5020 - Services

Services are the labor and other work provided by outside organizations for fees and related expenses. Outside organizations may be private companies or public entities. The agency reports work done by personnel within the reporting unit as salaries and wages and fringe benefits. For example, if the reporting unit is a city, then transit-related work done by city employees, even those outside the transit division, is reported as salaries and wages and fringe benefits, not services.

Services provided by an outside organization are usually procured as a substitute for in-house employee labor, except in the case of independent audits, which could not be performed by employees. Agencies usually substitute services for in-house labor because the skills offered by the outside organization are needed for only a short period of time or internal staff does not have the requisite skills. This object class includes all costs that are part of the service agreement. For example, if in a contract for custodial service the custodial company provides the cleaning supplies, the cost of these supplies belongs to Services, not Other Materials and Supplies. Services expenses may apply to any sub-function.