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(1) Receipt and Filing of the Report Regarding the Parks, Recreation and Community Services Department Fiscal Year 2024/2025 Adopted Budget; (2) Consideration of Forming a Parks, Recreation and Community Services Commission “Recreation Programming and Rentals Fee Study Ad Hoc Subcommittee;” and (3) If Desired, Appoint two PRCS Commission Members to the Newly Formed Ad Hoc Subcommittee.
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Meeting Date: December 3, 2024
Contact Person/Dept: Adam Ferguson/PRCS
Phone Number: (310) 253-6685
Fiscal Impact: Yes [] No [X] General Fund: Yes [] No []
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification: (E-Mail) Meetings and Agendas - Parks, Recreation and Community Services Commission (11/26/2024); (E-Mail) Parks, Recreation & Community Service Department Updates (11/26/2024)
Department Approval: Ted Stevens, PRCS Director (11/26/2024)
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RECOMMENDATION
Staff recommends that the Parks, Recreation and Community Services (PRCS) Commission (1) receive and file the report regarding the PRCS Department Fiscal Year 2024/2025 Adopted Budget; (2) consider forming a PRCS Commission “Recreation Programming and Rentals Fee Study Ad Hoc Subcommittee;” and (3) if desired, appoint two PRCS Commission Members to the newly formed Ad Hoc Subcommittee.
BACKGROUND
On April 2, 2024, the PRCS Commission finalized their Fiscal Year 2024/2025 budget recommendations to the City Council and authorized transmittal of the correspondence to the City Council (Attachment 1). Here is a summary of the funding status of the Commission’s recommendations:
• Personnel Enhancements - (Ongoing Cost)
o The addition of one Maintenance Worker I and one Irrigation Maintenance Technician position will allow PRCS to “provide comprehensive preventative maintenance [and] result in improved safety, lower repair costs, and extend useful life of our facilities and equipment.”
§ Status: PRCS received an additional Irrigation Maintenance Technician in the 2024/2025 budget. The Maintenance Worker I position was not funded.
• Upgrades to Culver West and Lindberg Park Playgrounds ($2,000,000)
o The Commission requested $2,000,000 “to redesign and rebuild Culver West and Lindberg Park playgrounds.”
§ Status: For the 2024/2025 budget, $600,000 was added to the CIP PP014 Park Playground Rehabilitation in addition to the $400,000 that will be utilized from the 2023/2024 budget for a total of $1,000,000. This funding is slated for the Culver West playground. For Lindberg Park, the goal is to begin community meetings during the 2024/2025 fiscal year to discuss that playground with residents, and then use funding of $1,000,000 in the 2025/2026 fiscal year and $1,000,000 in the 2026/2027 fiscal year to cover design and construction.
• Include Playground Maintenance in the PRCS operating Budget ($35,000)
o The PRCS Commission “suggest[ed] that a standing budget line item be incorporated into the PRCS operating budget to conduct regular inspections and sustain playground maintenance.”
§ Status: $110,000 was added to the CIP PP016 Playground Equipment Repair. Though it was not added to the operating budget, the City did increase the funding by a substantial amount.
• Fund In-house Youth Sports Programs (One-Time)
o PRCS Commission “recommend[s] that the Council provide support to develop and maintain these activities to ensure success in this endeavor.”
§ Status: This was funded with supplies and personnel in the Sports programs account (10130240).
• Ensure Compliance with California’s Model Water Efficient Landscape Ordinance (MWELO) (Multi-year)
o The PRCS Commission wants to “ensure the Department is meeting the City’s commitments to comply with the statewide MWELO.”
§ Status: This was funded in CIP PP026 MWELO Consultant for $85,000.
• Procurement and Delivery of Wood-grain Fiber City Wide (Ongoing)
o The PRCS Commission “also requests that Council considers an annual ongoing funding for continued maintenance of mulch citywide in order to comply with SB1383.”
§ Status: This was funded through the department’s reallocation of funds during the budget process. $44,000 was moved permanently into the Parks Division account (10130300.514100) to cover the purchase of wood-grain fiber.
The City of Culver City Fiscal Year 2024/2025 Budget was adopted by the City Council on June 12, 2024.
