HomeMy WebLinkAboutRES 071222-I - Park & Rec Cost RecoveryRESOLUTION NO. 011'LZz-I
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GEORGETOWN,
TEXAS, ESTABLISHING THE CITY OF GEORGETOWN'S PARKS AND
RECREATION DEPARTMENT COST RECOVERY POLICY EFFECTIVE
JULY 12, 2022.
WHEREAS, the Georgetown Parks and Recreation Master Plan, under Goal 5. l.c., recommends
the Department implement a cost recovery philosophy and policy;
WHEREAS, the goal of the City is for the City's Parks and Recreation Department to implement
a fair and equitable cost recovery policy allowing the City to recover appropriate costs without
compromising essential services to the widest public;
WHEREAS, the City's Parks and Recreation Department conducted a Cost Recovery Study,
attached as Exhibit "A", extensively reviewing its programs and services for pricing and cost recovery;
WHEREAS, the Cost Recovery Study proposed the City adopt a cost recovery policy where the
Georgetown Cost Recovery Pyramid is a fundamental component of the cost recovery philosophy;
WHEREAS, the City Council of the City of Georgetown has reviewed the proposed Cost
Recovery Policy, attached as Exhibit `B"; and
WHEREAS, the City Council of the City of Georgetown wishes to adopt the Cost Recovery
Policy attached as Exhibit `B".
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
GEORGETOWN, TEXAS, THAT:
SECTION 1. The facts and recitations contained in the preamble of this resolution are hereby
found and declared to be true and correct and are incorporated by reference herein and expressly made
a part hereof, as if copied verbatim.
SECTION 2. Georgetown Parks and Recreation Cost Recovery Study. The City Council hereby
adopts the March 2022 Cost Recovery Study presented by Georgetown Parks and Recreation
Department.
SECTION 3. The Cost Recovery Policy. The Cost Recovery Policy outlined by the March 2022
Cost Recovery Study is hereby adopted by the City Council of the City of Georgetown, Texas.
SECTION 4. This resolution shall be effective immediately upon adoption.
Resolution Number: (n 1 -T- Page 1 of 2
Description: Cost Recovery Policy
Date Approved: July 12, 2022
RESOLVED this 12th day of July 2022.
ATTEST:
<-7&I
iq co"�,C- m
Robyn Dens are
City Secretary
APPROVED AS TO FORM:
SICye gisso
City Attorney
Resolution Number: 011 =]c Page 2 of 2
Description: Cost Recovery Policy
Date Approved: July 12, 2022
EXHIBIT A
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• /� 61 �• GEORGETOWN PARKS AND RECREATION
- Golden Bear Park
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ACKNOWLEDGMENTS
Mayor and City Council
Mayor —Josh Schroeder
Council District 1— Amanda Parr
Council District 2 — Shawn Hood
Council District 3 — Mike Triggs
Council District 4 —Steve Fought
Council District 5 — Kevin Pitts
Council District 6—Jake French
Council District 7—Tommy Gonzalez
Administration
David Morgan, City Manager
Laurie Brewer, Assistant City Manager
Wayne Nero, Assistant City Manager
Nick Woolery, Assistant City Manager
Parks and Recreation Board
Katherine Kainer, Chair
Chad Holz, Co -Chair
Lindsay Cooper, Secretary
Brazos Fielder
Jack P. Flatau
Jolene Melancon
Peter Bahrs
Parks and Recreation Staff Project Team
Kimberly Garrett, Parks and Recreation Director
Eric Nuner, Parks and Recreation Assistant Director
Robert Gaylor, Parks and Recreation Manager
Traci Stengle, Parks and Recreation Manager
Jamie Beran, Parks Superintendent
Jill Kellum, Administrative Supervisor
Consultant Team
GreenPlay, LLC
For more information about this document, contact GreenPlay, LLC
At: 1021 E. South Boulder Road, Suite N, Louisville, Colorado 80027, Telephone: 303-439-8369
Email: info@p-reenplayllc.com www.greenplaylIc.com
Table of Contents
Table of Contents
I. Introduction .................................
Why do this? ..................................
Study Objective ..............................
The Pyramid Methodology .............
................................................................................ 7
........................................................................... 7
................................................................................ 7
............. ,............................ ...................................... 8
II. Study Approach...................................................................................................... 9
Understanding Resource Allocation and Cost Recovery .................................................. 11
Category of Service Development................................................................................... 12
Staff and Stakeholder Engagement................................................................................. 13
AConsensus Pyramid.................................................................................. 14
Cost of Service Analysis................................................................................................... 15
III. Key Findings and Recommendations.....................................................................19
Cost Recovery Tier Targets.............................................................................................. 20
PolicyActions.................................................................................................................. 22
AdministrativeTask......................................................................................................... 23
Cost Savings and Revenue Generation Strategies........................................................... 24
Suggested Policy Language.............................................................................................. 30
IV. Conclusion...........................................................................................................31
Appendices...............................................................................................................32
Appendix A: The Pyramid Methodology Process............................................................ 33
Appendix B: Georgetown Categories of Service.............................................................. 39
Appendix C: Developing a Pricing Strategy ........................................... ................. 43
Criteria for Establishing Fees..................................................................................... 46
Cost Recovery Study
Table of Figures
Figure 1: Georgetown Consensus Pyramid..................................................................... 14
Figure 2: Georgetown Pyramid Model............................................................................ 21
Table of Tables
Table 1: FY21 Cost Recovery Distribution........................................................................ 15
Table 2: FY21 Cost Recovery by Category of Service....................................................... 16
Table 3: FY21 Tier Aggregate........................................................................................... 17
Table 4: Cost Recovery Tier Targets................................................................................. 18
Table5: Policy Actions...................................................................................................... 22
Table 6: Administrative Task........................................................................................... 23
Table 7: Cost Savings and Revenue Generation Strategies ............................................. 24
Illllllllllllllllllllllllltlllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll
s
GEORGETOWN
Cost Recovery Study
I. Introduction
In summer of 2021, the City of Georgetown's Parks and Recreation Department (Department), began
an extensive project to review its programs and services pricing and Cost Recovery. This significant
undertaking is built on community values and mission -based service, and provides a foundational
philosophy, policies, and best practice model which will live on in the organization. Its intent is to be
flexible and responsive to changing conditions, allowing the Department to allocate its resources wisely
and provide valuable information for decision -making and setting priorities for improvements to the
system.
Why do this?
The Department desires to evolve a long term strategy, structure, and system that provides for its fiscal
health and sustainability and is responsive to the community. This includes a methodology for costing
services as well as a Cost Recovery model that is based on the Department's mission and is fair and
equitable.
Cost Recovery must be done carefully, with information and insight, so that agencies can recover
appropriate costs without compromising essential services to the widest public. Cost Recovery needs
to be thoughtful, deliberate and based on understanding — not reactionary. Through this effort, the
Department is seeking a meaningful Cost Recovery philosophy and methodology that is based on
community values and supported by City of Georgetown policy makers.
Study Objective
Responsible stewardship of resources also includes the creation and maintenance of affordability,
fairness, and equity in the system. This requires pro -active planning and a business tool designed around
these principles, yet one that addresses a much more comprehensive picture than just pricing. Although
fee adjustments are likely, the objective is not to simply generate new revenues through fees, but to
ensure a sustainable system into the future by using tax revenues and fees in the most appropriate
ways, supplemented where possible by grants, donations, partnerships, and other sources of alternative
revenues.
Having a Cost Recovery Philosophy, Model, and Policy assists in answering challenging questions from
organization leadership and from citizens such as:
• Are our programs priced fairly and equitably?
• How will we continue to fund facilities and services in relationship to future budget constraints?
• Are we using funding in a responsible manner?
• Does the way we charge for services (facilities, programs, etc.) support our values, vision, and
mission?
The primary objective of this plan is to develop a framework and model for planning, Cost Recovery,
budgeting, and pricing for the City's parks, facilities and programs, based on a strong philosophical
foundation.
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GEORGETOWN
The Pyramid Methodology
The Pyramid Methodology used in this study is built on a foundation of understanding who is benefiting
from park and recreation services to determine how the costs for service should be funded. The model
illustrates a pricing philosophy for establishing fees commensurate with a target Cost Recovery level
based on the benefit received.
Descriptions regarding each level of the pyramid are provided in Appendix A; however, the model
is intended as a discussion point and is very dependent on agency philosophies to determine what
programs and services belong on each level. Cultural, regional, geographical, and resource differences
play a large role in this determination. The resulting pyramid is unique to each agency that applies this
methodology.
