Cost Recovery Working Group Final Report 12 August 2018
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- Horace Jefferson
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1 Cst Recvery Wrking Grup Final Reprt 12 August 2018 Table f Cntents Executive Summary Page 1 Membership Page 1 Backgrund Page 2 Wrking Grup Activities Page 3 Purpse and Gals Page 3 Recmmendatins Page 4 Other Issues Page 6 Next Steps Page 7 Appendices Page 7 1. Executive Summary The Cst Recvery Wrking Grup (CRWG) recmmends that Arlingtn Public Schls (APS) cllect revenue frm all users fr admissin t the Aquatic Centers (hereinafter Pls ) lcated at Arlingtn s high schls t cver the csts f Pl Operatins and Maintenance (O&M). The admissin charge calculatin shuld be simple, repeatable, transparent, and accuntable. These gals can be achieved by ensuring that the admissin charge is based n the number f pl entries ( splashes ) that have ccurred during the mst recent fiscal year (FY) fr which data is available. Splashes will be assigned t ne f fur user grups: APS prgrams, renters, DPR prgram registrants, and cmmunity swimmers. Additinally, rental grups shuld pay a prtin f O&M expenses based n the space and time the grups are in the Pls. Admissin charges fr participants in APS prgrams are tax-supprted thrugh the Cunty s Revenue Sharing Agreement (RSA), while rentals, DPR prgram registrants, and cmmunity swimmers will pay access fees t APS. T ensure that users are paying their fair share, the revenue targets fr each f thse fur grups is based n splash percentages assigned each year. This apprach t setting revenue targets aims t recver 100 percent f expenses, and will have the effect f equitably rebalancing the share f O&M expenses paid by cmmunity swimmers. When 100 percent cst recvery is nt reached, the deficit shuld be paid by Arlingtn Cunty, nt APS. In years when +100 percent cst recvery is reached, the surplus shuld be set-aside fr O&M expenses apprved by the Aquatics Cmmittee and used within the new FY. 2. Membership The CRWG is cmprised f members f the Aquatics Cmmittee (AC): 1 Cynthia Hiltn, Chair Rn Kampeas Dee Rmanek 1 The AC is a jint cmmittee f Arlingtn Cunty and the Arlingtn Public Schls. The Cmmittee is charged with ensuring cmmunity engagement in the peratin and use f the Arlingtn indr swimming pls lcated within the three high schls and with making recmmendatins n behalf f users t the Cunty Bard, thrugh the Sprts Cmmissin, and t the Schl Bard as needed.
2 2 Staff Liaisns Helena Machad (APS) Kevin Crnin (APS) Jennifer Lainhart 2 (DPR) 3. Backgrund In 2009, a Memrandum f Understanding (MOU) was signed between the Arlingtn Cunty Bard and the Schl Bard t set frth general plicies and prcedures related t the peratin and use f the Pls. Amng ther things, the MOU prvided that the Department f Parks and Recreatin (DPR) wuld annually transfer t APS funds in additin t all amunts budgeted fr the schls and the Cmmunity Activities Fund by the Cunty Bard fr O&M csts. The FY2010 transfer was set at $286,988. APS and DPR staff were additinally charged t annually evaluate bth the revenue and the expenditures fr all three Pls, and [t] recmmend changes t the transfer amunt, if apprpriate. Since that time, DPR prgrams and the number f participants served have mre than dubled, but the amunt f the transfer has nt changed. During this time, O&M csts have risen. T keep pace with these increasing csts, APS has increased fees fr cmmunity swimmers and renters fur times, cumulatively increasing these fees ver 40 percent. The mst recent increases went int effect July 1, 2018, fr FY The 2018 fee increases were included in the budget withut input frm the AC. Amng the respnsibilities f the AC is a charge t make recmmendatins n fees charged fr the use f the Pls. In 2014, the Cmmittee adpted criteria t assess the need fr fee adjustments. 