AUDIT OF COMMUNITY SERVICES DEPARTMENT CLASS COST RECOVERY

OCTOBER 2006

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City of Palo Alto Office of the City Auditor October 17, 2006 Honorable City Council Attn: Finance Committee Palo Alto, California AUDIT OF COMMUNITY SERVICES DEPARTMENT CLASS COST RECOVERY The Community Services Department (CSD) offers classes on a broad range of topics to the public. These classes include recreation and sports, art and theater, dance, music, and numerous camps. In FY 2004-05, about 21,000 participants enrolled in about 2,600 classes. Like other cities, CSD charges fees for classes. Prices depend on the type and duration of the class. The purpose of our review was to determine to what extent the fees charged cover the cost of offering the classes. CSD classes recovered a significant portion of their costs in FY 2004-05, but even so, the General Fund subsidy for classes was about $757,000. Overall, CSD classes recovered about $2.1 million of their $2.9 million cost. Classes recovered about 97% of their direct costs and 73% of their full costs (including departmental and citywide overhead and facilities costs). Full costs were not recovered for most categories of classes – full cost recovery levels ranged from 11% to 102%. Overall, Arts/Culture classes recovered a higher percentage of full cost (79%) than Recreation, Open Space and Sciences classes (71%); and Youth/Teen classes recovered a higher percentage of full cost (75%) than adult classes (69%). The City lacks a policy that specifies cost recovery targets for various types of classes. We recommend the City Council adopt a policy that includes targets for various types of classes and specifies whether prices should be set to recover the full cost of certain types of classes or whether it is the desire of the community to subsidize certain kinds of classes. CSD should also annually review cost recovery by class category. Data from such a review should be used to adjust pricing in accordance with the adopted policy that takes into account relevant factors such as market pricing, likely enrollment, and overhead costs. The large number of refunds and transfers impacts staff workload. In FY 2004-05, staff processed about 1,000 refunds and 2,000 transfers. One reason was that nearly 10% of classes that were offered were later cancelled – often due to insufficient enrollment. This increases workload and administrative costs. We recommend tracking and reducing the number of refunds, transfers, and cancelled classes. Minimum enrollment targets were not consistently met. Not meeting minimum enrollment could impact cost recovery. However, even when minimum enrollment targets were met, it was not clear they were established to achieve a certain level of cost recovery. We recommend that the Department

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establish minimum enrollment levels that relate to cost recovery goals, and document the criteria that will be used to decide to offer a class that doesn’t meet its minimum enrollment. The differential that Palo Alto charges for nonresident class participants is generally lower than that of several nearby cities. About 16% of class registrants are nonresidents. Palo Alto may be able to increase the price differential for some classes while taking into account market pricing and reliance on nonresident enrollment. Our report includes a total of 8 recommendations to improve class program cost recovery. We will present this report to the Finance Committee on October 17th. Staff has reviewed the information in this report and the City Manager’s response is attached. We thank the staff in Community Services, Administrative Services, and other participating departments for their cooperation and assistance during our review. Respectfully submitted,

Sharon W. Erickson City Auditor Audit staff: Renata Khoshroo, Senior Auditor

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TABLE OF CONTENTS

Cover Letter 1 Introduction 5 Background 5

• Organization and Staffing 6 Audit Scope and Methodology 7 CSD classes recovered a significant portion of their costs in FY 2004-05 but even so, the General Fund subsidy for classes was about $757,000

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Class programs recovered about $2.1 million of their $2.9 million cost 8 • Only “classes” are included in this analysis 9

Full costs were not recovered for most categories of classes 9 • Overall, youth/teen classes recovered a higher percentage of full cost (75%)

than adult classes (69%) 11

A cost recovery policy would facilitate price setting 12 Annual cost recovery analysis and more consistent price setting practices needed 13 A large number of refunds and transfers impact workload 15 An estimated 1,000 refunds and 2,000 transfers in FY 2004-05 increased workload 15

• Reducing refunds and transfers would reduce workload 15 Cancelled classes increase the number of refunds 16 CLASS system not closed timely 17 Minimum enrollment targets were not consistently met 18 Classes were sometimes offered even if minimum enrollment levels were not met 18

• Even when minimum enrollment targets were met, it was not clear they were established to achieve a certain level of cost recovery

