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HomeMy WebLinkAbout2009-06-09; City Council; 19851; Acceptance of reportCITY OF CARLSBAD - AGENDA BILL AB# 19,851 MTG. 06/09/09 DEPT. PKS&REC ACCEPTANCE OF "CORE SERVICES, RESOURCE ALLOCATION AND PRICING STRATEGIES REPORT DEPT. HEAD ^ ) CITYATTY. -^m^ CITY MGR. f /A RECOMMENDED ACTION: Adopt Resolution No. 2009-135 accepting the Parks and Recreation Department's "Core Services, Resource Allocation, and Pricing Strategies" report and support the pyramid philosophy, goals, and objectives. ITEM EXPLANATION: In July 2008, a city wide goal team was formed with the purpose of developing a cost recovery philosophy and pricing strategies for the Parks and Recreation Department. The resulting pyramid cost recovery philosophy and pricing strategies is intended to be used to guide the allocation of funds for capital projects and subsidy levels for recreation programming. The pyramid method is a best practice approach to cost recovery that will assist the department in identifying a financial management philosophy that guides the level to which all department services should be subsidized by General Fund monies, if at all. At the base of the pyramid are those programs and services that have the greatest community benefit. As you ascend the five levels of the pyramid, the amount of community benefit gradually diminishes as the degree of individual benefit becomes primary for those programs and services at the top of the pyramid. In an effort to incorporate sound business operating principles and to make sure that the majority of taxpayer funds go to support those programs and services identified on the pyramid as having the highest community benefit overall, staff recommends that the City Council endorse and implement several key recommendations and general cost recovery strategies summarized below: 1. Support the pyramid philosophy and the conceptual cost recovery method; and, 2. Authorize the Parks and Recreation Director to make program and service changes as necessary to become more closely aligned with the pyramid cost recovery percentages. 3. Authorize the Parks and Recreation Director to return to City Council for proposed changes to current fee structure for programs/services based on pyramid cost recovery strategies. DEPARTMENT CONTACT: Brian Albright 760-434-2826 brian.albriaht@carlsbadca.aov FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED p DENIED D CONTINUED D WITHDRAWN D AMENDED D CONTINUED TO DATE SPECIFIC O CONTINUED TO DATE UNKNOWN O RETURNED TO STAFF D OTHER - SEE MINUTES D Page 2 The primary goal of the core service and resource allocation model and pricing policy is to establish long term organizational sustainability and vitality through a logical and thoughtful philosophy of cost recovery and pricing strategies that supports the core values, vision, and mission of the Parks and Recreation Department, and the community it serves. On April 20,2009 the Parks and Recreation Commission voted unanimously to recommend City Council acceptance and implementation of the key recommendations and general cost recovery strategies as outlined in the "Core Services, Resource Allocation, and Pricing Strategies" report. FISCAL IMPACT: The acceptance of the report will not have an immediate fiscal impact. However, future fiscal impact will vary depending upon the individual cost recovery goal range percentages established for each service category. The pyramid cost recovery method will have a positive fiscal impact overall. As the department increases its cost recovery level, dependence on the General Fund as subsidy for park and recreation programs will be reduced. ENVIRONMENTAL IMPACT: Pursuant to Public Resources Code section 21065 and CEQA Guidelines section 15378, this action does not constitute a "project" within the meaning of CEQA and therefore, does not require an environmental review. EXHIBITS: 1. Resolution Number 2009-135 accepting the Parks and Recreation Department's "Core Services, Resource Allocation, and Pricing Strategies" report and support the pyramid philosophy, goals, and objectives. 2. "Core Services, Resource Allocation, and Pricing Strategies" report dated June 9, 2009. 2_ Ex U. b.'f 1. 1 RESOLUTION NO. 2009-135 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, ACCEPTING THE "CORE 3 SERVICES, RESOURCE ALLOCATION, AND PRICING 4 STRATEGIES" REPORT. 5 WHEREAS, a city wide goal team was formed with the purpose of developing a 6 cost recovery philosophy and pricing strategies for the Parks and Recreation 7 Department; and o 9 WHEREAS, the City Council of the City of Carlsbad, California supports the pyramid philosophy and the overall cost recovery method described in the report; and 11 WHEREAS, the City Council of Carlsbad, California wishes to accept the Parks 12 and Recreation Department's "Core Services, Resource Allocation, and Pricing 13 Strategies" report and support the pyramid philosophy, goals, and objectives contained 14 therein; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of 16 Carlsbad, California, as follows: 17 1. That the above recitations are true and correct. 19 2. That the "Core Services, Resource Allocation, and Pricing Strategies" 20 report is accepted as set forth in Exhibit 2 of the Agenda Bill entitled "Acceptance of 21 'Core Service, Resource Allocation and Pricing Strategies' Report." 22 // 23 II 24 II 25 II 26 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 9- day of June. 2009, by the following vote to wit: AYES: Council Members Lewis, Kulchin, Hall, Packard and Blackburn. NOES: None. ABSENT: None. A/7 A llmj/S (j[«&DEK LEW ATTEST: C T*t^rT (SEAL)^m^ •^ 4.,- x.-4^ = °§t^lPI^•%Jj~s?g^li ''''t *'"+"' ^*~} 'J<^?FHJfc*"s,'Ma5&r u / t***4r £*+*&?- 6at/£t^— OQ^C City Clerk (J •&\ JS5wv ^s Core Services, Resource Allocation, and Pricing Strategies June 9, 2009 BEST CITY OF CARLSBAD Acknowledgements City Council Claude A. "Bud" Lewis, Mayor Ann J. Kulchin, Mayor Pro Tern Matt Hall, Council Member Mark Packard, Council Member Keith Blackburn, Council Member City Manager Lisa Hildabrand Parks and Recreation Commission Sally Lyons, Chairperson Denny Cooper, Commissioner, Vice Chairperson Jim Comstock, Commissioner Jim Craig, Commissioner Jim Farley, Commissioner Dr. Leonard Martyns, Commissioner Diane Proulx, Commissioner Parks and Recreation Director Brian Albright Cost Benefit Analysis and Fee Setting Policy Support Staff Goal Team Members Aimee Blanchard Mick Calarco, Team Leader Bonnie Elliott Kevin Branca Kevin Granse Gian Lauro Steve Herrera Carl Pope Kyle Lancaster Lolly Sangster Gail Lynn Sue Spickard Jack Risley MarkSteyaert Rachel Shay Judi Vincent Craddock Stropes Lori Swenck For more information about this document, please contact: City of Carlsbad Parks and Recreation Department 799 Pine Avenue, Suite 200, Carlsbad, CA 92008 760.434.2826 http://www.carlsbadca.gov/recreation GreenPlay, LLC Karon Badalamenti, CPRP, Principal and Jamie S. Sabbach, CPRP, Senior Project Consultant 3050 Industrial Lane, Suite 200, Broomfield, CO 80020 Telephone: 303/439-8369 / www.GreenPlayLLC.com Core Services, Resource Allocation, and Pricing Strategy -June 2009 i Table of Contents Acknowledgements i Executive Summary 1 The Core Services and Resource Allocation Model and Pricing Strategy Process 11 Core Services Identification and Provision Strategies 16 Developing a Resource Allocation Philosophy: The Pyramid Method 21 Development of an Operational Action Plan - Implementing the Resource Allocation and Core Service Model 29 Pricing 101: Developing a Pricing Strategy 29 Progressive Analysis and Materials 33 Conclusion and Recommendations 40 Appendix A - Definition of Terms 41 Appendix B - Carlsbad Recreation Services Menu 51 Appendix C - Categories of Service 56 Appendix D - Carlsbad Parks and Recreation Department Operational Action Plan 58 Appendix E - Comparative Analysis Criteria 65 City of Carlsbad Parks and Recreation Department 1 Executive Summary In an effort to continually improve and enhance services and overall organizational effectiveness, the Carlsbad Parks and Recreation Department began an extensive process to create a Core Service and Resource Allocation Model and Pricing Strategy. This process included an analysis of the Department's values, vision, and mission; review and assessment of services including programs and facilities; categorization of Departmental services based upon the level of community versus individual benefit; identification of direct and indirect costs, and an evaluation of current pricing methods. All of the components of this process directly influence current cost recovery and subsidy allocation levels, the establishment of future cost recovery and subsidy allocation goals, and future pricing strategies and methods. This comprehensive review and analysis will assist the Department in refining its service delivery and financial management philosophy as it moves forward in efforts to sustain services over both the short and long-term. Having a Core Service and Resource Allocation Model and Pricing Strategy can help organizations answer challenging questions from their stakeholders and governing bodies. Such questions include: • Does the Carlsbad Parks and Recreation Department provide services that align with the community's values, the project vision, and mission of the organization? • Does the Carlsbad Parks and Recreation Department utilize its resources responsibly, attempt to collaborate with other entities with similar missions, and make efforts to minimize duplication of services when appropriate? • How will the Carlsbad Parks and Recreation Department fund services related to budget constraints in the future? • Is the Carlsbad Parks and Recreation Department utilizing funding in a responsible manner and maintaining a high level of governmental accountability? • Are the Carlsbad Parks and Recreation Department services priced to allow for reasonable public access while competing fairly in the market? Core Values, Project vision, and Mission The initial step in the process included the review of the Park and Recreation Department's core values, project vision, and mission. After review, it became apparent that a more focused and measurable Parks and Recreation project vision would help inform both the staff and the public, and guide the project. Therefore, the team created a project vision and discussed how these fundamental principles lend themselves to guiding and directing service provision and resource allocation decision-making. In addition, as a result of the initial review process, it was suggested that as a part of the 2009-2010 strategic plan update the Parks and Recreation Department may wish to reconsider their core values, vision, and mission with the public to assure concurrence with the community's perspective. Service Assessment Subsequent to this internal review and analysis, a Service Assessment was conducted. This intensive review of organizational services led to the development of the Department's Service Portfolio and identified those services that are "core" to the values, project vision, and mission of the Department. The underlying philosophy of the Service Assessment is based on the assumption that duplication of existing comparable services (unnecessary competition) among public and non-profit organizations can fragment limited resources available, leaving all providers unable to increase the quality and cost- Core Services, Resource Allocation, and Pricing Strategy -June 2009 1 effectiveness of customer services. The Assessment also included management strategies intended to assist the Department in its provision of these services in the future. The resulting provision strategies recommend the divestment of Lagoon Permitting, Adult Social Dance, Health & Wellness Expo, and the EGGstravaganza Spring Festival. The assessment also recommended divesting recreational swim at the Monroe Street pool or reconfiguring to a "teaching" facility, as the existing pool configuration really isn't conducive to a "play" experience. Cost Recovery and Subsidy Allocation After the completion of the Service Assessment, an analysis of current cost recovery and subsidy allocation was conducted. Cost Recovery is the basis for the degree to which the operational and maintenance costs of service provision are financially supported by user fees and/or other applicable funding mechanisms such as grants, partnerships, donations, sponsorships, volunteers or other alternative funding sources. In contrast, Subsidy includes designated General Fund sources such as sales taxes, property taxes, or other taxing mechanisms that financially support operations and maintenance of services. Subsidy dollars provide for service costs that are not recovered by either user fees or other forms of alternative funding. Essentially, subsidy is the community's investment in parks and recreation. Currently, the Carlsbad Parks and Recreation Department is operating at an approximately 22 percent cost recovery level (this includes all park and recreation revenues and expenses, internal service fees, and the relevant portion of facility cost allocations). This translates to 78 percent of operations subsidized by the General Fund. According to Dr. John Crompton, a leading expert on parks and recreation financing, the national average of cost recovery in public parks and recreation is approximately 34 percent. Although the Carlsbad Parks and Recreation Department's cost recovery level is lower than the national average, it is important to note that communities across this country vary in terms of how they allocate direct and indirect costs qualifiers such as availability of resources, size, scope of services, community demand, and ability to pay. Therefore, different departments must maintain cost recovery/subsidy levels that are appropriate based upon their own community's characteristics, values, and available funding. Pyramid Model and Focus Groups The Parks and Recreation Department held a public forum where resident focus groups representing the Carlsbad community were engaged in workshops introducing them to the Pyramid Method, a current best practice approach that assists agencies in identifying a financial management philosophy which details the level to which all Department services should be subsidized, if at all. Residents were asked to rank, in order of the degree of community or individual benefit, services for varying populations with varying interests. Subsequently, they guided the development of proposed resource allocation levels for the Carlsbad Parks and Recreation Department, categorizing each Department service based upon perceived beneficiaries of services, community values, and project vision and mission. The resulting pyramid model target cost recovery levels are intended to account for all direct and indirect costs, while working toward increasing the cost recovery of many services. The intent is to help the Park and Recreation Department adjust to the current economic climate and budget reductions, while not decreasing services. Therefore, a heavy reliance on alternative funding sources, as well as aligning pricing strategies will be warranted. City of Carlsbad Parks and Recreation Department Operational Action Plan Once all of the above analysis and process was completed, Department staff developed a measurable one-year Operational Action Plan outlining planning and operational efforts intended to put the Core Service and Resource Allocation Model and Pricing Strategy into action. This internal working document articulates the goals and objectives that must be achieved to realize the intended results of this comprehensive process. This operational plan will move the organization forward in a logical and organized way while maintaining connectivity to the steps in this financial planning process. Included in the Operational Action Plan are the following three strategies: • Service Provision Strategy - Divestment of Selected Events and Services (with five goals identified) • Service Provision Strategy - Collaborate or Divest (with three goals identified) • Strategies to Meet Cost Recovery Goals (with six goals identified) Service Pricing Workshop As a last step, staff participated in a Service Pricing Workshop intended to create a consistent, fair, and equitable approach to the development of service fees and charges based upon established resource allocation goals. The outcome of this comprehensive process resulted in a proposed Core Service and Resource Allocation Model and Pricing Strategy as presented in the Services Portfolio. The Model's methods establishes the Department's Service Portfolio, provision strategies, cost recovery and subsidy goals, and articulates a philosophy and policy that is intended to guide the development and management of the Department's operational budget into the future. Conclusion The primary goal of the Carlsbad Parks and Recreation Department's Core Service and Resource Allocation Model and Pricing Strategy is to establish organizational sustainability through a logical and thoughtful philosophy that supports the core values, project vision, mission of the Carlsbad Parks and Recreation Department, and its community. As a result of the comprehensive process and impending results as illustrated in