23 The AC is generally supprtive f justified fee increases. Hwever, the 2018 prpsal was nt justified based n the Cmmittee s fee assessment criteria. Als, the fee increases are estimated t generate revenue in excess f the $55,000 APS said it needed t clse a revenue gap expected in FY 2019, and, while revenue needs fr FY 2019 prmpt the prpsed fee increases, there is n plan t sunset the higher fees at the end f the fiscal year. T address these cncerns, the AC instituted a survey t alert the public t the prpsed fee increase and t slicit input n ptins t generate the $55,000 in new revenue requested by the APS Superintendent in his FY 2019 budget request. T date, the survey has generated a respnse rate in excess f 10 percent. It shws that 60 percent f the respndents want the DPR transfer t be increased as stipulated in the MOU. The APS Superintendent s prpsal t raise fees was preferred by nly 13 percent. The AC presented the results f the survey and the Cmmittee s cncerns t Cunty and APS staff as well as bth Cunty and Schl Bards. Despite recnsideratin, it was t late befre the beginning f FY 2019 t the exercise the O&M transfer prvisin in the MOU as a surce f the needed $55,000. Ging frward, hwever, bth the Cunty Manager and the Superintendent expressed in an exchange f letters that they were pen t an increase. 4 The Superintendent s letter stated that, 2 Althugh appinted, Ms. Lainhart did nt attend any CRWG meetings; DPR did nt prvide a substitute. 3 The criteria are intended t be cnsidered as a whle; n ne criterin shuld be used t justify a fee increase. The criteria are used t trigger fee adjustment analyses, nt autmatic fee increases. The criteria cnsist f three metrics: (1) cst recvery that falls 1-5% belw a 3-year rlling average; (2) cmparisn f similar fees assessed by ther jurisdictins; and (3) cnsideratin f inflatin and cst f living rates. 4 Cunty Manager letter dated 30APR2018; Superintendent letter dated 23MAY2018.
3 Scial Value Scale 3 The aquatics industry cmmnly uses the number f individual swims, referred t as splashes, as the key data pint fr evaluating csts and revenue, establishing cst recvery targets and setting user fees. Furthermre, the Superintendent fund that splash data is critical t develping an equitable, lgical and manageable apprach fr determining hw t distribute perating csts acrss all APS and DPR user grups. The AC established a CRWG t make recmmendatins abut the merits f using a splash-based frmula t ensure that all Pl users were cntributing their fair share t O&M csts. 4. Wrking Grup Activities The CWRG met fur times, May 22, 2018, June 5, 2018, June 19, 2018, and July 24, Minutes and agendas are als psted at: Public cmment was welcmed at each meeting, but nne was received. 5. Purpse and Gals The CRWG adpted as its purpse t recmmend a cst-recvery mdel fr aquatics O&M expenses that is fair t all users, simple fr patrns t understand, repeatable fr staff t implement, and transparent and accuntable fr the public. The CRWG first cnsidered the cst-recvery pyramid used by DPR as a mdel t benchmark hw much revenue wuld be expected t be recvered thrugh fees. 5 Hwever, the DPR mdel was deemed inadequate because it was ranking all cunty sprt/recreatinal activities, and the Wrking Grup was lking t rank nly Pl uses. Instead, the CRWG develped a cst cntinuum based n a scial value scale: 0% Tax Supprt Private Lessns Rentals 50% Tax Supprt Cmmunity Swim DPR Classes /Teams 100% Tax Supprt APS Instructin/Athletics Free Swim Prgram The Wrking Grup set a gal t develp a cst-recvery frmula that wuld recver 100 percent f O&M csts based n fees aligned t the scial value scale. T achieve this gal, the CRWG established a frmula based n the percent f splashes assigned t each user grup annually. The effect wuld be t lwer current O&M csts charged t cmmunity swimmers by APS. Since DPR has nt heretfre factred int its aquatic prgram registratin fees an O&M surcharge r therwise transferred t APS funds sufficient t cver O&M csts attributed t its Pl usage, this gal was deemed reasnable. 5 DPR Cst Recvery Pyramid (Nvember 2013).