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The differential that Palo Alto charges for nonresident class participants is lower than that of several nearby cities

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Palo Alto’s nonresident differential is generally lower than that of surrounding cities 19 Conclusion 21 Recommendations 21 CITY MANAGER’S RESPONSE 23 Appendix A: Allocation Methodology 27 Appendix B: Revenues and Costs of Classes Sorted by Recreation, Open Space and

Sciences and Arts and Culture (FY 2004-05) 28

Appendix C: Revenues and costs of Classes Sorted by Adults and Youth/Teen (FY 2004-05)

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Appendix D: Comparative Hourly Class Prices 30 Appendix E: Fee Reduction Subsidy by Class Category 32 Appendix F: Resident/Nonresident Enrollment Data 33 Appendix G: City of San Mateo Cost Recovery Plan 34

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LIST OF EXHIBITS

Exhibit 1: Class Enrollment FY 2000-01 through FY 2004-05 5 Exhibit 2: CSD Organization Chart Showing Divisions/Programs That Offer Classes 6 Exhibit 3: Summary of Costs and General Fund Subsidies 9 Exhibit 4: FY 2004-05 Percent of Costs Recovered by Type of Class 11 Exhibit 5: FY 2004-05 Percent of Costs Recovered by Participant Age 12 Exhibit 6: Refund and Transfer Fees in Nearby Cities 16 Exhibit 7: Cancelled Classes as a Percent of Total Classes Offered (FY 2004-05) 17 Exhibit 8: Percent of Class Registrants Who Were Nonresidents (FY 2000-01 through

FY 2004-05) 19

Exhibit 9: Nonresident Differential for Class Prices 20 Exhibit 10: Resident/Nonresident Percentages in FY 2004-05 Art Classes 20

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Introduction

In accordance with the 2005-06 Annual Audit Plan, the City Auditor’s Office has completed an audit of cost recovery for the Community Services class program. The purpose of our audit was to determine the income/subsidy of class programs net of direct and indirect costs. Our audit was conducted between February and July 2006 in accordance with government auditing standards. The City Auditor’s Office would like to thank the staff of Community Services, Administrative Services, and other participating departments for their cooperation and assistance during our review.

Background

The Community Services Department (CSD) offers classes on a broad range of topics to the public. These classes include recreation and sports, art and theater, dance, music, and numerous camps. CSD publishes the Enjoy! catalog quarterly that offers a broad range of classes for all ages. In FY 2004-05, CSD offered about 2,600 classes1. Approximately 21,000 participants2 enrolled in these classes, about 16% (or 3,360) of whom were not Palo Alto residents. Exhibit 1: Class Enrollment FY 2000-01 through FY 2004-05

Camps

Youth (excluding

camps) AdultsPre-

school TOTAL FY 2000-01 5,837 4,302 4,963 3,792 18,894 FY 2001-02 6,626 5,131 5,157 3,814 20,728 FY 2002-03 7,011 4,681 5,323 3,980 20,995 FY 2003-04 7,270 5,165 6,070 4,160 22,665 FY 2004-05 6,601 4,862 5,676 3,764 20,903 Source: Service Efforts and Accomplishments Report FY 2004-05 Recreation programs and classes were rated favorably by community participants in an annual survey of customer satisfaction by the City Auditor’s Office. The percent of respondents rating recreation programs and classes as “good” or “excellent” was 87%, 86%, and 83% in fiscal years 2004-05, 2003-04 and 2002-03, respectively. Palo Alto’s survey responses ranked in the 93rd percentile in comparison to other jurisdictions in 2004-05. The percent rating the range and variety of recreation programs and classes as good or excellent was 84% in 2004-05, placing Palo Alto in the 95th percentile in comparison to other jurisdictions.

1 “Class” for purposes here means sections of a class. For example, if three sections of a Beginning Watercolor class are offered, each section is considered a class. 2 “Participant” for purposes here means a person who enrolls in a given class. If someone enrolls in a Summer class and a Fall class, that person would count as two participants.

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Organization and Staffing Class offerings span several CSD Divisions including Recreation and Youth Sciences, Arts and Culture, Open Space. At least 8 regular full-time equivalents (FTE) in CSD are directly involved in offering classes. Twenty temporary FTE are also directly involved. In addition, staff from other Departments provide administrative support. All CSD Divisions are impacted by classes, even if they do not offer them directly because classroom and athletic field space Department-wide is used for classes.