The development of a financial Cost Recovery philosophy and policy is built upon a very logical
foundation rooted in Georgetown's values. Mission and vision represent principles that create a
philosophical framework to serve as the foundation for organizational decisions and processes. They
also help determine those community conditions that the Department wishes to impact, guiding often
difficult management decisions, substantiating them, and making them justifiable and defensible.
The application of the pyramid methodology begins with the Mission of the organization, but must also
address other considerations:
Who benefits from the service, the community in general or only the individual or group
receiving the service?
Does the individual or group receiving the service generate the need (and therefore the cost) of
providing the service?
• Will imposing the full cost fee pose a hardship on specific users?
• Will the level of the fee affect the demand for the service?
Are there competing providers of the service in the public or private sector?
5 - Mostly Individual Benefit
A - Considerable individual Benefit
3 - IndividuallCommunity Benefit
(Balanced Beneficiaries)
2 - Considerable Community Benefit
1 - Mostly Community Benefit
6RE'ENPLAY.
Pyramid Methodology for
Resource Allocation/Cost Recovery
�o
Cost Recovery Study
II. Study Approach
The study commenced in July of 2021; included three workshops in July, October, and January; and
concluded with final recommendations at the start of 2022. A Project Team comprised of staff from the
Department as well as the Finance Department was established to review practices and existing policy,
to become familiar with the Pyramid Methodology, and to work with the public to understand its values.
Team Members attended an initial Orientation and Training Workshop in July 2021. This was followed
by additional workshops, where staff identified key themes by reviewing existing policy, guidelines, and
practices; becoming familiar with the Pyramid Methodology; and examining current resource allocation
practices. Staff defined categories of programs and services, participated in sorting workshops to place
categories of services on appropriate pyramid tiers, hosted community workshops, and tackled the
challenges of identifying measurable costs associated with providing programs and services.
The execution of the model is broken down into the following steps:
Step 1: Building on your organization's values, vision, and mission
Step 2: Understanding the Pyramid Methodology, and the benefits filter
Step 3: Developing the organization's Categories of Service
Step 4: Sorting the Categories of Service onto the Pyramid
Step 5: Defining direct and indirect costs
Step 6: Determining Cost Recovery levels
Step 7: Establishing Cost Recovery goals
Step 8: Understanding and preparing for Influential Factors
Step 9: Implementation
Step 10: Evaluation
A detailed description of each step is provided in Appendix A.
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GEORGETOWN U1
Step 1: Building on your
organization's values,
vision. and mission
Step 3: Developing the
organization's Categories of
Service
K.
Step 5: Defining direct and
indirect costs
Step 7: Establishing Cost
Recovery goals
k
Step 9: Implementation
(n
IA WA
Step 2: Understanding the
Pyramid Methodology, and
the benefits filter
Step 4: Sorting the Categories
of Service onto the Pyramid
Step 6: Determining Cost
Recovery levels
Step 8: Understanding and
preparing for Influential Factors
■ Step 10: Evaluation
■
Cost Recovery Study
Understanding Resource Allocation and Cost Recovery
Resource allocation is how limited tax dollars and alternative sources of funding are utilized. Cost
Recovery is the percent of the annual operating budget cost that can be offset by funding other than
General Fund taxpayer investment (whether derived from property, sales, or other sources).
Parks and Recreation services provide value to the community in terms of economic, environmental, and
social benefits. Tax dollars support these "core services! Beyond those benefits realized by all residents,
the agency is also able to provide specific activities and services that benefit individuals. There are not
adequate tax dollars to completely support this level of activity, and it is appropriate and common to
charge at least minimally for these services.
For example, if an individual takes a swimming lesson or participates in a senior dance program, there
are certain levels of skill building, social engagement, or entertainment that accrue to that person, but
it can still be argued there is a benefit to the community as a whole by teaching people safety around
water, and through the social capital and health gained by keeping seniors active and in touch. This
warrants covering at least a portion of the cost of a program or activity through tax dollars. Other
opportunities, such as the rental of a space for a private party, warrant a fee to cover a larger portion of
the cost of providing that space.
Although fee adjustments are possible, the goal is not to simply generate new revenues through
fees, but to ensure a sustainable system into the future by using tax revenues and fees in the most
appropriate ways, supplemented where possible by grants, donations, partnerships, and other sources
of alternative revenues. Taxes should support "core services," whereas fees and charges are appropriate
for activities and services benefiting individuals.
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CA-
GEORGETOWN
Category of Service Development
Prior to sorting each program and service onto the Pyramid, the project team took on the rigorous
task of reviewing, analyzing, and sifting through many individual programs and services in an effort to
create the Department's Categories of Services, including definitions and examples. "Narrowing down"
facilities, programs, and services and placing them in categories (groups of like or similar service) that
best fit their descriptions allowed a reasonable number of items to be sorted onto the pyramid tiers
using the Individual and Community Benefit filter. Thirty-seven (37) categories were identified as listed
below. All Categories of Service with a full description and listing of programs and services within can be
found in Appendix B.
• Attractions
• Cemetery Lot Sales and Locates
■ Concession, Vending, Merchandise
• Equipment Rentals
• Garey House Full -Service Rentals
• Memorial Tree and Bench
• Party Packages
• Private/Semi-Private Lessons
• Trips
• Classes, Programs, Sports, Camps and Clinics —
Advanced/Competitive
• Department Organized Tournaments
• Drop -in Childcare / Babysitting
• Facility Rentals
• Field Rental
• Partnered Rental Agreement
• Public Space Permits
• Special Permits
• Adapted Programs
• Adult Classes, Programs, Workshops— Beginning/
Intermediate
ti
• Adult Leagues
• Camps - Specialized
• Drop -in Use
• Facility Membership
• Family Programs
• Garey Park Pass
• Park Pavilion Rentals
• Senior Classes, Programs, Workshops —
Beginning/ Intermediate
• Camps - General Recreation
• Mobile/Pop-up and Outreach Programs
• Social Clubs/Affinity Groups
• Youth Classes, Programs, Workshops —
Beginning/ Intermediate
• Youth Leagues
• Department Produced Public Events
• Non -Monitored or Non -Staffed Park/Facility
Usage
• Partnered Social Services
• Public Education/Outreach Programs
• Volunteer Program
Cost Recovery Study
Staff and Stakeholder Engagement
The Department hosted five workshops on October
11 and October 12, 2021 with the goal to gather
input from staff and citizen stakeholders. The charge
to both was to sort the Department's Categories of
Service onto appropriate levels of the pyramid model
based on who they benefited (the benefit filter).
Those categories ranged from mostly benefiting the
Community as a whole, to programs and services
mostly providing an Individual benefit.
The effort is based on a community values -based
conversation. During public workshops 32 community
members each dedicated 1.5 hours of their time. This
approach, providing 48 hours of meaningful volunteer
deliberation, allowed staff to understand the values
of the community, and allowed participants to better
understand their fellow citizens' perspectives.
The sorting process is where ownership is created for the philosophy, while participants discover the
current and possibly varied operating histories, cultures, missions, and values of the organization. This
process develops consensus and allows everyone to land on the same page. The effort is ultimately a
reflection of the community and the mission of the Department.
The sorting process was a challenging step and was led by objective and impartial facilitators in order to
hear all viewpoints. The process generated discussion and debate as participants discovered what others
had to say about serving the community, about adults versus youth versus seniors, about advanced
versus intermediate and beginning programs, about special events, athletic fields, and rentals involving
the general public, non-profit and for -profit entities, etc. It was important to push through the "what" to
the "why" to find common ground.
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GEORGETOWN �.
A Consensus Pyramid
Through the use of the Pyramid framework, a consensus pyramid from the staff and public sorting
process was created with each Category of Service placed in the appropriate tier of the pyramid based
on the benefits filter. By using feedback from the community to look at programs and services in this
way, staff can set a program's cost -recovery goal relative to the amount of community benefit a category
of service provides. Figure 1 represents the Department's consensus pyramid. Programs and services
considered to have higher individual benefits will be recommended to have a higher Cost Recovery ratio.
