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HomeMy WebLinkAbout6.1 PH Amend.ToFeeResolution19t _ 82 AGENDA STATEMENT PARKS AND COMMUNITY SERVICES COMMISSION MEETING DATE: July 18, 2011 SUBJECT: PUBLIC HEARING: Amendments to Fee Resolution Report prepared by Paul McCreary, Assistant Director of Parks and Community Services ATTACHMENTS: 1. Resolution Adopting a Master Fee Schedule for Parks and Community Services Department Programs and Services 2. Parks and Community Services Pricing Policy RECOMMENDATION: 1. Receive Staff Presentation 2. Open Public Hearing 3. Receive Public Testimony 4. Close Public Hearing and Deliberate 5. Adopt Resolution or Provide Alternate Recommendation FINANCIAL STATEMENT: None DESCRIPTION: On September 21, 2010 the City Council adopted the Parks and Community Services Pricing Policy to increase cost recovery for services generally provided to specific populations. This Pricing Policy provides guidance for annual adjustments to service fees. It identifies what services should recover 100% of the total cost (direct and indirect costs) of providing a service, and objective criteria for pricing services at lower levels. On an annual basis, Staff undertakes a review of the expenditures and revenues related to various Department programs and recommends fee adjustments as necessary. Staff has utilized the new Pricing Policy to ensure fees are set so that cost recovery targets are met. Staff also reviewed the fees charged by other local agencies to determine if the proposed fees are comparable to the market average. Non-resident fees are 20% higher than resident fees, except for drop-in programs, in which the fees are the same for residents and non-residents alike. During Fiscal Year 2011-2012, fees charged for programs, services, and facility rentals need to generate $2.13 million in revenue. The proposed fee increases are necessary to meet this projection. Following is a summary of the recommended fee adjustments for Fiscal Year 2011-2012. COPIES TO: None ITEM NO.: 6.1 G:\PARKS COMMISSION\AGNDSTMT\2011\7-18 Item 6.1 Amendments to Master Fee Resolution.docx PRESCHOOL PROGRAMS Dublin Preschool Program At this time there are no increases proposed for the Dublin Preschool Program. Fees for the 2011-2012 school year were adopted by the Commission on February 23, 2011. The Dublin Preschool Program is achieving 100% cost recovery. Tenderfoot Day Camp Tenderfoot Day Camp is for children who are three-years old to entering Kindergarten. Each one-week session has a special theme. Camp is held Monday through Thursday for two and a half hours per day during June, July and August. This program is not a co-op program like the Dublin Preschool. Therefore parents are not required to volunteer during Camp. Staff proposes a fee increase of 6%, or $4.00 per week. This equates to an increase of $0.40 per hour on the average. The fee at $6.90 per hour remains a good value compared to similar programs. The Tenderfoot Day Camp is estimated to achieve 59% cost recovery with the fee increase, which is I% shy of the target. Staff recommends not increasing the fee any higher this year, and will achieve the 60% target in FY 2012-2013. Following are the proposed fee increases: PROPOSED PRESCHOOLFEE MODIFICATIONS CURRENT PROPOSED Description Resident Non-Resident Resident Non-Resident Tenderfoot Day Camp (1 week session; 10 hours) $65.00 $75.00 $69.00 $83.00 FAMILY SERVICES PROGRAMS Family Services Programs support positive youth development and strong families. Programs include Fun in the Sun, Nature Day Camp, After School Recreation, Student Union and Family Events. Staff proposes increasing resident fees for Family Services Programs an average of 7%. Despite the fee increase the programs continue to be an excellent value compared to the market average. The following table summarizes the proposed fee modifications. PROPOSED FAMILY SERVICES FEE MODIFICATIONS CURRENT FEES PROPOSED FEES Description Resident Non-Resident Resident Non-Resident Fun in the Sun 8 Week Session $209.00 $240.00 $219.00 $263.00 1 Week Session $46.00 $53.00 $48.00 $58.00 Nature Day Camp (only increasing non-res fee) 1 Week Session $165.00 $190.00 $165.00 $198.00 Extended Care $51.00 $59.00 $51.00 $61.00 Family Events Breakfast with Santa $6.50 $7.50 $7.50 $9.00 Letters from Santa $6.00 $7.00 $7.00 $8.00 Spring Eggstravaganza $6.50 $7.50 $7.50 $9.00 The resident fees for Fun in the Sun are increasing 4.6% due to increased salary costs for Recreation Leaders. Fun in the Sun is estimated to achieve 61% cost recovery with the proposed fee increase. Staff is proposing no increases to the resident fees for Nature Day Camp, which has been estimated to achieve 65% cost recovery. The holiday family events and programs including Breakfast with Santa, Letters from Santa and the Spring Eggstravaganza were achieving less than 55% cost recovery. Therefore Staff recommends 2 of 5 increasing the registration fees $1.00 per person to achieve the 60% target. It has been several years since the fees for these events have been adjusted. Although there is no proposed increase in resident fees for the Family Campout, the non-resident rate is increasing from $17.00 to $18.00 to meet the new non-resident fee requirements in the Pricing Policy. TEEN PROGRAMS Monthly Teen Events No fee increases are proposed for teen events. Currently the teen events program is achieving 8% cost recovery, which is below the target of 30% for this service. Staff does not believe it is feasible to achieve this target because the teens are not willing to pay more for the events, and the expenditure budgets are already lean. Staff will be considering alternatives for reassigning some of the permanent staffing resources assigned to teen programs to other higher priorities, which will help improve the cost recovery rate, but still fall short of the 30% target for a "Priority 2" service. Junior Leader Training Staff proposes increasing the fee for the Junior Leader Training Program