City of Alexandria, Virginia
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MEMORANDUM
DATE: SEPTEMBER 18, 2013
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: RASHAD M. YOUNG, CITY MANAGER /s/
DOCKET TITLE:
TITLE
Consideration of a Resolution to Adopt Resource Allocation and Fee Assistance Policy for the Department of Recreation, Parks and Cultural Activities. [ROLL-CALL VOTE]
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ISSUE: Consideration of a Resolution (Attachment 1) to adopt two polices pertaining to the Department of Recreation, Parks and Cultural Activities programs and services. (1) The Resource Allocation and Cost Recovery Policy (Attachment 2) provides methodology to determine the basis for fees and charges, and (2) the Fee Assistance Policy (Attachment 3) provides formal guidance for qualifications pertaining to fee reductions for programs and services.
RECOMMENDATION: That City Council adopts the resolution for the two recommended policies (1) The Resource Allocation and Cost Recovery Policy, and (2) the Financial Assistance Policy effective July 1, 2013.
BACKGROUND: City Council Strategic Plan Goal 5 states that; Alexandria is financially sustainable, efficient, community oriented and values its employees. The proposed polices align the work of the Department of Recreation, Parks and Cultural Activities (RPCA)to the focus area that City government manages taxpayer dollars in a manner that safeguards the long-term delivery of services. Determining a cost recovery and allocation methodology addresses the policy question of how much of the service costs taxes should support versus the participants. A policy to allocate resources in this manner supports sustainability of services. Cost recovery benchmarks nationally show a 34% level of participant fees versus tax support for programs. In Northern Virginia, the ratio has a range of the City of Alexandria at 12% versus Loudoun County at 63% cost recovery.
GreenPlay, L.L.C., conducted the research and public outreach to develop the resource and cost recovery policy for the City of Alexandria. They developed similar policies in over 25 agencies across the country. The Pyramid Pricing Methodology in now a standard practice nationally to determine levels of tax support for municipal recreation and parks services. RPCA pursued this practice to ensure the Department was more financially sustainable, and has an ordered approach to allocate scarce public resources.
The City of Alexandria received a Resource Allocation and Cost Recovery Report (Attachment 4) from GreenPlay, L.L.C, which identifies practices and goals to continually improve and enhance services and overall organizational effectiveness for RPCA. Report development included an analysis of the Department's core values, vision, and mission; how department operations align with the City Council's Strategic plan; and the City's Four Guiding Principles. The process included a review and assessment of services including programs and facilities, categorization of Departmental services based upon the level of community versus individual benefit, identification of direct and indirect costs, and an evaluation of current pricing methods. All of the components of this process directly influence current cost recovery and subsidy allocation levels, the establishment of future cost recovery and subsidy allocation goals, and future pricing strategies and methods. In keeping with Council's FY 2014 Budget Guidance Resolution, this comprehensive review and analysis will assist the Department in refining its service delivery and financial management philosophy as it moves forward in efforts to sustain services over both the short and long-term.
The goals detailed in the Resource Allocation and Cost Recovery Report includes:
Goal 1: Formally adopt revised Departmental policies to guide pricing decisions.
Goal 2: Fund and leverage the Financial Assistance Program (reduced or waived fees) through various funding sources.
Goal 3: Define the role and responsibilities of "Affiliates/Grantees" so that resource allocation can be tied to those with allied interests.
Goal 4: Adjust fees to align with Tier Minimum as recommended. Adjust fees that have the greatest departure from cost recovery targets.
Goal 5: Review, seek, and implement alternative funding sources in lieu or addition to fees.
Goal 6: Seek strategies to Reduce expenditures.
Goal 7: Adjust program management strategies in determining program offerings.
Goal 8: Improve marketing efforts.
Goal 9: Consider additional potential future opportunities.
Having a Resource Allocation and Cost Recovery Philosophy, Model, and Policy will assist in answering challenging questions from City leadership and from citizens such as:
· Are our programs priced fairly and equitably?
· How will we continue to fund Departmental facilities and services in relationship to future budget constraints?
· Are we using funding in a responsible manner?
· Is there a methodology for the distribution of subsidy (funds used in excess of what is collected by direct fees)? If so, are we transparent?
· Does the way we charge for services (facilities, programs, etc.) align with the City Strategic Plan and support the Departmental values, vision, and mission?
DISCUSSION: In 2011, City Council began to adopt fees for traditional community recreation programs. Prior to this date, programs such as the Out of School Time Program were provided at no cost to participants. City Council annually approves fees for swimming pool use, market rate classes and camps, and youth sports, as submitted by RPCA. As the City moves to align City Council strategic plans to resource allocation, RPCA needs to be more cost effective. A policy decision must underlie the rationale for charges and equity among different services. The Pyramid Methodology sets certain public decision criteria for cost recovery:
* 3 factors determine fee levels - (a) Cost of service provision, (b) Community benefit of the program (Subsidy versus Cost Recovery), and (c) Competitive market rates.
* RPCA will conduct a public sorting process annually to determine the community benefit level for each program. The sorting process determines the level of expected general fund allocation versus revenue provided by participants.
* RPCA would submit a fee schedule in the budget process based on this sorting process. City Council would retain the ability to determine a different sorting outcome based on overriding public policy.
The Financial Assistance Policy consolidates assistance decisions made at different times by either the City Council or RPCA. This new City Council policy clarifies the public purpose for offsetting charges to different classifications of program participants. It supports the public purpose of ensuring access to services for all residents. The two rationales for fee support include family economic factors and age. A fee reduction means additional general fund support for affected programs.
FISCAL IMPACT: The proposed policy would increase the cost recovery ratio for RPCA over time. Initially, RPCA has a future target of 40% cost recovery for the Recreation Services budget. If the department were to apply the policy to the FY2014 budget, this equates to a Recreation Services budget of $8,993,173 and program and services revenue of $3,597,269. The net general fund impact would be $5,395,904. This compares to the FY2014 approved net impact of $6,597,410.
ATTACHMENTS:
Attachment 1: Resolution to Adopt Two RPCA Policies
Attachment 2: Resource Allocation and Cost Recovery Policy
Attachment 3: Financial Assistance Policy
Attachment 4: City of Alexandria Final Resource Allocation and Cost Recovery Report
Attachment 5: City Manager Letter
Attachment 6: Benefits Methodology
STAFF:
Debra Collins, Deputy City Manager
James Spengler, Director, RPCA
William Chesley, Deputy Director, Recreation Services
David Miller, Division Chief, Recreation Services
Nelsie Smith, Budget Director