Purpose

State law grants the authority for local government agencies to impose user fees to recover costs for certain services that are provided to the community.  User fees are charges to customers for "personal choice services", which are services and programs (i.e. classes, facility rentals) that more directly benefit a person as an individual versus the services and programs (i.e. playgrounds, open space) that are provided for the general benefit of all taxpayers.  As the cost to provide the services changes over time, the user fees that are imposed should also change to keep pace with the cost of providing the service. 

Recovering fair and reasonable fees for user fee-based services increases the likelihood that those types of services can be maintained, and also helps to ensure that sufficient general taxpayer funds are available to maintain service levels for services that are provided for the benefit of the general public as a whole. Establishing user fees at appropriate levels helps meet the service level expectations of the community. 

Analyzing these user fees and establishing expectations of how much cost recovery will be charged is imperative to maintaining a healthy budget. During the 2021-2026 Strategic Plan process, the Board of Directors acknowledged the need for a formal analysis of the Cost of Service for ALL District-provided services and an approved Cost Recovery Policy based on the outcomes of the Cost of Service Analysis. 

Project Goals & Objectives

The main goals and objectives of the study/project were as follows:

• Develop a cost recovery model and policy that provides a framework for future planning, budgeting, pricing, and resource allocation for the District's parks and recreational services.
• Included in the study but not limited to: 
  • a general review of the District's current fees
  • current fee methodology and allocation plan
  • a determination of what it costs the District to provide various services
  • any streamlining or changes in fees due to a shift in methodology or pricing rationale
  • recommendations for adjustments to the District's fee schedule
• Utilize an interactive and holistic approach to developing a Cost Recovery Policy reflecting the goals, mission and vision of the District that aligns available and future resources with services and commitments to include desired levels of service, sustainable fiscal stewardship, and industry best practices.
• An implementation plan that will ensure the District is strategically progressing to meet the needs of the community in a financially sustainable and equitable direction.  

Consultant Selection & Project Kick-Off

A formal Request for Proposals ("RFP") process was completed from September 1, 2021 to October 8, 2021, where the District received seven (7) proposals from consulting firms located throughout the United States.

On November 4, 2021, the Board of Directors awarded Aptos, CA-based ClearSource Financial Consulting the contract for the project. The project kick-off meeting was held on December 2, 2021. 

Project Phases

1. Data Gathering 
2. Cost of Service Analysis
3. Community Engagement & Feedback
4. Cost Recovery Policy Development
5. Fee Schedule Revisement
6. Board Approval of Cost Recovery Policy and Revised Master Fee Schedule  

Community Input Meeting

An important part of the Fee Study and Cost Recovery Policy is feedback from our community on current and upcoming fees.

A public input meeting was held on Tuesday, August 30, 2022 from 6-7:30p in the Senior Center. A powerpoint presentation was presented by ClearSource Financial followed by a Q&A session for meeting attendees. A link to the community survey was provided to all attendees to complete before the meeting concluded.  You can find the presentation given by ClearSource below:

Fee Study Survey

ClearSource Financial conducted a digital community survey asking our constituents to rank which benefit tier they felt 10 different categories of District provided services and programs fell into. The benefit tiers were based on the example Cost Recovery Pyramid below: 

The survey was open to the public from August 30-September 30, 2022. A total of 325 responses were received.

Survey results can be found in the attachment below:

Cost of Service & Cost Recovery Analysis

The Cost of Service and Cost Recovery Analysis uses a quantitative approach to ascertain the full cost of providing District services. The current Fee Schedule was last studied and updated in Fiscal Year 2017-2018. Since that time, regional costs have increased approximately 21%. Furthermore, in the last 10 years the California minimum wage has increased 88%. 

ClearSource independently prepared a multi-year financial forecast examining District revenue and expenditures. The forecast yields a scenario where the District faces a potential long-term structural budget imbalance resulting in the possibility that the District may not be able to sustain current service levels over a period of time should the District not increase it's user fees and rental charges. The scenario is largely caused by the fact that the projected rate of growth of District costs are estimated to exceed the projected rate of growth of District revenues. The rate of growth of expenditures is caused by significant increases in expenditures that are largely out of the control of the District, such as mandated minimum wage requirements, increases in utility costs (water, electricity, fuel, etc.), increases in insurance premiums, aging infrastructure, and some employee related costs. In order to correct the situation, the District can consider cutting costs, thereby reducing service levels over time; raising additional revenue through taxes or assessments which is limited and regulated by the state and not by the District; increasing program fees, rental charges or finding other income sources; becoming more efficient in various areas of operations or a combination thereof.

