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| CITY COUNCIL AGENDA ITEM NO. 15
Meeting Date: February 11, 2003
Subject/Title: Accept report and methodology of Parks and Recreation Department Cost of Services Study
Submitted by: Craig D. Bronzan, Director of Parks and Recreation
Tina Clark, Parks and Recreation Department Accountant
Pam Ehler, Director of Finance and Information Services
Approved by: John Stevenson, City Manager
Accept the Parks and Recreation Department methodology and Cost of Services Study report prepared by Maximus.
Under the direction of the City of Brentwood Finance and Information Services Department, Maximus was hired to review the user fee services and related revenues of the Parks and Recreation Department. The purpose of the study was to: 1) identify the full cost (both direct and indirect) of providing fee for services; 2) compare costs with revenues currently received for these services; and 3) present recommendations of practical and achievable cost recovery levels together with adjusted revenues by user fee service. The attached report from Maximus provides the background information on the study.
The City of Brentwood Parks and Recreation Department was established on July 31, 1999, as a result of the merging of the Brentwood Recreation and Park District into the City of Brentwood. The newly created City of Brentwood Parks and Recreation Department included the staff of the old District and maintained the $.031 property tax assessment as a subsidiary district under the direction of City Council. This property tax assessment, collected for park and recreation services, was kept solely for the provision of Park and Recreation Services by the City of Brentwood.
This merging of the old (District) with the new (City) brought together the “recreation program” side, as had been operated by the District, with the “park maintenance/development” side of the City of Brentwood. With a backlog of park and recreational facilities, the emphasis of the Parks and Recreation Department has been on park and facility design and development, establishment of standards and specification, including the City adopted Urban Forest Guidelines, and the updating of the City of Brentwood Parks, Trails, and Recreation Master Plan.
With the creation of the City of Brentwood Parks and Recreation Department, the City accepted the existing recreational programs and activities, and respective fees and charges as they had been offered by the District. The City Finance and Information Services Department also was charged with merging old District budget history and practices, which was sparse at best, with current City policies and procedures. As the District did not budget specifically by program, but rather in very general terms, there was very little history of expenses and revenues by program. As a result, the fiscal year 1999/01 City of Brentwood Parks and Recreation Department budget was a “best guess” budget as incorporation of the new department occurred after adoption of the two year budget. When the next two-year budget cycle for fiscal years 2001/03 was adopted, the City, for the first time, started the process of breaking down programs into individual budget accounts. With the end of the 2001/02 fiscal year, the Parks and Recreation Department moved forward with the cost recovery study, as there was now enough history with program budgets in the City system to be able to break down costs.
As stated in the report by Maximus, based on experience with other cities, the recovery level for city park and recreation departments ranges from 20% cost recovery to 45% cost recovery. The current level of cost recovery for the City of Brentwood Parks and Recreation Department is 35.48%. Considering that no pricing policies or cost recovery methodology had been in place from the District, the City is well positioned as far as cost recovery is concerned in relation to like recovery rates. However, in light of the continuing pressures from the economy, State of California, and requests for services, the Department is taking a close look at ways to insure that the delivery of recreational services to the community are in line with City Council goals for effectiveness and efficiency. Staff will also be looking at ways to recover, when appropriate, department and City overhead charges that are appropriate.
The report shows how different program categories reflect different cost recovery percentages, from a high in pre-school sports (58%) to a low in senior programs (11%). Though generalities can be drawn between programs, such as the title of youth sports, each program must be looked at individually.
• Each program, though similar by title, can have different expenses. Pre-school programs vary in cost for facility use (indoor vs. outdoor), equipment necessary (all provided vs. some brought by participant), and cost of staff (paid coaches/officials vs. use of volunteers). To cover costs, it is easier to have a cost recovery goal as opposed to trying to have equal fees.
• Some programs have market influences that affect what can be charged. ASA Girl’s Softball and most adult sport programs compete with surrounding cities for similar programs. If covering all costs would drive the fee for the program higher than surrounding leagues, the result would be that players would go to other cities to play. Therefore, we make a concerted effort to determine which programs are best run by the City and which can be run by other groups. Our department continues to support PONY Baseball and East Diablo Youth Soccer, as they are capable of offering programs in a more efficient manner than if the City ran the programs. Staff continues to evaluate market influences to insure that we offer only those programs that make sense for the City to run.
• Some programs have very specific Council direction, which sets the fees that we charge. The Skate Park is an example of a program that is offered, free of charge, by City Council direction, with supervisory costs covered within the department budget. There is no cost recovery for this activity, which results in 100% subsidy by the City. Fees at the Aquatic Complex are also City Council policy driven. The gate fees, competitive swim practice fees, and the subsidized use of the facility by Liberty High School are all set with heavy subsidy as directed by City Council so that users groups can enjoy the facility at nominal charges.
• As all programs are fluid in participation, our cost recovery can vary up or down based on program attendance. For instance, our youth basketball program has grown in one year from approximately 275 youth to over 425. The first year of the program required initial purchase of equipment, which would reflect a lower cost recovery. In year two, with most of the equipment already purchased and a large growth in participation, our cost recovery has increased. By adopting cost recovery goals, it allows the flexibility to change fees as necessary to cover program expenses. And as the City now produces two-year budget cycles, it allows for a more stable environment in which to forecast program expenses.
• The department also offers a number of special interest classes and programs that work with contract instructors. In these programs, we pay the instructors through a contract, a percentage of the fees received. As the minimum enrollment covers our costs, a large number of participants can inflate our cost recovery percentage (e.g. #28 animal activity classes). When this occurs, staff will reconsider the contract to reduce our fees based on increased participation.
The Maximus study is based on actual numbers for revenue and expenses in the past year, the first year we have been able to track individual program budgets. As programs do in fact fluctuate up and down in participation, we are using this as our base line study in which to build future year budgets. This new format will allow our department to budget specific programs based on the accounting of actual costs for the direct costs necessary to run the program, department overhead, and where applicable, citywide overhead. With adoption of cost recovery goals, this information will be used to establish fees for service, which will be updated annually by City Council through revisions to the Master Fee Schedule.
As a result of the information that has been produced in the Cost of Services Study and recent City budget history, staff is making the following recommendations:
• Accept the fee study report and individual cost centers with recommended cost recovery levels.
• Set as a goal, 50% cost recovery for youth programs.
• Set as a goal, 75% cost recovery for adult programs.
• All programs that are currently above the recommended cost recovery will continue a goal of 100% cost recovery.
• Programs that are under the cost recovery percentage, with the exception of the aquatic center, will recover direct costs, and set as a goal, over the next three years, to meet the cost recovery percentage as approved by Council.
• With cost centers #53 (swim lessons), #55 (swim passes – lap swim), #56 (swim passes – 10 swim pass), #57 (swim passes – 25 swim pass), and #63 (swim gate), staff is recommending option A, existing fees. However, as the pool has such a heavy subsidy, staff has provided City Council with a second option B, should that be the direction for staff.
With City Council approval, staff will use the cost center worksheets as the format to produce the 2003/05 fiscal year budgets, meeting the approved cost recovery goals set by City Council. Approval of this item does not change the master fee schedule, but will direct staff to return, as a part of the 2003/05 budget approval process, with an updated master fee schedule that will approve the fees necessary to meet the cost recovery goals.
No impact in 2002/03 fiscal year budget. Approval will direct staff to prepare 2003/05 fiscal year budgets to meet City Council approved cost recovery goals.
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