Figure 1: Georgetown Consensus Pyramid
• Attractions
• Cemetery Lot Sales and Locates
• Concession, Vending, Merchandise
• Equipment Rentals
• Garey House Full -Service Rentals
• Memorial Tree and Bench
• Party Packages
• Private/Seml-Private Lessons
• Trips
• Classes, Programs, Sports, Camps and
Clinics —Advanced/Competitive
• Department Organized Tournaments
• Drop -in Childcare / Babysitting
• Facility Rentals
• Field Rental
• Partnered Rental Agreement
• Public Space Permits
• Special Permits
5
Mostly
Individual Benefit
4
Considerable
Individual Benefit
3
Balanced
Indtvidual,'Community Benefit
2
• Camps -General Recreation Considerable
Community Benefit• Moblle/Pop-up and Outreach Programs
• Social Clubs/Afflnity Groups
• Youth Classes, Programs, Workshops— i
Beginning/ Intermediate Ma511y
• Youth Leagues Community Benefit
• Adapted Programs
• Adult Classes, Programs, Workshops
Beginning/ Intermediate
• Adult Leagues
• Camps - Specialized
• Drop -in Use
• Facility Membership
• Family Programs
• Garey Park Pass
• Park Pavilion Rentals
• Senior Classes, Programs, Workshops
Beginning/ Intermediate
• Department Produced Public Events
• Non -Monitored or Non -Staffed Park/Facility
Usage
• Partnered Social Services
• PublicEducatlon/Outreach Programs
• Volunteer Program
Cost Recovery Study
Cost of Service Analysis
For this study, GreenPlay engaged the services
of Amilia, a Park and Recreation Software
Company. Amilia specializes in helping agencies
organize and sort their data efficiently by guiding
them in the use of Amilia's Cost Recovery
software tool. Cost of service was measured
using FY21 data to provide a baseline of data for
setting appropriate Cost Recovery targets.
No measurement of Cost Recovery is possible
without a clear definition of what is being
counted as "cost" The definition of direct and indirect costs can vary from agency to agency. The most
important aspect to understand is that all costs associated with running a program or providing a service
are identified and consistently applied across the system. Direct cost includes all the specific, identifiable
expenses (fixed and variable) associated with providing a service or program. These expenses would not
exist without the program or service and often increase exponentially. Indirect cost are those cost that
are not directly attributable to a program or service, but are necessary to support the effort and are
incurred for a common objective.
For the study, the Department evaluated the direct and indirect costs associated with programs and
services as well as park and facility operations. Identifying cost was highly intensive and required a deep
dive into the Department's financials. All revenue and expense data were compiled, then uploaded
into Amilia's Cost Recovery software tool. Current Cost Recovery performance results were used as the
baseline from which the department can justifiably and rationally set Cost Recovery goals and targets.
Table 1 shows the average Cost Recovery across all 1,229 programs evaluated.
Table 1: FY21 Cost Recovery Distribution
Cost Recovery Distribution
500
450 35%
33%
400
U1
350
a`)
300
0
250
17%
200
150
z
8% 7%
100
50
0
0-25%
25-50% 50-75% 75-100% 100+%
■ Number of Seivices 432
403 207 95 92
I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
GEOIZGETOWN
According to 2021 NRPA Agency Review the typical parks and recreation agency in the United States
recovers 26 percent of its operating expenditures from non -tax revenues. The FY21 cost recovery for the
Department was 31 percent. Table 2 is a listing of FY21 Cost Recovery percentages for each Category of
Service once programs and services have been assigned to their respective Categories. The percentages
listed here are based on the actual costs to provide the service.
Table 2: FY21 Cost Recovery by Category of Service
Category of Service
Current Cost Recovery %
TS - Trips
33%
T5 - Private/Semiprivate
32%
T5 - Memorial Tree and Bench
70%
TS - Garey House
36%
TS - Concession, Vending, Merchandise
92%
T5 - Cemetery Lot
96%
T4 - Public Space Permits
26%
T4 - Programs Advanced/Competitive
33%
T4 - Field Rental
26%
T4 - Facility Rental
55%
T3 - Senior Programs - Beginner/Intermediate
10%
T3 - Park Pavilion Rental
68%
T3 - Facility Membership
38%
T3 - Garey Park Pass
51%
T3 - Family Programs
46%
T3 - Drop -in Use
15%
T3 - Camps - Specialized
53%
T3 - Adult Programs - Beginner/Intermediate
27%
T3 - Adult Leagues
54%
T3 - Adapted Programs
30%
T2 - Youth Programs - Beginner/Intermediate
27%
T2 - Youth Leagues
47%
T2 - Mobile/Pop-up and Outreach Programs
39%
T2 - Camps - General Recreation
48%
Ti - Public Education
0%
T1- Non -Monitored Parks, Trails, Open Space Use
0%
T1- Department Produced Public Events
0%
Cost Recovery Study
Table 3 displays the FY21 Cost Recovery aggregate for each Tier of the pyramid. Between Tier 2 and
Tier 5 the variance in Cost Recovery is only 5 percent. This is representative of the consistent approach
the Department uses to price programs. The Department has strived to maintain 50-60 percent Cost
Recovery across all programs. This goal did not include counting indirect cost as the Study does. With
this in mind the Department has been successful at reaching previous Cost Recovery goals.
Table 3: FY21 Tier Aggregate
Tier
Revenues
Expenses
Category CF
Actuals
Median
Service CR
TS
$404,051.77
$865,067.55
47%
35%
T4
$418,132.33
$1,158,037.52
36%
26%
T3
$1,153,888.50
$2,827,020.69
41%
34%
T2
$328,172.03
$833,252.95
39%
49%
T1
$6,625.50
$1,850,925.47
0%
0%
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GEORGETOWN
Cost Recovery Study
III. Key Findings and Recommendations
The main purpose of this endeavor has been to create a fair, equitable, and transparent approach for
establishing and adjusting fees and charges. However, it should be noted that adjusting fees is only
one mechanism for meeting target Cost Recovery levels. Others include using other funding sources
(sponsorships, scholarships, donations, grants, etc.), and creating cost efficiencies. The extensive effort
undertaken during this study has brought to light key findings that are critical to addressing financial
goals, Cost Recovery targets, and fee setting and decision -making. Key findings and recommendations
have been developed and grouped into the following themes:
A. Policy Actions
B. Administrative Task
C. Cost Savings and Revenue Generation Strategies
The recommendations will act as the implementation catalyst and internal work plan, and are intended
to guide goals, objectives, and decision -making, while creating service sustainability for the Department.
Some recommendations are scheduled to occur in the near future, and others will take time to put into
place. Sensitivity to fee tolerance levels must be considered as fee adjustments are made.
The first year of implementation will continue to be a learning year as more data is generated and
analyzed. It is likely that some adjustments will be made during or at the end of year one including:
• Further clarification or addition of categories
• Possible movement of a category to a more appropriate tier
Possible movement of a program or service to a different category
■ Reassignment of costs or recalculation of Cost Recovery levels
■ Refinement of targets based on any or all of these bulleted items
_Vk-
GEO - -. .TOWN
Cost Recovery Tier Targets
After the data collection and import into the Amilia software concluded, staff viewed the agency's
Cost Recovery Tool and the results of the cost -of -service analysis. This data and supplemental reports
included the cost to provide (both direct and indirect) each individual service in the system and current
Cost Recovery performance results. The Cost Recovery software provided an analysis of where the
department is currently and delivered true metrics to help the department move forward in a fiscally
responsible manner.
Current Cost Recovery performance results will guide the agency in establishing fees and making other
informed financial decisions moving forward. The current and target Cost Recovery ranges by Tier are
shown in Table 4 below. As costing of services is a very revealing process, realistic and feasible targets
have been recommended to align with the pyramid model and also to meet specific financial objectives
for Cost Recovery.
The following targets ranges are recommended:
Table 4: Cost Recovery Tier Targets
Tier
Current
Minimum Goal
Range Max
Category Cost
Recovery vs Range
Minimum
T5
45%
900
100%
-45%
T4
37%
65%
89%
-28%
T3
41%
41%
70%
0%
T2
39%
11%
40%
28%
T1
0%
0%
10%
0%
The Georgetown Pyramid Model with current Cost Recovery by Category of Service is shown in Figure
2. Current Cost Recovery will be refined over the first year of implementation as steps are taken to more
accurately account for revenues and expenditures by Category of Service. The Tier aggregate is simply a
measure of all of the services on each tier.