Exhibit 2: CSD Organization Chart Showing Divisions/Programs That Offer Classes3

The nine-member City Council has budgetary authority for CSD by approving an annual budget. The seven-member Parks and Recreation Commission, appointed by the City Council, consists of Palo Alto residents who serve three-year terms. The purpose of the commission is to “advise the city council on matters relating to the activities of the parks and golf division and the Recreation, Open Space and Sciences

3 Organization chart shows organization that began in FY 2005-06. Prior to FY 2005-06, Recreation, Open Space and Sciences were a single division. Shaded boxes indicate divisions and functional areas that offer classes.

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division of the community services department, excluding daily administrative operations.”

Audit Scope and Methodology Our audit objective was to determine the income/subsidy of class programs net of direct and indirect costs. To address the audit objective, we worked with CSD to identify direct class-related costs and revenues for various types of classes and compile direct and indirect cost data on categories of classes. We extracted data from the SAP accounting system and from the CLASS system, a system that CSD uses to manage registration and other class-related data. We interviewed staff and reviewed key CLASS reports to understand how the systems relate to each other. Since CLASS and SAP have different year-end cutoff points, we reviewed full-year data from both to gain reasonable assurance of data integrity and that differences in data were due to timing. We reviewed class enrollment data for FY 2004-05 (the most recent full year available), including data on refunds and transfers. We analyzed enrollment data with regard to minimum enrollment targets. We reviewed prices charged to residents and nonresidents in Palo Alto and other nearby cities. We also reviewed controls over cash collections at Lucie Stern, where most class registrations are processed.

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CSD classes recovered a significant portion of their costs in FY 2004-05 but even so, the General Fund subsidy for classes was about $757,000

The City spends about $2.9 million providing 18 broad categories of classes. Overall, CSD classes recovered 97% of their direct costs and 73% of their full costs in FY 2004-05. Even with this high level of cost recovery, a $757,000 General Fund subsidy was required to cover full costs. Eight of 18 categories of classes fully recovered their direct costs; only one category achieved full cost recovery.

Class programs recovered about $2.1 million of their $2.9 million cost

In FY 2004-05, spending on classes totaled about $2.9 million. Class-related costs fall into three categories:

• Direct costs (about $2.2 million) – Direct costs are those costs that would go away if the class were not offered. An example of a direct cost is the amount paid to the instructor who teaches the class.

• Departmental indirect costs (about $296,000) – An example of a departmental indirect cost is the cost of an administrative support employee, a portion of whose time is spent on class registrations. Allocations of utility costs and departmental administration are also in this category.

• Citywide indirect costs (about $388,000) – Citywide indirect costs are the portion of citywide administrative and facility maintenance costs related to CSD classes.4 An example would be support provided by Human Resources for the hiring of a temporary employee to teach swimming lessons. Another example would be the maintenance of classrooms.

CSD charges fees for classes. Prices depend on the type and duration of the class. CSD charges about 15% more for nonresident participants than for residents. In FY 2004-05, class program revenue totaled about $2.1 million, or nearly 97% of direct costs. However, as shown in Exhibit 3, the resulting General Fund subsidy was about $74,000 of direct costs, plus about $296,000 in departmental indirect costs, plus about $388,000 in Citywide indirect costs, for a total General Fund subsidy of about $757,000.

4 The City allocates the costs of its administrative departments through “cost plan charges.” This includes a portion of costs in the Administrative Services department, Human Resources department, the City Auditor’s Office, the City Attorney’s Office, the City Clerk’s Office and the City Manager’s Office. This also includes Public Works maintenance costs of CSD buildings.

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Exhibit 3: Summary of Costs and General Fund Subsidies

Direct costs

Departmental indirect Costs

Citywide indirect costs TOTAL

City costs $2,169,145 $295,610 $387,528 $2,852,283Less fee revenue $2,095,256 $0 $0 $2,095,256

Net General Fund subsidy $73,789 $295,610 $387,528 $756,927 For low-income class participants, CSD offers the Fee Reduction Program. In FY 2004-05, fee reduction participants received class price discounts totaling about $267,000. In the prior year (FY 2003-04), the fee reductions totaled about $238,000. Beginning in FY 2005-06, however, the City began a tiered program that provides a 25%, 50% or 75% price reduction based on income. Previously (including in FY 2004-05) the City granted a 75% price reduction to all qualified participants. As a result of this change the FY 2005-06 fee reduction amount totaled $70,314. Appendix E shows the breakdown by class category.