by 5% due to increases in staffing costs associated with administering the program. The Junior Leader Program is expected to achieve 7% cost recovery, which is acceptable for a "Priority 1" service. AQUATIC PROGRAMS At the Dublin Swim Center, the City is experiencing increases in utility, pool chemical, and repair and maintenance costs. Therefore, Staff is proposing the following fee modifications: PROPOSED REC AND LAP SWIM FEES CURRENT FEES PROPOSED FEES 15-Swim 15-Swim 15-Swim 15-Swim Pass Pass Pass Pass Daily Fee Resident Non-Res Daily Fee Resident Non-Res 5 years and younger $2.50 $25.00 $37.50 $2.75 $27.45 $41.25 6-17 years $3.00 $30.00 $45.00 $3.25 $32.55 $48.75 18-54 years $3.75 $35.00 $52.50 $3.75 $37.50 $56.25 55 years and older $3.25 $30.00 $45.00 $3.25 $32.55 $48.75 PROPOSED AQUATIC PROGRAM OTHER FEES CURRENT FEES PROPOSED FEES Resident Non-Res Resident Non-Res Family Pass $150.00 $173.00 $165.00 $198.00 Competitive Swimming Programs Swim Team $175.00 $201.00 $199.00 $239.00 Competitive Stroke Lessons $62.00 $71.00 $69.00 $83.00 Other Programs Guard Start/WSIA Training $80.00 $92.00 $85.00 $102.00 Lifeguard Training $185.00 $213.00 $195.00 $234.00 Water Safety Instructor Training $185.00 $213.00 $195.00 $234.00 The proposed resident fee increases for aquatics programs average 8.6%. The proposed fee increases for Recreational Swimming average 8.8% and are attributable to an increase in facility and staffing costs. For recreational swimming it is estimated that the cost recovery rate will be 15%, which is within the range for a Priority 1 service. These fees will still be competitive in the market, and less than the San Ramon Olympic pool, which is the nearest competitor. 3 of 5 The current cost recovery rate for Competitive Swimming Programs is only 24%, which falls short of the 30% target for a Priority 2 service. In order to achieve the 30% cost recovery rate the fees would need to be raised 26%. For example Swim Team would increase from $175 to $225 in one year. Staff recommends implementing the fee increase necessary to achieve the cost recovery over two years. Therefore the proposed fee increases for Swim Team and Competitive Stroke Lessons average 12.5%. For certification classes the proposed fee increases average 5.7%, which is primarily due to increased administrative costs charged by the American Red Cross. The certification classes are estimated to achieve a 32% cost recovery rate, which meets the minimum for a Priority 2 service. Based on the market survey, Staff is not recommending any increases to resident fees for swimming lessons. However non-resident rates will be increased from 15% to 20% more than residents per the Pricing Policy. The estimated cost recovery rate for swimming lessons is 31%, which slightly exceeds the range for a Priority 1 service. The fee increases for Aquatic programs would not be effective until the 2012 season begins. SPORTS PROGRAM FEES The proposed fee increases for sports will help offset anticipated cost increases including contract officials, custodial and facility use charges from the School District and part-time staff. PROPOSED SPORTS FEE MODIFCIATIONS CURRENT PROPOSED Description Resident Non-Resident Resident Non-Resident Junior Warriors Winter League $122.00 $140.00 $125.00 $150.00 Junior Warriors Summer Program $75.00 $86.00 $79.00 $95.00 Open Gym $3.00 $3.00 $4.00 $4.00 Community Golf Tournament (adult) $90.00 $90.00 $99.00 $99.00 Community Golf Tournament (teen/senior) $60.00 $60.00 $69.00 $69.00 Community Golf Tournament (dinner only) $30.00 $30.00 $35.00 $35.00 Tennis Tournament $30.00 $30.00 $42.00 $42.00 Fees for the Junior Warrior Basketball Leagues (summer and winter) are proposed to increase an average of 3.9% for residents and achieve a cost recovery rate averaging 69%. The increase is primarily associated with increased costs for officials. There are no increases proposed to the resident fees for the youth basketball clinics; however, non-resident rates are being increased from 15% to 20% more than the existing resident rates. This also applies to the fees for adult sports leagues, which will only increase for non-residents. The Open Gym program is currently achieving only 41% cost recovery, which does not meet the minimum target for a Priority 3 service. In order to achieve the 60% target, open gym fees would need to be raised from $3.00 to $4.35; however Staff recommends phasing in the increase and only increasing to $4.00. San Ramon currently charges $4.00; however Pleasanton charges $3.25. Staff recommends increasing fees for Tournaments an average of 20%. For the tennis tournaments there are per player costs charged to the City by the United States Tennis Association for sanctioning the tournament and coordinating registration. The golf tournament fees were increased due to less participation and the need to spread the event costs over fewer players. Despite these increases the tournaments are only achieving 57% cost recovery. Rather than significantly increase the fees in one year, Staff will determine if there are ways to augment with sponsors and vendors at the events to increase overall revenue. 