Cost Recovery Study
Figure 2: Georgetown Pyramid Model
• Attractions: N/A
• Cemetery Lot Sales and Locates: 96%
• Concession, Vending, Merchandise: 92%
• Equipment Rentals: N/A
• Garey House Full -Service Rentals: 36%
• Memorial Tree and Bench: 70%
• Party Packages: N/A
• Private/Semi-Private Lessons: 32% • Adapted Programs: 30%
• Trips: 33% • Adult Classes, Programs, Workshops
5 (Beginning/Intermediate): 27%
Tier Aggregate: 45% Mostly • Adult Leagues: 54%
Tier Target: 90to100% Individual Benefit • Camps —Specialized: 53%
• Drop -in Use: 15%
• Classes, Programs, Sports, Camps and Clinics Facility Membership: 38%
(Advanced/Competitive): 33% Considerable• Family Programs: 46%
• Department Organized Tournaments: N/A Individual Benefit • Garey Park Pass: 46
• Drop -in Childcare / Babysitting: N/A • Park Pavilion Rentals: 68%
1% 4
• Facility Rentals: 55% • • Field Rental: 26% Senior Classes, Programs, Workshops
3 (Beginning/Intermediate): 9%
• Partnered Rental Agreement: N/A
• Public Space Permits: 26% t3alance[1 • Special Permits: N/A Individual/Conimwzity Benefit Tier Aggregate: 41%
p Tier Target: 41 to 70%
Tier Aggregate: 37% f
Tier Target: 65 to 89% J 2 �� )
Considerable • Department Produced Public Events: 0%
I;:ammunity Benefit • Non -Monitored or Non -Staffed Park/Facility
• Camps - General Recreation: 48% Usage: 0%
• Mobile/Pop-up and Outreach Programs: 39% — • Partnered Social Services: N/A
• Social Clubs/Affinity Groups: N/A . Public Education/Outreach Programs: 0%
• Youth Classes, Programs, Workshops • Volunteer Program: N/A
(Beginning/ Intermediate): 27% Mostly
• Youth Leagues:47% COTTIMLinity Benefit °
Tier Aggregate: 0%
Tier Aggregate: 39% Tier Target: 0 to 10 %
Tier Target: 11 to 40% -
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GEORGETOWN
Policy Actions
Table 5: Policy Actions
Key Finding One:
The Department does not have a comprehensive financial policy regarding Cost Recovery and
program pricing
Seek approval of the proposed Cost Recovery Policy by the Parks Board and City
1.1
Council. Recommended policy language is provided.
Recognize the Georgetown Cost Recovery Pyramid (Figure 2) as a fundamental
1.2
component of the Cost Recovery philosophy.
Review existing policy and procedure to assure full integration with the overall
1.3
Cost Recovery philosophy.
Key Finding Two:
There appears to be an access barrier for scholarship opportunity
Develop a marketing campaign and written scholarship program guidelines to
2.1
provide better access, identifying eligibility requirements, allowable uses, and
individual and family limits. Employ tracking mechanisms for scholarship use and
seek funding sources.
Key Finding Three:
Partnered Rental Agreements (on -going field and facility use) should be updated to support the
Cost Recovery recommendation in this study. Some agreements do not reflect the true nature of the
desired partnership
Develop a Partnership Policy and philosophy to create equity and consistency
while maximizing and leveraging resources of the Department. Distinguish
partnerships from simple use agreements. The criteria for partnership should
3.1
establish the premise of a true partnership with the Department, with mutual
goals and outcomes desired. Facility use costs should be addressed in the
guidelines as a cost of the endeavor and calculated as a value of what the City
offers in the partnership. A partnership should not be represented first and
foremost as a method of waiving or discounting fees.
Cost Recovery Study
Administrative Task
Table 6: Administrative Task
Key Finding Four:
Cost accounting at the activity level is challenging
Further refine the expenses for programs and services and continue to investigate
4.1
expanding cost accounting functions in Workday, or through Cost Recovery soft-
ware solution to create a systemic approach to establishing Cost Recovery levels
more efficiently.
Use Cost Recovery philosophy, model, and policy as a department -wide staff train-
4.2
ing tool, and incorporate specific recommendations into annual staff work plans
as appropriate.
Key Findings Five:
Deliberate and timely fee setting and adjusting is necessary for a sustainable system.
5.1
Review the performance toward Cost Recovery goals on an annual basis.
5.2
Adjust fees to reflect the Department's Cost Recovery philosophy, being sensitive
to fee tolerance, and implementing over time as necessary.
Set initial pricing for programs and services at a fee level that considers Cost
5.3
Recovery targets, market rates and willingness to pay.
Manage program life -cycles through monitoring registration, attendance figures,
5.4
and Cost Recovery goals on an ongoing basis. Cancel, retool, and/or replace
under -performing services.
Review all fees for annual adjustments at the staff level and provide an update
5.5
to City Council through the budget process. All fees should be considered for an
annual adjustment in order to keep up with the increasing cost of providing the
service.
Consider the annual Consumer Price Index (CPI) when considering price
5.6
adjustments. The CPI is generally the best measure for adjusting fees when the
intent is to allow consumers to purchase at today's prices.
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GEORGETOWN
Cost Savings and Revenue Generation Strategies
Table 7: Cost Savings and Revenue Generation Strategies
Key Finding Six:
Low Cost Recovery could be an indicator of high expenses
Continue to review internal management practices to identify cost savings.
6.1
Expenses may be minimized through avenues such as restructuring of programs,
management efficiencies, and partnering.
Engage staff in budget development and discussion of annual expense budget
6.2
and revenue goals. Partner with the Finance Department to provide annual staff
training on the budget process.
Explore alternative funding sources that strategically align with the Department
6.3
missions including potential partnerships.
Cost Recovery Study
Key Finding Seven:
The current method of setting fees is not conducted using a methodology that aligns Cost Recovery
and pricing with community values.
Tier 5: Mostly Individual Benefit
7.1.a.
Tier 5 represents activities determined to provide a very high level of individual
benefit. These programs are the least related to the fundamental purpose of the
Department, although they complement other activities. For this reason, these
categories should require full Cost Recovery. Review the structure of programs in
all categories on Tier 5 to increase Cost Recovery to a minimum of 90 percent by
2027.
7.1.b. Garey House (Current Cost Recovery 36%):
Garey House is a full -service banquet facility. The fee structure at the Garey
House is below market rate and should be evaluated. Annually the Department
should benchmark similar sized facilities and increase the fee to the prevailing
market rate. While moving from 36 percent to 90 percent cost recovery will take
7.1 time, it should be noted that FY21 revenue did not reach its full potential due
to COVID-19 restrictions. Additionally, it will take time for the recently opened
facility to establish itself. It can take 7 to 10 years for a facility to realize its
full potential; furthermore, reservations are typically made 9 to 18 months in
advance, so increased Cost Recovery will take time to be realized.
7.1.c.
Most programs in this category are facilitated by contracted instructors.
Continued cost of service accounting to accurately align Department staff time
for contracted programs is needed; however this service Category also includes
the Challenge Course. Cost Recovery for Challenge Course is not meeting the
goal. Tier performance should be set to reach a minimum of 90% Cost Recovery
by 2027. Relative to the Challenge Course the Department will need to explore
cost avoidance and revenue enhancement strategies, as well as partnerships
possibilities or divestment.
Tier 4: Considerable Individual Benefit
7.2.a.
7.2 The categories of programs on Tier 4 represent considerable individual benefit
and should not be reliant on tax resources to support them. Modify program
delivery to Increase Tier 4 Cost Recovery to a minimum of 65% by 2027.
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GEORGETOWN
Key Finding Seven (cont.)
Tier 4: Considerable Individual Benefit (cont.)
7.2.b
Field Rental (Current Cost Recovery 26%):
Current circumstances:
• Total costs associated with providing fields in FY21 was approximately $700,000.
• Total revenue generated in FY21 was less than $200,000.
• Total Cost Recovery ranges from 17 percent to 36 percent, depending on the field
and user group. The median Cost Recovery is 23 percent.
■ Associations primarily use volunteers to manage programs/services. If they did
not exist, the Department would need to manage the programs and services,
so a cooperative relationship is highly advantageous to the Department and the
community.
• The Department wants Associations to continue to operate these programs, as
7.2 their volunteers help supplement Department services.
Charge a fee that will increase Cost Recovery to 65% over time.
• Ensure 100% of light fees are recovered from all user groups.
C Evaluate and benchmark the all -day field rental rate and consider restructuring.
The current rate is over incentivized.
• Develop a stand-alone fee structure for Tournament play.
• Ensure fees for field prep are recouping 100% Cost Recovery and are being
applied consistently to Field Use Contracts.
■ Some leagues have discounted hourly field rental rate. User groups with reduced
rates should be increased by $2.00 an hour annually for the next 5 years. The
hourly rate should not go below 50 percent of what other users pay for field use.
Additionally, the fee paid for field lights should be increased to the full rate paid
by other users.
Cost Recovery Study
Key Finding Seven (cont.)
Tier 4: Considerable Individual Benefit (cont.)
7.2.c
Facility Rental (Current Cost Recovery 55%):
Current circumstances:
Total costs associated with providing facility and pool rentals in FY21 was
$413,988.
Total revenue generated in FY21 was $228,712. Over 70% of the revenue is
generated from the Community Center.
• Cost Recovery ranges from 15 percent to 100 percent, depending on the facility
and user group. The median Cost Recovery is 21 percent.
• Facility Rental fees at the Recreation Center have not increased since 2009.
• Cost Recovery for aquatic rentals is driving the overall Cost Recovery of the
Category of Service down. Cost Recovery associated with a pool or lane rental is
7.2 15%. Expenses exceed $300,000 and Revenue is less than $50,000 annually.