4 4 6. Recmmendatins Establish Cst-Recvery Expectatins that are Fair t All Users The CRWG recmmends that APS cllect revenue frm all users fr admissin t the Pls t cver the O&M expenses. The admissin charge calculatin shuld be simple fr custmers t understand, repeatable fr staff t implement, and transparent and accuntable t the public. These gals can be achieved by ensuring that the admissin charge is based n the number f individual splashes that have ccurred during the mst recent FY fr which data is available. Splashes will be assigned t ne f fur user grups: APS prgrams, rentals, DPR prgram registrants, and cmmunity swimmers. Additinally, rental grups shuld pay a prtin f O&M expenses based n the space and time the grups are in the Pls. Admissin charges fr participants in APS prgrams are tax-supprted thrugh the Cunty s RSA, while renters, DPR prgram registrants, and cmmunity swimmers will pay access fees t APS. T ensure that users are paying their fair share, the revenue targets fr each f thse fur grups is based n splash percentages assigned each year. Setting a Per Splash Rate The CRWG set as gals t reach 100 percent cst-recvery using a per/splash frmula fr setting admissin charges while reducing current fee assessments. Data frm the latest FY (1JUL t 30JUN) shuld be used t set the splash rate fr the cming FY. It is expected that data will be n mre than tw-years ld. Each splash is assigned t ne f fur user grups. (See fllwing table fr FY2018 splash percentages.) Splash Grup FY 2018 Percentages APS Prgrams 16 DPR Classes & Teams 43 Cmmunity Swimmers 30 Rentals 11 T minimize the burden f data cllectin, APS student numbers will be based n the September 30 enrllment by grade reprt and the number f athletes registered t participate in aquatic athletic prgrams, and DPR class participant numbers will be based n full enrllment in classes advertised. By the end f a FY, individual admissin charges credited t each user grup will be expected t cntribute t revenue available fr O&M expenses an amunt equal t the user grup s assigned percentage f splashes. Levying an admissin charge n all individuals seeking access t the Pls allws the charges fr FY2020 t be set at rates belw thse set fr FY2019, and ends the practice f impsing disprprtinate fee increases n cmmunity swimmers r rentals when revenue cllectin des nt cver O&M expenses. Scial Value Scale While the equivalent f the established splash rate must be cllected frm each individual Pl user in rder t cver 100 percent f O&M expenses, the CRWG recgnizes that there is merit t
5 5 setting reduced, free, r therwise discunted admissin charges based n a scale that reflects Arlingtn s scial values and prmtin f active recreatinal lifestyles as fllws: APS Reduced Cst /Free Swim Prgrams APS will cntinue t pay all r a prtin f admissin charges fr certain individuals with funds frm its RSA as fllws: All APS Instructinal/Athletics Prgrams; Free Swim fr Yuth and Senirs; Free Swim fr unifrmed public safety persnnel; and Reduced-rate admissins fr cmmunity swimmers based n incme accrding t Schl Bard established plicy in rder t facilitate Pl use by all citizens. Discunts The splash rate is based n the O&M cst fr a single-swim adult admissin. APS will cntinue t pay fr discunts t full-time APS emplyees cnsistent with APS plicy t prmte an active lifestyle. APS will cntinue t ffer: Age-based discunts t cmmunity swimmers wh are children and senirs; Discunts fr cllege students; Discunts t individual cmmunity swimmers purchasing multi-mnth r annual memberships r multi-swim passes; and A discunt fr a cmbined family membership package. APS will ffer discunts t individuals registering fr DPR classes r teams. O&M Revenue Cllectin Respnsibility Inasmuch as APS is respnsible fr the peratin and management f the Pls, APS shuld be charged with cllecting admissin revenue frm all users t cver O&M expenses. Basing the admissin charge n the individual user allws APS t perate and manage the Pls in a fair and fiscally-respnsible way. This apprach des nt task DPR with cllecting O&M admissin charges frm its user cmmunities. While DPR may cntinue t charge a separate fee t cver the csts f its prgrams, APS will establish a prcess fr cllecting admissin charges frm DPR participants that minimizes the incnvenience t r therwise benefits the participant: APS will explre web-based registratin and linking t DPR s registratin site t simplify participant registratin. DPR participants may chse t purchase existing swim passes and membership packages; these wuld exempt them frm additinal APS charges fr DPR class/team admissin. DPR participants wh miss a nn-refundable class r practice, will be able t use the splash fr a nn-class/practice swim f their chsing. Treatment f Over- r Under-Revenue Cllectin This apprach t setting revenue targets aims t recver 100 percent f expenses, and will have the effect f rebalancing the share f O&M expenses paid by cmmunity swimmers t ensure that all users are assessed equitable admissin charges. In years when +100 percent cst recvery is reached, the surplus shuld be set-aside fr O&M expenses apprved by the Aquatics Cmmittee and used within the new FY. When 100 percent cst recvery is nt reached, the deficit shuld be paid by Arlingtn Cunty, nt APS.