the Service Portfolio, the department will begin the process of implementing service provision strategies and align financial resource allocation with newly developed cost recovery goals. These efforts are intended to create service sustainability for the organization and resulted from the following steps in the process: • Service Assessment - Core Service Identification and Service Provision Strategies • Pyramid Methodology - Resource Allocation Philosophy • Operational Work Plan - internal action plan • Pricing Workshop - development of a pricing philosophy Core Services, Resource Allocation, and Pricing Strategy-June 2009 in Q-C<u§s 8 oo(N bo•c>-Q. Ou The Core Services and Resource Allocation Model and Pricing Strategy Process A City-wide goal team was formed to initiate the core services and resource allocation model and pricing strategy process." The goal team was comprised of staff from various areas of the City, including Recreation Programming, Park Development, and the Finance Department. The goal team was also assisted by several support staff members. Cost Benefit Analysis and Fee Setting Policy Goal Team Members Mick Calarco, Team Leader Kevin Branca Gian Lauro Carl Pope Lolly Sangster Sue Spickard MarkSteyaert Judi Vincent Support Staff Aimee Blanchard Bonnie Elliott Kevin Granse Steve Herrera Kyle Lancaster Gail Lynn Jack Risley Rachel Shay Craddock Stropes Lori Swenck Development of the Core Service and Resource Allocation Model and Pricing Strategy included a significant number of educational workshops. These workshops introduced each component of the process and engaged stakeholder groups in interactive dialogue and exercises that led to the design and development of each of the major components of the Core Service and Resource Allocation Model and Pricing Strategy. Stakeholder engagement is critical to collective "buy-in," consensus, and endorsement of the process. Specific community engagement workshops were held, allowing Carlsbad residents an active "place at the table" for their voices to be heard. Subsequently, these individuals helped guide the development of the Resource Allocation and Core Services Model. A variety of participants representing diverse interests were invited to take part in the process. Interest areas represented included: • Aquatics/swimming • Youth sports • Seniors/older adults • Alternative providers • Youth interest/high school students Core Services, Resource Allocation, and Pricing Strategy -June 2009 11 The process also required extensive time and effort by many Department staff. Educational workshops were the foundation for the development of the Carlsbad Parks and Recreation Department's Resource Allocation and Core Services Model. These workshops provided the groundwork for many intensive work sessions and ultimately, for the recommended Model. REVIEW AND ANALYSIS OF ORGANIZATIONAL VALUES AND MISSION, AND PROJECT VISION Workshop - Department Staff and Other City Staff-June 18,2008 • Introduction to the Resource Allocation and Core Services Model and Pricing Strategy process • Review of the Park and Recreation Department's Values and Vision • Development of the Parks and Recreation Department's Project Vision and Mission CORE SERVICES IDENTIFICATION AND PROVISION STRATEGIES Workshop - Department Staff - August 25-27, 2008 • Presentation of the Service Assessment Methodology • Identification of Department Services including programs and facilities • Identification of alternative service providers • Processing each service through each of the Service Matrix filters • Identification and discussion of resulting provision strategies DEVELOPING A RESOURCE ALLOCATION PHILOSOPHY: THE PYRAMID METHOD Workshop I - Department and Other City Staff - September 30, 2008 • Review project intent • Presentation of the Pyramid Method • Exercise - Sample Sorting of Services • Re-orientation to the Department's Values, and Project Vision and Mission Statements • Development of the Carlsbad Parks and Recreation Department's Categories of Service • Preliminary discussion of direct and indirect costs Strategy Session - October 27-28,2009 • Review Project Vision • Determine strategy for identifying and applying direct and indirect costs • Review current budgeting procedures and cost allocations • Review Categories of Service, definitions and examples Workshop lla/b - Citizens Focus Group and Department Staff- November 17, 2008 • Presentation of the Pyramid Method • Review of the Department's Values, Project Vision and Mission Statements • Review Department's Categories of Service • Exercise - Development of a Consensus Pyramid - Sorting Department Services Workshop He - Department Staff- November 18, 2008 • Debrief of Workshop lla/b • Refining of the Categories of Service including examples • Consideration of Citizen Consensus Pyramid • Development of a Recommended Pyramid • Finalize and applied direct costs 12 City of Carlsbad Parks and Recreation Department • Identify preliminary indirect costs • Discussion of current cost recovery levels • Establishment of cost recovery goals • Assign small working group for other financial terms and concept definitions (Appendix A) Council Briefing - November 19, 2008 Workshop III - Department Staff-January 6, 2009 • Finalize recommended pyramid • Finalize cost recovery goals • Finalize terminology definitions DEVELOPMENT OF AN ACTION PLAN - IMPLEMENTING THE RESOURCE ALLOCATION AND CORE SERVICE MODEL Workshop - Department Staff - March 2,2009 • Goals and objectives theory • Development of the implementation plan for the Resource Allocation and Core Service Model - discuss and document actions steps • Develop specific and measureable goals and objectives PRICING 101: DEVELOPING A PRICING STRATEGY Workshop - Department Staff - March 3,2009 • Pricing theory • Development of the Department's pricing strategy and methods o Cost Recovery Strategy o Competitive Strategy o Market Rate Strategy o Arbitrary pricing should never be used • Budgeting exercise - application of cost recovery goals REVIEW AND ANALYSIS OF ORGANIZATIONAL VALUES, VISION, AND MISSION These fundamental principles create a logical philosophical framework that guides and directs decision- making efforts. They are the foundation for all organizational decisions and processes. An organization's values are comprised of the Department's leadership values, staff values, and community values. They direct an Department's vision and help determine those community conditions the Department wishes to impact through the organizational mission. The Department mission helps guide management decisions, often substantiating difficult decisions making them justifiable and defensible. Core Services, Resource Allocation, and Pricing Strategy -June 2009 13 Societal/Community Values Organizational Values Member/Staff Leader/Policy Maker Values Values The City of Carlsbad established a series of guiding statements and principles that were reviewed, analyzed, and considered as the process advanced. These include the Department's mission, core values, vision, community target issues and project specific vision PARKS AND RECREATION DEPARTMENT CORE VALUES • Quality of life • Sense of community • Equal access for all • Strong community • Excellence in service • Efficient and effective • Organizational vitality PARKS AND RECREATION DEPARTMENT VISION Special emphasis is given to human development to promote healthy and resilient individuals that become the building blocks of healthy families, neighborhoods and communities. The community of Carlsbad is strengthened in several ways including economic vitality and quality of life, as a place where people want to live, work and play. PARKS AND RECREATION DEPARTMENT COMMUNITY TARGET ISSUES • Safe places to gather • Lifelong learning opportunities • Trails, parks and open space • Programs that strengthen families and build a strong sense of community • Health and fitness 14 City of Carlsbad Parks and Recreation Department PARKS AND RECREATION DEPARTMENT PROJECT VISION The Park and Recreation Department's project vision is to have active and healthy citizens engaged in programs and using facilities that are operated in a safe and sustainable manner. PARKS AND RECREATION DEPARTMENT MISSION STATEMENT The Parks and Recreation Department's mission is to build strong community through a broad range of high quality recreation and park services for all who live, work, and recreation in Carlsbad. Core Services, Resource Allocation, and Pricing Strategy -June 2009 15 Core Services Identification and Provision Strategies Public agencies have not traditionally been thought of as organizations needing to be competitively oriented. Unlike private and commercial enterprises which compete for customers and whose very survival depends on satisfying paying customers, many public and non-profit organizations operate in a non-market, or grants economy - one in which services may not be commercially viable. In other words, the marketplace may not supply sufficient and adequate resources such as a willingness to pay to play, to support service demands. In the public sector, our customers do not decide how funding is allocated and which service gets adequate, ongoing funding. Many public agencies and non-profits can be considered "sole-source," the only place to get a service, so there is little to no competition and therefore potential for apathetic service enhancement and improvement. Consequently, public and non-profit organizations have not necessarily had an incentive to question the status quo, to assess whether customer needs were being met, or to examine the cost-effectiveness or quality of available services. The public sector and competitive environments have changed. Funders and customers alike are beginning to demand more accountability and both traditional (taxes and mandatory fees) and alternative funding (grants and contributions) are getting harder to come by, even as need and demand increase. This increasing demand for a smaller pool of resources requires today's public and non-profit agencies to rethink how they do business, to compete where appropriate, to avoid duplicating existing comparable services, and to increase collaboration, when possible. In addition, organizations are leveraging all available resources where possible. Assessment of Parks and Recreation Services is an intensive review of organizational services including activities, facilities, and parklands that leads to the development of an Department's Service Portfolio. Additional results indicate whether the service is "core to the organization's values and vision" and provides recommended provision strategies that can include, but are not limited to, enhancement of service, reduction of service, collaboration, or aggressive competition. This assessment begins to provide a nexus relative to which services are central to the organization's purpose. The process includes an analysis of each service's relevance to the organization's values and vision; the organization's competitive position in the community relative to market; other service providers in the service area including quantity and quality of provider, and the economic viability of the service. Based on the MacMillan Matrix for Competitive Analysis of Programs1, the Public Sector Services Assessment Matrix is an extraordinarily valuable tool that is specifically adapted to help public agencies assess their services. The use of the MacMillan Matrix realized significant success in the non-profit environment, which has led to application in the public sector. The Parks and Recreation Services Assessment Matrix is based on the assumption that duplication of existing comparable services (unnecessary competition) among public and non-profit organizations can fragment limited resources available, leaving all providers too weak to increase the quality and cost-effectiveness of customer services. This is also true for public agencies. The Service Assessment Matrix assumes that trying to be all things to all people can result in mediocre or low-quality service. Instead, agencies should focus on delivering higher-quality service in a more focused (and perhaps limited) way. The Matrix helps organizations think about some very pragmatic questions. 1 Alliance for Nonprofit Management 16 City of Carlsbad Parks and Recreation Department Q: Is the Department the best or most appropriate organization to provide the service? Q: Is competition good for the customers? Q: Is the Department spreading its resources too thin without the capacity to sustain core services and the system in general? Q: Are there opportunities to partner with another organization to provide services in a more efficient and responsible manner? Services Assessment Matrix Good Fit Poor Fit Strong Competitive Position Weak Competitive Position Financial Attractiveness Economically Viable Financial Attractiveness Not Economically Viable Alternative Coverage High Aggressive competition Alternative Coverage Low Alternative Coverage High 2. Aggressive 5. Build up growth best competitc provider Alternative Coverage Low 'Core Service 3. Aggressive 4. Invest, 7. Collaborate 8. Collaborate or divestment collaborate or or divest divest divest 9. Aggressive divestment 10. Orderly divestment Fit Fit is the degree to which a service "belongs" or fits within the organization. Criteria for "Good Fit" include: • Congruence with Department values, vision and mission • The skills necessary to successfully manage the service Core Services, Resource Allocation, and Pricing Strategy -June 2009 17 Service Attractiveness Service Attractiveness is the degree to which a service is attractive to the Department from an economic perspective as an investment of current and future resources. A service that does not align with the Department's values, vision, and mission should not be classified as attractive. No program should be classified as 'highly attractive" unless it is ranked as attractive on a substantial majority of the criteria below: • Consistent and stable funding • Market demand from a large (relative) client base • Appeal to volunteers, donors or sponsors • Measurable, reportable program results • Focus on prevention • Intended to promote self-sufficiency of users Alternative Coverage Alternative Coverage is the extent to which similar services are provided in the service area. If there are no other large (significant), or very few small, comparable services being provided in the same region or service area, the service should be classified as "low coverage." Otherwise, coverage is "high." Competitive Position Competitive Position is the degree to which the organization has a stronger capability and potential to deliver the service than other agencies - a combination of the Department's effectiveness, quality, credibility, and market share dominance. No service should be classified as being in a "strong competitive position" unless it has some clear basis for declaring superiority over all competitors in that service category. Criteria for a "strong competitive position" include: • Good location in relation to the market • Past success securing funding • Superior track record of service delivery • Large market share of the target clientele currently served • Gaining momentum or growing in relation to competitors • Better quality service and/or service delivery than competitors • Ability to raise funds, particularly for this type of service • Superior skill at service advocacy • Superiority of technical skills needed for service provision • Ability to conduct necessary research and/or properly monitor service performance • Superior ability to communicate to and with stakeholders • Cost effective delivery of service Market Competition GreenPlay, LLC discourages public agencies from competing directly with the private sector using tax payer funding or subsidy, as this creates unfair competition. When both the public and private sector provide similar services to the same target market, a better choice is collaboration or a re-purposing of the service to find a niche market that is different and distinct from the private sector. However, if there are good reasons to compete (like not enough providers to fill the market demand or circumstances where everyone benefits), then competition may be warranted as long as it's fair and competitively 18 City of Carlsbad Parks and Recreation Department priced with all costs accounted for, including indirect costs and debt service. Then competition is on a level playing field between the private and public sector. Issues surface when a Department competes with itself by providing the same service in different areas of the organization, resulting in internal competition. Internal competition can also arise when multiple facilities serving the same market or service area overlap. For example, in the City of Carlsbad, the Cultural Arts Department overlaps certain services with the Parks and Recreation Department, providing a variety of summer art camps targeted at a similar audience. It is not recommended to "undercut" the competitive market internally or externally, but rather target different niche markets, demographics, service areas, or compliment the market. Recommended Provision Strategies - Defined Compete - Affirm Market Position - A number of (or one significant) alternative providers) exists yet the service \sfinancially attractive, and the Department is in a strong competitive position to provide the service to customers or the community. Affirming market position includes efforts to capture more of the market and investigating the merits of competitive pricing strategies. This includes investment of resources to realize a financial return on investment. Typically, these services have the ability to generate excess revenue. Growth - Advance Market Position- A smaller number or no alternative providers exist to provide the service, the service is financially attractive, and the Department is in a strong competitive position to provide the service. Due primarily to the fact that there are fewer if any alternative providers; advancing market position of the service is a logical operational strategy. This includes efforts to capture more of the market, investigating the merits of market pricing and various outreach efforts. Also, this service may be an excess revenue generator by increased volume. Divestment - The Department has determined that the service does not fit with the Department's values and vision, and/or the Department has determined it is in a weak competitive position with little opportunity to strengthen its position. Further, the Department deems the service to be contrary to the Department's interest in the responsible use of resources; therefore, the Department is positioned to consider divestment of the service. Investment- Investment of resources is the Department's best course of action as the service is a good fit with values and vision and opportunity exists to strengthen the Department's current weak competitive position in the marketplace. Build up Best Competitor - Complementary Development - The service is a good fit, a number of (or one significant) alternative provider(s) exist that provide the service, and the Department is in a strong competitive position to provide the service, yet it is not//nonc/o//y attractive to the Department. "Complementary development" encourages the planning efforts that lead to complementary services rather than duplicative services, broadening the reach of all providers. Although there may be perceived competition for the service due to the number of or like services of alternative providers, the demand exists justifying the service's continued place in the market. Collaboration-The Department determines that the service can be enhanced or improved through the development of a collaborative effort as the Department's current competitive position is weak. Collaborations are partnerships with other service providers (can be internal or external) that minimize or eliminate duplication of services while most responsibly utilizing Department resources. Core Services, Resource Allocation, and Pricing Strategy -June 2009 19 Core Service-These services fit with the Department's values and vision, there are few, if any. alternative providers, yet the Department is in a strong competitive position to provide the service. However, the service is notfinancially attractive. These services are "core" to service provision and typically benefit all community members or are seen as essential to the lives of under-served populations. Carlsbad's Parks and Recreation Department Service Menu The Carlsbad Parks and Recreation Department's Service Menu (shown in a matrix format in Appendix B) illustrates each program, activity, or facility provided to the community by the Department, and the recommended provision strategy for each individual service moving forward. This Service Menu is the preliminary step in the evolution of the Department's comprehensive Service Portfolio,which inevitably includes not only the individual service and recommended provision strategy, but also the category of service to which each service belongs, cost recovery goal, and pricing strategy. These resulting provision strategies include divestment recommendations for Lagoon Permitting, Adult Social Dance, Health & Wellness Expo, and the EGGstravaganza Spring Festival. The assessment also recommended divesting recreational swim at the Monroe Street pool or reconfiguring to a "teaching" facility as the existing pool configuration really isn't conducive to a "play" experience. 20 City of Carlsbad Parks and Recreation Department Developing a Resource Allocation Philosophy: The Pyramid Method It is often easier to integrate the values of an organization with its mission if they can be visualized. An ideal philosophical model for this purpose is the Pyramid. In addition to a physical structure, the pyramid is defined by Webster's Dictionary as "an immaterial structure built on a broad supporting base and narrowing gradually to an apex." Parks and recreation programs are built with a broad supporting base of core services, enhanced with more specialized services as resources allow. The Pyramid illustrates a Department's categories of services and resource allocation philosophy. The Pyramid details cost recovery and subsidy goals commensurate with the benefit received by a service's user and the community as a whole. Descriptions regarding each level of the Pyramid are provided in this document; however, they are intended to serve only as a guide, as they are critically dependent upon Department philosophies. These philosophies inevitably determine where Department's services will fall within the Pyramid. Historical, cultural, geographical and resource impacts may play a role in this determination. The resulting Pyramid will be unique to each Department that applies this method. The Pyramid is the major component of a Resource Allocation and Core Services Model. The foundational level of the Pyramid represents the mainstay of a public parks and recreation system. It is the largest service level and most heavily subsidized by tax dollars. Services appropriate to higher levels of the Pyramid should be offered only when the preceding levels below are significant enough to provide basic parks and recreation services to the community as a whole. This represents the public parks and recreation mission while reflecting the growth and maturity of a Department. ^ ~ , .. ^. HIGHLY INDIVIDUALCore Services and Resource Allocation MOSTLY INDIVIDUAL BMMfK INDIVIDUAL / Community Benefit COMMUNITY / Individual Benefit COMMUNITY Benefit O2001 GrwnPlay.LLC Core Services, Resource Allocation, and Pricing Strategy -June 2009 21 Application of the Pyramid Method begins with the values, vision and mission of the organization, but must also address the following questions and issues: • Who benefits from the service, the community in general, the individual, or the group receiving the service? • Does the individual or group receiving the service generate the need and therefore, the cost of providing the service? An example of this type of service is a permitted activity in a park that requires police presence beyond the norm. • Will imposing the fee pose an economic hardship on specific users? • If the ability to pay does not align with the benefit and value of a service, consideration of this dynamic should be addressed during the implementation phase of pricing and marketing. • Do community values support taxpayer subsidy of the cost of service for individuals with special needs (e.g. specialized programs for people with disabilities or services for low-income families)? • Are services federally mandated like inclusionary services as instituted by the American's with Disabilities Act (ADA) • Will the level of the fee affect the demand for the service? o Is it possible and desirable to manage demand for a service by changing the level of the fee? o Are there competing providers of the service in the public, nonprofit or private sector? CORE SERVICE AND RESOURCE ALLOCATION: THE PYRAMID METHOD The creation of a resource allocation philosophy is key to financial sustainability and ultimately, to organizational sustainability. Critical to this philosophical undertaking is the support and buy-in of elected officials and advisory boards, staff and citizens. Whether or not significant changes are called for, the organization wants to be certain that it is philosophically aligned with its constituents, therefore, including representatives of stakeholder groups in the process. The development of the resource allocation philosophy is built upon a very logical foundation - determining the beneficiary of parks and recreation services. The development of a resource allocation philosophy includes the following steps: Step 1 - Building on the Carlsbad Parks and Recreation Department's Values, Vision and Mission Step 2 - Understanding the Pyramid, the Benefits Filter, and Secondary Filters Step 3 - Sorting Carlsbad Parks and Recreation Department Services Step 4 - Determining Current Subsidy/Cost Recovery Levels Step 5 - Assigning Desired Subsidy/Cost Recovery Goals Step 6 - Understanding Other Factors and Considerations Step 7 - Adjusting Fees or Other Funding Sources to Reflect the Comprehensive Resource Allocation Philosophy Step 8 - Implementation and Pilot Period Step 1 - Building on Your Organization's Values, Vision, and Mission The premise of this process is to align the Department's resource allocation philosophy with the Department's values, vision, and mission. Reviewing these foundational principles and statements is fundamental to the development of the resource allocation philosophy. This step in the process also includes re-visiting why the Department exists and who it is expected to serve. This often includes 22 City of Carlsbad Parks and Recreation Department review of all constituents who contribute some type of financial assistance to the Department (e.g., tax support, fees and charges, alternative funding such as donations or sponsorships). It is important to note that those who contribute expect to benefit from services. Values, vision, and mission statements are the starting point in the process. Sometimes, further work or clarification needs to occur to create a common understanding of the interpretation of the values, vision and/or mission. This can be accomplished by involving staff in discussion and by analyzing a variety of Filters. Step 2 - Understanding the Pyramid Method, the Benefits Filter and Secondary Filters Filters are a series of continuums providing different ways of viewing service provision. These filters influence the final positioning of services as they relate to each other and are summarized below. The Benefits Filter forms the foundation of the Model and is used to illustrate a resource allocation philosophy for parks and recreation organizations. • : WlflR :^ •, • Benefit Access/Type of Service Organizational Responsibility Historical Expectations Anticipated Impacts Social Value DEFINITION Who receives a benefit from the service? (e.g., skill development, education, physical or mental health, safety or property value enhancement) Is the service available to everyone equally? Is participation or eligibility restricted by diversity factors such as age, ability, skill, or finances? Is it the organization's responsibility or obligation to provide the service based upon mission, legal mandate, or other obligation or requirement? What has always been done that would be counter-productive to change? 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? What is the perceived social value of the service by constituents, city staff and leadership, and policy makers? Is it a community builder? THE BENEFITS FILTER Conceptually, the base level of the pyramid represents the mainstay of a public parks and recreation Department. Services appropriate to higher levels of the pyramid should only be offered when preceding levels are comprehensive enough to provide a solid foundation to support the next level. This foundation and upward progression is intended to represent the public parks and recreation core mission, while also reflecting the growth and maturity of an organization as it enhances its service offerings including programs, facilities, and parkland. COMMUNITY Benefit COMMUNITYThe foundational level of the pyramid is the largest, and / includes those services including programs, facilities, and ^ parkland that benefit the COMMUNITY as a whole. These services can increase property values, provide safety, address social needs, and enhance quality of life for all residents. The community generally pays for these basic services and facilities through taxes. These services are offered to residents at minimal or no fee. A large percentage of the tax support of the Department would fund this level of the pyramid. Core Services, Resource Allocation, and Pricing Strategy -June 2009 23 Examples of these services could include the existence of the community parks and recreation system, the ability for youngsters to visit facilities on an informal basis, low-income or scholarship programs, park and facility planning and design, park maintenance, or others. NOTE: All examples are generalizations - services may be perceived differently based on the Department's values, vision, mission, demographics, goals, etc. COMMUNITY / Individual Benefit The second and smaller level of the pyramid represents / COMMUIWTY services including programs, facilities, and parkland that Z promote individual physical and mental well-being and provide recreational skill development. These are generally more traditionally expected services and beginner instructional levels. Costs are partially offset by both a tax subsidy to account for the COMMUNITY Benefit and fees and charges or other alternative funding sources to account for the INDIVIDUAL Benefit. Examples of these services could include the ability of teens and adults to visit facilities on an informal basis and beginning level instructional programs including classes, etc. INDIVIDUAL / Community Benefit The third and even smaller level of the pyramid represents services which promote individual physical and mental well-being and provide an intermediate level of recreational skill development. This level provides more INDIVIDUAL Benefit and less COMMUNITY Benefit. Cost recovery goals are set to recover a higher percentage of costs than for programs and services that fall in the lower pyramid levels. Examples of these services could include summer day camps, summer spans leagues, year-round swim teams, etc. MOSTLY INDIVIDUAL Benefit The fourth and still smaller pyramid level represents specialized services /MOSTLVMDMOUU.' generally offered for specific interests, possibly having a competitive focus. In this level, cost recovery goals may be set to recover full costs of service provision, including all direct and indirect expenses. Examples of these services might include classes for special interest groups or uses and services designed for advanced or competitive interests. HIGHLY INDIVIDUAL Benefit /v At the top of the pyramid, the fifth and smallest level represents activities that woHWwonwteAu have profit center potential, and may not align with the Department's values, / a*n*m\/ vision and/or mission. In this level, cost recovery goals may be established to minimally recover all costs plus a designated profit or excess revenue percentage. Examples of these activities could include elite diving teams, private lessons, concessions, private rentals and other facility rentals such as for weddings or other like services. 