DISCUSSION
On August 6, 2024, the PRCS Commission agendized a report on the PRCS Department Fiscal Year 2024/2025 Adopted Budget, with the goal to begin budget discussions in preparation for the PRCS Commission’s budget recommendations to City Council. In addition, the PRCS Commission has requested in multiple meetings information of the City’s Fee Study and the department’s development of new fees.
PRCS Budget Overview
The PRCS Department Proposed Enhancements (Attachment 2) and the PRCS pages from the 2024/2025 Adopted Budget (Attachment 3) are provided because all of the City Manager’s Recommendations contained therein were approved by the City Council on June 12, 2024. The adopted budget for PRCS for 2024/2025 fiscal year is $13,116,390.00. The 2024/2025 adopted budget has a 2.9% increase from the previous year. The PRCS pages from the 2024/2025 Adopted Budget contains the following sections:
• Expenditure Summary- This shows an overall view of each divisions’ expenses.
• Listing of Regular positions- This shows the full-time positions budgeted within the department and which account within the budget the position is funded.
• Performance Measures- This shows the categories which the department’s performance is tracked.
• Detailed explanation of the department’s Work Plan Priorities.
• Expenditure Detail- This breaks down the expenditures for each division by category and budget code. The categories are Personnel, Operating and Maintenance, and Capital.
The pages from the Proposed CIP Budget relating to PRCS projects, including those done in collaboration with the Public Works Department, are provided as Attachment 4. In addition to the $2,376,000 new funding for projects, the 2024-2025 budget includes $4,198,979 in carryover funds that will help continue long-term projects.
Fee Study Background
In Fiscal Year 2005-2006, the City Council adopted Resolution No. 2006-053 to consolidate the City’s fees and charges into one document for improved fee assessment and streamlined management. In Fiscal Year 2006-2007, Council approved funds to hire a consultant to conduct an updated comprehensive study of the City’s programs to ensure that the City was utilizing the most current and best practice methodologies, analyze cost recovery across all departments as well as to ensure that the City was recovering an appropriate amount of revenues to support ongoing operations. The final comprehensive report was submitted and presented to Council on May 7, 2007, where Council ultimately adopted Resolution No. 2007-R024 establishing and amending the various fees and charges for services. The study conducted in Fiscal Year 2006-2007 was the first study conducted by the City in more than 15 years. Consequently, the fee adjustments adopted by City Council were significant in some cases, in other cases the fee increases where phased in over time to reduce the impact to the customer base, and in some limited cases the fees were not increased to full cost recovery due to economic and policy considerations related to the residents, individuals and businesses utilizing those services as well as the community.
Prudent financial management recommends that cost of services user fee studies be conducted every five to seven years. This ensures that cities use the most up to date methodologies, incorporate program process improvements and organizational and financial changes, and remain compliant with new regulations. On June 23, 2008, Council received and adopted a revised cost recovery policy for Fiscal Year 2008-2009 and an implementation schedule to phase in the user fee increases over the next few years.
Between Fiscal Year 2008-2009 and Fiscal Year 2012-2013, staff adjusted fees annually to achieve the cost recovery goals adopted by City Council. On May 13, 2013, Council adopted a resolution that made minor changes to various fees and charges for services as recommended by staff to address operational changes that occurred since the last fee study.
In Fiscal Year 2013-2014, the City entered into an agreement with a consultant to assist with conducting an updated comprehensive user fee and cost of services analysis. However, due to staff turnover at the executive management levels across multiple City departments, coupled with the later disruption caused by the 2020 pandemic, staff did not complete an updated comprehensive user fee study during the recommended five-to-seven-year period. During this time, staff also did not update the fees by Consumer Price Index (“CPI”) to align the fee increases with the increased cost of doing services, thus further exacerbating the gap between the City’s actual cost recovery and Council adopted targets.
The City Council’s Adopted 2018-2023 strategic planning goals included addressing the long-term financial stability of the City by reviewing existing revenue sources. This strategic goal was carried forward into the City’s Adopted Strategic Goals for 2024-2029. As key General Fund revenue sources, program user fees and regulatory permits were identified as revenue sources to be analyzed. In the past 10 years, the City has experienced significant increases in program costs coupled with changes in operational structure. In Fiscal Year 2022-2023, staff engaged NBS Government Finance Group (NBS) to assist the City with conducting an updated comprehensive user fee and cost of services analysis.