6 6 In the past, shrtfalls have been paid by APS ut f its RSA, which is the schl budget fr bks, teachers, schls, etc. The cmpetitin fr scarce schl budget resurces has led APS t cver the funding gap by raising the O&M fees APS cllects n cmmunity swimmers (e.g., the 5% increase impsed in FY2019). Of the fur splash user grups, tw are paying their fair share and tw may fall shrt. APS is funding its user cmmunity at the full-adult, nndiscunted splash rate. Renters are als assessed 100 percent f csts. Discunts are ffered nly t DPR class and team registrants and t Arlingtn citizen swimmers, a subset f DPR s larger sprts and recreatin cmmunity. It is apprpriate that DPR fund any O&M shrtfall as it wuld fund O&M expenses incurred fr ther sprts/recreatin ptins ffered by the Cunty. Retaining the DPR Transfer" The Aquatics MOU (2009) prvides that DPR transfer funds frm its apprpriated funds t the APS Cmmunity Activities Fund (CAF) fr aquatic O&M expenses incurred by its prgram users. This is revenue t APS in additin t the RSA. Cunty and APS staff have been directed by the Cunty and Schl Bards t see what changes need t be made t the MOU after receiving citizen input abut failure f the MOU text t require that the O&M transfer, which has nt exceeded $286,988, match DPR s increased usage f Pl space and patrns served. While the current annual transfer bears n relatinship t the increased O&M csts APS incurs t supprt DPR s prgrams, the CRWG recmmends that the cncept f a transfer (meaning a disbursement frm DPR apprpriated funds and a depsit t the CAF) be retained in any revised MOU. The directive fr a transfer shuld be triggered nly when there is a gap between aquatics revenue cllected and O&M expenses incurred, and the amunt f the transfer shuld be limited t the unfunded gap. APS will cntinue t apply cst avidance strategies and revenue generating pprtunities t ensure 100 percent recvery f Cmmunity Swim csts. Accuntability The AC retains its respnsibility t versee the aquatics budget and revenue streams t cver O&M expenses. In this capacity, APS and DPR will prvide a financial reprt, at least annually, t the AC as required by the AC charter. The data APS and DPR prvide in the reprt must be based n the same standards f disclsure in rder fr the AC t verify the reliability f the scial value scale ; t determine the effect, if any, f admissin charges n DPR s ability t recver prgram csts; and t allw fr recmmendatins n fee setting fr the upcming budget cycle. The AC will als evaluate recmmendatins fr the use f funds that may be cllected in excess f actual expenses related t the aquatics center peratins. 7. Other Issues Reciprcity with Lng Bridge Park (LBP) Aquatics Center The CRWG did nt specifically address reciprcity f memberships between APS Pl and LBP. The main fcus f the grup is t establish a prcess by which APS can perate its facilities at 100% cst recvery. T the extent that this gal can be maintained, the CRWG recmmends that the AC address this issue at a later date.