24 City of Carlsbad Parks and Recreation Department Examples of the Applied Benefits Filter The following example illustrates the benefit filter as it might apply to aquatic services. The Benefits Filter in Action HIGHLY INDIVIDUAL- elite swimming or diving team MOSTLY INDIVIDUAL - swim team INDIVIDUAL/Community - swim lessons COMMUNITY/Individual - pool COMMUNITY - spray ground, non- monitored lake The following illustrates the benefits filter as it might apply to park services. The Benefits Filter in Action HIGHLY INDIVIDUAL - marina concessions MOSTLY INDIVIDUAL - boat launch or reserved camp site INDIVIDUAL/Community - monitored nature garden or environmental/interpretive park COMMUNITY/Individual - non-reserved camp J site or public fishing pier I COMMUNITY - non-monitored open space park or trail Core Services, Resource Allocation, and Pricing Strategy -June 2009 25 Step 3 - Sorting Services As a precursor to this step, staff developed the Categories of Service that included all of the Department's programs, facilities, and parkland (Appendix C). This list of Categories was then sorted onto the pyramid through processing the question "Who benefits from the service: the community, the individual or both?" It is critical that this sorting step be done with staff, governing body representatives, and with citizens. This is where ownership is created for the philosophy, while participants discover the current and possibly varied operating histories and cultures of the organization, and where personal values emerge. It is a goal of this step to develop consensus and get everyone on the same page, the page written by all of the stakeholders together. Carlsbad Parks and Recreation Department staff representing all areas of the organization, governing bodies, and citizen representatives sorted service categories onto each level of the pyramid. This step was facilitated by an objective and impartial facilitator in order to encourage varying viewpoints. Healthy discussion and debate resulted as participants discovered and heard what was shared about serving different cultural and economic segments of the community; about services with long histories and citizen expectation; about the importance and therefore priority of youth versus adults versus seniors, and the list goes on. It was important to push through the "what" to the "why" to find common ground. This was critical to discovering a resource allocation philosophy. Step 4 - Determining Current Subsidy/Cost Recovery Levels Subsidy and cost recovery are complementary. If a program is subsidized by 75%, it has a 25% cost recovery, and vice-versa. It is important to the process that the Department identifies the cost of service provision for each of its programs, facilities, and parkland. Once these levels are determined, they are aligned with the appropriate categories of service on the Pyramid. There may be a substantial range in each level, and some cost recovery levels could overlap with other levels of the pyramid. In the event that overlap occurs, it will be addressed and rectified in subsequent process steps. Step 5 - Assigning Desired Subsidy/Cost Recovery Levels An effective way for the Department to move through this step is to give thought to where tax subsidy can be used responsibly and justifiably rather than what cost recovery levels should be. As this step evolves, the Department is asked to ponder these questions: "Who benefits from the service?" and "Who should assume responsibility for paying for the provision of the service?" Tax subsidy is used in greater amounts at the bottom levels of the pyramid, reflecting the benefit to the Community as a whole. As the pyramid ascends, the percentage of tax subsidy decreases, and at the top levels it may not be used at all, reflecting the Individual benefit. So, the Department must address the question: "What is the right percentage of tax subsidy for each level?" It would be appropriate to keep some range within each level; however, the ranges should not overlap from level to level to maintain distinction. Again, this effort must reflect community needs and desires and must align with the thinking of policy- makers. In addition, cost recovery levels must reflect, among other things, realistic opportunities for alternative funding (other than fees and charges), the market's ability to pay, the community's pricing tolerance, and service value. 26 City of Carlsbad Parks and Recreation Department Examples Many times categories at the bottom level will be completely or mostly subsidized, but the Department may establish a minimal cost recovery goal to convey a value of the experience. The range for subsidy may be 90-100%, (0-10% direct cost recovery) - but it may be higher, depending on the Department's overall goals. The top level may range from 0% subsidy to 50% excess revenues above all costs (100% to 150% direct cost recovery plus), or more. Or, the Department may not have any services in the top level. Step 6 - Understanding the Other Factors and Considerations Inherent in sorting services onto the pyramid is the realization that other factors beyond the filters may come into play. This can result in discussion and decisions to place services in levels not initially considered due to alternative issues such as politics, economics, or others. These supplemental factors can follow continuums and can influence the final placement of a category on the pyramid. THE COMMITMENT FACTOR: What is the intensity of the program, what is the commitment of the participant? Drop-In Opportunities Instructional - Basic Instructional - Intermediate Competitive - Not Recreational Specialized THE TRENDS FACTOR: Is the program or service tried and true, or is it a fad? Basic Traditionally Expected Staying Current with Trends Cool, Cutting Edge Far Out THE MARKETING FACTOR: What is the effect of the program in attracting customers? Loss Leader Popular - High Willingness to Pay THE RELATIVE COST TO PROVIDE FACTOR: What is the cost per participant? Low Cost per Participant Medium Cost per Participant High Cost per Participant THE ECONOMIC CONDITIONS FACTOR: What are the financial realities of the community? Low Ability to Pay Pay to Play Core Services, Resource Allocation, and Pricing Strategy -June 2009 27 FINANCIAL GOALS FACTOR: Are we targeting a financial goal such as increasing sustainability, decreasing subsidy reliance? 100% Generates Excess Revenue Subsidized over Direct Expenditures THE POLITICAL FACTOR: What is out of our control? This filter does not operate on a continuum, but is a reality and will dictate from time to time where certain programs fit on the pyramid. Step 7 - Adjust Fees and Other Funding Resources to Reflect Your Comprehensive Resource Allocation Philosophy Across the country, ranges in overall cost recovery levels can vary from 0% to more than 100% of both direct and indirect costs. The organization may set its goals based on its values, vision, and mission, stakeholder input, existing funding sources, and/or other circumstances. This process unveils current cost recovery levels, and in most cases, the Department may need to increase cost recovery levels to meet budget targets or expectations. At times, simply implementing the new resource allocation policy equitably across existing services is enough, without a concerted effort to increase revenues (e.g., alternative funding sources or fees and charges). Once a new resource allocation philosophy has been methodically developed, the organization can articulate where it has been and where it is going and alternative funding sources can be identified, and/or fees and charges can be adjusted accordingly. Step 8 — Implementation and Pilot Period - Use Efforts to the Department's Advantage in the Future The results of this work can be used to: • Articulate a comprehensive resource allocation philosophy • Train staff at all levels in pricing methods • Shift subsidy to where is it most appropriately needed or most responsibly utilized • Recommend service reductions to meet budget subsidy targets, or articulate and illustrate how revenues can be increased as an alternative • Justify cost recovery/subsidy levels of new programs 28 City of Carlsbad Parks and Recreation Department Development of an Operational Action Plan - Implementing the Resource Allocation and Core Service Model The Department's Operational Action Plan (Appendix D) will act as an internal work plan spanning a one-year period. The Operational Action Plan will be the implementation catalyst for the Resource Allocation and Core Service Model. This operational action plan includes the establishment of broad-based goals and subsequent, measurable objectives. Derived from each goal are short (six months or less), medium (one year or less) and long-term (more than one year) objectives that lead to the accomplishment of the goal. This plan outlines service planning and operational efforts intended to move the organization forward in a logical and organized way while maintaining connectivity to the previous steps in the Resource Allocation and Core Services Model development process. The following outlines the Action Plan's components. Department and Service Goals are broad-based statements of intent that are singularly focused, and correlate directly to the various components of the Resource Allocation and Core Service Model. Department Goals reflect overall Department administration and operations while Service Goals are specific to the provision of Department services (programs, facilities, and land asset provision). Therefore, Department Goals support Service Goal efforts. Planning Objectives are attainable milestones that lead to the accomplishment of Department and service goals. They are specific, measurable, realistic, and trackable. They include: 1) the responsible staff member or staff team; 2) the action(s) that must take place; 3) how the action(s) will be accomplished; and 4) the degree to which they will be accomplished (by when or to what level of improvement). The Department's Action Plan is included in Appendix D. Many of the Service Goals and subsequent Planning Objectives were derived from the Service Assessment that reviewed all of the services offered by the Parks and Recreation Department including activities, facilities, and parklands. This assessment led to the development of Carlsbad's Service Portfolio. Results indicate whether the service is "core to the organization's values and vision" and provides recommended provision strategies that can include, but are not limited to, enhancement of service, divestment or reduction of service, collaboration, or aggressive competition. Pricing 101: Developing a Pricing Strategy Core Services, Resource Allocation, and Pricing Strategy -June 2009 29 As the final step in the development of the Resource Allocation and Core Service Model and Pricing Policy, a Pricing 101 Workshop was conducted for all Department staff that included the following topic areas: 1. 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 that have impacted fiscal and pricing decisions include: • Increased governmental accountability • Increased demand for people's "leisure dollar" • On-going or increased demand for services with no/limited additional funding • Disinterest in service reductions or increased fees and charges • Increased operating expenses (e.g., utilities, fuel, personnel, supplies) 2. Understanding the Department's 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 Department's process and how it is impacts and is impacted by pricing. 3. Understanding the costs of service provision Prior to making pricing decisions, is it important to understand the different types of service provision costs. Having a grounded 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 Refer to Appendix A where these definitions are found. 4. Understanding the purpose of pricing 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 5. Pricing strategies - 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 30 City of Carlsbad Parks and Recreation Department 6. Alternative funding sources In general, there has been a decrease in the amount of tax support available to public parks and recreation departments. 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 • Sponsorships • Collaborations • Volunteer contributions 7. Examining the psychological dimensions of pricing In addition to the social and environmental issues that surround 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) 8. Establishing initial price Establishing an actual price for a program can be based upon a variety of strategies. Arbitrary pricing is not encouraged as it is impossible to justify. Pricing strategies include: • Arbitrary pricing - a fee based on nothing rational like raising all fees $.25 to meet budget goals; ignores market conditions and cost recovery goals. • 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 utilize this strategy. One consideration for establishing a market rate fee is determined by identifying all providers of an identical service (i.e. private sector providers, other 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 (i.e. private sector providers, other municipalities, etc.), and setting the mid-point or lowest fee. • Cost recovery pricing - a fee based on cost recovery goals within market pricing ranges. 9. Understanding price revisions Once a price is established, there may be the need to periodically review the price and examine the need for revision. In some cases, "revised" may be viewed as "increased", therefore, a systematic approach to pricing revision us important. Factors to consider in pricing revision include: • Customer tolerance - the degree to which small increases in price will not encounter client resistance. Core Services, Resource Allocation, and Pricing Strategy -June 2009 31 • 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. • Customer's 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. 10. The pricing process - developing a method Staff participating in this workshop engaged in interactive pricing exercises that applied the cost recovery goals of their respective service areas. The workshop prompted discussion leading to recommended changes to current pricing practices with the intention of attaining recommended cost recovery and subsidy 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). These recommended pricing strategies are detailed in the Department's Service Portfolio and Pricing Strategy document. Comparative Analysis Criteria As part of a pricing methodology, comparative analysis of differing fees structures can reveal market rates and competitive pricing in the market place. Comparative analysis (benchmarking) is an important tool that allows for comparison of certain attributes of the City's management practices and fee structure. This process creates deeper understanding of alternative providers, your place in the market, and varying fee methodologies, which may be used to enhance and improve the service delivery of parks and recreation. The suggested criteria are found in Appendix E. The Core Services, Resource Allocation, and Pricing Strategy The recommended policy for core services, resource allocation, and pricing for the City of Carlsbad Parks and Recreation Department's services is detailed in the Service Portfolio. The portfolio summarizes the cumulative results from all of the work and connects recommended provision and pricing strategies to cost recovery goals. This entire document, along with the services portfolio and the pyramid model should be considered the culminating policy documents for the City Council's consideration. 32 City of Carlsbad Parks and Recreation Department Progressive Analysis and Materials As the project progressed, a consensus pyramid from public process was created along with recommendations for minor adjustments (this pyramid follows). The target cost recovery percentages were established based on current cost recovery when all direct and indirect costs were allocated, and with the goal of increasing cost recovery for the Department. In addition, specific cost centers were defined and supplemental cost center pyramids were created to include the Pool Facility, Senior Community Center, and the Leo Carrillo Ranch. Recreation Centers, Pool, and Senior Community Center - Facility Operations and Maintenance Cost Center (all membership or facility use activities are facility costs) includes all direct, identifiable expenses (fixed and variable) associated with operating the Recreation Centers, Pool, or Senior Community Center (charged to the appropriate facility). • All full or part time facility staff including front desk or reception (or front desk/counter staff) associated with facility operations • Area specific supervisors as applicable (weight room attendant, gym supervisor, climbing wall monitor, lifeguards, membership fitness instructors, childcare staff) • Registration functions and support staff • Temporary help for vacancies and absences • Personnel benefits including PICA and Medicare, Social Security, Worker's Compensation Insurance, Unemployment Insurance, Retirement, Health, Dental, and other Insurance premiums as applicable; currently estimated at 51% for full-time benefited employees, 12% for part time/ employees. • Contractual services as applicable • Consumable equipment and supplies like basketballs, chalk, first aid supplies, nets, custodial supplies, etc...) • Uniforms, tee shirts, for staff • Non-consumable equipment (equipment replacement fund) purchased only for the facility that require periodic, continual replacement or are necessary for the start of the drop-in activity like free weights, racquets and goggles • Training specifically for the facility operation or service like CPR and First Aid, ongoing or reimbursed training and certifications • Transportation costs as applicable • Rental fees for equipment, charge backs, etc... • Office equipment and supplies (copier, printers, phones, faxes, maintenace agreements, network, securtity cameras, etc...) • Office furniture • Bank Fees (for credit card registrations) • Utilities • Any other costs associated or attributed specifically with the facility or service • Facility Maintenance and Operations Allocation (from Public Works to the facility) • Facility maintenance staff and associated benefits allocated to maintain recreation facilities including janitorial services and minor repairs • Utilities (not already directly billed to the facility) • Specific marketing and advertisement • Specific employment ads • Associated M & 0 supplies, services, contracts, equipment, etc... • General contractual services like janitorial or security Core Services, Resource Allocation, and Pricing Strategy -June 2009 33 dn • Park Maintenance and Operations Allocation (active allocations from Public Works to the facility) • Park staff and associated benefits allocated to maintain active parks used for recreation such as fields, and perimeters of recreation facilities • Includes landscaping and footprint park services to active allocation • Associated M & 0 supplies, services, contracts, equipment, etc... • Merchandise