Fees and Charges Policy Guidelines
There is mixed and varying degrees of public acceptance of user fees. The public takes fees for some programs for granted but does not readily accept fees for other programs. The perfect user fee is one which the public will not resist paying.
For example, in some municipalities there is relatively little complaint about charges for swimming in indoor pools and yet, when an attempt is made to charge a modest fee for use of a neighborhood outdoor pool, it can quickly became a political issue.
No consistent pattern of user fee policy exists. In Canada. for example, while 93% of municipalities recently surveyed had some form of user fees for recreational programs, only 58%, had any formal policy at all.
Reasons cited for implementing user fees range from increasing costs to the fact that "other agencies charge''.
The eight most important reasons cited are:
1. increasing costs
2. budget restrictions
3. special services warrant charges
4. increasing demands
5. charges gain respect for the activities
6. services would not otherwise be available
7. charging aids discipline and control
8. other agencies charge fees
There is a strong difference between Canadian and American approaches to user fees. American municipalities tend to emphasize cost recovery while Canadians tend to argue that by financing programs primarily through general revenues they are allowing universal accessibility to programs and services while Americans tend to argue that equity requires that only the users should pay.
Canadian taxpayers tend to have a greater propensity to have programs and services financed through general-revenues than their American counterparts .
Evidence for this assertion may be found in the results of a study conducted by Canada Mortgage and Housing which found that, for many identified urban problems, a significant number of respondents were willing to have their taxes increased.
Nevertheless, of all 37 municipalities surveyed: (Canadian and American, the bulk of recreational costs were recovered through taxes with some money from grants and the remainder from fees.
PRINCIPLES INVOLVED IN ESTABLISHING USER FEES
As with any policy which governs our actions, there is a set of values and beliefs which for the basis of a User Fee Policy, whether we realize it or not. These values and beliefs for the rational behind the policy. However, the principles enunciated in the establishment of User fees more often. than not contradict' each other and reflect and reflects very different and conflicting values and beliefs about Recreation. Take for example the following list:
1. Users should pay: Those who use a recreational facility should contribute more to its upkeep than those who do not. This statement implies that recreation is primarily a commodity for consumption.
2. Ability to pay: Top consideration should be given to participants ability to pay. This principle implies that recreational facilities and programs should be accessible to all and, by extension, are public services. This principle conflicts with the previous one.
3. Active vs. passive use: User Fees should be confined to facilities where there is active use incurring costs. This would imply charging for ball diamonds, for example, but not for the use of parks. The assumption appears to be that passive use has greater social value than active use, although evidence for this is not clear.
4. Subsidies should be consistent: Subsidies of recreational facilities should be universally applied to all facilities of a similar nature. Restated, this principle could also mean that surcharges should not be applied to some facilities if they are not applied to all similar facilities.
5. Historic patterns should be considered: In other words, if some programs have received subsidies or surcharges in the past they should continue to do so. This principle contradicts the previous one.
6. Users of one facility should not be charged more than the cost in order to subsidize another facility. The assumption is that this. would be unfair to the users of the first- facility. The implication is that a municipality has a responsibility to be equitable in its treatment of its citizens. This principle contradicts the previous one and the following one.
7. Some facilities should be profit making. For example, concession stands located in stadiums are expected o be profitable-kin to subsidize the stadium. Liquor outlets often serve the same purpose. This principle represents an exception to the previous principal.
8. All costs including capital costs should be recovered v. operating costs only should be recovered. If all costs are to be recovered, the fees would normally be too high to make a facility viable. The implication would be that there are no social benefits to be financed through general revenues. On the other hand, if only operating costs are to be recovered, then the fees tend to be prohibitive for lower income participants.
Among the municipalities with a user fee policy, there appears to be two basic approaches:
1. User fees based on characteristics of particular user groups.
2. User fees based on:
A.) degree of social benefits; Basic programs and deserving of subsidies
B.) private consumption (public good); Basic programs and not deserving of subsidies
The inherent problem with using characteristics of particular user groups to establish fees is that within the traditional categories of users, e.g. Seniors, Adults, People with Disabilities, Students, etc. there exists today, varying degrees of need and, therefore, support required within any of these categories. As many of us realize, there are older adults who require less financial assistance or support than some young adults who are single parents, unemployed, etc.
It is becoming more and more obvious that we have to find a way to develop a system which establishes a User Fee Policy which is based on the participants' ability to pay.
There are still many Parks and Recreation agencies who do not have a comprehensive consistent User Fee Policy and therefore, no rationale, guidelines or process for developing user fees for programs/services, or for reviewing and establishing annual user fee schedules.
As a result, several major problems have developed and you may be able to identify with some of these problems:
1. Current fees are not related to sound policy objectives as outlined in the agency's Statement of Purpose (Mission Statement).