7 7 8. Next Steps The CRWG requests that the AC supprt its recmmendatins and frward them t the Cunty Bard, thrugh the Sprts Cmmissin, and t the Schl Bard with a request that the recmmendatins be shared with and acted upn by the Superintendent and the Cunty Manager in time t be included in Cunty and APS FY 2020 budget prpsals. 9. Appendices Definitins Cmmunity Swimmers mean all patrns at APS aquatics centers ther than thse that are APS curriculum-based r sanctined by the VHSL, Renters, r thse registered in DPR classes r teams. DPR Classes means prgrams managed by DPR and ffered at the APS aquatics centers as stipulated under a current MOU. These prgrams are further rganized int: Sessins Seasnal set f multiple ffering f classes (e.g., summer, fall, winter and spring). Class A scheduled ffering within the Sessin (e.g., 5:30 pm Water Babies Class). DPR Cmpetitive Teams mean yuth and adult teams managed and ffered by DPR at the APS aquatics centers, currently, AAC and Masters. O&M csts mean Operatins and Maintenance csts including csts related t the staffing, utilities, supplies, maintenance and repairs necessary t keep the APS Aquatics Centers safely peratinal. Rental means a third-party individual, grup r entity using the APS Aquatic Centers under a rental agreement with APS, including private instructrs, fr prfit and nnprfit teams, ne-time events r ther service prviders. Revenue means all funding surces that are allcated fr O&M csts including apprpriated tax revenue, the DPR transfer, and fees cllected by APS. Tax-Supprted Prgrams mean prgrams managed by APS that are funded by the Cunty/APS Revenue Sharing Agreement thrugh the APS Cmmunity Activities Fund. Cunty Manager/Superintendent Letters (pdf attachments) Recmmended FY 2020 Aquatics Admissin Charges The O&M cst f a single splash each baseline year (preceding tw fiscal cycles) will dictate the Adult admissin charge fr a single swim, e.g., FY2018 splash cst fr FY2020 admissin charges. All ther fees will be based n the frmula shwn belw: Per-Splash Discunt r Surcharge Prpsed FY 2020 Splash Assessment Baseline Cst/Swim (0%) $5.15 Adult Fee Res (0%) $5.15 Arlingtn Unifrmed Public Safety Emplyees (0%) $5.15 APS Students and Athletes (0%) $5.15 Senir Fee Res (<30%) $3.65 Cllege Student Fee Res (<20%) $4.15 Child Fee Res (<60%) $2.10
8 8 Adult Fee - Nn Res (+30%) $6.70 Senir Fee Nn Res (+30%) $6.70 Cllege Student Fee Nn Res (+20%) $5.00 Child Fee nn Res (+30%) $2.75 Swim Passes and memberships will cntinue t be calculated using the frmula implemented by APS in 2010 and supprted by the Aquatics Cmmittee in 2018: Packages # Splashes Discunt 3-ms 24 15% 3-ms NR 24 10% 6-ms 52 25% 6-ms NR 52 10% 12-ms % 12-ms NR % Family Membership Summed Cst f individual memberships 10% APS Full-time Emplyees Cst f individual membership 50% Swim Pass Res 10 15% Swim Pass Nn Res 10 10% Nn-Resident fees will cntinue t be adjusted t match the resident fees at neighbring jurisdictins. Rental fees will be based n the preceding tw fiscal cycles actual O&M csts/hur, and admissin charges capped at the number f swimmers that can safely ccupy a lane, divers per bard, r the capacity f IPls, etc. Table belw shws the estimated rental fees based n Fiscal 2018 Budgeted expenses and cst/splash adjusted t a resident child admissin charge: Third Party (Rental) Rates (FY 2018 estimate) Utilities O&M Manager n Duty #Guards Wages Subttal #Swimmers Splash Fee Incme/ Splash /hur Rental Nn Prfit Fee 2020 Fr Prfit Fee 2020 Full Facility (Cpl/Ipl/Well) $ 197 $ 309 $ 324 Full Facility (Cpl/Ipl/Well/Classrm) $ 260 $ 372 $ Lanes (WL Only) $ 168 $ 279 $ Lanes $ 134 $ 230 $ lanes with tank $ 197 $ 309 $ Lanes $ 101 $ 196 $ Lanes + Tank $ 164 $ 275 $ Lanes $ 67 $ 106 $ Lanes + tank $ 67 $ 111 $ 117 Instructinal Pl (WK) $ 67 $ 163 $ 171 Instructinal Tanks $ 63 $ 159 $ 167 Divning Well $ 25 $ 98 $ Lanes $ 50 $ 81 $ 85 Classrm $ 53 $ 114 $ 119 Classrm w/ AV $ 53 $ 139 $ 146 Single Lane (1/2 Lane)/Partial Tank -Private $ 7 $ 21 $ 22 Special Event Set up/sessin $ 66 $ 70 Special Event Clean up/sessin $ 82 $ 86 Clrad Equipment Set up/sessin $ 51 $ 53 Clrad Equipment Rental /sessin $ 100 $ 105 Clrad Operatr/Hurs $ 35 $ 37
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