for Resale (Rev/Exp and Sales Tax) -this line item will generate revenues as well as create expenditures and should be treated as a sub-cost center of the Recreation Center, Pool, or Senior Community Center • Birthday Parties (Private Rentals), other Rentals, Equipment Rentals (Rev/Exp) -this line item will generate revenues as well as create expenditures and should be treated as a sub-cost center of the Recreation Center, Pool, or Senior Community Center Recreation Program Cost Center (each program fits into a category of service and the cost recovery goal is applied) includes all direct, identifiable expenses (fixed and variable) associated with providing any recreation activity or service (charged to the appropriate program). These expenses would not exist without the activity or service and often increase exponentially. • Full time, hourly or part time salaries for instructors, leaders, aides, field supervisors, officials, coaches • Temporary help for vacancies and absences • Personnel benefits including PICA and Medicare, Social Security, Worker's Compensation Insurance, Unemployment Insurance, Retirement, Health, Dental, and other Insurance premiums as applicable; currently estimated at 51% for full-time benefited employees, 12% for part time/ employees. • Contractual services for coaches, officials, instructors, etc.... • Consumable equipment and supplies like balls, paper, clay and glazes, kiln firing, art supplies provided by instructor or Department • Uniforms, tee shirts, for participants and staff • Non-consumable equipment (equipment replacement fund) purchased only for the program that require periodic, continual replacement or are necessary for the start of the program like yoga mats, blocks, bouncy balls, low free weights, racquets and goggles • Training specifically for the program such as CPR and First Aid, ongoing or reimbursed training and certifications • Transportation costs such as van driver and mileage, parking, tolls, detailing, or rental of busses, taxis, metro, etc... • Entry fees, tickets, admissions for participants and leaders/instructors • Rental fees for facilities, spaces, janitors, charge backs, etc... • General contractual services such as janitorial, security, armored car (if charged directly to a program) • Office equipment and supplies • Any other costs associated or attributed specifically with the program or service Parks Maintenance Cost Center includes all direct, identifiable expenses (fixed and variable) associated with providing Drop-in, Non-Monitored Access for parks, trails, open space, playgrounds, and other park amenities. These expenses include staff and the associated personnel services, operations and maintenance costs. Departmental Administration or Indirect (Support Services) Cost Center encompasses remaining overhead (fixed and variable) not identified as Direct Costs. These Indirect Costs would exist without any one specific service. 34 City of Carlsbad Parks and Recreation Department Departmental Administrative Support - including all global departmental administrative overhead, and pro-rata share of general administrative duties of the Department's Recreation Area Managers Director's office Recreation Services Managers Management Analyst Commission Support Secretarial and Receptionist Support Parks and Trails Planning and Development Marketing and research (global) except identifiable large ticket, allocate-able items for programs and facilities City Support Services Fund debt service City Manager's office, Finance Office, Human Resources Office, and other administrative functions of the City Full time employee salaries and benefits (other than Semi-Direct Costs of Administration) Employment ads Maintenance of grounds, equipment and buildings (other than Semi-Direct Costs of Parks and Facility Maintenance and Operations) Various other appropriated costs Core Services, Resource Allocation, and Pricing Strategy -June 2009 35 Carlsbad, CA Parks & Recreation Department Cost Recovery Pyramid Based on Consensus Revised April 15, 2009 100% + cost recovery Instructional/development programs - intermediate 59% -Special events - competitive 66% 80% -100% cost recovery -Rentals/private 81% -Rentals/for-profit 80% -Product resale/vending (Proposed) -Lagoon permits 64% -Equipment Rentals -Instructional/development programs - advanced 73% -Individualized lessons (Proposed) -Trips 83% -Rentals/non-profit 35% -Specialized services (Proposed) -Leagues/teams 74% -Instructional/developmental programs - beginning 68% -Camps 64% -Structured/monitored access 25% -60+ wellness services 60% -Rental/government - non-city 2% -Special events - social 13% -Drop-in/monitored access 0% -Rentals/government - city 0% -Drop-in/non-monitored access 0% -Inclusion 0% -Departmental administrative support 0% 50% - 80% cost recovery 15% - 50% cost recovery 0% -15% cost recovery Copyright © 2001, 2003, 2008 GreenPlay, LLC Carlsbad, CA Parks & Recreation Department Cost Recovery Pyramid Based on Consensus Recommended - Final Monroe Street Pool Cost Center 100% + cost recovery -Rentals/private -Rentals/for-profit -Product resale/vending -Instructional/development programs - advanced - WSI -Individualized lessons - Private Swim nstructional/development programs - intermediate - Masters Swim -Special events - competitive 80% -100% cost recovery Mostly Individual -Rentals/non-profit -Specialized services - Head Injury swim lessons -Leagues/teams - Swim Team -Instructional/developmental programs - beginning Learn to Swim -Structured/monitored access Water Polo -Rental/government- non-city -Special events - social Doggy Dive In -Orop-in/monitored access Drop-in Admission/Membership, Open Swim -Rentals/government - city -Inclusion -Departmental administrative support 15% - 50% cost recovery 0% -15% cost recovery Copyright © 2001, 2003, 2008 GreenPlay, LLC Carlsbad, CA Parks & Recreation Department Cost Recovery Pyramid Based on Consensus Recommended - Final 100% + cost recovery fistructional/development programs - intermediate -Special events - competitive -Rentals/private -Rentals/for-profit -Product resale/vending -Instructional/development programs - advanced -Individualized lessons -Trips 80% -100% cost recovery Mostly Individual Senior Center Facility Cost Center . ientals/non-profit •Specialized services - Stroke recovery fitness -Leagues/teams - Senior softball -Instructional/developmental programs - beginning -Structured/monitored access -60+ wellness services -Rental/government - non-city -Special events - social Pot luck and canasta; Hot Rods and Cool Treats -Drop-in/monitored access Drop-in Admission/Membership Weight Room and Cardiovascular Equipment Use; monthly dances -Rentals/government - city -Inclusion -Departmental administrative support 50% - 80% cost recovery INDIVIDUAL/Community 0% -15% cost recovery Mostly Community Copyright © 2001, 2003, 2008 GreenPlay, LLC Carlsbad, CA Parks & Recreation Department Cost Recovery Pyramid Based on Consensus Recommended - Final Leo Carrillo Ranch Facility Cost Centei 100% + cost recovery -Rentals/private -Renta Is/for-profit -Product resale/vending -Instructional/development programs - advanced -Instructional/development programs - intermediate 80% -100% cost recovery Mostly Individual -Rentals/non-profit -Specialized services - (Proposed)Blind Sensory Develo -Instructional/developmental programs - beginning «th4 Grade Art & History Program -Structured/monitored access Guided tours -Rental/government - non-city -Special events - social Friday Night Film Festival, Dinner and a Movie -Drop-in/monitored access Drop-in Museum Visits -Rentals/government - city -Drop-in/non-monitored access Self-Guided Walking Tours -Inclusion -Departmental administrative support 50% - 80% cost recovery 15% - 50% cost recovery 0% -15% cost recovery Copyright © 2001, 2003, 2008 GreenPlay, LLC Conclusion and Recommendations The primary goal of the Carlsbad Parks and Recreation Department's Core Service and Resource Allocation Model and Pricing Strategy is to establish organizational sustainability through a logical and thoughtful philosophy that supports the core values, project vision, mission of the Carlsbad Parks and Recreation Department, and its community. As a result of the comprehensive process and impending results as illustrated in the Service Portfolio, the department will begin the process of implementing service provision strategies and align financial resource allocation with newly developed cost recovery goals. These efforts are intended to guide goals and objectives, and the decision-making proves to create service sustainability for the organization. 40 City of Carlsbad Parks and Recreation Department Appendix A - Definition of Terms Glossary of Terms and Definitions Accounting, Business Planning, Cost Recovery Ability to Pay: Ability to pay is based on an individual's financial circumstances; it is not related to who benefits from programs and services. Active Use Spaces: Spaces that are available to the public. Costs are allocated to active use spaces whether they generate revenue or not. City-wide Administrative and Support Services: Support services include costs that are not directly attributable to any particular public service. They include legal services, finance, and human resources. Advisory Groups: Groups (Boards, Commissions, or Committees) that are appointed by the City Council or through agreements with other agencies to provide recommendations to the City Council pertaining to specified operational and/or planning functions. Membership may include City Council members, staff members, organizations and/or citizens. These groups can be long-standing or temporary project specific advisory groups. Age Categories: Sometimes age is defined by age range, for the purposes of assigning user fees, into which participants and users can be classified. Alternative Funding: Other ways to improve cost recovery in addition to fees and charges; may include grants, sponsorships, partnerships, fundraising, and volunteers. Alternative Providers: Community organizations and businesses that provide similar or like services to those of the Department (e.g., YMCA, Boys and Girls Club). Asset Lifecycle: The expected usable life of a particular piece of equipment or asset before replacement. Attendance: Attendance is measuring the total number of participants registered in a program. In a tournament, festival, event, or drop in sports activity it is the number of participants and/or spectators at that one- time event. Benefit: 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. Core Services, Resource Allocation, and Pricing Strategy -June 2009 41 For example, the National Recreation and Park Association define the benefits of Park and Recreation as: Personal well being (i.e., Joy, happiness, feel good) Socialization Lifelong learning Healthy lifestyle - life long wellness Economic development and vitality Environmental stewardship Benefit versus Value or Intent: 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 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. Capacity: The number of available spaces at a site, in a class, at an event or facility. Consensus: Resolution reached among all differing opinions after discussion or deliberation and compromise, sometimes referred to as "informed consent." It does not necessarily mean 100% agreement with everything. Cost Recovery: The degree to which the cost (direct and/or indirect) of services including programs, facilities and parks is supported by user fees and/or other designated funding mechanisms such as grants, partnerships, etc,. Cost versus Price or Fee: Cost is defined as all direct and indirect expenses associated with providing a service including programs, facilities and parks. Price or fee is the amount charged to the customer for the service. Customer Satisfaction: The degree to which customer expectations are met. This is measured by customer feedback, not necessarily by measuring the number of repeat visits or new users. Direct Cost: Includes all the specific, identifiable expenses (fixed and variable) associated with providing a service including programs, facility and/or parks. Direct costs would not exist without the service and variable direct costs may increase proportionately. For specific examples refer to Carlsbad Parks & Recreation Definition of Direct and Indirect Costs later in this section. Enterprise Fund: An enterprise fund is a separate fund where fees or rates are set to cover 100% of all the program or service costs. In essence, it is not subsidized by the General Fund. Exclusive Use: Scheduled, planned or programmed use of a facility or space that is limited or restricted to an identified individual or group. They have exclusive use of a facility or space for a specified period of time. 42 City of Carlsbad Parks and Recreation Department For-Profit/Private Group or Individual: A group or individual who does not have an IRS non-profit or governmental designation exempting them from paying taxes. Full Cost Recovery Fee: The fee recovers the total cost of a service or program including all direct and indirect costs, enabling the breakeven point to be reached. Full-cost recovery is often used as a strategy for services perceived as "individual," benefiting only users while offering minimal external benefits to the general community. Full-Time/ Three Quarter Time Employee: A regular employee who works at least 30 hours per week for three quarter time and 40 hours per week for full-time on a regularly scheduled basis. These employees are eligible for the City's benefit package. Governmental Group: Any inter-Department, county or other federal, state or local governmental group. Indirect Cost: Encompasses remaining overhead (fixed and variable) not identified as Direct Costs associated with a specific program or service. These Indirect Costs would exist without any one specific service. For specific examples refer to Carlsbad Parks & Recreation Definition of Direct and Indirect Costs later in this section. Market Rate Fee: Fee based on demand for a service or facility. One consideration for establishing a market rate fee is determined by identifying all providers of an identical service (i.e. private sector providers, other municipalities, etc.), and setting the highest fee. Another consideration is setting the fee at the highest level the market will bear. Membership: This is a count of how many belong to a club or group. Membership is the number of people who have a right to a facility or program (also often used for annual, semi-annual or monthly pass holders). Membership can be paid or unpaid. A possible feature could include restricted access, and or privileges to the site, program, or facility. Minimum Service Level: Minimum level of maintenance and staffing needed to safely and reasonably operate a service including a program, facility or park. Non-Profit Group: Agencies outside of the organization's system with IRS non-profit status. Non-Resident: A person who does not meet the Resident Verification Test. Carlsbad residents must show proof of residency with one of the following: • Property tax papers (original or photocopy with registrant's or participant's name). Note: A business OWNER who can show both proof of ownership and property tax payment will qualify, or proof of homeowner's tax exemption, but not employees of the business. • Utility/telephone bill (showing participant's/registrant's address) • Rental receipt/lease • Imprinted address on check (not acceptable if handwritten or with P.O. Box) Core Services, Resource Allocation, and Pricing Strategy -June 2009 43 • AND a photo I.D. Please include a copy of document used for proof of residency. Once you have shown proof of residency at one of the Community Centers, you can set up your on-line ClientID and Family PIN over the phone or in person. Non-User: Those who are not currently using the parks, facilities, taking the programs or using the organization's facilities or services. Optimum Service Level: The highest service level with the most efficient management of a program and facility service; a function of maintenance levels, staffing levels, types and number of amenities available (picnic sites, nature trails, restrooms, recreation centers, etc.). Off-Peak: Period of anticipated low demand for services and programs. Opportunity Grants: The Carlsbad Parks and Recreation Department offers opportunity grants for youth from very low- income families that reside in Carlsbad. The opportunity grants program is designed to provide youth, ages 17 years and younger, the opportunity to participate in Recreation classes, camps and aquatic programs that they may not normally be able to afford. Refer to the City Website for the current Opportunity Grants qualifications and processing requirements. Part-time Hourly Employee: Regular employee who is scheduled to work less than 1,000 hours within a fiscal year. These employees receive only legally mandated benefits (such as workers' compensation and Social Security). Partial Cost Recovery: The fee recovers the partial cost of a service or program including direct and indirect costs. Partial-cost recovery is often used as a strategy for services perceived with a higher amount of community benefit. Participant/Guest/Spectator, User/Visitor: Persons who use services and visit parks or facilities. Participation: Participation refers to the number of those who are enrolled or partaking in a program, workshop, activity or event. They are the contributors or users, the enrollees or class attendees. Participation Rates and Capacity: Over and under capacity issues can be addressed by giving certain individuals including residents pre- registration priority, adjustments to the price based on peak or off-peak time or a market price differential. Passive Use Spaces: Portions of the park that are not programmable do not generate revenue, and therefore no costs were allocated for the purposes of the cost recovery pyramid. 