DATE: July 14, 2026
TO: Board of Supervisors
SUBMITTED BY: Mike Kerr, Director of Information Technology/Chief Information Officer
SUBJECT: First Hearing to Amend Master Schedule of Fees, Charges, and Recovered Costs, Section 4300 - Information Technology Services
RECOMMENDED ACTION(S):
TITLE
1. Conduct first hearing to amend the Master Schedule of Fees, Charges, and Recovered Costs, Section 4300 - Information Technology Services, waive reading of the proposed Ordinance in its entirety, and set the second hearing for August 11, 2026;
2. Designate County Counsel to prepare a fair and adequate summary of the proposed Ordinance; and
3. Direct the Clerk of the Board to post and publish the required summary in accordance with Government Code Section 25124(b)(1).
REPORT
There is no additional Net County Cost associated with the recommended actions. Approval of the recommended actions will amend the Master Schedule of Fees, Charges, and Recovered Costs (MSF) Ordinance, Section 4300 - Information Technology Services, based on anticipated FY 2026-27 Information Technology Services Department (ITSD) costs. The proposed rate increases, which range from 5% to 42%, will be used for recovery of costs for certain services and PeopleSoft operations provided to public agencies. The proposed MSF rates also include decreases, ranging from 8% to 63%, due to cost reduction in some areas. This item is countywide.
ALTERNATIVE ACTION(S):
Your Board may direct staff not to change the rates, change a portion of the rates, or propose alternative rates; however, these alternatives may not recover the full costs of the services.
FISCAL IMPACT:
There is no increase in Net County Cost associated with the recommended actions. Amending the rates for services rendered to public agencies will result in the collection of a portion of the revenues needed to operate two separate Internal Service Funds (ISF) for FY 2026-27 (Fund 1020, Information Technology Services Orgs 8905-8908 and Fund 1030, PeopleSoft Operations Org 8933).
DISCUSSION:
As an ISF, ITSD must recover all operating expenses by charging user departments and public agencies for services ordered and rendered. The recommended amendments to the MSF, if adopted by your Board, would update ITSD’s rates for services provided to public agencies. These rates were established by estimating the annual operating costs of the components of each of the respective services and then dividing those costs by the projected usage of all user departments and public agencies. The rates indicated are for services used by both internal and external customers and make up a portion of the total revenues collected by the ISFs. Attachment A is a summary of the proposed rates with a comparison to the current rates.
ITSD staff calculated the rates using its best estimation of FY 2026-27 costs, resulting in new rates, and increases and decreases to existing rates due to several key factors. The addition of Subsections 4301, 4303, 4306, 4318, 4319, and 4340-4343 are included to capture increased service obligations and related cost elements, and to provide customers with improved transparency into the specific components driving their charges. Increases are primarily driven by adjustments in infrastructure services, software licensing, staffing allocations, and updates to several service metrics used in the rate model. The proposed rates also incorporate reductions based on actual costs incurred in FY 2025-26 and by eliminating or scaling back on certain expenditures including eliminating the Subsections 4309, 4313-4315, and 4330.
The recommended rates, including their calculation and the methodology applied for cost recovery, have been reviewed and approved by the Auditor-Controller/Treasurer-Tax Collector. ITSD has been given recommended instructions for improving the existing rate development methodology, which will be implemented in the FY 2027-28 rate development process.
If the recommended actions are approved by your Board, the second hearing will be scheduled for August 11, 2026. If your Board adopts the recommended MSF rates at the second hearing, the proposed Ordinance amendments and rate changes will take effect after 30 days.
ATTACHMENTS INCLUDED AND/OR ON FILE:
Ordinance
Attachment A - Proposed MSF Revisions
On file with Clerk - Summary of Ordinance
CAO ANALYST:
Amy Ryals