated costs for compliance with the UCOA requirements. KPMG used data collected from the School District surveys and calculated the estimated nonrecurring one time costs, recurring monthly costs for revenue and expense accounts, and annual costs for balance sheet accounts.



KPMG prepared a list of questions to discuss with the person who submitted the survey. KPMG contacted individuals noted in the survey response by phone to confirm or adjust the survey

responses.

The School District surveys required further review of 17 responses. The results of data validation and analysis included 16 entities that did not require a change and 1 entity that required adjustment to the submitted survey responses as directed by the entity. After the change was updated the costs were extrapolated to the tiered population and estimated costs were projected to the entire School District population.

School District UCOA Cost Extrapolation

KPMG estimated the total costs for the School District by multiplying the survey response costs by the respective extrapolation factor. The extrapolation factor is determined by dividing the count of tier survey responses received (sample population) by the tier total population in order to estimate the costs associated with the UCOA implementation.

Exhibit IV-23

One Time Monthly AnnualTier 1 22,730,717$ 63,248$ 199,737$ Tier 2 3,085,938$ 123,936$ 448,851$ Tier 3 961,303$ 52,584$ 817,160$

26,777,958$ 239,767$ 1,465,748$

School District SurveysSurvey Response Costs

Exhibit IV-24

Total Average Total Average Total AverageTier 1 26,519,170$ 3,788,453$ 73,789$ 10,541$ 233,026$ 33,289$

Tier 2 3,497,396$ 205,729$ 140,461$ 8,262$ 508,698$ 29,923$

Tier 3 1,488,470$ 31,010$ 81,420$ 1,696$ 1,265,279$ 26,360$

31,505,036$ 295,670$ 2,007,004$


School DistrictExtrapolated Cost



B-4 Aggregate Costs for Education Entities

The following chart summarizes the aggregate costs for education entities for the estimated recurring monthly costs for revenue and expense accounts, the estimated recurring annual costs for balance sheet accounts and the estimated nonrecurring one time costs.

C. STATE OF FLORIDA – DEPARTMENT OF FINANCIAL SERVICES DFS provided KPMG with the State’s estimated cost for making the changes necessary to implement and maintain the uniform chart of accounts reporting requirements. This includes the one time costs for updating the LOGER system to support posting the reporting entities information on the web and for the staff needed to process the monthly and annual reporting on behalf of the state agencies activity.

State Tier Structure and Response

A single tier was utilized to review the State survey response.

As explained in Section B.3 above, the following is a summary of the data transmission method and resource type selected by the State of Florida.


Exhibit IV-25

SchoolColleges Universities Districts Total

Monthly Costs 127,452$ 123,237$ 295,670$ 546,358$

Annualized Monthly Costs 1,529,423$ 1,478,841$ 3,548,036$ 6,556,300$

Annual Costs 395,834$ 197,384$ 2,007,004$ 2,600,221$

Total Recurring Costs 1,925,257$ 1,676,225$ 5,555,040$ 9,156,521$

Transition Costs 3,008,894$ 1,840,611$ 31,505,036$ 36,354,541$

Uniform Chart of Accounts ImplementationAnnual and Five Year Cost EstimateDetail by Type of Education Entity



State Data Validation and Analysis

Analysis of the State survey response was not necessary because the population is one and DFS assisted in preparing the survey.

State UCOA Cost Extrapolation

Since the State is a single entity, there is no need to perform an extrapolation calculation. The State survey response costs equal the total estimated one time, monthly and annual costs.

Aggregate costs for the Department of Financial Services

DFS provided KPMG with the State’s estimated cost for making the changes necessary to implement and maintain the uniform chart of accounts reporting requirements. This includes the incremental costs for updating the LOGER system and for the staff needed to process the monthly and annual activity.

The following chart summarizes the aggregate costs for the DFS entities for the estimated recurring monthly costs for revenue and expense accounts, the estimated recurring annual costs for balance sheet accounts and the estimated nonrecurring one time costs.

Exhibit IV-27

State Agency LOGERCosts Costs Total

Monthly Costs 786$ 1,748$ 2,534$

Annualized Monthly Costs 9,432$ 20,976$ 30,408$

Annual Costs 1,787$ 40,320$ 42,107$

Total Recurring Costs 11,219$ 61,296$ 72,515$

Transition Costs 43,197$ 37,363$ 80,560$

Detail for DFS


Annual Cost Estimate

Exhibit IV-26


80,560$ 2,534$ 42,107$

DFS Cost Estimate



C-1 Cost Estimate Summary

The following chart summaries all three types (Local Governments, Education Entities and the State of Florida).

