HomeMy WebLinkAbout5B - The Parks & Recreation Department's 2007 BudgetCITY OF BOULDER
PARKS AND RECREATION ADVISORY BOARD AGENDA ITEM
MEETING DATE: June 26, 2006
(Agenda Item Preparation Date: June 20, 2006)
AGENDA TITLE:
The Parks and Recreation Department's 2007 Budget
PRESENTERS:
Jan Geden, CPRP, Director of Parks and Recreation
Jim Reasor, Business and Financial Manager
Eaecutive Summary:
This is a summary of the Parks and Recreation Department's 2007 budget. The information is
provided to serve as an overview of the department's operating and capital budget. A brief
summary of the major budget issues identified during this year's budget process is included for
the Board's review. The fiscally constrained budget reallocations show how the department is
striving to find resources to address issues within its current funding streams. A synopsis of the
policy and revenue issues submitted to the City Manager is included to provide clarification and
increase understanding of departmental concerns. A timeline for budget related deadlines and
milestones is provided for context and understanding of the budget approval process.
Fiscal Impacts:
Budgetary: $22,597,000
Other impacts: None
Board and Commission Feedback:
There was no additional Board or Commission input following the operating budget presentation
and request for feedback at the April PRAB meeting.
Public Feedback:
Public comment will be provided during the City Council budget reading meetings.
Staff Recommendation:
The purpose of this memorandum is to present the Parks and Recreation Department's 2007
budget to PRAB for consideration and comment.
PAGE 1
Analvsis:
Budget Over-view
The department's budget is accounted tor in six funds: the General Fund. .25 Cent Sales Tax
Fund, Recreation Activity Fund. Permanent Parks and Recreation Fund. Lottery Fund, and the
.15 Cent Sales Tax Fund. The department is designated as fund mana~er for the .25 Cent Sales
Tax Fund. Recreation Activity Fund. Permanent Parks and Recreation Fund and Lottery Fund.
The graph and table below~ detail these funds and their use.
2007 Parks and Recreation Budget
522,597,000
s9,ooo,ooo
sa,oao,ooa
s~.ooo,ooo
ss.ooo,ooo
55,000,000
$a,ooa,ooo
$3A~0,000
$2.000.000
$1.000.000
$0
General Fund 25 Sales Tax Recreation Permanent Lottery Fund ~i ~ 5 Sales Tax
Fund Activity Fund Parks Fund Fund
Operating
5493.000 $1.070.000 550.000
o RAF 5300.000 I
Allocation 5149.000 ~
52.429.000
The $16,061,000 operating budget is allocated for the department's two divisions and
administrative services, comprised by two administrative work units: Parks & Planning division,
Recreation division. Business and Financial Mana~ement work unit and Policy and Information
Services work unit. The graph and table below~ detail the operating budgets. by fund. for each
division.
; PAGE 2
2007 Operating Budget by Division and Function
$22,597,000
$i o,ooo,ooo
$9,OOD,000
$8,000,000
$7,0OO,ODO
$6,000,000
$5, 000, 000
$4, 000,000
$3,000,000
$2,000,000
$1, 000, 000
$~ Note:
Parks Recreation Capital & CIP Projects Administration Administration
$276,000 budget includes
$2,935,000
$646,000 5304,000 allocated for
~nd • $1,984,000 553,000 debt service &
_ , .. .. ..... ...... ~,,, ,,,,,, cost allocation.
25 Sales
757
Components of the Bud~et
The operating budget provides funding for parks, forestry, conservation, general administrative
services, business services and recreational services/programs totaling $1~,322,000. An
additional $739,000 is allocated for operating activities related to capital planning, development
and renovation projects.
Debt service and cost allocations are funded in the Administration division budget:
$2,429,000 is funded for debt service and $149,000 for cost allocation in the .2~ Cent Sales Tax
Fund; $304,000 is funded for debt service in the Lottery Fund and $53,000 is funded for cost
allocation in the Permanent Parks and Recreation Fund.
Renovation and refurbishment projects and Facilities Asset Management (FAM) fundinb of
$1,988,000 are budgeted within the Lottery, Permanent Parks and Recreation and the .25 Cent
Sales Tax Funds.
Capital Improvement Program (CIP) projects totaling $1,613,000 are funded within the
Conservation, Planning and Development division.
Sud~etarv Challen~es and Issues
The major issues identified during the 2007 budget process include:
PAGE 3
T'he Recreation Activit.~
The fund continues to be challenged by financial conditions. To ensure the solvency of the
Recreation Activity Fund (RAF), rcvenue generation must grow at the same rate as eYpenditures.