4of5 Staff recommends deleting the private and semi-private basketball training, as well as 3-on-3 basketball, from the Resolution as these programs are no longer offered. COMMUNITY EVENTS AND FESTIVALS The only increases proposed for events are for the Shamrock 5K Fun Run and Walk. This event has become extremely popular with over 1,800 runners in 2011. Currently the Fun Run is only achieving a 56% cost recovery rate (not including costs for Police and Street Maintenance Staff). Additionally fees for Dublin's Fun Run are well below what is charged for comparable events. Therefore staff is recommending increases averaging 19.4% as follows. PROPOSED EVENTS FEE MODIFCIATIONS Description CURRENT PROPOSED Fun Run - Individual Pre-Registration $21.00 $25.00 Fun Run - Families Pre-Reg per Person $17.00 $20.00 Fun Run - Corporate Pre-Reg per Person $19.00 $23.00 Onsite Registration $25.00 $30.00 The proposed fees should increase the cost recovery rate to 65%, which is within the range for a Priority 3 service. For the St. Patrick's Day Festival, Staff has added two new categories of fees for activity vendors, and vendors who sell Irish or Celtic items. The Irish/Celtic vendor fee is a little less than the other vendors, which hopefully will encourage more to participate in Dublin's festival. SENIOR CENTER PROGRAMS There are no proposed fee increases for Senior Center programs. However Staff has added new fees for the Trips and Tours program, which will be reinstated in September. Following are the proposed fees: PROPOSED TRIPS AND TOUR FEES Description RESIDENT NON-RES Local Trips Distant Trips $35.00 $39.00 $42.00 $47.00 These fees are 30% higher than when the program was cancelled a year ago. The cost recovery rate including all of the overhead and in-direct costs is 36%, which is above the minimum rate for a Priority 2 service. RECOMMENDATION: Staff recommends that the Parks and Community Services Commission receive the Staff presentation, open the Public Hearing, receive public testimony, close the Public Hearing, deliberate and adopt the Resolution, or provide alternate direction. 5 of 5 RESOLUTION NO. 02-11 A RESOLUTION OF THE PARKS & COMMUNITY SERVICES COMMISSION OF THE CITY OF DUBLIN ADOPTING A MASTER FEE SCHEDULE FOR PARKS AND COMMUNITY SERVICES DEPARTMENT PROGRAMS AND SERVICES WHEREAS, the City of Dublin has been sponsoring recreational programs, services and events since 1984; and WHEREAS, the City Council adopted the Parks and Community Services Pricing Policy on September 21, 2010; and WHEREAS, the Pricing Policy provides guidance for annual adjustments to service fees and identifies what services should recover 100% of the total cost (direct and indirect costs) of providing a service, and objective criteria for pricing services at lower levels; and WHEREAS, it is necessary to revise fees to reflect changes in the cost of providing programs; and WHEREAS, the proposed fee schedule reflects these changing conditions and the guidelines of the Pricing Policy; and WHEREAS, the Pricing Policy provides that fees for Dublin residents should be discounted 17% less than non-residents. NOW, THEREFORE, BE IT RESOLVED that the Parks and Community Services Commission of the City of Dublin does hereby adopt the following fee schedule: I. FAMILY SERVICES FEES Description Resident Non-Resident After School Recreation and Student Union Full Session $529.00 $635.00 20-Da Pass $149.00 $179.00 Late Fee (per minute $1.00 $1.00 Fun in the Sun 8 Week Session $219.00 $263.00 1 Week Session $48.00 $58.00 Nature Da Cam 1 Week Session $165.00 $198.00 Extended Care Pass $51.00 $61.00 Family Events Breakfast with Santa $7.50 $9.00 Letters from Santa $7.00 $8.00 E strava anza $7.50 $9.00- Family Cam out (per person) $15.00 $18.00 ATTACHMENT 1 H. PRESCHOOL PROGRAM FEES Resident Non-Resident Dublin Preschool Co-Op - 2 days per week 12 weeks $334.00 $401.00 Dublin Preschool Co-Op - 3 days per week 12 weeks $499.00 $599.00 Dublin Preschool Co-Op - 4 days per week 12 weeks $749.00 $899.00 Dublin Preschool - 2 days per week 12 weeks $424.00 $509.00 Dublin Preschool - 3 days per week 12 weeks $639.00 $767.00 Dublin Preschool - 4 days per week 12 weeks $949.00 $1,139.00 Tenderfoot Da Cam 1 week session $69.00 $83.00 III. TEEN PROGRAM FEES Resident Non-Resident Junior Leader Program $68.00 $82.00 Teen Events Monthly Teen Events (Pre-Registration) $5.00 $5.00 Monthly Teen Events At the Door $6.00 $6.00 IV. AOUATIC FEES (EFFECTIVE JANUARY 1. 2012) Recreational Swimming Dail Fee 15- Pass 15-Pass N/R 0-5 Years Dail Admission $2.75 $27.45 $41.25 6-17 Years Dail Admission $3.25 $32.55 $48.75 Adult Dail Admission $3.75 $37.50 $56.25 Senior Dail Admission $3.25 $32.55 $48.75 Resident Non-Res Family Pass $165.00 $198.00 Fitness Programs Adult La Swim - daily fee $3.75 $3.75 Sr. La Swim - daily fee $3.25 $3.25 Adult La Swim - ass fee 15 admissions $37.50 $56.25 Sr. La Swim - ass fee 15 admissions $32.55 $48.75 Learn-to-Swim Program Infant/Parent 1:9 ratio; 8 classes $38.00 $46.00 Preschool 1:5 ratio; 8 classes $54.00 $65.00 Youth 1:7 ratio; 8 classes $46.00 $55.00 Adult 1:5 ratio; 8 classes $54.00 $65.00 Private Lesson 1:1 ratio $31.00 $37.00 Semi-Private Lesson per person 1:2 ratio $25.00 $30.00 Competitive Swimming Programs Swim Team $199.00 $239.00 Competitive Stroke Lessons 9 lessons $69.00 $83.00 Other Programs Group Picnic Area Reservation $30.00 $36.00 Guard Start/WSIA Training includes materials $85.00 $102.00 Lifeguard Training includes materials $195.00 $234.00 Water Safe Instructor includes materials $195.00 $234.00 Springboard Diving $49.00 $56.00 Page 2 of 4 V. SPORTS FEES Description Resident Non-Resident Jr. Warriors Winter Basketball League $125.00 $150.00 Jr. Warriors Summer Basketball Program $79.00 $95.00 Basketball Clinic Grades 1-2 $39.00 $47.00 Basketball Clinic Grades 3-6 $49.00 $59.00 Basketball 5 on 5 Leagues $620.00 $744.00 Basketball 4 on 4 Leagues $420.00 $504.00 Basketball3 on 3 Leagues $400.00 $480.00 Softball Leagues - Full Season $620.00 $744.00 Bocce Ball Adult Co-ed League $125.00 $150.00 Soccer League $700.00 $840.00 Sports League Late Registration Fee $25.00 $25.00 Open Gym Dail Admission 3 hours $4.00 $4.00 Tournaments General Community Golf Tournament Adult $99.00 Community Golf Tournament Teen/Senior $69.00 Community Golf Tournament Dinner Only) $35.00 Tennis Tournament $42.00 VI. COMMUNITY EVENTS AND FESTIVALS FEES Description Resident Non-Resident St. Patrick's Da Festival Commercial Vendors $400.00 $1,000.00 Restaurant Vendors $800.00 $800.00 Snack Vendors $650.00 $650.00 Beverage Vendors $400.00 $400.00 Pre-Packaged Food Vendors $500.00 $500.00 Activity Vendor $300.00 $300.00 Irish/Celtic Vendors $250.00 $250.00 Non-Profit (fundraising only) $25.00 $25.00 Fun Run Individuals (pre-registration) $25.00 $25.00 Families (pre-registration; per