The multi-year financial forecast is presented in the table below. The Capital/Periodic expenses highlighted are adjustable dependent upon annual revenues and expenses which formulate the percentage of funding allocated to capital projects.

Cost of Service Analysis

For purposes of this analysis, District services were categorized into two primary categories:

1. General Parks Maintenance and Operations Services
2. Recreation Services

A secondary component of this analysis categorizes the broad categories of service into program areas.  For example, fee-related services are categorized into the following programs:

1. Aquatics
2. Sports
3. Camps, Classes
4. Senior Services
5. Special Events
6. Reserved Community Service Organization Facility Use

The analysis also categorizes costs as either: 

1)      Direct Costs

2)      Indirect Costs

Direct costs are those which specifically relate to the activity in question. An example of a direct cost is the salary and benefit expense associated with the individual staff member performing the service, as well as direct materials and supplies.

Indirect costs are those which support the provision of services but cannot be directly assigned to the service in question. An example of an indirect cost would include the expenses incurred to provide an office and the equipment needed for the staff person to perform the duties.

Current Cost Recovery Evaluation (FY 21/22)

Current cost recovery levels from fees and charges (generated revenues) are stated by comparing the existing generated revenues to the District’s full cost of service quantified through the cost of-service analysis.  A cost recovery percentage is then expressed as a percentage of the full cost.  A cost recovery rate or percentage of 0% means no costs are recovered from fees and charges for the particular service, and that the cost is borne entirely by general taxes. A cost recovery rate of percentage of 100% means that the full cost of service is recovered from fee and charges. A rate between 0% and 100% indicates partial recovery of the full cost of service through user fees and charges, while the remainder is subsidized by general tax revenue.

The cost recovery analysis indicates that, in aggregate, 9% of district operating costs are currently recovered from user fees and charges. The below file shows charts detailing the entire Cost of Service and Cost Recovery Analysis:

In this section you can find all study-related reports and documents presented to the Board of Directors with the final Cost Recovery Policy and Revised Master Fee Schedule approved on November 15, 2022.

4/20/2022 - Finance Committee Meeting

6/8/2022 - Special Board Meeting - Cost of Service Analysis

11/15/2022 - Special Board Meeting - Approval of Finalized Study, Cost Recovery Policy, and Revised Master Fee Schedule

Documents of updated Approved Policies and Fees from the 11.15.2022 Special Board Meeting: 

The Board of Directors held a special meeting on Tuesday, November 15, 2022 at 5:30 p.m. in the Senior Center to discuss and finalize the 2021-2022 Fee Study and Cost Recovery Analysis with staff and ClearSource Financial Consulting.

Main Outcomes and Decisions of the meeting:

• The District is currently obtaining an overall 9% Cost Recovery rate. 
• The current rate of expenses increasing is forecasted to outpace the growth in revenue if all user fees and charges are kept at current rates.
• The community was clear through feedback that we should value non-profit organizations and that non-residents should always pay a higher rate for services. 
• The Board of Directors approved the following updates and changes:
  • a three (3) year plan of increased rates of the Master Fee Schedule, with the main exception of no increases to sports field lighting rates. The increases begin with 5% the first year (FY 2023-2024) and increase an additional 2% each year: 
    • FY 2023-2024 (7.1.23-6.30.24): 5%
    • FY 2024-2025 (7.1.24-6.30.25): 7%  
    • FY 2025-2026 (7.1.25-6.30.26): 9% 
  • The Master Fee Schedule will be evaluated and approved every fiscal year with a planned "deep dive" study on a projected five to seven year cycle. 
  • Approved Community Service Organization (CSO's) rates for all hours included in the approved FFAU process will increase by $2/hour in FY 2023-2024 and subsequently $1/hour for FY's 2024-2028.  Reservations for time outside of the FFAU approved hours will be charged at the standard rates on the Master Fee Schedule for Class 1-CSO rates.   
  • a new Cost Recovery Policy with guidelines covering all District provided services.