Current Evaluation of PRCS Fees
California municipalities may impose user and regulatory fees for services through provisions set forth in the State of California Constitution, Article XIII C 1(e). Under this legal framework, a fee may not exceed the reasonable cost of providing the service or performing the activity. In addition, Culver City Council Policy No. 5002 calls for a comprehensive user fee and cost of services study to ensure that fees continue to meet cost recovery targets.
The purpose of the User Fee Study is to calculate the full cost of providing each fee activity (including direct and indirect costs), and to provide Council with the data that supports a realignment of fee amounts with localized cost recovery policy recommendations. The full cost, or actual cost, as calculated by NBS, is the maximum that the City can legally charge for each fee related activity.
Finance staff worked with NBS and representatives from all City departments to prepare the User Fee Study. The Introduction and the PRCS Chapter from the User Fee Study is attached to the staff report for review (Attachment 5). The report includes the estimated total cost of providing each service, as calculated by NBS based on inputs from City departments, and a comparison to the City’s current fee structure. It also includes a new proposed fee equation to understand the full cost of PRCS programs.
The study identified over $24.4 million in eligible cost for recovery from fees for services, compared to about $13.3 million in revenues collected from fees. This results in a 54% Citywide cost recovery effective rate.
As can be seen in the Summary Cost Recovery Table (Attachment 6), PRCS accounts for lion’s share of the costs that are subsidized by other General Fund revenues. Subsiding recreation programs with General Fund revenues is a common practice across most cities as PRCS programs inherently provide some of the greatest and most visible benefits to the community. However, staff also recognizes the need to ensure prudent fiscal management, and with the Parks Master Plan being published for public review, PRCS is currently rethinking its cost recovery targets and subsidy policies. This fee study launched the evaluation of the department’s full costs for services for each primary program offered by PRCS. Now PRCS will review all their programs to develop and recommend policy goals for cost recovery versus subsidy. PRCS will undertake this robust process in calendar year 2025, will engage the PRCS Commission to ensure that the needs of the community are considered, and will return to City Council with recommendations on cost recovery rates and policy recommendations for their varied program offerings.
Staff is currently organizing work sessions with PRCS staff and other key City departments to discuss the current levels of PRCS fees, the community impact on raising fees, and how to balance subsidy and cost recovery goals equitably among all user groups. The PRCS Commission can consider forming a “Recreation Programming and Rentals Fee Study Ad Hoc Subcommittee.” Staff would request that members of the Ad Hoc Subcommittee attend working sessions with PRCS staff and other City departments in order to contribute to the discussion of the department fees. These working sessions will include discussions of subsidy, square footage analysis for rentals, cost analysis of recreation programming, and assessment of which program offerings to continue.
FISCAL ANALYSIS
Staff recommends that the PRCS Commission begin discussion on a letter to make recommendations and requests for the 2025-2026 fiscal year budget. It is also recommended that the PRCS Commission form the “Recreation Programming and Rentals Fee Study Ad Hoc Subcommittee” in order to allow more in-depth participation in the department’s fee analysis to support later recommendations to City Council.
ATTACHMENTS
1. 2024-12-03 - ATT 1 PRCS Commission FY 2024-2025 Budget Recommendations
2. 2024-12-03 - ATT 2 PRCS Pages from the FY 2024-25 Enhancements List
3. 2024-12-03 - ATT 3 PRCS Pages from the FY 2024-25 Adopted Budget Book
4. 2024-12-03 - ATT 4 Parks and Recreation Projects from the FY 2024-25 Adopted CIP Budget
5. 2024-12-03 - ATT 5 Introduction and PRCS Chapter from the Draft Citywide User Fee Study
6. 2024-12-03 - ATT 6 Summary Cost Recovery Table
7. 2024-12-03 - ATT 7 PRCS Budget and Fee Presentation Slides
MOTION
That the Parks, Recreation and Community Services Commission:
1. Receive and file the report regarding the Parks, Recreation and Community Services Departmental Fiscal Year 2024-2025 Adopted Budget;
2. Consider forming a Parks, Recreation and Community Services Commission “Recreation Programming and Rentals Fee Study Ad Hoc Subcommittee;” and,
3. If desired, appoint to Parks, Recreation and Community Services Commission Members to the newly formed Ad Hoc Subcommittee.