person) $20.00 $20.00 Corporate (pre-registration; per person) $23.00 $23.00 Onsite Registration $30.00 $30.00 Page 3 of 4 Vii. SENIOR CENTER PROGRAM FEES Description Annual Senior Supporter Card Resident $9.00 Annual Senior Supporter Card on-Resident $10.00 Activity Fee (per activity) $1.25 Trips and Tours - Local Trips Resident $35.00 Trips and Tours - Local Trips on-Resident $42.00 Trips and Tours - Distant Trips Resident $39.00 Trips and Tours - Distant Trips on-Resident $47.00 Special Events Resident $7.00 Special Events on-Resident $8.00 Dances Pre-Registration Resident $9.00 Dances Pre-Registration on-Resident $10.00 Dances at the Door $12.00 BE IT FURTHER RESOLVED, that the Parks and Community Services Director may adjust the adopted fees as long as cost-recovery target rates are maintained, and the increase does not exceed 10.0 percent for purposes of introductory rates, family discounts and coupon discounts, non-prime-time pricing, package discounts and early registration discounts to promote new recreation programs or resurrect existing programs. BE IT FURTHER RESOLVED, that Resolution Number 01-11 be rescinded in entirety. PASSED, APPROVED AND ADOPTED this 18th day of July 2011. AYES: NOES: ABSENT: ABSTAIN: ATTEST: Parks & Community Services Director Chairperson Page 4 of 4 CITY OF DUBLIN PARKS & COMMUNITY SERVICES PRICING POLICY The City of Dublin promotes and supports a high quality of life which ensures a safe and secure environment that fosters new opportunities. ATTACHMENT 2 5ft CIYY (11 DUBLIN Parks and Community Services Pricing Policy ACKNOWLEDGMENTS City Council Tim Sbranti, Mayor Kasie Hildenbrand, Vice Mayor Don Biddle Kevin Hart Kate Ann Scholz Parks and Community Services Commission Heritage and Cultural Arts Commission Steve Jones, Chairperson Rich Guarienti, Vice Chairperson Alan Elias Angela Muetterties Anthony Totaro Matthew Reinemann, Student Commissioner City of Dublin Executive Staff Joni Pattillo, City Manager Chris Foss, Assistant City Manager Department Management Staff Steve Minniear, Chairperson Sonal Nuckols, Vice Chairperson Anita Carr Kim Halket Connie Mack Dayna Tutino Georgean Vonheeder Leopold Diane Lowart, Parks and Community Services Director Paul McCreary, Assistant Director of Parks and Community Services Herma Lichtenstein, Parks and Facilities Development Manager John Hartnett, Heritage and Cultural Arts Manager Written by Paul McCreary, Assistant Director of Parks and Community Services Based on policies established by the cities of Davis, Mountain View, San Luis Obispo and San Mateo c1YY m DUBLIN Table of Contents Parks and Community Services Pricing Policy OVERVIEW ......................................................................................................................... 2 Purpose of the Policy ..............................................................................................................3 Summary of Cost Recovery and Pricing Model ......................................................................3 DETERMINING PROGRAM COSTS ....................................................................................... 5 Direct and Indirect Program Costs .......................................... ................................................5 Direct Service Costs ............................................................. ................................................ 5 Indirect Program Coordination Costs .................................. ................................................ 5 Indirect Department Administrative Costs ......................... ................................................ 5 Indirect Facility Overhead Costs ......................................... ................................................ 5 Allocating Indirect Costs ....................................................... ................................................5 SETTING COST RECOVERY TARGETS ................................................................................... 8 Calculating Cost Recovery Rate .............................................................................................. 8 Prioritizing Service Values .......................................................................................................8 Priority 1- Core/Essential Services ...................................................................................... 8 Priority 2 - Important Services ............................................................................................. 9 Priority 3 - Discretionary Services ....................................................................................... 9 SETTING PRICES ............................................................................................................... 10 Establishing Proposed Prices ................................................................................................10 Non-Resident Rates ..............................................................................................................10 Discounts and Variable Pricing .............................................................................................11 Guidelines for Changing Prices .............................................................................................12 Page 11 City 111 DUBLIN Parks and Community Services Pricing Policy Parks & Community Services Pricing Policy OVERVIEW Due to the economic recession the City has experienced a significant decrease in revenues from property tax, sales tax and interest earnings, as well as takeaways by the State of California. In the past these revenues allowed the City absorb most of the indirect costs of providing recreational services. However it has been estimated the City will face multi-million dollar deficits for several years. The City Council has already approved millions in prudent budget reductions to bridge the gap, and if revenues do not increase significantly the City's General Fund-supported