AGENDA #9c

 

BUDGET WORKING PAPER

 

TO:                  W. Calvin Horton, Town Manager

 

FROM:            Kathryn Spatz, Parks and Recreation Director

 

SUBJECT:       Parks and Recreation Budget

                                                               

DATE:             April 27, 2005

 

 

This budget working paper describes opportunities to reduce expenditures and raise revenues within the Parks and Recreation Department’s operating budget for FY 2005-06.

                                                                                                                        

BACKGROUND

 

On April 11, 2005 the Citizens Budget Subcommittee presented its report. The subcommittee stated its belief that the Department could raise fees, secure grants, or reduce expenses in the amount of $232,000. The report did not make specific recommendations.

 

DISCUSSION

 

In FY 1997-98, the Department generated $287,000 from fees and charges. Orange County made a contribution of about $83,000, so that Orange County residents who did not live in the Town use Town leisure facilities and programs. In FY1998-1999, the Town began implementing several changes in the Parks and Recreation user fee policy. These included: moving from a fee waiver to fee reduction system, increased rental of athletic fields and facilities for private use, and setting youth program fees to recoup 100% of direct costs. These changes and additions have resulted in almost $100,000 in additional revenue per year.

 

In FY 2003-2004, the operations of Parks and Recreation Department costs $2,199,900 and revenues were $386,600 from fees and charges. In addition, the Department received an $86,000 contribution from Orange County.  Revenues and grants were 17% of expenditures.

 

Potential Revenue Increases: We currently set fees to recover 110% of direct program costs from adult programs and 100% of direct program costs for youth programs. There are many program-by-program variations, but on the whole we believe that most of our fees are comparable to those charged in nearby municipalities. For this reason most of our revenue enhancement ideas are not related to direct program fees. We have identified the following additional opportunities:

 

  1. Revise Current FY 2005-06 Revenue Estimates: We believe that our revenue budget estimates could be safely revised upward by about $26,000 based on recent review of our of our experience this year and a revised forecast for 2005-06 activities.  We are bringing in more revenue than expected from rentals and expect that trend to continue. In addition, it now appears that revenues in several programs will not be reduced as originally expected.  We recommend this adjustment.

 

  1. Charge a 10% Administration Fee for Youth Programs: We currently charge a 10% fee for all adult programs. A similar charge could be set in place for youth program fees. This increase could potentially annually raise up to $4,000. The amount would be closer to $2,000 in FY 2005-06 because prices for fall programs are already established prior to passage of the Town budget in June. We believe that an additional fee increase could result in a loss of participation and worry that it would disproportionately affect low income families. In addition, we could potentially see lower numbers of participants since nearby municipalities including Carrboro and Orange County already charge less for many youth programs.  We do not recommend this fee increase.

 

  1. Increase Fees Charged for Athletic Field Rentals: We currently charge $15 per hour for times that do require lights and $30 per hour for times that require lights. This fee potentially offsets maintenance costs. Currently the Chapel Hill/Carrboro City Schools charge $17 to $28 per hour to non-profit organizations, depending on the type of field and its use. For profit groups renting fields are charged between $40 and $45. If we increase fees to $20 for fields that do not have lights and $40 per hour for fields with lights we could expect to increase revenues by about $10,000. The amount would be closer to $5,000 in FY 2005-06 because prices for fall programs are already established prior to passage of the Town budget in June.  We recommend this adjustment.

 

  1. Increase Fees Charged for Gymnasium Rentals: We currently charge $30 per hour for gymnasiums. This fee offsets maintenance and utility costs. Currently the Chapel Hill/Carrboro City Schools charge $34 per hour to non-profit organizations. For profit groups renting fields are charged $67 per hour. They are considering an increase to $60 per hour for non-profits. If we increase fees to $50 per hour we could expect to increase revenues by about $5,000. The amount would be closer to $2,500 in FY 2005-06 because prices for fall programs are already established prior to passage of the Town budget in June.

 

  1. Seek Sponsorships: We currently raise some funds through sponsorships for our street fairs and 4th of July event. Most sponsorships are in the form of in-kind services such as publicity. In FY 2004-05 the amount of financial sponsorship funding was about $1,500. It may be possible to significantly increase the amount of sponsorship revenue if the Town were to allow corporate sponsors to assume sponsorship of large events such as the street fairs and the 4th of July event. At this time we have no information as to the actual amounts that could be raised in this manner. If the Council desires we could attempt to recruit sponsors for one or more of these events.

 

  1. Grants: In the past 20 years the number and amounts of grants available to Parks and Recreation Departments specifically for programs (which, is not the case with capital projects such as greenway development) have fallen significantly. We received $6,000 in FY 2004-05 through the efforts of the non-profit Friends of Chapel Hill Parks, Recreation, and Greenways for camps for persons with disabilities. We believe that the few grants available are highly competitive and tend to be for small amounts. We will continue to seek grants when they match our program goals; however, it is not possible to accurately predict the amounts of program grants that the Department might receive in any year.

 

Potential Decreases in Expenditures: The greatest opportunities that we have to make significant decreases in budget would be to reduce or eliminate programs that raise little or no revenue. In some cases programs are free. In other cases programs raise less in revenues than the cost of providing the program. All of the following potential program reductions are either free of charge, have significant numbers of people who attend through our fee reduction program, or have a significant gap between revenues and expenditures.  We do not recommend these adjustments.

 

  1. Eliminate Fee Reduction Program: Last year we reduced fees by about $103,000 for families dealing with financial hardships. The majority of these reductions were for summer camps and the Hargraves afterschool program. However, some fee reductions are granted for all program areas. The possibility exists that if fee reductions are eliminated the summer camp and afterschool programs may not have enough participation to justify operation.

 

  1. Eliminate Summer Day Camps at Community Center and Hargraves: We could save about $80,000 if we eliminate these camps. They serve about 215 children per year, most of whom receive significant fee reductions because of financial hardships.

 

  1. Eliminate the Hargraves Afterschool Program: This program costs about $10,000 per year and serves about 65 children per year, most of whom receive significant fee reductions because of financial hardships.

 

  1. Eliminate the Street Scene Summer Camp and Afterschool Programs: These programs cost about $10,000 per year and serve about 40 youth.

 

  1. Eliminate 4th of July Celebration: Elimination of this event would save about $25,000. Funds are used for fireworks, entertainment, security, and parking services. There are no revenues except for occasional sponsorships.

 

  1. Eliminate One or Both of the Town’s Street Fairs: We could eliminate the Apple Chill and/or Festifall street fairs. Revenue from vendor fees cover the Parks and Recreation Department’s direct costs for Festifall and come close to paying the Department’s direct costs for Apple Chill. We believe real savings would come in other departments’ budgets, especially Police, Public Works, Transportation, and Fire. We estimated other departments’ costs for the Apple Chill fair in FY 2003-03 to be $45,000.

 

  1. Reduce Operating Hours of Buildings: We could reduce the operating hours of recreation centers, pools and gymnasiums. This approach would be especially effective during open play hours or at facilities that have many low cost or free programs. If the Council desires to explore this approach we could return with a report detailing the hours we could close each facility, the impacts to patrons, and the expected savings.