Although recreation revenues ~rew 4.3% in 2005. expenditures for operating costs. particularly
fuel and utilities, increased at much higher rate. The gap between revenues and expenditures
must be closed to prevent additional budget reductions. The department must continue to focus
on identifying a long-term solution to increase the sustainability of its recreation programs and
services
Even though the Recreation Division continues to be challenged by financial conditions, the
economic outlook is improving. To increase revenue streams and retain current business. new
practices have been implemented to provide better customer service, including a recreation
center annual pass monthly payment option. The department has developed a discount program
aimed at employees of businesses that belong to the Boulder Chamber of Commerce. The
department hired a Marketing Manager to centralize marketing efforts, evaluate its effectiveness
and increase return on investment.
Through these efforts. the department has narrowed the gap between revenues and expenditures.
In 2004, a$400.000 deficit was absorbed by fund balance. In 2005, the deticit decreased to
$200,000. As a result of the 2006 budget reductions and increased 2006 revenues, cunent
projections indicate that additional use of fund balance w~ill not be necessary for 2006. Based on
higher operating costs. a$300.000 budgetary shortfall was identified for 2007. Due to improved
actual revenue generation, the funding deficit has been reduced to $175,000.
The sustainability of the fund is in questionable under the current cost recovery model. To
maintain solvency, revenue generation must grow at the same rate as expenditures. Even though
the fund is currently balanced, it is critical that the department continues to focus on improving
lon~-term sustainability.
Fiscallv Coostrained Business Plan
The 2007 bud~et provides an opportunity for the department to propose reallocating resources
for programs and services within its existing fiscally constrained budget. The department's
budget submission includes the following reallocations:
Utilit~~et - $125,000
A recommended reallocation of $125.000 is proposed to cover utility cosis for recreation
facilities. The funding for the reallocation is being provided by projected increased revenues
from recreation programs and facilities. This basic operating expense needs to be increased
significantly with the substantial increase in utility costs.
Parks Budget - $100.000
The proposed reallocation is to convert the vacant Planning and De~-elopment Superintendent to
increase non-personnel funding for park maintenance and park renovation projects. The
proposal will provide additional resources to be utilized to address identitied maintenance
deficiencies within the parks system.
PAGE 4
Mazketing Budget - $45,000
The suggested reallocation is to centralize non-personnel funding used to promote and/or
advertise programs and services within the Marketing work unit. The Parks and Recreation
organizational restructure identified that a comprehensive and effective mazketing program was
crucial for the departsnent to retain current mazket shaze and enhance revenue streams through
increased recreation facility and class attendance. The mazketing program will increase the
sustainability of recreation programs and services and help the department succeed in the
competitive pazks and recreation environment. A comprehensive and analytic-based mazketing
plan is vital for the deparhnent to thrive within this environment.
Youth Services Initiative (YSII - $18,500
To enhance programs for underserved youth, the YSI program was developed in 2004 as an
extension of the existing Youth Recreation Program. The initial $150,000 funding for YSI is
expected to be fully expended in 2006. Although there are some similarities between the
programs, the more comprehensive services provided by the Youth Services Initiative have been
recognized as a better way to fill the unmet community need.
The proposed reallocation of $18,500 for the Youth Services Initiative (YSI) will a11ow the
program to continue at three sites. A$9,000 reallocation will be derived from the elimination of
funding for Boulder County's Head Start program, which was discontinued following a federal
decision to reduce its funding. An additional $9,500 has been identified as a budget savings
resulting from replacing two 0.50 FTE vacant Child Caze positions with seasonal employees.
Allocate Recreation Functions from the General Fund to the RAF -$226,000
The proposed reallocation will transfer funding for programs and services that directly support
the Recreation Activity Fund (RAF) from the General Fund into the RAF. No additional funds
will be required to support this proposal. The recommendation will better reflect the purpose of
the RAF and will make it easier for Recreation Center Supervisors to manage and monitor their
budgets. The Pazks and Recreation total funding from the General Fund will remain unchanged.
Fiscallv Constrained and Action Business Plans
For the 2007 budget, each city department was required to submit a list of their lowest and
highest priority programs and services. Both lists were prepazed by fund and need to reflect 1%
of the fund's budget. The fiscally constrained business plan was utilized to provide the rationale
for the submitted lowest priority items. This list reflects the programs and services that would be
reduced if any further budget reductions aze necessary.