services may be subject to greater reductions. In order to have the least impact on services and achieve a structurally balanced budget one strategy is to develop a Pricing Policy to increase cost recovery for services generally provided to specific populations. This Pricing Policy will provide guidance for annual adjustments to service fees. It will identify what services should recover 100° of the total cost (direct and indirect costs) of providing a service, and objective criteria for pricing services at lower levels. If a user-fee activity is not completely cost recovered, a General Fund operating subsidy is necessary. There are reasons for subsidies, such as activities that provide a greater community benefit. The level of cost recovery should consider the community-wide versus special service nature of the program or activity. The use of General Fund revenues is appropriate for community-wide services, while user fees are appropriate for services that are of special benefit to easily identified individuals or groups. Additional reasons to subsidize services include the desire of the City to target a specific population or activity, as well as for promotion and marketing benefits. Establishing a Pricing Policy will allow the City of Dublin to continue to provide high-quality programs in a financially sustainable manner. It will maximize the benefits of programs to the greatest number of Dublin residents, and focus on initiatives or populations of priority to the City. The policy will continue to value preferential access and fee discounts to Dublin residents. Page 12 CI FY Ut DUBLIN Parks and Community Services Pricing Policy Purpose of the Policy The Parks and Community Services Strategic Plan identified a strategic goal (#4f) to develop a pricing policy. This will establish cost recovery levels and goals for programs and accomplish the following: • Formalize the structure for calculating fees • Establish cost recovery levels with a clearer connection between core service values, the population served and the level of community benefit • Promote the best investment of General Fund resources • Provide a system for tracking the financial performance and identifying programs not generating the designated minimum cost recovery Surrtrrtar of Cost Recovery and Pricing [Model The Pricing Policy is based on best practices used by other municipalities and recommendations from continuing education experts on program pricing. The Policy establishes guidance for Staff to have the flexibility to adjust fees to maximize revenue and differentiate pricing in response to fluctuations in the market or demand. It will also provide the ability to package programs and provide discounts to increase participation and/or promote new programs. The Policy is based on the "Parks and Community Services Cost Recovery and Pricing Model" depicted in Figure 1 below. FIGURE 1 -PARKS AND COMMUNITY SERVICES COST RECOVERY AND PRICING MODEL DETERMINE: Costs service Values Market Conditions Demand General Fund Capacity DETERMINE MODIFICATIONS: Reduce Costs ReduceRecovery Target Eliminate Program too EVALUATE IF: Cost Con Be Reduced Recovery Can Be Increased SET COST RECOVERY TARGETS SET PRICING IMPLEMENT I PRICING Page 13 of DUBLIN Parks and Community Services Pricing Policy In recognition of the wide variety of service values and revenue generating potential of various activities, Staff will assign each activity to one of three "service priority groups" based upon an assessment of service and cost recovery values. Specific cost recovery thresholds will be established for each service priority group and include both minimum and target levels of cost recovery. "Priority 1" activities will provide the greatest community-wide benefit and will have lower cost recovery targets than "Priority 3" activities which provide more of an individual or small group benefit, and therefore will have higher cost recovery thresholds. Cost recovery for activities directed to adults should be relatively high. While cost recovery for youth and senior activities should be relatively low. In those circumstances where services are similar to those provided in the private sector, cost recovery levels should be higher. Activities within each priority group will be reviewed and where appropriate may include specific considerations that may supersede the cost recovery thresholds identified for the group. Considerations could include market rates and demand, benchmarking to a specific competitor, the availability of alternative providers, or collection of fees is not cost effective. Both the Heritage and Cultural Arts Commission and the Parks and Community Services Commission annually adopt a Master Fee Resolutions for programs. Following the adoption of the new Pricing Policy the Commissions will still adopt annual Fee Resolutions. However, the Resolutions will provide Staff with the authority to adjust program fees during the fiscal year; except that no fee increase may exceed 10% without the approval of the appropriate Commission. Additionally as part of the annual fee adoption process, the Commissions will review the performance of each activity compared to the Pricing Policy and make recommendations for adjustments to the Pricing Policy as deemed appropriate. The City Council must approve any future changes to the adopted Pricing Policy. Following the adoption of the Pricing Policy, strategies for achieving the target cost recovery rate will be established by Staff for each program area. These strategies may include immediate or gradual action depending upon the best interests of maintaining a strong program, achieving the target within a reasonable time period and current market conditions. Activities that do not meet the minimum cost recovery threshold will be reviewed by Staff to determine whether it is feasible to reduce costs or if the cost recovery target can be adjusted. Otherwise Staff will recommend eliminating the activity. For activities that exceed