Implement fee adjustments that will increase the Tier aggregate Cost Recovery to 65 percent
by 2027.
• Benchmark similar sized rental facilities to determine if current fee structure is at
market rate. Consider moderate fee increases for buildings and pools.
• Increase the number of rentals at the Recreation Center by creating "peak" and
"off-peak" pricing.
• Continue the annual incremental increase of the hourly rate paid by the Swim
Teams to cover increasing cost of operations and staffing to meet Cost Recovery
objectives. Consider a differential rate at the Williams Drive Pool due to the
additional staffing requirement. Evaluate and benchmark the fee charged for
swim meets. Consider moving from an all -day rental rate to an hourly rate. The
current rate is over incentivized.
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GEORGETOWN
Key Finding Seven (cont.)
Tier 3: Balanced Individual and Community Benefit
7.3.a.
Tier 3 has variety of programs and services, and a large capacity for volume, which results
in an acceptable aggregate Cost Recovery level for the tier. However, within each Category
of Service, there are areas that suggest a closer look at program structure, consistency, and
refinement of cost accounting.
7.3.b.
Facility Membership (Current Cost Recovery 38%):
• Membership rates have not been increased at the Recreation Center or Tennis
Center since 2014. Evaluate the structure and rates of similar, neighboring
facilities. Consider implementing the following to reach and maintain a minimum
of 41% Cost Recovery:
Eliminate the "Membership" concept and fee structure in favor of an
"Admissions" and "Passes" concept. Membership implies restrictions and public
agencies are moving away from this concept; all Georgetown residents are
"members" of all facilities as age appropriate.
Evaluate and update Admission pricing structure:
• Simplify and mimic admission structure at all facilities (daily, monthly, summer,
annual passes etc.).
7.3 • Passes or daily admissions should be facility -specific (Tennis Center, Pools, or
Recreation Center).
Increase the age of a Senior from 55 to 60.
• Implement an auto renew process for passes.
• Move forward with fee increases for admission and passes if supported through
benchmarking assessment.
• Institute a 5% fee increase to occur every 3 years.
7.3.c. Drop -in Use (Current Cost Recovery 15%)
Cost Recovery for this category is driven by drop -in use at the Tennis Center. Few programs at
the Recreation Center were categorized as Drop -in Use. Current circumstance for drop in use
at the Tennis Center:
• Total costs associated with Tennis Center drop -in use in FY21 was $79,021.
• Total revenue generated for drop -in use at the Tennis Center in FY21 was
$19,966.
• Cost Recovery for drop -in use at the Tennis Center is 25 percent.
The current two -dollar drop -in fee has not increased since 1999.
Increase the drop -in rate at the Tennis Center:
• The cumulative inflation from 1999 to date is 68% percent. If the fee would have
kept up with inflation it would be $3.38. It is recommended that the drop -in rate
be increased to $2.50. This adjustment will increase Cost Recovery for drop -in use
at the Tennis Center to approximately 32 percent. The proposed fee is equivalent
to other area service providers.
Cost Recovery Study
Key Finding Seven (cont.)
Tier 2: Considerable Community Benefit /
Tier 1: Considerable Community Benefit
7.4
7.4.a
Focus the use of General Fund Subsidy on those activities, primarily found in Tier
1 and Tier 2 of the Pyramid Model, that provide mostly community benefit to the
taxpayers of the City.
7.5
Continue to provide ongoing opportunities for community input. In order to
gauge perceptions about programs and service over time, a survey or similar tool
may be used. Surveys should be administered at least every other year.
Cost Recovery targets may need refinement over the first year of implementation,
7.6
so preliminary targets should be re-evaluated prior to year two. These targets are
set to be in addition to what is needed just to keep up with inflationary expenses
and will have to be carefully considered in the wake of the impact of COVID-19.
I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111
GEORGETOWN
Suggested Policy Language
A formal policy regarding pricing and Cost Recovery levels for services does not exist. This begins with
a foundational statement of policy that articulates the philosophical underpinnings and addresses the
financing and service provision strategies by looking at them through a different lens. The following
overarching policy language is suggested.
As a publicly financed park system, the Georgetown Parks and Recreation Department provides a basic
level of Parks and Recreation services for the public, funded by tax dollars. However, fees and charges
and other methods to recover costs are considered a responsible and necessary means to supplement
tax revenue and regulate park use where appropriate.
Critical to the success of service delivery is affordability, fairness, and equity. It is the intent of this
policy to ensure that the approach in the use of tax dollars as well as alternative forms of revenue will
result in these qualities.
In establishing fees and charges, the Department will determine the costs of providing services based
on an identified and consistently applied methodology. This calculated cost will be used to measure
current and future levels of Cost Recovery and to help establish appropriate Cost Recovery goals to
support services. The appropriate level of Cost Recovery will be based on an assessment of who is
benefiting from the service provided. If the benefit is to the community as a whole, it is appropriate to
use taxpayer dollars to completely, or primarily fund the service. Examples of services that primarily
provide community benefits are trails, play areas, parks, and signature community events. The Cost
Recovery goals are used to establish and/or adjust fees to reach these goals.
As the benefit is increasingly offered to an individual or select group of individuals, it is appropriate
to charge fees for the service at a decreasing level of subsidy and an increasing rate of Cost Recovery.
Supervised or instructed programs, facilities, and equipment that visitors can use exclusively, as well as
products and services that may be consumed, provide examples where fees are appropriate.
The Department shall also consider available resources, public need, public acceptance, and the
community economic climate when establishing fees and charges. In cases where certain programs
and facilities are highly specialized by activity and design, and appeal to a select user group, the
Department shall additionally consider fees charged by alternative service providers or market rates.
The Department may further subsidize services for persons with economic need or other targeted
populations, as allowable, through tax -supported fee reductions, scholarships, grants, or other
methods.
Cost Recovery Study
IV. Conclusion
This study has been an examination of all programs and services from a Cost Recovery perspective.
Knowing the current status allows the setting of specific performance measures for the future. In
addition to Cost Recovery other information provides valuable indicators of performance that must be
considered as well.
This first year implementation will allow communication of the philosophy and policy, and adjustment
of fees as indicated by the Model. It will also allow for staff to see the implications for overall Cost
Recovery; identify any currently unknown market, historical, and political filters; and allow staff to
experience using the methodology.
Having broken down the financial picture to the activity level will allow all Department staff responsible
for budgeting for the services they deliver to be proactively engaged in reaching the desired result. The
Department will need to remain flexible in refining targets as systems for tracking expenditures will
provide a more accurate picture as each year goes by, especially the shift from the first to the second
year. The Pyramid model has allowed the aligning of service benefits with the form of revenue best
suited to support the service whether taxes, fees, or other forms of revenue.
It has been our pleasure to assist the City of Georgetown and work with the Department to support its
fiscal health and sustainability.
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Cost Recovery Study
THE PYRAMID METHODOLOGY
The GreenPlay Pyramid Methodology, used in the development of the Subsidy 5
and Resource Allocation Model, is built on a foundation of understanding who
is benefiting from park and recreation services to determine how the costs for 4
service should be paid.
The Model illustrates a pricing philosophy based on establishing fees '1
commensurate with the benefit received. Descriptions regarding each level 1
of the pyramid are provided; however, the model is intended as a discussion
point and is very dependent on agency philosophies to determine what
programs and services belong on each level. Cultural, regional, geographical,
and resource differences play a large role in this determination. The resulting
pyramid is unique to each agency that applies this methodology.
Application of the pyramid methodology begins with the mission of the organization, but must also address
other considerations:
Who benefits from the service - the community in general, or only the individual or group receiving the
service?
Does the individual or group receiving the service generate the need (and therefore the cost) of providing
the service?
Will imposing the full cost fee pose a hardship on specific users? (The ability to pay is different than
the benefit and value of a program, activity, or service, and therefore, should be dealt with during the
implementation phase of pricing and marketing.)
Do community values support taxpayer investment for the cost of service for individuals with special needs
(for example, people with disabilities or low-income)?
Will the level of the fee affect the demand for the service?
Is it possible and desirable to manage demand for a service by changing the level of the fee?
Are there competing providers of the service in the public or private sector?