The highest 1% priority action plan was prepazed based on identified needs to increase funding
or enhance a program or service. The highest priority list indicated how the funding request
would be utilized to increase service standazds for essential services that aze currently being
provided below acceptable levels. The action plan will help the City Manager and City Council
decide where any new money could best be utilized to meet community needs.
Budeet Policv and Revenue Issues
T'he budget provides an opportunity for the department to submit policy and revenue issues to the
City Manager. The City Manager evaluates the requests and may recommend that City Council
PAGE 5
review or approve the proposal. The department's budget submission includes the following
policy and revenue issues:
Recreation Activitv Fund Subsidv
In recognition of the fund's volatility and relative immaturity, staff believes that a
comprehensive analysis is critical to ensure reliable and sustainable funding for recreation
services and progams. The methodology used to calculate the General Fund's subsidy to the
Recreation Activity Fund has not been reviewed since the fund's inception in 2001. During the
2006-07 budget process, staff recommended that the RAF's structure be reevaluated.
The departmenYs Master Plan is focused on the Core Services Model. The model is a mazket-
based business management tool used to categorize services within the parks and recreation
industry. Recognizing the unique business needs of Boulder Parks and Recreation, the model
was combined with the citywide Business Plan to create the Core Services Business Model
(CSBM) for the Pazks and Recreation Department. The CSBM is intended to provide a
framework for determining cost recovery rates for programs and services and will clarify
expectations regazding the use of the General Fund subsidy.
Staff recommends that the RAF's General Fund subsidy be calculated by using the CSBM to
categorize services and appropriate cost recovery rates. Staff acknowledges that any changes
resulting from the analysis will not be immediately funded. It is also requested that the RAF's
structure be evaluated on a regularly scheduled basis to adapt to changing community needs,
demographics and other city priorities. Staff recommends that an RAF evaluation occur every
five years to coincide with a midterm Master Plan progress update.
Recreation Activitv Fund Budeet Shortfall and Bridge Funding
The departrnent identified a preliminary budget reduction of $300,000 to balance the RAF's
2007 budget. The department recommended that the .25 Cent Sales Taac Fund provide a one-
time $300,000 transfer to absorb the anticipated 2007 budget shortfall.
A one-time transfer would not resolve the RAF's ongoing funding challenges. The transfer
would simply delay any program or facility reductions until the 2008-09 budget cycle. This
proposal benefits the department by allowing it to focus on completing its Master Plan. This
scenario would give City Council appropriate time to evaluate the departmenYs completed
Master Plan instead of just the elements that have been presented thus faz. By bridging the
funding gap for one year, the City Council would have ample time to understand the
departmenYs financial constraints and address any potential service reductions. This proposal
would allow time for the city to evaluate all available options.
During the City Council study session held on May 23, 2006, the City Manager recommended
that the .25 Cent Sales Tax Fund and increased Lottery Funds (provided by Open
Space/Mountain Pazks) be leveraged to prevent any 2007 budget reductions for recreation
programs and services.
Utility Expenditures
Staff recommended that funds for utility budgets be prioritized to receive any available city
; PAGE 6
funding. The significant growth in utility expenses occurred in 2005 after the submission of the
2006-07 budget, resulting in a substantial unfmided liability citywide.
Resident vs. Non-Resident Fees
The department expressed its support of the economic vitality efforts proposed to help retain
Boulder's employment base. In particular, the deparfinent supports the suggestion to allow
employees of Boulder businesses to access Pazks and Recreation facilities at resident rates.
Identification of Park Maintenance Fundin~
The Permanent Pazks and Recreation Fund lacks an identified funding stream for the ongoing
operations and maintenance of pazk sites constructed with its funds. Funding for pazk
maintenance needs to be identified prior to development or construction of park sites. Park
maintenance is funded by either the General Fund or the .25 Cent Sales Taac Fund. Park
development is funded through the Permanent Pazks and Recreation Fund or the .25 Cent Sales
Taac Fund.
In theory, pazk development would coincide with Boulder's population growth and General Fund
revenues and departmental allocations would grow conespondingly. In this ideal scenazio,
growth pays its own way through contributions to city excise, sales and property t~es.
Unfortunately, Boulder's economy and its ability to generate municipal revenue are impacted by
competition for retail sales ta~c dollars, business retention, local and/or national economic
conditions and State restrictions on taxing.
Tree Grate Deferred Maintenance
In 2005, an inventory and assessment of tree grates across the city identified certain tree grates as
potentially hazardous and in need of immediate replacement. The department is in the process of
developing a comprehensive Commercial Tree Pit Maintenance Program to address citywide
concerns, high priority defened maintenance and long-term maintenance requirements.