44 City of Carlsbad Parks and Recreation Department Peak: Period of highest demand for services and programs. Peak and off-peak categorizations may vary for services and programs within a facility or park. For example, in a park, day use may be highest during the same time period in which demand for a program is low. Performance Measures: Performance measures are quantifiable evaluations of the organization's key performance areas on a pre-determined set of criteria measured overtime. The agreed upon standard performance measures allows the organization to judge its progress overtime (internal and external benchmarking) and identify areas of strength and weakness. Price Differentials: Offering variations of the price to a particular group, which may achieve more equitable and efficient service delivery. Different groups are charged different prices for the same service, even though there is no direct corresponding difference in the costs of providing the service to each of these groups. Price differentials can be based on resident (tax payer)/non-resident, age categories, location of facility, time or season, quantity of use, incentives, etc. Program: The activities and special events offered by the Department at various locations with specific participant purposes such as education, skill development, socialization, or health. Program Life Cycle: Program Life Cycle is when participation and interest in a particular program wanes to below an acceptable level, the program is cancelled. Refund Policy: General • When the City cancels a fee supported Recreation program, the participant or payee shall be eligible for a full refund. • When a registrant requests a refund prior to the second scheduled class or by trip deadline date and paid their registration by check or cash, the refund will be granted minus a Cancellation Check Processing Fee of $20, and the prorated fee for the first class. If Visa or MasterCard was used to pay the registration fee, the refund will be granted minus the prorated fee for the first class. If the registrant prefers to have a credit to avoid the Cancellation Check Processing Fee, a credit will be issued regardless of method of payment. The credit is good for 12 months from date of issue, and may be used for any Recreation Department program. After 12 months, any unused credits will be written off. Once a credit is issued, it cannot be exchanged for a refund. Beginning on the second class date, no refunds or credits will be given. If a registrant fails to attend a program after it begins, the registrant is not entitled to a refund. There are NO CASH REFUNDS. All refunds will be mailed approximately two to three (2-3) weeks after a request for refund is received. Preschool • Once registered for fall, refunds will be given only if we receive notice of your cancellation prior to August 1, 2009 AND we are able to fill your spot from the waiting list. If we're unable to fill your space, no refund will be given. All refunds granted will be processed minus a $20 processing fee per person, per class. Core Services, Resource Allocation, and Pricing Strategy -June 2009 45 Senior Safaris • Day Trips: Registration for individuals must be canceled three (3) business days prior to the tour date to receive a refund. There will be a $20 cancellation fee deducted from your registration fee, unless a credit card was used, and then there is no cancellation fee. • Overnight Trips: Registrations for individuals for an over-night trip must be canceled twenty-one (21) business days prior to the departure date to receive a refund. There will be a $20 cancellation fee deducted from your registration fee, unless a credit card was used, and then there is no cancellation fee. Athletic Field and Facility Rental Application Fee or Rental Fee Payment • A non-refundable application fee or rental fee payment in full is required and is due at time of application submittal. • The application fee will be applied to the total cost of the rental and will not be refunded if the reservation is canceled. If the total rental fee is less than the amount of the application fee, the difference will be refunded after the rental has occurred. • Exception: category B users - where no fee is required • In the event of a cancellation less than 30 calendar days in advance of registration date (for pool rental cancellation, notice must be given 10 calendar days in advance) the applicant will forfeit all rental fees paid. Cleaning/Damage Deposit • On the day of the event, the Applicant or Event Contact must initially inspect the premises with a staff person and fill out a "Condition of Facility Report." This report is a checklist that identifies any Facility conditions that need to be addressed or noted before the Facility is used. It also helps insure the Facility is returned to the same condition it was in before the use occurred. • At the end of the rental and clean up period, the applicant or Event Contact will inspect the premises with a Department staff person and complete the Condition of Facility Report. • Applicant or Event Contact is responsible for the following clean up at the end of their event: • Cleaning of all equipment used • Cleaning of any counter areas used • Cleaning and wiping of all tabletops used • Cleaning of any floor or carpet areas soiled or dampened • Cleaning of the kitchen and all amenities used (i.e. refrigerator, stove, oven, sink, etc.) • Putting all trash and recyclables in proper receptacles • Removal of all equipment supplies, personal articles, displays, etc., immediately following clean up • Proper clean-up shall be determined by the Department, based upon the Conditions of Facility Report. • Cleaning/damage deposit shall be refunded if proper clean-up is completed and no breakage or damage has occurred. Rentals: This includes service to our customer for the exclusive use of designated space(s) and equipment. This may include the non-exclusive use of other amenities. Resale: This category includes the selling of merchandise, food and beverage. 46 City of Carlsbad Parks and Recreation Department Resident: Resident Verification Carlsbad residents must show proof of residency with one of the following: • Property tax papers (original or photocopy with registrant's or participant's name). Note: A business OWNER who can show both proof of ownership and property tax payment will qualify, or proof of homeowner's tax exemption, but not employees of the business. • Utility/telephone bill (showing participant's/registrant's address) • Rental receipt/lease • Imprinted address on check (not acceptable if handwritten or with P.O. Box) • AND a photo I.D. Please include a copy of document used for proof of residency. Once you have shown proof of residency at one of the Community Centers, you can set up your on-line ClientID and Family PIN over the phone or in person. Returned Check Policy: A service fee will be charged for all checks returned for insufficient funds as listed in the Community Services Guide. Fee Reduction Process: Only the City Council has the authority to reduce or waive fees. Subsidy: Taxes and other financial vehicles that are used to financially support Department services including programs, facilities and parks. Subsidy dollars provide for service costs (direct and/or indirect) that are not covered by user or participant fees, or other forms of alternative funding. Definition of Direct and Indirect Costs as included in the calculation of cost recovery levels. Direct Costs: Includes all the specific, identifiable expenses (fixed and variable) associated with providing a service (program, park or facility). Direct costs would not exist without the service and variable direct costs may increase proportionately. RECREATION: • Full time, hourly or part time salaries for instructors, leaders, aides, field supervisors, officials, and coaches (charged to the appropriate facility or program). • Facility staff including front desk or reception (charged to the appropriate facility) • Registration functions and support staff (charged to the appropriate facility) • Temporary help for vacancies and absences (charged to the appropriate facility or program) • Personnel benefits including FICA and Medicare, Social Security, worker's compensation Insurance, unemployment insurance, retirement, health, dental, and other insurance premiums as applicable; currently estimated at 51% for full-time benefited employees, 12% for part time/ employees, (charged to the appropriate facility or program) • Contractual services for coaches, officials, instructors, etc.... (charged to the appropriate program) • Consumable equipment and supplies like balls, paper, clay and glazes, kiln firing, art supplies provided by instructor or Department, and chalk (charged to the appropriate facility or program) Core Services, Resource Allocation, and Pricing Strategy -June 2009 47 • Uniforms and tee shirts for participants and staff (charged to the appropriate facility or program) • Non-consumable equipment purchased only for the program that require periodic, continual replacements are necessary for the start of the program like yoga mats, blocks, bouncy balls, low free weights, racquets and goggles (charged to the appropriate facility or program) • Training specifically for the program or service like CPR and first aid, and ongoing or reimbursed training and certifications (charged to the appropriate facility or program) • Transportation costs like van driver and mileage, parking, tolls, detailing, or rental of busses, taxis, metro, etc... (charged to the appropriate program or facility) • Entry fees, tickets, admissions for participants and leaders/instructors (charged to the program) • Rental fees for facilities, spaces, janitors, charge backs, etc... (charged to the appropriate facility or program) • General contractual services like janitorial and security (charged to the appropriate facility or program) • Office equipment and supplies (charged to the appropriate facility or the program) • Office furniture (charged to the facility) • Utilities (charged directly to the facility: Monroe Street Pool & Senior Center) • Any other costs associated or attributed specifically with the program or service • Specific marketing and advertisement expenses (charged to the appropriate facility or program) were allocated except for 20% of the Community Coordinator. • Specific employment ads (charged to the appropriate facility or program) FACILITIES: Facility Maintenance and Operations Allocated by average costs per square footage (from Public Works to the facility) • Staff and associated benefits allocated to maintain recreation facilities including janitorial services and minor repairs as included in the average cost per square footage for all facilities. • Utilities (not already directly billed to the facility: the Monroe Street Pool and the Senior Center) • Associated M & 0 supplies, services, contracts, equipment, etc... • General contractual services like janitorial and security PARKS: Maintenance and Operations allocated by average costs per acre. Park Maintenance and Operations Allocation includes the average cost per acre. • Park staff and associated benefits allocated to maintain active parks used for recreation such as fields, and perimeters of recreation facilities • Landscaping and footprint park services to active allocation • Associated M & O supplies, services, contracts, equipment, etc... Indirect Cost: Encompasses remaining overhead (fixed and variable) not identified as Direct Costs. These Indirect Costs would exist without any one specific service. • Departmental Administrative Support - including all global departmental administrative overhead, and pro-rata share of general administrative duties of the Recreation Department's Administration Division while including 20% of all Recreation Managers. The Parks Managers have been included in the average cost per acre. Indirect Costs Not Included in the PYRAMID: • City Support Services 48 City of Carlsbad Parks and Recreation Department • Fund debt service (No general obligation debt exists as this time) • City Manager's office, Finance Office, Human Resources Office, and other administrative functions of the City • Employment ads listed by Human Resources Allocation Philosophy: Starting budget includes: Total block & out of block dollars for the Parks & Recreation Department. The internal service fees (ISF) for Recreation were added as a line item under Department Administration but may be allocated in the future. The internal service fees for Parks are included in their average cost per acre. However, not all acreage was allocated and the unallocated portion is listed as one lump sum in the non-monitored space category- Active areas of the parks were included when specifically identified as being used by any program or rental based on the average cost per square acreage. Active area costs that were not identified were calculated by subtracting the allocated parks expense from the total parks expenses and added to open space "non-monitored space". The average cost per acre did include the ISF fees so only the unallocated ISF should have been included. The costs associated with trails and open space should have been separated from Recreation and Parks. Most of the costs were identified and in the future we anticipate including all related costs for trails and open space. Facility costs were allocated by the average cost per square footage for all Recreation facilities that have public access. There are other facility costs associated with other Recreation and Parks buildings that are not open to the public and their costs were not included. Recreation costs were allocated in two stages. The first stage includes the identification of all program and facility costs that can be easily identified as being used by the program or rental staff. This included all staff within that specific program organization key. If facility staff or front desk staff from a site exclusively helped with a program or rental then they were identified and included and reduced from the site expenses. If they were not identified then they remained in the site organizational key as unallocated expenses. Other than the matching of staff within an organization key the M&O costs were allowed to increase or decrease from their typical block budget amount in hopes of reflecting the true cost of the program. Because of this variance the true starting point for unallocated costs per site was not exact. Unallocated expenses were allocated based on hours of use by a rental, program; including camps, enrichment, youth and adult sports, and special events, as well as monitored and un-monitored spaces. This percentage of use is how the remaining balance was allocated. If the site is open to the public then all of the expenses were allocated. If the site is not open to the public it was included in Department Administration. As this is a new way of dividing up our hours of use, some of the hours assigned are based on estimates with the intent of including more realistic numbers next fiscal year once staff has had the opportunity to track the hours. Marketing expenses were allocated by the marketing department based on the percentage of hours they spend on the marketing for the specific item. Core Services, Resource Allocation, and Pricing Strategy -June 2009 49 Sources; City of Carlsbad, Parks and Recreation Department GreenPlay, LLC (www.GreenPlayllc.com) The leading edge in management consulting for Parks, Recreation, Open Space and related industries. About.com (http://retail.about.eom/od/glossary/g/cogs.htm) About.Com was founded in 1996 (as The Mining Company) by Scott Kurnit and a dedicated group of entrepreneurs. It was re-named About.Com in 1999 to reflect its growing breadth of content, services and ease of use. In 2001, About, Inc. was acquired by PRIMEDIA Inc. In 2005 About, Inc. was acquired by The New York Times Company(NYSE: NYT). BPIans.com (www.bplans.com) Bplans.com contains the largest single collection of free sample business plans online. In addition to that, it has helpful tools and know-how for managing your business. Bplans.com includes practical advice on planning, interactive tools, and a panel of experts who have answered more than 1,400 questions from people like you. Bplans.com has also won several awards as a valuable "plain talk" resource. Bplans.com is owned and operated by Palo Alto Software, Inc. as a free resource to help entrepreneurs plan better businesses. Palo Alto Software-The Planning People-develops, publishes, and markets software products for use with personal computers. Its products offer task-oriented, "know how" solutions for small-business and home-office entrepreneurs, professionals, and middle managers. The company is a privately-owned corporation in Eugene, Oregon. Bizminer (www.bizminer.com) BizMiner (the Brandow Company, Inc.) has been based in Camp Hill, PA since its establishment in 1990. BizMiner has built its reputation on quality industry research and data development. The company pioneers online delivery of detailed industry analysis to small and large businesses and entrepreneurs through its local and national Marketing Plan Research Profiles, Financial Analysis Profiles, Local Business Summaries, State Market Index Profiles, Franchise Profiles and Business Risk Index series. BizMiner's proprietary research methodology tracks and analyzes the experience of over 18 million US business facilities, condensing millions of data points into the unique measures found in our profile series. Consultants and larger firms also benefit from our Research License options. Entrepreneur (www.entrepreneur.com) Washington Small Business Development Center (http://www.wsbdc.org/index.htm) Recreation Computer Software programs for point of sale (POS), memberships and pass management, registration, scheduling, etc.... transactional definitions. 