the cost recovery thresholds, Staff will determine the feasibility of increasing the cost recovery target. Page 14 CITY P1 DUBLIN Parks and Community Services Pricing Policy DETERMINING PROGRAM COSTS Direct n Indirect Program Costs Direct costs by nature are usually easy to identify and relate to a specific service. However this is not the case for indirect costs. This policy will help to determine the total cost of providing a specific service by developing a system for allocating indirect costs to direct cost programs. Direct costs are those solely associated with a particular service, such as After School Recreation, Swim Lessons, Adult Basketball Leagues, or the First Saturday events at the Heritage Center. Indirect costs are not identified with one particular service and are typically incurred for a joint purpose that benefits more than one service within the Department. The total cost of a service is the sum of the following direct and indirect costs. Direct Service Costs • The fixed and variable costs necessary to operate a specific program • Includes seasonal part time staff, supplies, equipment, and contracted services Indirect Prograrn Coordination Costs • The fixed resources for the service area (i.e. Sports, Family Services, Preschool, Teens, Heritage and Cultural Arts, etc.) that do not vary with program participation • Includes permanent staffing for customer service; program oversight by Coordinators, Supervisors, and Managers, and, other overhead supplies and services Indirect Department Administrative Costs • The share of the Department's executive management support • This includes permanent staffing, technology, printing, advertising, internal service funds, credit card processing, etc. Indirect Facility Overhead Costs • The day-to-day costs to keep the facility open and provide facility supervision, as well as on- going maintenance, repairs and equipment replacement. • Includes facility attendants, supplies, utilities, contracted services, and repairs and maintenance Allocating Indirect Costs Allocating indirect costs requires creating indirect cost rates or overhead rates for each of the cost areas identified above. The indirect cost rate is simply the ratio between indirect and direct costs. By applying the overall indirect cost rate to any specific direct cost program, the total cost of the program can be determined. Following is an example using the Preschool Program. Page 15 CITI OI DUBLIN Parks and Community Services Pricing Policy TABLE 1 - FY 2010-2011 INDIRECT OVERHEAD RATE FOR PRESCHOOL COORDINATION Direct Preschool Service Costs (A) ............................. $220,318 Indirect Preschool Service Costs (B) ............................. $93,572 Indirect Preschool Overhead Rate (= B / A) .............0.424716 Dividing the indirect service costs by the direct service costs calculates the indirect overhead rate for the preschool division of the Department. In essence for every dollar of direct expenditures there is an additional $0.42 in cost for indirect preschool program coordination. In addition to the indirect program coordination costs, there are indirect department administration costs. For Fiscal Year 2010-2011 the indirect department overhead rate is 0.182916 of a program's total direct and indirect costs. Using the example above for preschool: TABLE 2 - FY 2010-2011 DEPARTMENT ADMINISTRATI6'E OVERHEAD RATE FOR PRESCHOOL Total Preschool Program Costs (A) ............................ $313,890 Indirect Department Admin Rate (B) .........................0.182916 Indirect Department Admin Costs (= A x B) ...............$57,416 Allocating indirect costs via an indirect cost rate assumes that all indirect costs are incurred proportionately to the direct cost of the program. However, this may not be a reasonable assumption in all cases, as the benefit received from certain types of support services may be more closely related to an indicator other than cost, such as program length or percentage of square feet of dedicated space. The Pricing Policy allocates indirect facility overhead costs based on an hourly rate per square foot of use for rooms used by multiple programs, or based on a per square foot cost for spaces dedicated to one program, such as the preschool space in Shannon and the Emerald Glen Activity Center. Following shows the calculation for the Facility Overhead Costs for preschool. TABLE 3 - FY 2010-2011 FACILITY OPERATIONS OVERHEAD COSTS Activity Center Direct/Indirect Costs (A) ......................................................$39,250 Percent of Square Feet for Preschool (B) ..................................... ....................100% Activity Center Facility Overhead Cost for Preschool (A x B = C) .. ................$39,250 Shannon Center Direct/Indirect Costs (D) ................................... ..............$349,758 Percent of Square Feet for Preschool (E) ..................................... ......................26% Shannon Center Facility Overhead Cost for Preschool (D x E = F) ................ $91,230 Total Preschool Facility Overhead Costs (= C + F) .................................. $130,480 Since the Preschool has exclusive use of these facilities 100% of these overhead costs are assigned to the preschool program. If multiple programs were using a room, then an hourly overhead rate would be assigned instead. The hourly overhead rate would be calculated by dividing the total overhead costs for a room by the annual usable hours for the facility (i.e. daily from 8:00 a.m. to 10:00 p.m.). Page 16 c1TY 01 DUBLIN Parks and Community Services Pricing Based on the above example the following is a summary of the total cost of the preschool program for Fiscal Year 2010-2011: TABLE 4 - FY 2010-2011 TOTAL PRESCHOOL PROGR,4M COSTS Direct Preschool Program Costs ................................ $220,318 Indirect Preschool Coordination Costs ........................ $93,572 Indirect Department Administrative Costs .................. $57,416 Facility Overhead Costs .............................................. $130,483 Total Preschool Program Costs ...............................$501,789 This policy recognizes the principle that the cost of developing the information necessary to perform the cost allocations should not exceed the benefits likely to be gained. Calculating hourly facility overhead rates and the annual indirect cost rates is relatively easy using the EDEN finance and enterprise resource planning (ERP) system and the CLASS facility booking system. In a true cost accounting system, indirect costs would be calculated and allocated on an ongoing basis throughout the fiscal year based on actual costs. However frequent updating in a municipality would not serve any specific purpose such as price control in a manufacturing company, and would consume significant staffing resources. Therefore the indirect cost rates will be prepared annually as part of the budget preparation process. Page 17 CIYY of DUBLIN Parks and Community Services Pricing Policy SETTING COST RECOVERY TARGETS Calculating Cost Recovery !fate Once the total cost of a program has been identified there needs to be a method to determine the desired level of cost recovery for each activity. To calculate the cost recovery rate, divide the revenue collected for a service by the total cost of providing the service (including direct, indirect and facility overhead costs). The following is an example using the preschool again. TABLE 5 - FY 2010-2011 PRESCHOOL PROGRAM COST RECD VERY RATE Total Preschool Revenue (A) ...................................... $403,530 Total Preschool Program Costs (B) ............................. $501,789 Cost Recovery Rate (= A / B) ...........................................80% The cost recovery rate determines how much a program must generate in revenue (user fees, sponsorships, grants, etc.) and how much subsidy will be needed from the General Fund. Prioritizing Service Values In order to maximize available General Fund resources to the greatest number of residents, the prioritization of subsidies is based on the: • Type of service • Target population • Level of community benefit and participation • Availability of alternative providers These criteria will be used by Staff to assign each Department service to one of three priority groups. These categories are used to set the minimum cost recovery rate and the targeted cost recovery rate for each activity. The following describes in more detail the criteria Staff will use to categorize services into the three priority levels. Priority 1 - Core/Essential Services Minimum Cost Recovery Rate: 0% Priority 1 services have the lowest level of cost recovery and include activities that provide larger community benefit and can be accessed by the broadest cross section of the population. The public expects the City to provide these services and they are usually not provided by others. These services may be provided to a targeted population and/or be essential to the health, safety or livability of the community. Residents would consider these program subsidies a sound investment of public funds. Programs that may fit this category include recreational swimming, Heritage Center tours or picnic area rentals. Page 18 DuBU`N Priority 2 - Important Services Minimum Cost Recovery Rate: 30% Parks and Community Services Pricing Priority 2 services have mid-range cost recovery targets and include activities that provide some community benefit as well as individual or group benefit, and serve a significant number of residents. These programs service the needs of youth or seniors. The services may expand or enhance health and safety, or contribute to economic and community vitality. Although there may be other providers of these services, they can't provide residents with the same level of accessibility, efficiency or effectiveness as the City's services. Important services may include after school programs, preschool classes, swimming lessons, or the St. Patrick's Day Celebration. Priority 3 - Discretionary Services Minimum Cost Recovery Rate: 60% Priority 3 services are discretionary and have the highest level of cost recovery targets. These activities serve a moderate number of residents, providing benefit to the individual or group, and minimal benefit to the greater community. They are typically specialized, and may be provided by the private sector or other agencies with the same level of accessibility, efficiency and effectiveness as the City's programs. These services are nice to have when additional funding is available. The public may not typically expect the City to provide these services, which may provide value beyond what is expected of the City. Examples of Priority 3 services include contracted specialty classes and camps, letters from Santa, concert series or adult sports leagues. Page 19 CI TV of DUBLIN SETTING PRICES Establishing Proposed Prices Parks and Community Services Pricing Policy With the total costs identified and each activity categorized into a service priority group, Staff can then set the price for each activity. As noted each priority group has a minimum cost recovery rate and a targeted cost recovery rate. When setting the price to be within the cost recovery range identified for the priority level of the service, Staff will need to evaluate the market rates and demand for the activity to determine the feasibility of the proposed price. If the price is too high compared to the market and there is little demand for the program, Staff will need to take one or more of the following actions: • Evaluate the feasibility of reducing costs • Provide a justification to the Department Administration for reducing the fee • Propose elimination of the activity the Department Administration If applying the Pricing Policy to an existing program will result in a significant fee increase in one year, Staff could also consider implementing the fee increase over a two or three year period. When conducting the market