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The Canby City Council passed Resolution 1271, creating a corrective action plan and a policy for calculating the rate it used for reimbursements for a federal transportation grant it received, and will apply the new policy to at least some future federal grants that have similar requirements.

STOCK PHOTO - Canby City Hall is home to the city council chambers.When the city completed an audit of fiscal year 2015-16, Finance Director Julie Blums found Canby Area Transit incorrectly had been submitting fleet labor cost reimbursement requests for the grant, from which the city no longer receives revenue, using a rate that did not comply with federal requirements.

Canby Area Transit employees were calculating a flat labor pay rate of $75 per hour — the same rate CAT charges internally for work between departments — which included overhead costs. The federal grant required that only actual hourly wages be included in reimbursement requests, and the city now has updated that policy and is in full compliance, Blums said.

"We did not receive more money than we should have, we just received it sooner than we should have," Blum said.

City Administrator Rick Robinson told the city council that the federal requirements were "a little bit disappointing" because the cost of doing business includes overhead, however, in this context with this particular grant, recipients were not allowed to charge those additional costs.

"As all of you know from being involved in running businesses of your own, you can't conduct a business with just employees," Robinson said. "They have to have a roof over their head, as well as tools, equipment, they use electricity — all of those (factors) were not allowable costs under this grant. So, we have to back off the costs and only capture the actual salaries and benefits associated with employees doing the work and we're not allowed to (request reimbursement for) the overhead charges."

Mayor Brian Hodson commended Blums for her department's quick action on correcting the audit finding.

"All of the financial bookkeeping we have done as a city has been recognized for the good job we do for a number of years," Hodson said. "I know when something like this occurs it's always resulted in quick action from us. This is the first (case like this) I've heard of and I've been on the council now for almost 10 years. I appreciate the quick action and getting this corrected."