Only classes are included in this analysis It should be noted that the Department provides a number of free or very low cost activities. Those activities are not included in this analysis. For example, the Children’s Theatre staff, participants, and facilities used for Theatre classes are also used for Theatre productions. However, the productions are not considered “classes” because participant fees are not charged and participants do not register through the CLASS system. For example, the Children’s Theatre spent about $1.2 million in FY 2004-05, of which about $91,000 was for direct costs related to providing classes. Total revenue for the Theatre was about $248,000 of which about $66,000 was from classes. Similarly, the cost of swimming instructors and the pool costs associated with swimming classes are included here, but the costs and revenues associated with “drop-in swim” (which is not considered a class) are not. While CSD classes may reflect a high level of cost recovery, these free or low-cost programs are typically not considered on the “cost recovery radar” but contribute to CSD’s expenditures.

Full costs were not recovered for most categories of classes

CSD classes can be organized in 18 broad categories.5 In FY 2004-05, of the 18 categories of classes, one category recovered full costs (children’s studio classes), and one category recovered 96% of full costs (youth/teen special classes). The full cost recovery levels for all categories ranged from 11% to 102% with an overall cost recovery of 73%. In total, the General Fund subsidized class programs by $756,927. When just direct costs are considered, eight categories (six in Recreation, Open Space and Sciences and two in Arts/Culture) recovered their costs. Cost recovery levels ranged from 22% to 122% with an overall cost recovery of 97%. Arts and Culture

5 See Exhibits 4 and 5.

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classes recovered 79% of full costs; Recreation, Open Space and Sciences classes recovered 71%. Exhibit 4 shows the recovery levels by class categories. There were 13 categories of Recreation, Open Space and Sciences classes. None recovered full costs, although youth/teen special classes recovered 96% of full cost. Recovery levels ranged from 11% to 96%, with an overall level of 71% on a full cost basis. Six of the 13 categories recovered their direct costs, with recovery levels ranging from 22% to 121%. The overall direct cost recovery for Recreation, Open Space and Sciences classes was 96%. The overall subsidy for Recreation, Open Space and Sciences classes was about $597,000. There were five categories of Arts and Culture classes. Of the five, one recovered full costs (children’s studio classes). Full cost recovery levels ranged from 55% to 102%, with an overall full cost recovery level of 79%. When just direct costs are considered, two of the five categories recovered their costs. Direct cost recovery levels ranged from 72% to 122%, with an overall direct cost recovery level of 98%. The overall subsidy for Arts/Culture classes was about $160,000.

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Exhibit 4: FY 2004-05 Percent of Costs Recovered by Type of Class

Direct costs

Direct costs plus

departmental indirect costs Full cost6

Income/

(subsidy) (based on full cost)

Recreation, Open Space and Sciences Jr. Museum and Zoo Classes 110% 89% 75% ($26,997)Therapeutics – Special Needs 22% 14% 11% ($44,422)Foothills Park Interpretation 52% 34% 24% ($22,008)Middle School Athletics 53% 43% 36% ($159,593)Baylands Interpretation 73% 62% 53% ($26,687)Sports – Youth/Teen Camps 88% 81% 74% ($75,732)Teens – Youth/Teen Programs 95% 69% 59% ($52,271)Jr. Museum and Zoo Camps 97% 88% 80% ($39,205)Day Camps 103% 92% 85% ($28,720)Aquatics – Youth/Teen 106% 96% 66% ($61,171)Aquatics 110% 61% 33% ($7,945)Special Classes – Youth/Teen 115% 105% 96% ($16,795)Special Classes -- Adult 121% 92% 79% ($35,790)

Recreation, Open Space and Sciences - Overall 96% 82% 71% ($597,336)