The application of the Step 10: Evaluation
model is broken down into
the following steps: -1 Step 9: Implementation
s co
Step 8: Understanding and preparing for influential factors and considerations
j Step 7: Establishing tax investment goals/subsidy level targets
Step 6: Determining (or confirming) current tax investment/cost
Step S: Defining Direct and Indirect Costs
Step 4: Sorting the Categories of Service onto the Pyramid
Step 3: Developing the organization's Categories of Service
Step 2: Understanding the Pyramid Methodology, the benefits filter, and secondary filters
Step 1: Building on your organization's values, vision, and mission
Step 1: Building on Your Organization's Values, Vision, and Mission
Critical to this philosophical undertaking is the support and buy -in of elected officials and advisory
board members, staff, and ultimately, citizens. Whether or not significant changes are called for, the
organization should be certain that it philosophically aligns with its constituents. The financial resource
allocation philosophy and policy is built upon a very logical foundation based upon the theory that those
who benefit from parks and recreation services ultimately pay for them.
Envision a pyramid sectioned horizontally into five levels:
5 - Mostly Individual Benefit
d - Considerable Individual Benefit
3 - Individual/Community Benefit
(Balanced Beneficiaries)
2 - Considerable Community Benefit
T - Mostly Community Benefit
GREENPLAYuc
Pyramid Methodology for
Resource Allocation/Cost Recovery
Step 2: Understanding the Pyramid Methodology and Filters
The philosophy and policy are key components to maintaining an agency's financial control, equitably
pricing offerings, and helping to identify core services including programs and facilities.
The principle of the Pyramid is the Benefits Filter. The base level of the pyramid represents the core
services of a public parks and recreation system. Services appropriate to higher levels of the pyramid
should only be offered when the preceding levels below are comprehensive enough to provide a
foundation for the next level. The foundation and upward progression are intended to represent public
parks and recreation's core mission, while also reflecting the growth and maturity of an organization as it
enhances its service offerings.
MOSTLY COMMUNITY Benefit
Level One is the foundation of the pyramid and therefore the
largest, and encompasses those services, including programs
and facilities, that MOSTLY benefit the COMMUNITY as a
whole. These services may increase property values, provide
safety, address social needs, and enhance quality of life for
residents. The community generally pays for these basic
services via tax support and they are generally offered to
residents at a minimal charge or with no fee. A large
percentage of the agency's tax support funds this level.
A%00
Mostly Community Benefit
Examples of these services could include: the existence of the community parks and recreation system
(park maintenance), the ability to visit facilities on an informal basis, park and facility planning and design.
NOTE: All examples given are generic — individual agencies vary in their determination of which
services belong on which level of the Pyramid based upon agency values, vision, mission,
demographics, goals, etc.
CONSIDERABLE COMMUNITY Benefit
Level Two represents services that promote community and
individual physical and mental well-being, and may begin to
provide skill development. They are generally traditionally
expected services and/or beginner instructional levels. These
services are typically assigned fees based upon a specified
percentage of direct (and may also include indirect) costs. These Considerable Community Benefit
costs are partially offset by both a tax investment to account for
CONSIDERABLE COMMUNITY benefit and participant fees to account for the Individual benefit received
from the service.
Examples of these services could include: staffed facility and park use, therapeutic recreation programs
and services, senior services, etc.
BALANCED INDIVIDUAL/COMMUNITY Benefit
Level Three represents services promoting individual physical
and mental well-being and providing an intermediate level of skill
development. There is a more balanced INDIVIDUAL and COMMUNITY
benefit and should be priced accordingly. The individual fee is set to
recover a higher percentage of cost than those services falling within
lower Pyramid levels.
Individual/Community Benefit
(Balanced Beneficiaries)
Examples of these services could include: summer recreational day camp, youth sports leagues, summer
swim team, etc.
CONSIDERABLE INDIVIDUAL Benefit
Level Four represents specialized services geared toward individuals
and specific groups, and services that may have a competitive focus.
These are not highly subsidized and may be priced to recover full cost,
including all direct expenses.
Examples of these services could include: Trips, advanced level classes, Considerable Individual Benefit
competitive leagues, etc.
MOSTLY INDIVIDUAL Benefit
At the top of the Pyramid, Level Five represents services that have potential
to generate revenues above costs, may be in the same market space as the
private sector, or may fall outside the primary mission of the agency. In this level, 5
services should not be supported by subsidy, should be priced to recover full
cost, and may generate revenue in excess of cost. Mostly Individual Benefit
Examples of these activities could include: Private lessons, company picnic rentals, other facility rentals
for weddings or other services, concessions and merchandise for resale, restaurant services, etc.
Step 3: Developing the Organization's Categories of Service
Prior to sorting programs and services onto the Pyramid, each must be reviewed, analyzed, and sifted
through to create the agency's Categories of Services, including definitions and examples. "Narrowing
down" facilities, programs, and services and placing them in categories (groups of like or similar service)
that best fit their descriptions, allows a reasonable number of items to be sorted onto the pyramid tiers
using the Individual and Community Benefit filter. There is not a pre -determined number of categories,
however, ultimately every program and service offered must fit within a category, so carefully naming,
describing, distinguishing, and providing examples for each category is critical to a successful effort.
Step 4: Sorting the Categories of Service onto the Pyramid
The sorting process is where ownership is created for the
philosophy, while participants discover the current and possibly
varied operating histories, cultures, missions, and values of
the organization. The process develops consensus and allows
everyone to land on the same page. The effort must reflect the
community and align with the mission of the agency.
The sorting process is a challenging step led by objective and
impartial facilitators in order to hear all viewpoints. The process
generates discussion and debate as participants discover what
others have to say about serving the community; about adults versus youth versus seniors; about
advanced versus intermediate and beginning programs; about special events; athletic fields; and rentals
involving the general public, non-profit and for -profit entities; etc. It is important to push through
the "what" to the "why" to find common ground. There is also the consideration of additional filters
(discussed in Step 8), which often hold a secondary significance in determining placement on the Cost
Recovery Pyramid.
Step 5: Defining Costs
The definition of direct and indirect costs can vary from agency to agency. The most important aspect
is that all costs associated with directly running a program or providing a service are identified and
consistently applied across the system. Direct costs typically include the specific, identifiable expenses
associated with providing a service. These expenses would not exist without the service and may
be fixed or variable costs. Indirect costs are costs shared among services. It is up to each agency to
determine how best to allocate indirect costs, and the default is often the consequence of the agency's
accounting software's ability to track and assign costs at the programmatic level.
Step 6: Determining (or Confirming) Current Tax Investment/Subsidy Levels
The agency will confirm or determine current subsidy allocation levels by category of services based
upon the definition of costs. Results of this step identify what it costs to provide services to the
community, whether staff has the capacity or resources necessary to account for and track costs,
whether accurate cost recovery levels can be identified, and whether cost centers or general ledger
line items align with how the agency may want to track these costs in the future. Staff may not be cost
accounting consistently, and these inconsistencies become apparent.
Step 7: Establishing Cost Recovery/Tax Investment Targets
The steps thus far work to align who is benefiting from programs and services with the sources of
funding used to pay for them. The tax investment is used in greater amounts at the bottom levels of the
pyramid, reflecting the benefit to the Community as a whole. As the pyramid is climbed, the percentage
of tax investment decreases, and at the top levels, it may not be used at all, reflecting the Individual
benefit.
Targets take into account current subsidy levels. As costing of services and matching revenues is a very
revealing process, realistic and feasible targets are recommended to align with the pyramid model and
also to meet specific financial objectives for recovery of direct and indirect cost. These targets will be
identified for each tier of the agency's Pyramid Model.
Step 8: Understanding and Preparing for Influential Factors and Considerations
Inherent to sorting programs onto the Pyramid Model
using the Benefits and other filters is the realization that
other factors come into play. This can result in decisions to
place services in other levels than might first be thought.
These factors can aid in determining core services
versus ancillary services. These may include participant
commitment, trends, political issues, marketing, relative
cost to provide the service (cost per participant), current
economic conditions, and financial goals.
Step 9: Implementation
The agency sets goals based upon its mission, stakeholder input, funding, and/or other criteria.
Completion of steps 1-8 position the agency to illustrate and articulate where it has been and where it is
heading from a financial perspective. Some recommendations are scheduled to occur immediately, and
others will take time to put into place, while some will be implemented incrementally. It is important
that fee change tolerance levels are considered.
Step 10: Evaluation
This process is undertaken to articulate a philosophy, train staff on a best practice ongoing approach to
subsidizing services in public parks and recreation, and enhance financial sustainability. Performance
measures are established through subsidy level targets, specific recommendations are made for services
found to be out of alignment, and evaluation of goal attainment is recommended to take place annually.
Georgetown Categories of Service
Category of Service
Tier
Definition
Examples
Attractions
5
An admission entitling the user to
Challenge Course open
access an attraction/park/facility/
play, Kayak Rentals
activity that is either registered or
walk up and is actively managed,
programmed, or attended by agency
staff or volunteers
Cemetery Lot Sales and
5
Provide cemetery lot sales, lot locates,
Cemetery lot sales and
Locates
records retention and maintenance
locates
of the IOOF Cemetery. Assist CCMA
with lot locates records retention and
maintenance of Citizen's Memorial
Cemetery.