The commercial tree pit maintenance elements include leveling grates/pavers with surrounding
sidewalks, expanding inner grate rings to allow for tree growth, installing supporting frames and
replacing outdated and/or broken grate panels.
The departrnent is seeking funding to address the identified high priority maintenance
deficiencies related to commercial tree pits. The funding will allow the department to decrease
potential city liability while a comprehensive commercial tree pit maintenance standazds
program is developed. The recommended funding source is the Patio Lease Program
administered by the Planning and Development Services Department. Excess revenues collected
by the Patio Lease program could be reallocated to address deferred tree maintenance issues and
reduce the city's trip hazazd liability.
Recreation Center Annual Pass Fee Evaluation
For 2007, the department recommends raising the Recreation Center daily drop-in rate. It is
proposed that the adult, youth and senior categories will be increased by 25 cents. The child rate
will not be changed for 2007. Daily drop-in fees and annual pass fees have not increased since
January 1, 2004. To match typical policies in other communities, the department will lower the
minimum age required for children to pay admission fees. Children less than four yeazs old
PAGE 7
currently receive free admission. It is anticipated that the fees will be implemented for three-
yeaz-old children.
The current pricing structure was evaluated to ensure that a consistent discount philosophy was
applied to all annual pass products. The analysis of the annual pass pricing structure indicated
that discrepancies exist for the discount applied to each annual pass category. As shown by the
table below, the current discounts range from 27.8% for adults to 48.1% for children.
Category 2006 Annual Pass Discount
Adult 455.00 27.8%
Senior 263.00 37.4%
Teen 193.00 47.5%
Child 177.00 48.1 %
To ensure a consistent pricing structure, staff recommends that the discount structure be uniform
across all age categories. The base drop-in rate should be the distinguishing factor utilized to
provide the pricing differential between the age categories. Staff recommends using a uniform
30% discount for all types of annual passes. The implementation of this proposal will result in
significant fee increases for annual passes holders in the senior, teen and child categories as
shown in the table below.
Category 2006 Fee 2007 Fee
Prior to
Discount Discount Revised
Fee Percent
Change
Adult $455.00 656.25 30% $45938 0.95%
Senior $263.00 446.25 30% $312.38 18.75%
Teen $193.00 393.75 30% $275.63 42.50%
Child $177.00 341.25 30% $238.88 35.00%
Staff believes it is not appropriate ar feasible to suggest these fee increases become effective
immediately on Januazy 1, 2007. Although the intent is to develop a consistent pricing structure,
staff is aware of the potential controversial nature of the recommended changes. To minimize
the immediate impact, staff recommends the use of a three yeaz, phased-in schedule to
implement the new discount structure. The changes aze not intended to generate revenue for the
department. Minimal revenue increases aze projected since the majority of annual passes are
held by the adult category, which is proposed to increase by less than 1%. The
recommendations will create consistent and equitable pricing policies.
It is also important to note that a majority of annual passes for youth and children are purchased
on family plans and receive and additiona150% discount. As an example, in 2005, a total of two
out of 129 children paid the full $177.00 annual pass price. Recognizing that the majority of
teens and children purchase their passes at an additiona150% family discount does not change
the significant percentage increase that these two groups will realize. However, this will lower
the average actual fee increase paid by these two consumer groups.
, PAGE 8
Category Number of Number of Full Price % of Full Average Effective
Annual Passes Annual Passes Price Annual Yield
Purchased at Full Purchased at Paid Pass
Price (Individual Discounted Price
Rate) Price (Family Paid
Rate)
Adult 619 275 $455.00 69.2% $384.89 84.6%
Senior 282 28 $263.00 91.0% $25112 95.5%
Teen 25 55 $193.00 31.3% $126.66 65.6%
Child 2 127 $177.00 1.6% $ 89.19 50.4%
2007 Bud¢et Timeline
July 13 Meeting with City Manager to discuss Pazks and Recreation's 2007 budget
submission.
July 20 Planning Board meets to review 2006 - 2011 Capital Improvement Program
(CIP).
July 25 City Council Study Session on Capital Improvement Program (CIP).
August 15 2007 recommended budget is submitted to the City Council.
August 22 City Council study session on the 2007 budget.
August 25 Departments submit updated fees.
September 12 City Council study session on the 2007 budget.
October 17 City Council - First reading of the 2006 budget.
November 14 City Council - Second reading of the 2006 budget.
Next Stens
Additional information regarding the 2007 budget submission will be available after staff ineet
with the City Manager on July 13, 2006.
PAGE 9