Exhibit IV-28

Local Education State of

Governments Entities Florida Total

Recurring Annual Costs 50,812,530$ 9,156,521$ 72,515$ 60,041,566$

One Time Transition 36,134,206$ 36,354,541$ 80,560$ 72,569,307$


Summary of Overall Costs



D. TRANSMISSION OF GENERAL LEDGER DATA TO DEPARTMENT OF FINANCIAL

SERVICES Average Costs

The following exhibit presents the average recurring and nonrecurring survey costs for surveys received from each Reporting Entity Category. KPMG noted trends in the average costs calculated as follows:

The average School Districts one time implementation costs are significantly more than all other categories. The School District average of $514,961 is 335% of the next highest category, Universities ($153,384) and 404% of the average of the eight entity categories ($127,314). Four of the 52 school districts (Hillsborough, Orange, Osceola, and Pinellas) reported one time costs in excess of $1,000,000, including one estimate of more than $10,000,000. If the costs for these four entities are removed from the calculation, the average one time cost for the remaining 48 school districts surveyed would be $75,616.

The average one time implementation costs for Counties, Colleges and Universities are higher than the other entity categories. These entity categories all had significant component units in their calculation which reflect a more complex reporting structure.

The average one time implementation costs for Special Districts and Water Management Districts are approximately 10% of the entity average which reflects a less complex structure and generally smaller financial organization.

The average recurring costs for Counties and Universities are approximately 200% of the average entity category. This is consistent with a higher concentration of component units which increases the annual reporting requirements.

The average annual costs for Special Districts and Water Management Districts are less than 30% of the entity average which reflects a less complex structure and generally smaller financial organization.

Exhibit IV-29

One-Time Annual

Recurring

Cities and Municipalities 43,842$ 40,520$

Counties 96,767$ 125,700$

Special Districts 10,222$ 18,076$

Water Mgmt Districts 11,316$ 4,638$

Colleges 107,461$ 68,759$

Universities 153,384$ 139,685$

School Districts 514,961$ 83,518$

State 80,560$ 72,513$

Average 127,314$ 69,176$

Uniform Chart of Accounts ImplementationAverage Survey Cost by Reporting Entity

Exhibit IV-30

$-$100,000 $200,000 $300,000 $400,000 $500,000

Average Cost by Reporting Entity

One-Time Annual Recurring

Exhibit IV-30



Crosswalk Method

The Survey provides three methods to transmit data from the local government general ledger to a central repository:

A manual crosswalk A technology crosswalk Modifying the general ledger system so that no crosswalk is needed.

Each survey respondent indicated the method it intended to use to provide the crosswalk. KPMG summarized the primary government survey responses on Exhibit IV-31. KPMG analyzed the crosswalk solution by entity. KPMG also analyzed the crosswalk solution by size of entity using the Tier identified in the cost extrapolation. Based on the results of analysis, KPMG noted the following:

46% of government entities intend to use a manual crosswalk to transmit data to DFS. The percent of governments using technology crosswalk and system modifications were 26% and 28%.

Education entities that intend to use a technology solution totaled 49%, which is approximately twice the ratio of the remaining governments. County governments also had a rate of 34% intending to use technology. This is consistent with a technology application for larger and more complex entities, financial staff and technology staff.

In general, while the manual crosswalk will require less effort upfront than either the technology crosswalk or system modification, the manual crosswalk will generally require more effort over the long term. For the categories of governments that KPMG stratified to extrapolate the estimated costs to comply with the UCOA disclosures, we compared the survey results by organization size.

For Cities and Municipalities, KPMG noted that nearly half of the survey respondents in the smallest category indicated that they intended to modify the system. This is consistent with the notion that smaller

Exhibit IV-31

Manual TechnologySystem

Modification TotalCities and Municipalities 69 36 72 177

Counties 16 15 13 44

Special Districts 101 28 33 162

Water Mgmt Districts 1 - 1 2

Colleges 12 11 1 24

Universities - 12 - 12

School Districts 20 20 12 52

State of Florida - 1 - 1

Total 219 123 132 474

Percent 46% 26% 28%

Data Transmission Method



systems would require less effort to modify and would have a quicker payback to the government. As there is only one Tier 1 city/municipality, (Jacksonville) Tiers 1 and 2 are combined for this analysis.