50 City of Carlsbad Parks and Recreation Department Appendix C - Categories of Service CARLSBAD PARKS AND RECREATION DEPARTMENT CATEGORIES OF DIRECT SERVICE 1. RENTALS - Rentals include exclusive use of a facility or space scheduled for a specified date and time outside of the Parks and Recreation Department's offering and activities. a. Governmental entities (conducting government business) i. City of Carlsbad entity (other departments like libraries, police, etc.) ii. Non-city entity (SANDAG, other cities, colleges, school district) b. Non-profit organizations (agencies or organizations with an IRS not-for-profit designation, or school district student activities) c. Private (individuals or groups) d. For-profit organizations (commercial or private business) 2. EQUIPMENT RENTALS - Equipment Rentals provide for the availability of Department-owned equipment to renters for a fee. 3. LAGOON PERMITS - Lagoon Permits are provided for non-exclusive use of the Lagoon. 4. PRODUCT RESALE/VENDING - Product Resale/Vending is the availability of consumable and non-consumable goods for purchase. 5. INDIVIDUALIZED LESSONS - Individualized and Customized Lessons take place in an independent or semi-independent setting (1-3 people) providing skill instruction, personalized attention, and guidance, managed by the Parks and Recreation Department. 6. 60+ WELLNESS SERVICES - 60+ Wellness Services consist of programs targeted for seniors (60 and older) that are oriented to enhance independent living skills, health, and welfare. [Includes transportation, home and congregate meals, health and blood pressure screenings, tax preparation, legal and health insurance consultation, etc.] 7. TRIPS - Trips include day, overnight, and extended trips that provide opportunities to visit select destinations, managed by the Parks and Recreation Department. 8. DROP-IN NON-MONITORED ACCESS - Drop-in, Non-Monitored Access managed by the Parks and Parks and Recreation Departments, providing open access to a city-owned space without expected oversight or supervision. [Includes parks, trails, open space, etc.] 9. DROP-IN MONITORED ACCESS - Drop-in, Monitored Access consists of activities and facility use which do not require pre-registration, are not instructed; however, include indirect oversight (in the facility but not necessarily present in the designated use space). [Includes open activities managed by the Parks and Recreation Department in the Senior Center such as open billiards and games, in the Community Center such as open gym, and at Carrillo Ranch such as self- guided tours, etc.] 56 City of Carlsbad Parks and Recreation Department 10. STRUCTURED/MONITORED ACCESS - Structured/Monitored Access consists of activities and facility use managed by the Parks and Recreation Department that do not require pre- registration but do require sign in; however, provide direct supervision (present in the designated use space) during a specified timeframe. [Includes structured basketball, recreational and lap swimming, bridge, guided tours, interest groups, etc.] 11. INSTRUCTIONAL/DEVELOPMENTAL PROGRAMS - Instructional/Developmental Programs include classes, workshops, lessons, clinics, and specialty camps managed by the Parks and Recreation Department that are structured with direct supervision or leadership, with pre- registration required. a. Beginning - novice, introductory, multi-level, or there is no pre-requisite b. Intermediate c. Advanced - includes competitive level 12. LEAGUES/TEAMS - Teams/Leagues are organized recreational sports activities that may or may not be officiated and/or judged, and may or may not be scored, managed by the Parks and Recreation Department. [Includes youth and adult Softball, basketball, soccer, etc.] 13. CAMPS - Camps are programs offered for community youth during the summer season or non- school contact weekdays, provide multi-faceted recreational activities, and are day-long experiences. 14. SPECIAL EVENTS -Special Events are Department managed, one-time events that may or may not require pre-registration and are offered once or twice per year. Special Events may be designed for any or all ages. a. Competitive [Includes triathlon] b. Social [Includes "Snores and Smores", "EGGstravaganza", "Pumpkin Plunge"] 15. INCLUSION SERVICES - Inclusion Services provide for reasonable accommodation to any Department activity, park and/or facility providing leisure opportunities to people with physical or cognitive disabilities. Inclusion services are intended to comply with the Americans with Disabilities Act (a federal mandate). 16. SPECIALIZED SERVICES - Specialized Services provide leisure opportunities for people with physical or cognitive disabilities that are designed and managed to be specific to the physical, cognitive, social, and affective needs of these populations. 17. DEPARTMENTAL ADMINISTRATIVE SUPPORT - Departmental Administrative Support includes all global departmental administrative overhead such as: Director's Office, Recreation Services Managers, Management Analyst, Commission Support, Secretarial and Receptionist Support, Parks and Trails Planning and Development, Volunteer Program, Marketing and Research (global), except identifiable large ticket, allocate-able items for programs and facilities, non- programmatic facility costs, and pro-rata share of general administrative duties of the Department's Recreation Area Managers/Aquatics Managers. Core Services, Resource Allocation, and Pricing Strategy -June 2009 57 Appendix D - Carlsbad Parks and Recreation Department Operational Action Plan " CITY OF CARLSBAD Parks S Recreation Service Provision Strategy - Divestment of Selected Events and Services •' '<-; - Li.". ':, «.-i,a',f^ 'v f* ,,> L- ,L -, Goal 1: Review the Divestment of Lagoon Permits: (Medium Term) D Objective 1 Aquatics staff will prepare a report regarding current lagoon use and historical information and submit report to the Recreation Services Manager (RSM), risk management, and attorney. D Objective 2 Aquatics staff will research best practices of agencies that manage similar-sized bodies of water and submit report to the RSM. D Objective 3 After review of submitted reports, the RSM will determine whether or not to direct Aquatics staff to investigate liability implications of the city divesting lagoon permitting via risk management and city attorney. D Objective 4 Aquatics staff will submit final recommendations with supporting documentation to RSM. D Objectives The RSM will evaluate and submit the recommended course of action to the Director. D Objective 6 In the event the Director agrees, he will propose divestment of the service to the City Manager for consideration. D Objective?: In the event the City Manager chooses to consider divestment, conduct a public meeting prior to bringing the issue to policy makers to obtain a sense of service divestment impact to the community. 58 City of Carlsbad Parks and Recreation Department Goal 2: Investigate Options for Divestment of individual Components of the Health and Wellness Expo (Part 1: Tri-athletes. Part 2: Expo): (Short Term) D Objective 1Objective 1 Special event staff will evaluate demand for Health and Wellness Expo by comparing attendance from previous three years versus current year and submit report to the RSM. D Objective 2Objective z Special event staff will evaluate the merits of the Health and Wellness Expo through participant surveys to learn of the event's benefits and importance to users, and submit report to the RSM. D Objective 3uojective i Special event staff will evaluate demand for Health and Wellness Expo by analyzing community support and alternative funding of current year's event and submit report to the RSM.RSM. D Objective 4uojective 4 Special event staff will research alternative providers of similar health and wellness events through professional contacts and submit report to the RSM. D Objectives Staff will assess current market conditions through contact with alternative providers and cnhmit rennrt tn the R^IWIsubmit report to the RSM D Objective 6uojective b Staff will submit final recommendations for with supporting documentation to the RSM. Objective 7 The RSM will evaluate and submit the recommended course of action to the Department r^! *s\^+s\ *• D Objective 7 The RSM Director. D Objectives In bjective 8 the event the Department Director agrees, he will propose divestment of the event to the City anacrpr fnr rnndHpratinnManager for consideration Goal 3: Review the Divestment of Adult Social Dance: (Short Term) (Instructional/Development Program - Beginning) D Objective 1 Enrichment staff will research the number of alternative providers of like or similar service. D Objective 2 Enrichment staff will collect enrollment history and analyze participation trends, and include possible alternative providers, making a recommendation to the RSM. Goal 4: Investigate Divestment of Other Instructional/Development Programs - Beginning Classes (e.g.. Cheerleading. Ethnic Dance and Youth Nutrition) and Advanced Classes (e.g.. Youth Classical Studio Dance): (Short Term) Core Services, Resource Allocation, and Pricing Strategy -June 2009 59 D Objective 1 Enrichment staff will collect and analyze current cost recovery and participation trends and present results to the RSM. D Objective 2 Enrichment staff will research potential alternative providers to develop options for divestment. D Objective 3 Enrichment staff (RAM) will make recommendation to RSM. Goal 5: Reconsider Recommendation to Divest Recreational Swim: (Short Term) D Objective 1 The RAM will compare recreational swim in relation to the facility use prioritization policy with appropriateness of the facility for usage, current community demand, cost recovery, usage, community benefit, balanced services, and submit the recommended course of action to the RSM. D Objective 2 The RSM will consider the recommendations and forward recommended course of action to the Department Director as appropriate. D Objectives In the event the Department Director agrees, he will take it through the appropriate approval channels for implementation. borafeor Divest<: Goal 1: Investigate Collaboration or Divestment of Leadership in Training and Education (LITE) Program: (Long Term) D Objective 1 Youth and Teen Services staff will create a survey (i.e. intercept/interview) to determine community demand for the service. D Objective 2 Youth and Teen Services staff will conduct the survey at the middle school and high school for students and parents. D Objectives Youth and Teen Services staff will analyze survey data and report results and recommendations to RSM to (either collaborate or divest). 60 City of Carlsbad Parks and Recreation Department D Objective 4 Youth and Teen Services staff will document the available venue options, participation trends, financial implications, demographics and target markets, outreach options, and develop a menu of program options as the result of feedback obtained surrounding the LITE program and submit to the RSM. D Objectives Depending on which strategy is warranted (collaborate or divest) Youth and Teen Services staff will research potential partners to collaborate efforts, consider the development of a youth advisory board, and evaluate program feasibility, or recommend divestment. D Objectives Youth and Teen Services staff will submit recommendations and supporting documentation to the RSM. D Objective 7 The RSM will evaluate, approve, and recommend a course of action. Goal 2: Develop a Youth Advisory Board: (Medium Term) D Objective 1 Youth and Teen Services staff will propose the development of a youth advisory board to the RSM. D Objective 2 The RSM will submit a request to the city manager and/or city council for the creation of the board. D Objectives Upon approval, youth and teen services staff will begin the recruitment process and board development. Goal 3: Transfer Management of Hot Rods and Cool Treats (Short Term) D Objective 1 Special Event staff will transfer the management of this event to the Senior Center (convert back to ice cream social). Strategies to Meet q Goal 1: increase the Level of Cost Recovery in Services not Meeting Cost Recovery Goals: (Long Term - Ongoing) Core Services, Resource Allocation, and Pricing Strategy -June 2009 61 D Objective 1 Conduct internal process meetings to determine efficiencies, management styles, efficient uses of assets, and create recommendations to reduce costs and simplify processes, pushing approval/decision-making throughout the organization and reduce silo effect. D Objective 2 The RAMs will document recommended process changes and management strategies, which reduce costs and forward to RSMs. D Objective 3 Supervisors and Specialists will evaluate appropriate pricing by conducting a market analysis using suggested comparative analysis of like facilities and services and submit it to the RAMs. D Objective 4 The RAMs will compare current facility usage with the results of the facility use prioritization policy and realign facility usage. Goal 2: Develop a Facility Use Prioritization Policy: (Medium Term) D Objective 1 The RSMs and department staff will develop a facility use prioritization policy based upon community demand, cost recovery, current use, community benefit, and balanced services based on information supplied by the RAMs and submit the recommended course of action to the Department Director. D Objective 2 In the event the Department Director agrees, he will take it through the appropriate approval channels for implementation. Goal 3: Determine Cost Recovery and/or Service Provision Strategies for Senior Trips: (Medium Term) D Objective 1 Senior staff will determine if they can make trips meet the recommended cost recovery goals by looking at costs and fee adjustments. D Objective 2 In the event that cost recovery goals cannot be achieved, then the RAM will articulate a recommendation to divest some or all trips to RSM'. D Objective 3 The RSM will consider recommendation and forward to the Department Director for approval. D Objective 4 In the event the Director agrees, he will take it through the appropriate approval channels for implementation. 62 City of Carlsbad Parks and Recreation Department Goal 4: Evaluate the feasibility of providing individualized swim lessons: (Medium Term) D Objective 1 Aquatic staff will re-evaluate the need for individualized swim lessons by completing a marl/at cturlwmarket study. D Objective 2uojective i Based on the results of the market study, aquatics staff design the service if there is a need, facility availability, and staffing. D Objectiveuojeciive a Aquatic staff will develop a tiered pricing and service model based on levels of instruction (e.g. lessons taught by a Tennis Pro versus a Tennis Instructor). D Objective 4UDjeaive 4 Based on the "prioritization policy", aquatics staff will incorporate the individualized lessons into facility schedules and assign lanes. Goal 5: Evaluate Feasibility of Providing Product Re-Sate and Vending: (Long Term) D Objective 1 The RSMs will research other similar service agencies/businesses to determine best practices in product sales. D Objective 2Objective 2 The RSMs will research resources needed to provide the service including staffing levels, systems support, possible funding, storage, and city support functions to offer product sales. D Objectives The RSMs will determine product mix by matching product compatibility with the department's services. D Objective 4 Finance will work with the RSMs to determine a pricing model based on best practices. D Objective 5 The RSMs will encourage Finance to approve the product/vendor business concept by outlining the proposed service and showing revenue increases. Goal 6: Develop a Rationale for Resident/Non-Resident Fees for Consistent Application Across the Department: (Medium Term) Q Objective 1 The ,RSMs and Finance will determine the merits of a resident/non-resident fee structure by examining comparative analysis of other municipal parks and Parks and Recreation Departments, registration trends of participants, and non-residential fee differential, document implications, and develop recommendations for the Department Director's consideration. Core Services, Resource Allocation, and Pricing Strategy -June 2009 63 D Objective 2 In the event the Department Director agrees, he will take it through the appropriate approval channels for implementation. D Objectives The RSMs and Finance will research associated implementation and marketing strategies and make recommendations for the Department Director's consideration in preparation for the June Council budget meetings. 