Concession, Vending,
5
Food, beverage and merchandise
Vending at Recreation
Merchandise
conveyed to individuals for use or
Center and Tennis
consumption. May be contracted or
Center. Point of Sale at
self -operated.
the Recreation Center,
Tennis Center, and
Garey Park Food Trucks,
concessions at VFW
and McMasters
Equipment Rentals
5
Various department -owned equipment
Microphones, TV's,
available to renters for exclusive use
Projectors, Ball
Machine, Ball Baskets,
Kayaks
Garey House
5
Full -service facility rental that requires
Garey House weddings/
Full -Service Rentals
the presence of staff and internal
events
coordination.
Memorial Tree and
5
Donation of memorial trees and
Memorial trees and
Bench
benches from individuals.
benches placed within
parks.
Party Packages
5
Includes an organized activity provided
Recreation Center
by staff as well as use of space; could
Event Room
include food, cake, decorations,
entertainment, and favors
Private/Semi-Private
5
Lessons arranged for one student, or a
Athletic Training,
Lessons
private group students with a specific
Personal Training,
instructor and/or time
Tennis Privates,
Pickleball Privates,
Private Swim Lessons,
Dance Lessons,
Computer Lessons
Trips
5
Day, overnight, and extended trips that
Senior Adult Day
provide opportunities for participants
Trips, Adventure
to visit selected destinations
Travel Camps, Collette
Vacations
CA -
GEORGETOWN
Category of Service
Tier
Definition
Examples
Classes, Programs,
4
Focus on advanced activities/
Athletic Skills
Sports, Camps and
instruction, certification, or
Development, Athletic
Clinics —Advanced/
competitive activities; children,
Camps, Fee Based
Competitive
youth and adults with prior skills and
Fitness
registration required to participate
Department Organized
4
Scheduled one-time sporting and/
Tennis, Pickleball,
Tournaments
or multi -game events for various age
Soccer, Softball
groups that are organized and/or
managed by staff
Drop -in Childcare /
4
Drop -in on -site childcare for
Recreation Center
Babysitting
participants using agency facilities
Childcare (Kids Club)
and/or programs
Facility Rentals
4
Temporary and exclusive use of spaces
Community Center,
and facilities including centers, pools,
Recreation Center,
parks, on a one-time or one season
Tennis Center, Pools,
basis by a private individual, group,
Garey House Room
organization, or business, etc.
Rentals
Field Rental
4
Field rentals for exclusive use on a
McMaster, San Gabriel,
one-time or one season basis
VFW, Recreation
Center Gym, Tennis and
Pickleball Court Fees
Partnered Rental
4
Temporary and exclusive use of
Georgetown Youth Girls
Agreement
spaces and facilities including centers,
Softball Association,
fields, pools, picnic areas, and parks,
Georgetown Baseball
on a one-time or one season basis
Association, Texas
through a formal agreement to groups
Gold, Georgetown
identified as having allied interests
Independent School
with the agency, fulfills a core service
District, Aquadillos
in lieu of the agency, and serve the
community at large
Public Space Permits
4
Use of park for private organizations or
Events may be
businesses to conduct a special event.
admission based or
These events require special event
open to the public
permit(s), and may require rental fees
Special Permits
4
Non -rental allowable services that
Vendor Fees, Booth
require a permit by the city
Fees, Photography Fees
Adapted Programs
3
Specialized opportunities for people
Special Needs Dances,
with disabilities. These are not
Adaptive Camp.
reasonable accommodations required
as inclusionary services.
Adult Classes,
3
Entry or multi -level group recreational
Learn to Swim, Dance,
Programs, Workshops—
and/or instructional programs and
Arts, Martial Arts,
Beginning/
activities requiring registration with no
Water Aerobics,
Intermediate
prior skills required
Outdoor Adventure,
Nature Based Programs
Cost Recovery Study
Category of Service
Tier
Definition
Examples
Adult Leagues
3
Scheduled multi -game athletics for
Volleyball, Softball,
adults of multi -skill levels that are
Soccer, Basketball,
organized and/or managed by agency
Tennis, Pickleball
or through partners, may or may not
be officiated and/or judged, and may
or may not be scored, providing a team
experience for participants with the in-
tent to play a game/match-format or
to compete on a recreational level.
Camps - Specialized
3
Targeted annual, non-traditional
STEM Camps, Sport
camps requiring registration that are
Camps, Dance Camps,
typically offered on a one-time or
Hoop Camps, Tennis
limited basis
Camps, Outdoor
Adventure
Drop -in Use
3
Drop -in use of a Recreation Center,
Recreation Center,
Tennis Center, Pools
Tennis Center, Pool
Daily Admissions
Facility Membership
3
On -going use of a Recreation Center
Recreation Center,
with no instruction, but is monitored
Tennis Center, Pool
by agency staff
Passes
Family Programs
3
Programs where parent or guardian
Parent/child swim
participation is required
lessons, Family Fishing,
Paint Your Own Pottery,
Star Gazing
Garey Park Pass
3
Day pass or annual pass to a premiere
Garey Park Pass
Regional Facility
Park Pavilion Rentals
3
Temporary and exclusive use of a park
Pavilion Rentals
pavilion.
Senior Classes,
3
Entry or multi -level group recreational
Senior Adventure,
Programs, Workshops—
and/or instructional programs and
Pickleball, Dance, Yoga,
Beginning/
activities requiring registration with no
Fitness, Tai Chi, Water
Intermediate
prior skills required
Aerobics, Senior Adult
Dances
Camps - General
2
Generalized after school program and
Camp Goodwater,
Recreation
break camps with a supervised social,
Holiday Camps
teen, recreational or enrichment focus
Mobile/Pop-up and
2
Events and activities that activate
NA at this time,
Out -reach Programs
parks and/or facilities, provide
possible department
exposure for new programs, and
led pop up sports and
engage the community
fitness opportunities.
Social Clubs/Affinity
2
City recognized, self -managed special
Keeping Young Doing
Groups
interest group meetings and get-
Senior Stuff, Donut
togethers
Happy Hour, Card Clubs
I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
GEORGETOWN
Category of Service
Tier
Definition
Examples
Youth Classes,
2
Entry or multi -level group recreational
Learn to Swim, Dance,
Programs, Workshops—
and/or instructional programs and
Cooking, STEM.
Beginning/
activities requiring registration with no
Multisport, Beginner
Intermediate
prior skills required
Sports, Nature Based
Programs
Youth Leagues
2
Scheduled multi -game athletics for
Youth Soccer, Youth
youth of multi -skill levels that are
Basketball, Youth
organized and/or managed by agency
Volleyball
or through partners, may or may not
be officiated and/or judged, and may
or may not be scored, providing a team
experience for participants with the
intent to play a game/match-format or
to compete on a recreational level.
Department Produced
1
Community -wide events typically
Sunset Movie Series,
Public Events
produced by the Department and
Family Nature Fest, K9
offered on an annual basis
Kerplunk, Fall Festival,
Swim with Santa,
Fishing Derby, Hay
Day, Arbor Day, Cupids
Chase 5K
Non -Monitored or Non-
1
Drop -in use of a park/facility/activity
Trail use, play -grounds,
Staffed Park/Facility
that is non -registered and non-
passive and active park
Us -age
instructed, and is NOT monitored by
areas, pick-up games,
agency staff/volunteer supervision
dog exercise areas,
skate park, self -guided
tours, public art, splash
pads, etc.
Partnered Social
1
Services provided by contracted
Alzheimer's Awareness
Services
companies and/or government
Classes, Tax Prep,
agencies or service organizations that
improve the community and individual
well-being.
Public Education/
1
Department driven community
Water Safety Month,
Outreach Programs
engagement in a structured or non-
Georgetown Swims,
structured setting
Health Fair
Volunteer Program
1
Projects -based volunteer programs
On -boarding, training
managed or overseen by staff initiated
and appreciation
by the City or outside entities
Cost Recovery Study
Developing a Pricing Strategy
Pricing of services must be done on a service -by -service basis. As the final step in the development of
the comprehensive Cost Recovery Study, pricing strategies were considered. This discussion should
continue in the future, and the following topic areas should be included and applied.
Understanding Financial Trends
The increasing complexity and resulting shifts of our society's economy have led to what can be
deemed as constant fiscal change in government. Public sector administrators and managers must
be prepared to respond to the fiscal realities that have resulted from these economic shifts. Trends
impacting fiscal and pricing decisions include:
• Increased governmental accountability
• Increased demand for people's "leisure dollar"
• Ongoing or increased demand for services with no/limited additional funding, or decreased
funding
• Disinterest in service reductions or increased fees and charges
• Increased operating expenses (utilities, fuel, personnel, supplies, etc.)
