1. Cost Recovery Model

2. What is Cost Recovery Cost=Subsidy + Cost recovery Cost –all expenditures associated with a program Subsidy –how much of the cost of the unit is absorbed by someone other than the consumer Cost recovery –All other revenue associated with the program Fees, grants, sponsors, etc.

3. Why have a CR Policy? Est. a consistent and equitable pricing structure for the agency Helps policy makers see logic in price structure Shows distribution of services for all residents

4. Cost Recovery Pyramid Designed for public agencies Based on cost-benefit analysis –Public, merit, private services Most based on direct costs –Some on indirect…unless indirects are tax supported Must be customized to the agency Largest # of services at bottom, smallest at top

6. L 1: Mostly Community Benefit Largest level Purpose –Programs/parks to increase property value –Safety –Social needs –Quality of life Eg. –Low income, park development, marketing, maintenance

7. L 2: Considerable Community Benefit Purposes –Focus on skill building, introduce recreation –Individual & physical well being Programs –Drop in recreation –Ranger led activities –Beginner level instruction Traditionally expected programs Heavy tax & minimal indiv reliance

8. L 3: Balance Indiv/Comm Benefits Purposes –Intermediate skill building, recreation program exposure Programs –Summer camps –Youth sports –Swim lessons Equitable tax & individual resources

9. L 4: Considerable Individual Benefit Purpose –More specialized services –May be competitive Programs –Golf –Tennis leagues –Camp sites Considerable or complete cost recovery thru fees & charges (direct & indirect)

10. L 5: Mostly Individual Purpose –Profit center potential –May be outside of core mission of agency –May be in enterprise fund Programs –Elite competitive sports –Facility rentals –Concessions Fully covered by individual Recover direct, indirect & make a profit

11. Example 5.Elite swimming or diving team 4. Swim team 3. Swim lessons 2. Pool 1. Spray ground, non-monitored lake

12. Normal Parks & Recreation

13. Step 1 – Building on Your Organization’s Values, Vision, and Mission

14. Step 2 – Understanding the Pyramid Methodology, the Benefits Filter, and Secondary Filters Filters….

15. FilterDefinition Benefit Who receives the benefit of the service? (Skill development, education, physical health, mental health, safety) Access/Type of Service Is the service available to everyone equally? Is participation or eligibility restricted by diversity factors (i.e., age, ability, skill, financial)? Organizational Responsibility Is it the organization’s responsibility or obligation to provide the service based upon mission, legal mandate, or other obligation or requirement? Historical ExpectationsWhat have we always done that we cannot change? Anticipated Impacts What is the anticipated impact of the service on existing resources? On other users? On the environment? What is the anticipated impact of not providing the service? Social Value What is the perceived social value of the service by constituents, city staff and leadership, and policy makers? Is it a community builder?

16. Step 3 – Developing the Organization’s Categories of Service Develop categories –Beginning instruction, special events

17. Step 4 – Placing the Categories of Service onto the Pyramid –Place the programs on the pyramid keeping in mind the filters

18. Step 5 – Determining (or Confirming) Current Subsidy/Cost Recovery Levels –How prevalent is knowledge on cost recovery? –How do you track costs? Examples?

19. Step 6 – Defining Direct and Indirect Costs Direct costs –typically include all the specific, identifiable expenses associated with providing a service. Indirect costs –Overhead, administration –May be a percent assigned to recover Percent of indirect to recover???

20. Step 7 – Establishing Cost Recovery/Subsidy Goals Examples….

21. Review the programs at each level Agreement/disagreement among groups?