64 City of Carlsbad Parks and Recreation Department 1 Appendix E - Comparative Analysis Criteria Limits of Comparative Data and Analysis Comparative analysis (benchmarking) is an important tool that allows for comparison of certain attributes of the City's management practices and fee structure. This process creates deeper understanding of alternative providers, your place in the market, and varying fee methodologies, which may be used to enhance and improve the service delivery of parks and recreation. It is very difficult to find exact comparable communities because each has its own unique identity, ways of conducting business, and differences in what populations they serve. The political, social, economic, and physical characteristics of each community make the policies and practices of each parks and recreation department unique. It is important to keep in mind that while many park and recreation departments serve primarily residents, others serve a large portion of non-residents, while still others cater to the tourism market. Despite efforts to promote uniformity in comparison, organizations often have slightly different fee structures and associated benefits. For example, some parks and recreation departments may not report all benefits associated with the purchase of a center membership, or may not explain the breadth of indoor recreation spaces they have in the same way as another. The availability of detailed information may also be limited. Additionally, organizations typically do not define the expenditures of parks, trails, facilities, and maintenance the same way. Agencies also vary in terms of how they organize their budget information and it may be difficult to assess whether or not the past year's expenses are typical for the community. Despite these inherent limitations, the comparative analysis and fee comparisons criteria presented in this document should be used as a catalyst for the City of Carlsbad to continue to research fees, market position, and best practices for more specific areas when they are needed. Comparative Analysis Data Sought The communities selected for benchmarking data should be chosen primarily for their proximity and perceived similarities to the City of Carlsbad. Requested comparative data in addition to service specific fee structure may also included: • Values, vision, and mission of the organization • Population and demographics • Median household income and household size • Prior year budget, actual expenses, and revenues for the entire department • Prior year budget, actual expenses, and revenues for the parks and recreation divisions • Number and square footage of Community/Recreation Centers • Total acres of open space and developed park land • Number of maintenance acres contracted out and maintenance description • Total miles of Department maintained trails • Number of indoor and outdoor pools • Number of lighted and unlighted Softball/baseball fields • Recreation and parks department full-time employees and FTE's Core Services, Resource Allocation, and Pricing Strategy -June 2009 65 -72- Often, comparative analysis data looks to weigh pertinent data along with comparing against a "per thousand" population calculation for categories including: total department budget, total acres, developed acres, miles of trails, Community/Recreation Center square footage, number of pools, number of Softball/baseball fields, and recreation FTE's. Parks expenses and FTE's can be calculated per developed acre. Population, demographics, median household income, and household size estimates can be provided by the US Census. Fee Comparison Considerations To compare fees, other factors should be considered along with the price or fee charged for a program, rental, admission, pass, or other services. Be sure to include comparative data for each fee as applicable: • Program contact hours • Program session length • Student/teacher ratio • Contractor or in-house instructional staff • Instructor qualifications • Program quality • Materials included or additional fees • Set up/tear down and preparation time included • Facility amenities included in admission or pass • Programs included with admission or pass • Towel service, locker, equipment usage included or extra • Hours of operation or availability of service • Peak or off peak pricing • Packaging • Value added amenities or services • Service area demographics • Subsidy versus cost recovery goals • Use of alternative funding 66 City of Carlsbad Parks and Recreation Department -73 Parks and Recreation Commission - 2 - April 20, 2009 PRESENTATIONS Steve Herrera, Recreation Supervisor and Staci Nieves, Senior Recreation Leader from the Youth Sports Division presented the Department's Teaching Respect, Unity, Sportsmanship and Teamwork (T.R.U.S.T.) Award to the following individuals: Coaches: Steve Matsumoto, (Steve Green and Jackie Freeman were unable to attend). Players: Reece Bryan, Alex Emerick, and Averi Aburto C-, All Receive - Agenda Item # / PUBLIC OPEN FORUM For Infdrmation of None THE CITY COUNCIL CM \S CA _CC CONSENT CALENDAR rW^fo From c&. Asst. CM_ 1. AB# 0409-1 SUMMARY REPORT (ACTION) To accept, approve and file the March 16, 2009 Parks and Recreation Commission Meeting Summary Report. 2. AB # 0409-2 ACCEPTANCE OF DONATION - 2009 Pine Avenue Park Fenced Storage Area (ACTION) The Commission recommended acceptance of donation by the City Council for expansion of Pine Avenue Park fenced area from Carlsbad Youth Baseball (CYB). ACTION: On motion by Commissioner Comstock, AB #0409-1 and AB #0409-2 of the consent calendar were approved. AYES: Chairperson Lyons, Commissioners Comstock, Craig, Cooper, Martyns, Farley, and Proulx NOES: None ABSTAIN: None ABSENT: None DEPARTMENTAL REPORTS 3. AB # 0409-3 DEPARTMENT REPORT (INFO) Brian Albright, Parks and Recreation Director, reported on recent and upcoming events and project work in the Department which include the following: • Cost Recovery Model (Pyramid) • Proposed Alga Norte Park • Poinsettia Park Tennis Program • Leo Carrillo Ranch Projects - Barn and Expanded Patio Area • Envision Carlsbad Public Meetings Completed • Budget Update • Completed Special Events • Upcoming events: 1. Maintenance Assessment Program at various park sites on Tuesday, April 21,2009 2. Beautify the Grove at Hosp Grove on Saturday, April 25, 2009 from 8:30-11:00 a.m. Parks and Recreation Commission - 3 - April 20, 2009 3. Trail Day at La Costa Ridgeline Trail on Saturday, May 9, 2009 from 8:00 a.m.-12:00 p.m. • City Communications 4. AB # 0409-4 COST RECOVERY AND RESOURCE ALLOCA TION METHODOLOGY ft RECOMMENDATION - 2009 (ACTION) Mick Calarco, Recreation Services Manager, made a presentation on this item. As one of our staff member on this city wide goal team, he has been working with all Recreation Managers to develop a cost recovery and resource allocation methodology based on the Pyramid Model. The resulting cost recovery philosophy will be used to address two goals: 1. To contribute alternative funding suggestions to help with the apportionment of funds for capital projects and; 2. Establish subsidy levels for our diverse recreation program categories based on individual vs. community benefit. Some of the items mentioned included: the service assessment matrix, public workshops, program based budgeting and cost recovery analysis, the operation plan, cost recovery goals and objectives, pricing guidelines workshop, and finally key strategies. Mr. Calarco stated that staff recommends the Commission support and recommend to City Council the acceptance and implementation of the following key strategies: 1. Support the pyramid philosophy and overall cost recovery strategy; 2. Authorize staff to make pricing and policy changes to become more closely aligned with the pyramid cost recovery percentages; 3. Authorize staff to make service changes as needed to become more closely aligned with the pyramid cost recovery percentages. ACTION: On motion by Commissioner Cooper, AB #0409-4 to accept a report from staff regarding outlining efforts and identifying recommendations for acceptance by City Council was approved. AYES: Chairperson Lyons, Commissioners Comstock, Craig, Cooper, Martyns, Farley, and Proulx NOES: None ABSTAIN: None ABSENT: None 5. AB # 0409-5 ALGA NORTE PARK UPDATE - (INFO) Mark Steyaert, Park Development Manager, made a presentation on this item. He reported the current status and that the staff will be taking an Agenda Bill to City Council on April 21, 2009 with the following construction options: 1. Place project on hold 2. Build project as proposed 3. Rough grade site for future development 4. Build project with only Phase 1 aquatic center 5. Build project with only community park Mr. Steyaert also reported that the following operating options would be presented: 1. City operate 2. Lease/management contract Core Service and Resource Allocation Model and Pricing Strategy Karon Badalamenti, CPRP, Principal, GreenPlay Brian Albright, Parks and Recreation Director June 9, 2009 1 Service Assessment (Core Service Identification & Provision Strategies) Pyramid Method (Resource Allocation) Goals & Objectives (Operational Action Plan) Service Portfolio •Services Assessment •Provision Strategies •Pyramid Model •Pricing Philosophy Organizational Review - values, vision & mission Presentations Staff Meetings/ Workshops Stakeholder Meetings/ Workshops City of Carlsbad Parks and Recreation Department Core Service and Resource Allocation Model and Pricing Strategy Development Process 2 Project Vision 3 Develop a Core Services and Resource Allocation Method and Pricing Strategy using the Pyramid Method Conduct an assessment of all services to determine level of responsibility and market position using the Public Sector Service Assessment Matrix Provide a framework for the future planning, budgeting, pricing, and decision making A system-wide approach Reflect the values, mission, and vision for the department Services Assessment Duplication of services can fragment limited resources available, affecting quality and cost-effectiveness Trying to be all things to all people can result in mediocre or low-quality service Agencies should focus on delivering higher-quality service in a more focused (and perhaps limited) way Guided by the Macmillan Matrix 4 Public Sector Services Assessment Matrix High Service Attractiveness “Easy” Program Low Service Attractiveness “Difficult” Program Alternative Coverage High Alternative Coverage Low Alternative Coverage High Alternative Coverage Low Good Fit Poor Fit Strong Competitive Position Weak Competitive Position 1.Aggressive competition 5.Build up best competitor 6. “Soul of the agency” 3.Aggressive divestment 4.Invest, collaborate or divest 7. Collaborate or divest 8. Collaborate or divest 9. Aggressive divestment 10. Orderly divestment 2. Aggressive growth 5 Pyramid Method Management tool utilized by agencies across the country Articulates the level of benefit that services provide Allows for logical determination of: resource allocation subsidy/cost recovery goals future fees and charges COMMUNITY Benefit COMMUNITY / Individual Benefit INDIVIDUAL / Community Benefit MOSTLY INDIVIDUAL Benefit HIGHLY INDIVIDUAL Benefit Copyright ©2001, 2003, 2008 GreenPlay LLC 6 Step 1:Building on Organizational Values, Vision, and Mission Step 2:Understanding the Pyramid, the Benefits Filter and Secondary Filters Step 3:Sorting Services Step 4:Determining Current Subsidy/Cost Recovery Levels Step 5:Assigning Desired Subsidy/Cost Recovery Levels Step 6:Understanding other factors and considerations Step 7:Adjusting fees or other funding sources to reflect the comprehensive Cost Recovery Philosophy Step 8:Implementation and Pilot Period Pyramid Method –8 steps Copyright ©2001, 2003, 2008 GreenPlay LLC 7 Current Cost Recovery 8 Currently, the department is operating at an approximately 22%cost recovery level (this includes all park and recreation revenue and expenses, internal service fees and the relevant portion of facility cost allocations) This translates to 78%of operations subsidized by the General Fund -Rentals/non-profit 35% -Specialized services (Proposed) -Leagues/teams 74% -Instructional/developmental programs –beginning 68% -Camps 64% -Structured/monitored access 25% -60+ wellness services 60% Average cost recovery 54% Carlsbad, CA Recreation Department Cost Recovery Pyramid - 2009 Based on Consensus Recommended -Final -Rental/government –non-city 2% -Special events -social 13% -Drop-in/monitored access 0% Average cost recovery 5% -Rentals/government –city 0% -Drop-in/non-monitored access 0% -Inclusion 0% -Departmental administrative support 0% Average cost recovery 0% -Rentals/private 81% -Rentals/for-profit 80% -Product resale/vending (Proposed) -Lagoon permits 64% -Equipment Rentals -Instructional/development programs –advanced 73% -Individualized lessons (Proposed) -Trips 83% Average cost recovery 76% -Instructional/development programs –intermediate 59% -Special events -competitive 66% Average cost recovery 63% Highly Individual Mostly Individual INDIVIDUAL/Community COMMUNITY/Individual Mostly Community Copyright © 2001, 2003, 2008 GreenPlay, LLC 0% -15% cost recovery 50% -80% cost recovery 80% -100% cost recovery 100% + cost recovery 15% -50% cost recovery 9 Department Operational Action Plan Three strategy areas Provision strategy divest Provision strategy collaborate or divest Cost recovery strategy Four terms of implementation Ongoing Short Term Medium Term Long Term 10 Service Provision Strategy -Divestment of Selected Events and Services Goal 1: Review the Divestment of Lagoon Permits: (Medium Term –7 objectives) Goal 5: Reconsider Recommendation to Divest Recreational Swim: (Short Term –3 objectives) Collaborate or Divest Goal 2: Develop a Youth Advisory Board: (Medium Term -3 objectives) 11 Strategies to Meet Cost Recovery Goals Goal 1: Increase the Level of Cost Recovery in Services not Meeting Cost Recovery Goals: (Long Term – Ongoing –4 objectives) Goal 2: Develop a Facility Use Prioritization Policy: (Medium Term -2 objectives) Goal 5: Evaluate Feasibility of Providing Product Re- Sale and Vending: (Long Term –5 objectives) 12 Next Steps Establish organizational sustainability through a logical and thoughtful philosophy that supports the core values, project vision, mission of the Carlsbad Parks and Recreation Department, and its community. Begin the process of implementing service provision strategies and align financial resource allocation with newly developed cost recovery goals. 13 Service Portfolio Service Assessment –core service identification and service provision strategies Pyramid Method –resource allocation philosophy Operational Work Plan –internal action plan Pricing Workshop –development of a pricing philosophy 14 Type of Service Beneficiary of Service Cost Recovery Goal Range Provision Strategy Pricing Strategy Ancillary Services Facility Rentals -Shelters Dependent on classification of user 0 -100%+ Growth -Advance Market Position Cost Recovery; Secondary -Market Facility Rentals -Center Rooms Dependent on classification of user 0 -100%+ Compete -Affirm Market Position Cost Recovery; Secondary -Competitive Facility Rentals -Pool Lap Lanes Dependent on classification of user 0 -100%+ Growth -Advance Market Position Cost Recovery; Secondary -Market Facility Rentals -Athletic Fields Dependent on classification of user 0 -100%+ Growth -Advance Market Position Cost Recovery; Secondary -Market Lagoon Permitting Highly Individual 100+%Divest Cost Recovery; Secondary -Market Equipment Rentals Highly Individual 100+% Compete -Affirm Market Position Cost Recovery; Secondary -Competitive ADA Compliance Inclusion Programs Community 0% -15%Core Service Cost Recovery; Secondary -Market Volunteer Program Community 0% -15% Compete -Affirm Market Position Cost Recovery; Secondary -Competitive TRUST (Teaching Respect Unity Sportsmanship Teamwork) Individual/ Community 50% - 80% Growth -Advance Market Position Cost Recovery; Secondary -Competitive 15 Educate all staff on your new philosophy Brainstorm with stakeholders –determine options to meet cost recovery goals Develop implementation strategies including alternative funding and fee adjustments Continue to foster “buy-in”from staff, governing bodies and citizens Evaluate the effectiveness of your new philosophy during the next budget cycle Make adjustments as necessary Implementation Pilot Period 16 Recommended Action Accept the Parks and Recreation Department’s “Core Services, Resource Allocation, and Pricing Strategies” report, and support the pyramid philosophy, goals, objectives, and pricing strategies contained therein. Questions? 17