It’s not too early to start thinking about the preparation of Successor Agency administrative budgets required for the Annual 21-22 Recognized Obligation Payments Schedule (“ROPS”), which is due to the California Department of Finance (“DOF”) on February 1, 2021. As we gear up to submit the ROPS to Successor Agencies in December and Oversight Boards in January, RSG is beginning the process in October with drafting administrative budgets, which includes projecting cash flows and reconciling cash balances. Given that the past few ROPS cycles for a number of Oversight Boards have been subject to increased scrutiny, it is imperative that work on administrative budgets begins early on in the ROPS process.
The Dissolution Act generally limits the Successor Agency administrative allowance to $250,000 per year. It can be less if your agency received less than $500,000 in RPTTF the prior fiscal year, or more if your agency received more than $8.3 million in RPTTF the prior fiscal year (excluding RPTTF for admin costs and City-Redevelopment Agency loans).
The administrative cost allowance can be used for professional services (legal, financial, Successor Agency consultants), staff costs to reimburse salaries and benefits for staff member time spent on Successor Agency matters, and overhead costs.
After eight years of ROPS preparation, RSG has developed the following recommendations and best practices for preparing the SA administrative budget:
Keep track of your administrative expenses to maximize the amount you can claim.
Create a list of all staff who work on Successor Agency matters. Allocate a percentage of their fully burdened salary for their time spent on Successor Agency administration and projects (including City Clerk and legal costs related to meetings).
Be prepared to create a reasonable administrative budget where you can justify the number of staff hours spent on Successor Agency matters.
When creating annual budgets, be mindful that your Successor Agency’s administrative budget might decrease. Oversight Boards are scrutinizing administrative costs more closely each year.
Weigh the pros and cons of filing a Last and Final ROPS. While a Last and Final ROPS removes the administrative burden of annual reporting, it also decreases the annual administrative allowance.
RSG has assisted over three dozen Successor Agencies with the preparation of their administrative budget, ROPS, and prior period adjustments. RSG is also engaged in DOF coordination, pass-through calculations and negotiations, review of County distribution of property taxes, and long-term cash flows. ROPS preparation is just one of your city’s opportunities to maximize fiscal health. If you would like to inquire about how RSG can help your jurisdiction with ROPS preparation, both for the Administrative Budget and otherwise, please contact Principal Jim Simon at [email protected].