Understanding the budget process and fiscal year cycle
Budgets are viewed as annual financial plans and include planning and forecasting, establishing
priorities, and a way to monitor fiscal process. This overview allows for an abbreviated look at the
process and how it is impacted by pricing.
Understanding the costs of service provision
Prior to making pricing decisions, it is important to understand the different types of service provision
costs. Having knowledge of the various types of costs allows staff to make better informed pricing
decisions. The different types of service provision costs are as follows:
• Direct costs
■ Fixed costs
■ Changing fixed costs
■ Variable costs
• Indirect Costs
Understanding the purpose of pricing Wn
There are many reasons to develop service fees and charges. These include, but are not limited to, the
following:
• Recover costs
■ Create new resources
• Establish value
■ Influence behavior
• Promote efficiency
GEORGETOWN
Differential pricing
Differential pricing is grounded in the notion that different fees are charged for the same service
when there is no real difference in the cost of providing the service. There may be many reasons the
Department may wish to consider this pricing strategy including:
• To stimulate demand for a service during a specified time
• To reach underserved populations
• To shift demand to another place, date, or time
Alternative funding sources
In general, there has been a decrease in the amount of tax support available to public Parks,
Recreation, and Senior Services agencies across the nation. The Department is forward thinking in
its planning. As such, the need to look at alternative funding sources as a way to financially support
services has become commonplace. Alternative funding sources are vast and can include:
• Gifts
• Grants
• Donations
• Scholarships
• Sponsorships
• Collaborations
• Volunteer contributions
Examining the psychological dimensions of pricing
In addition to the social and environmental issues surrounding pricing, the human elements of pricing
must be considered. Regardless of how logical a price may seem; customer reactions and responses
are their own and can be vastly different than what one might expect. The psychological dimensions of
pricing include:
• Protection of self-esteem (pricing in such a way as to not offend certain users)
• Price -quality relationship (value received for every dollar spent)
• Establishing a reference point (worth of service in comparison to others)
• Objective price (price has a basis in fact, is real, and impartial)
• Subjective price (price is not biased or prejudiced)
• Consistency of image (perception of the brand and identification with product or service)
• Odd pricing (perception of arbitrary or incongruent pricing)
Cost Recovery Study
Establishing an actual price for a program can be based upon a variety of strategies including:
Arbitrary pricing: basing fees on a general provision such as raising all fees $.25 to meet budget goals
which ignores market conditions and Cost Recovery goals. Arbitrary pricing is not encouraged, as it is
impossible to justify.
• Market pricing: a fee based on demand for a service or facility or what the target market is
willing to pay for a service. The private and commercial sectors commonly use this strategy.
One consideration for establishing a market rate fee is determined by identifying all providers
of an identical service (Examples: private sector providers, municipalities, etc.), and setting the
highest fee. Another consideration is setting the fee at the highest level the market will bear.
• Competitive pricing: a fee based on what similar service providers or close proximity
competitors are charging for services. One consideration for establishing a competitive fee
is determined by identifying all providers of an identical service (Examples: private sector
providers, municipalities, etc.), and setting the mid -point or lowest fee.
• Cost Recovery pricing: a fee based on Cost Recovery goals within market pricing ranges.
Once a price is established, there may be the need to periodically review it and examine the need for
revision. In some cases, "revised" may be viewed as "increased"; therefore, a systematic approach to
pricing revision is important. Factors to consider in pricing revision include:
• Customer tolerance: the degree to which small increases in price will not encounter client
resistance.
• Adjustment period: the period of time where the value of the service is assessed by the
customer in relation to the price increase. The value of the service from the customer's
perspective must meet or exceed the impact of the increased cost. Adjustment periods
may lead to diminished participation or termination of participation altogether based upon
customer loyalty and other factors.
• Customers' perceived value of the service: the degree to which services including programs,
facilities, and parks impact the public (individual and community), or in other words, the
results or outcomes of services. Value is the judgment or perception of worth or the degree of
usefulness or importance placed on a service by personal opinion. The intent or intention of a
service is the purpose, aim, or end.
.. ..
OEM
Staff participating in the series of workshops engaged in interactive exercises that applied the Cost
Recovery goals of their respective service areas. The workshops prompted discussions leading
to recommended changes to selected current pricing practices with the intention of attaining
recommended Cost Recovery and tax investment allocation goals and establishing a new method for
setting fees and charges. This method is based upon using Cost Recovery goals as a primary pricing
strategy, followed by either market pricing (for services with low alternative coverage — few if any
alternative providers) or competitive pricing (for services with high alternative coverage — other
alternative providers offer similar or like services).
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GEOIZGETOWN ®.
Criteria for Establishing Fees
The following guideline provides criteria used to determine if a service should be included in the tier,
keeping in mind that a service does not have to meet every condition.
. .
• The service is equally available to everyone in the community and should benefit everyone
• Because the service is basic, it is difficult to determine benefits received by one user
• The level of service attributable to a user is not known
• Administrative costs of imposing and collecting a fee exceed revenue expected from the fee
• Imposing the fee would place the agency at a serious competitive disadvantage
• The service is primarily provided by the public sector
Partial Tax Investment = Partial Cost Recovery Tiers 2 an
OM
User fees may recover only partial cost for those services for which the agency desires to manage
demand, from those individuals who cannot pay full cost due to economic hardship, and if competitive
market conditions make a full cost fee undesirable.
• Services benefit those who participate but the community at large also benefits
• The level of service use attributed to a user is known
• Administrative costs of imposing and collecting the fee are not excessive
• Imposing a full cost fee would place the agency at a competitive disadvantage
• The service may be provided by the public sector but may also be provided by the private
sector
User fees should recover a substantial portion of the cost of services benefiting specific groups or
individuals, and for those services provided to persons who generate the need for those services.
• The individual or group using the service is the primary beneficiary
• The level of service use attributed to a user is known
• Administrative costs of imposing and collecting the fee are not excessive
• Imposing a substantial fee would not place the agency at a competitive disadvantage
• The service is usually provided by the private sector but may also be provided by the public
sector
User fees should recover the full agency cost
• Individuals or groups benefit from the service and there is little community benefit
• The level of service use attributable to a user is known
• There is excess demand for the service; therefore, allocation of limited services is required
■ Administrative costs of imposing and collecting the fee are not excessive
■ The service is provided at market price by the private sector
Cost Recovery Study
GEORGETOWN
EXHIBIT B
Georgetown Parks and Recreation Department
Cost Recovery Policy
As a publicly financed park system, the Georgetown Parks and Recreation Department
provides a basic level of Parks and Recreation services for the public, funded by tax dollars.
However, fees and charges and other methods to recover costs are considered a responsible
and necessary means to supplement tax revenue and regulate park use where appropriate.
2. Critical to the success of service delivery is affordability, fairness, and equity. It is the intent
of this policy to ensure that the approach in the use of tax dollars as well as alternative forms
of revenue will result in these qualities.
3. In establishing fees and charges, the Department will determine the costs of providing
services based on an identified and consistently applied methodology. This calculated cost
will be used to measure current and future levels of Cost Recovery and to help establish
appropriate Cost Recovery goals to support services. The appropriate level of Cost Recovery
will be based on an assessment of who is benefiting from the service provided. If the benefit
is to the community as a whole, it is appropriate to use taxpayer dollars to completely, or
primarily fund the service. Examples of services that primarily provide community benefits
are trails, play areas, parks, and signature community events. The Cost Recovery goals are
used to establish and/or adjust fees to reach these goals.
4. The Department shall use the pyramid cost recovery methodology outlined in the Cost
Recovery Study. The Georgetown Cost Recovery Pyramid (Figure 2) is a fundamental
component of the City's Cost Recovery philosophy. Each tier represents the service's
community benefit. The relative community benefit, and the other factors outlined below, are
used to determine cost recovery levels.
As the benefit is increasingly offered to an individual or select group of individuals, it is
appropriate to charge fees for the service at a decreasing level of subsidy and an increasing
rate of Cost Recovery. Supervised or instructed programs, facilities, and equipment that
visitors can use exclusively, as well as products and services that may be consumed, provide
examples where fees are appropriate. The Department shall also consider available resources,
public need, public acceptance, and the community economic climate when establishing fees
and charges. In cases where certain programs and facilities are highly specialized by activity
and design, and appeal to a select user group, the Department shall additionally consider fees
charged by alternative service providers or market rates.
6. The Department may further subsidize services for persons with economic need or other
targeted populations, as allowable, through tax -supported fee reductions, scholarships, grants,
or other methods.