2. In some cases, fees are so large that they are counter-productive to program objectives. n other areas, revenue may be lost because of undercharging.
3. City Council, on occasion, may find itself under pressure by special interest groups to charge less than the appropriate fee for given programs.
4. Fees are not related to public preferences in community.
5. Fees are set annually without a comprehensive guideline which tends to make the process cumbersome, arbitrary and inconsistent.
6. Fees are not consistent with the principles of accessibility and equity.
PURPOSE OF USER FEES
Why do you use a system of User Fees? What purpose do they serve?
The following list outlines some of the purposes stated by Parks and Recreation Agencies for implementing User fees:
To avoid abuse; to decrease demand for over-used facilities; to regulate peak period demand; to have a means or excluding inappropriate behavior; to have a means of recording participation. Fees in this category are often token and do not necessary reflect costs. Relevant principles include considerations of ability to pay, equity, social values and accessibility .
In implementing regulatory fees, several things must be considered.
The precise purpose of the regulation, should be identified. The fee level should then be set at the point where the cost of administration of the fees are met. If this costs falls below the ability of all participants to pay, then it can be implemented. If not if a significant number of participants cannot afford the fee, then alternative means for meeting the same objective must be found.
(b) Recovery of Operating Costs
This usually means direct staff costs, material and equipment costs. There is no agreement in the literature about whether or not administrative or regulatory costs should be recovered as part of operating costs. It should be noted that capital costs are born by all taxpayers but only those who can afford to use the facilities e the benefits.
The value position is taken here that facilities and programs which confer social benefits should be financed out of general revenue for reasons of equity and accessibility.
(c) Recovery of Operating and Capital Costs
Fees used for this purpose imply that a municipality sees itself as a non-profit entrepreneur (at lest as far as that particular service is concerned). It allows municipalities to meet demands for programs which would not normally be seen as public services. This purpose is usually stated as "If you want it, we'll put it on if you'll pay for it. This is probably the area where municipalities potentially compete most direct it. private enterprise. It is for this reason that such initiatives are usually conducted under conditions of market failure. A good example is; the response of municipalities in the area of low income housing a, a result of the inability of private enterprise to meet current, needs. Municipalities should only adopt this strategy in cases of market failure in the private production of leisure services. The assumption is that social benefits in programs of this type are indirect and could as easily be conveyed through the market.
(d) Additional Revenue Not Tied to Costs
This, in effect, represents a means of direct taxation similar to sales tax or property tax. Ability to pay or relationship to income are not directly considered. This method of tax collection has received considerable criticism lately because of its regressive nature.
The purpose is to prevent or discourage certain groups or classes of people from using facilities. For example, charging high rates for golf courses might effectively restrict usage to middle and upper income earners at the expense of lower income earners or at the expense of youths. This use of charges conflicts with the spirit of human rights legislation and with current social value. On occasion, user fees have an exclusionary effect even when instituted for another purpose.
(f) Recover of Private Consumption Portion of Program/Facility
Many programs/facilities represent a mixture of social benefits and benefits which accrue only to the user. he goal of user fees here would be to recover that portion of the service which represents a purely private benefit.
If we examine this list, it is obvious that the setting of User Fees must be tailored to the specific purpose or which they re intended.
To be consistent, the purpose of implementing a User Fees Policy should be reflective of the community's values and beliefs and the principle(s) regarding the use of user fees. For example, if your Agency operates according to the principles of accessibility and equity, then a User Fee Policy should reflect these principles. The user fees should not create or add to the barriers to participation.
The Blaine County Recreation District
Recreation Master Plan
BLAINE COUNTY RECREATION DISTRICT FEES & CHARGES POLICY
The Blaine County Recreation District has developed a written fee policy in order to create a fair and organized method of setting fees.
All programs must cover their operating and maintenance costs both direct and indirect) to the extent possible Program participants where the major beneficiaries of programs, should pay for the bulk of program cost.
Categories have been created for the recreation programs in order to determine which programs must cover total or partial expenditures. These are minimum recovery rates: :
Partial Support - l00% of Direct & 55% Indirect Costs
All youth programs
Aquatic Center Facility
Total Support - 100% of Direct & 85% Indirect costs
All adult programs
Special events .
Direct Costs Include: Necessary program personnel, facility rental, program equipment, advertising, special insurance.
Indirect Costs include: Maintenance, office operations and supplies, administration, telephone, major capital equipment expenditures.
1. The Recreation District should recover a minimum of 55% of its total costs in revenue generated through fees and charges.
2. Total direct revenue from all recreation programs shall not fall below a 100% recovery of total direct costs.
3. The Recreation District will charge for all School District gymnasium and room use at the current rates.
[Class] [Project Guidelines]
Copyright 2001 Northern Arizona University, ALL RIGHTS RESERVED