For Counties, KPMG noted that half of the largest counties indicated that they intended to use a technology crosswalk. This is consistent with increased technology resources at the largest institutions.

For Special Districts, KPMG noted a majority of the highest revenue Special Districts indicated they intended to modify their system(s) while the majority of the lowest revenue Special Districts indicated they intended to use a manual crosswalk, consistent with increased technology resources at larger entities.

For School Districts, KPMG also noted that the largest School Districts indicated that they intended to use a technology crosswalk. Again, this is consistent with increased technology resources at the largest institutions. However, the smallest School Districts indicated that they intended to use a manual crosswalk, indicating a limitation of technology resources.

KPMG further reviewed the associated costs of the three Data Transmission Methods. Based on survey results, KPMG calculated average costs by Reporting Entity and a weighted average cost for the entire population for One Time, Monthly, and Annual Recurring costs. The Manual Crosswalk has the lowest associated One Time, Monthly, and Annual costs. The Technology Crosswalk has the highest associated One Time, Monthly, and Annual costs. Smaller and less complex organizations generally indicated using a Manual Crosswalk for data transmission. Larger and more complex organizations generally indicated using a Technology Crosswalk for data transmission.

Exhibit IV-33

Manual Tech Modify

Cities and Municipalities 20,889$ 57,275$ 33,012$

Counties 30,740$ 95,841$ 131,528$

Special Districts 3,674$ 27,146$ 14,186$

Water Mgmt Districts 2,215$ -$ 20,417$

Colleges 137,363$ 75,733$ 97,634$

Universities -$ 153,384$ -$

School Districts 6,880$ 165,004$ 265,686$

State Agency -$ 80,560$ -$

Average 8,352$ 67,338$ 53,517$

Data Transmission Method - Weighted Average CostsOne Time

Exhibit IV-32

Manual Crosswalk

Technology Crosswalk

System Modification

Cities and Municipalities

Tier 1 & 2 57% 29% 14%

Tier 3 40% 30% 30%

Tier 4 38% 15% 47%

Counties

Tier 1 33% 50% 17%

Tier 2 38% 31% 31%

Tier 3 36% 32% 32%

Special Districts

Tier 1 20% 20% 60%

Tier 2 33% 33% 33%

Tier 3 61% 16% 23%

School Districts

Tier 1 0% 67% 33%

Tier 2 40% 47% 13%

Tier 3 45% 29% 26%

Data Transmission Method



Type of Resource

The Survey provided three resource options to complete the crosswalk and data conversion:

Internal Resources Third Party Resources Both Internal and Third Party Resources

Exhibit IV-35

Manual Tech Modify


Counties 8,939$ 25,472$ 86,562$


Water Mgmt Districts 277$ -$ 437$

Colleges 17,814$ 10,949$ 5,073$




Average 5,592$ 8,509$ 5,650$

Data Transmission Method - Weighted Average CostsAnnual

Exhibit IV-34

Manual Tech Modify


Counties 4,695$ 7,360$ 6,858$

Special Districts 724$ 2,785$ 1,081$


Colleges 5,186$ 4,088$ 2,051$


School Districts 767$ 2,118$ 1,221$


Average 1,181$ 3,241$ 1,597$

Data Transmission Method - Weighted Average CostsMonthly



Each survey respondent indicated the resources for the data conversion would be internal resources, third party resources or some combination of internal and third party resources. KPMG summarized survey responses on Exhibit IV-36. KPMG analyzed the type of resources by entity. KPMG also analyzed the crosswalk solution by size of entity using the Tier identified in the cost extrapolation. Based on the results of our analysis, KPMG noted the following:

59% of governments intend to complete the crosswalk and data conversion using internal resources, while only 4% of governments intend to rely on third party resources and 37% intend to rely on both internal and third party resources.

Comparison of results by Reporting Entity Category indicate that cities and municipalities, and special districts intend to use internal resources at a higher rate than the average, while colleges and universities had a higher rate of both internal and third party resources than the average. As the process becomes more complex because of decentralization of operations, entities will tend to need additional third party resources to supplement existing staff.