analysis, if the target price is below the market average Staff should consider increasing the price to improve cost recovery, yet still remain competitive. If an activity has high demand Staff should also determine if the market will bear a fee increase to improve cost recovery. Annually, Staff will present the proposed pricing to the Heritage and Cultural Arts Commission and Parks and Community Services Commission for approval. During the year the Parks and Community Services Director can set and adjust fees as long as cost-recovery ranges and target rates are maintained. This will allow for Staff to respond to fluctuations in the market and demand, and provide the flexibility to package programs to increase participation and/or promote new programs. Any mid-year fee increase exceeding 10.0 percent will require the approval of the Parks and Community Services Commission. Non-Resident Mates Historically fees charged for non-residents compared to Dublin residents have been 15% more for programs, and 20% for facility rentals. Under the new Pricing Policy fees for non-resident programs will increase from 15% to 20% to be consistent with facility rentals. The Parks and Community Services Director is authorized to reduce or eliminate non-resident fee differentials when it can be demonstrated that: • The fee is reducing attendance and there are no appreciable expenditure savings from the reduced attendance. • It may be impractical or too costly to establish a system to identify and charge non-resident users. For example, checking residency status for drop-in activities that do not require pre-registration, such as Recreational Swimming, is impractical. Page 110 CITY M DUBLIN Parks and Community Services Pricing Policy Following adoption of the Pricing Policy, Staff will update the City's promotional materials to re-package how these fee differentials are presented. Rather than being a "non-resident surcharge" the differential will be featured as a "resident discount". This is a more positive way of marketing the concept. Discounts and Variable Pricing The Learning Resources Network (LERN) is an international association of people who coordinate lifelong learning classes and recreation programs. The organization has over 40 years of research on best practices, and in particular has a wealth of knowledge regarding pricing and marketing. Staff has reviewed information and training materials from LERN and has developed the variable pricing component of this policy based on the best practices recommended by LERN. As noted there will be situations when it is desirable to adjust the approved fee for a program. The Parks and Community Services Director is authorized to offer reduced fees such as introductory rates, family discounts and coupon discounts, or non prime-time pricing on a pilot basis (not to exceed 18 months) to promote new recreation programs or resurrect existing ones. Other potential pricing strategies could include early registration discounts, in which the current price would be the early price, and the fee for regular registration would be higher. Package discounts would lower the fee for customers that register for a group of classes. It can be shown that targeted, short-term discounts, for certain programs may be effective at garnering more participation. However Staff should be cautious about lowering prices permanently or across the board as a way to increase registration. In a recession enrollments drop, but those who still register are probably willing to pay the same or even higher prices because they need the class or service. Thus there can be less risk in boosting prices than in lowering them. For example there is an activity with a registration fee of $95 and 25 participants, and at that participation level the City nets $950 after paying direct expenses. If the fee were lowered to $75 there would need to be seven (28%) more registrations for the City to net the same amount. Alternatively if the price was raised to $125 then registrations could drop by six (24%) and still have the same level of income and profitability. Table 6 outlines this concept. TABLE 6 - COMPARISON OF PROFITABILITYAT LOWER AND HIGHER PRICING CURRENT LOWER HIGHER PRICE PRICE PRICE Registration Fee $95 $75 $125 Number of Registrations 25 32 19 Revenue Collected $2,375 $2,400 $2,375 Contract Payment (60% of revenue) $1,425 $1,440 $1,425 Net to City $950 $960 $950 Page 1 11 CITY of DUBLIN Parks and Community Services Pricing Policy Staff will be required to review the financial feasibility of variable pricing strategies before being approved by the Parks and Community Services Director. Guidelines for Changing Prices LERN has done extensive research on consumer response to pricing strategies. They have determined psychological price breaks for community classes and programs. These are the points at which if the City raises the fee beyond a price point, registration will decrease by an amount more than proportional to the price increase. Basically the market grows accustomed to paying a certain amount for a certain type of program. Additionally the perception of the price affects the price point. For example raising a price above $0.99 will cause demand to fall because people perceive $1.00 as a significantly higher price. This is sometimes referred to as "odd-number" pricing. According to LERN pricing points for community education and recreation are as follows: $20 $75 $400 $30 $100 $200 When raising fees Staff should consider where the existing fee is in relation to the price breaks and try to stay under the price break if possible. Additionally LERN recommends trying to change only one digit of the price and making it end in a "5" or "9". For example if the price of an existing activity is $50, Staff could lower the fee to $49 to stay under the price break, end the price in a "9" and only change one digit. Alternatively, Staff could raise the price to $55 or $59 and meet the guidelines recommended by LERN. Page 112