Exhibit IV-36

Internal Third-Party Both TotalCities and Municipalities 102 10 65 177

Counties 26 1 17 44

Special Districts 102 6 54 162

Water Mgmt Districts 1 - 1 2

Colleges 10 - 14 24

Universities 10 - 2 12

School Districts 27 1 24 52

State of Florida 1 - - 1

Total 279 18 177 474

Percent 59% 4% 37%

Crosswalk and Data Transmission Resource Type

For the categories of governments that KPMG stratified to extrapolate the estimated costs to comply with the UCOA disclosures, we compared the survey results by organization size.

For both cities and municipalities, and counties, KPMG noted that the largest counties had a higher utilization of only internal resources. This is consistent with larger nominal staffs that would be more realistic to not rely on third party. For smaller cities and municipalities, the rate of entities relying on both internal and third party staff tended to be larger because of generally very limited staff size.

For Special Districts, KPMG noted that revenue size did not correlate to the type of resources used. Sixty percent of both the highest revenue and lowest revenue Special Districts intended to use internal staff only. The remaining approximately 40 percent intended to use both internal and third party resources.

For School Districts, KPMG noted that about half of the districts intended to use internal staff and half of the districts intended to use both internal and third party resources. This is a slightly higher rate of both internal and third party resources which is generally because of the decentralization and complexity of accounting functions in school districts.



KPMG further reviewed the associated costs of the three Resource Options. Based on survey results, KPMG calculated average costs by Reporting Entity and a weighted average cost for the entire population for One Time, Monthly, and Annual Recurring costs. The Internal resource option has the lowest associated One Time, Monthly, and Annual costs. The Both resource option has the highest associated One Time, Monthly, and Annual costs. Smaller and less complex organizations generally indicated using Internal resources. Larger and more complex organizations generally indicated using Third Party/Both resource options.

Exhibit IV-38

Internal Third Party Both


Counties 47,322$ 35,585$ 143,881$


Water Mgmt Districts 2,215$ -$ 20,417$

Colleges 63,450$ -$ 138,897$

Universities 95,804$ -$ 57,581$


State Agency 80,560$ -$ -$

Average 6,530$ 11,008$ 74,285$

Resource Type - Weighted Average CostsOne Time

Exhibit IV-37

Internal Third-Party BothCities and Municipalities

Tier 1 & 2 71% 0% 29%

Tier 3 55% 4% 42%

Tier 4 58% 7% 35%

Counties

Tier 1 83% 0% 17%

Tier 2 56% 0% 44%

Tier 3 55% 5% 41%

Special Districts

Tier 1 60% 0% 40%

Tier 2 33% 33% 33%

Tier 3 60% 3% 37%

School Districts

Tier 1 50% 0% 50%

Tier 2 47% 0% 53%

Tier 3 55% 3% 42%

Crosswalk and Data Transmission Resource Type by Tier



PROJECT SUMMARY The purpose of this project was to estimate the costs associated with implementing the UCOA reporting requirements.

KPMG conducted a detailed survey to a population of 2,271 governmental Reporting Entities and received a total of 600 completed surveys. The responses included each Reporting Entity’s estimated costs for UCOA implementation. Each Reporting Entity reported their estimated costs separately for the following three cost elements:

One time implementation costs Monthly recurring costs for income and expenditure reporting Annual recurring costs for balance sheet reporting

Exhibit IV-39


Cities and Municipalities 15,201$ 279$ 1,331$

Counties 5,583$ 11,303$ 6,714$

Special Districts 461$ 749$ 2,302$


Colleges 4,474$ -$ 4,608$

Universities 7,750$ -$ 2,520$

School Districts 2,136$ 22$ 1,949$


Average 999$ 1,410$ 2,810$

Resource Type - Weighted Average CostsMonthly

Exhibit IV-40


Cities and Municipalities 28,292$ 786$ 4,338$

Counties 15,251$ 27,876$ 71,066$



Colleges 9,039$ -$ 17,779$

Universities 10,462$ -$ 5,987$

School Districts 4,241$ 215$ 23,419$


Average 2,417$ 3,494$ 12,368$

Resource Type - Weighted Average CostsAnnual



KPMG used the cost estimate data in the completed surveys to extrapolate to the entire population of 2,271 Reporting Entities. The following chart shows estimated costs for the implementation of the UCOA reporting requirements:

Exhibit IV-41

One-time implementation costs 72,569,307$

Monthly recurring costs for income and expenditure reporting 3,836,316$

Annual recurring costs for balance sheet reporting 14,005,768$

Total recurring annual costs 60,041,566$

Estimated UCOA Reporting Costs

florida department of financial services...dec 23, 2013 · i. executive summary 2 a. background...

Documents