Arts and Culture Children’s Performing Arts 72% 66% 55% ($54,180)Children’s Music/Dance 82% 80% 69% ($29,217)Adult Performing Art 85% 75% 57% ($59,909)Studio/Classes 104% 100% 90% ($20,671)Children’s Studio Classes 122% 116% 102% $4,386

Arts and Culture - Overall 98% 93% 79% ($159,591)

Grand Total 97% 85% 73% ($756,927)

Appendix B shows more detail about the revenue, direct cost, departmental indirect cost, citywide indirect cost, total cost, and income/(subsidy) of classes sorted by type of class. Overall, youth/teen classes recovered a higher percentage of full cost (75%) than adult classes (69%) From the perspective of participant age, six categories included classes for adults. None of the six recovered their full costs. Full cost recovery levels ranged from 11% to 90%, with a 69% overall recovery level. Three of the six categories recovered their direct costs. Direct cost recovery levels ranged from 22% to 121%, with an overall direct cost recovery of 98%. The overall subsidy for classes for adults was about $191,000.

6 Full cost means direct costs plus departmental indirect costs plus Citywide indirect costs.

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Twelve categories of classes were for youth and teens. One of the 12 categories recovered its full costs (children’s studio classes). Full cost recovery levels ranged from 36% to 102%, with an overall recovery level of 75%. Five of the 12 recovered their direct costs. Direct cost recovery levels ranged from 53% to 122%, with an overall direct cost recovery level of 96%. The overall subsidy for classes for youth and teens was about $566,000. Exhibit 5 shows the percent of costs recovered by participant age.

Exhibit 5: FY 2004-05 Percent of Costs Recovered by Participant Age

Direct costs

Direct costs plus

departmental indirect costs Full cost

Income/

(subsidy) (based on full cost)

Adults Therapeutics – Special Needs 22% 14% 11% ($44,422)Foothills Park Interpretation 52% 34% 24% ($22,008)Adult Performing Art 85% 75% 57% ($59,909)Aquatics 110% 61% 33% ($7,945)Special Classes -- Adult 121% 92% 79% ($35,790)Studio/Classes 104% 100% 90% ($20,671)

Adults – Overall Total 98% 83% 69% ($190,745) Youth and Teens Jr. Museum and Zoo Classes 110% 89% 75% ($26,997)Middle School Athletics 53% 43% 36% ($159,593)Children’s Performing Arts 72% 66% 55% ($54,180)Baylands Interpretation 73% 62% 53% ($26,687)Children’s Music/Dance 82% 80% 69% ($29,217)Sports – Youth/Teen Camps 88% 81% 74% ($75,732)Teens – Youth/Teen Programs 95% 69% 59% ($52,271)Jr. Museum and Zoo Camps 97% 88% 80% ($39,205)Day Camps 103% 92% 85% ($28,720)Aquatics – Youth/Teen 106% 96% 66% ($61,171)Special Classes – Youth/Teen 115% 105% 96% ($16,795)Children’s Studio Classes 122% 116% 102% $4,386

Youth and Teens – Overall Total 96% 86% 75% ($566,182)

Grand Total 97% 85% 73% ($756,927) Appendix C shows more detail about the revenue, direct cost, departmental indirect cost, citywide indirect cost, total cost, and income/(subsidy) of classes sorted by adults and youth/teens.

A cost recovery policy would facilitate price setting One reason pricing classes is a challenge is that the City lacks a cost recovery policy

that specifies cost recovery targets for various types of classes. A policy would provide staff with guidance regarding community priorities and goals. For example, it would

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provide direction about whether the City should be recovering the full cost of certain classes offered or whether it is the desire of the community to subsidize certain kinds of classes.

In April 1990, a consultant’s report on Citywide cost allocations and user fees included

a recommendation for “setting cost recovery goals and reviewing those goals and adjusting fees annually, increasing the 1991-92 fees for an estimated inflation amount, rounding individual fees up or down as appropriate to retain a reasonable fee amount...”

In June 1990, the City Council adopted this Citywide policy but it is not in use. The

Recreation staff sets budgetary targets for its programs and program coordinators price classes to try to meet those goals. The practice is based on staff judgment rather than on a Council-adopted policy and does not occur in other divisions that offer classes. An updated CSD cost recovery policy would provide staff with clear direction about how to price classes.

For example, in 2004, the City of San Mateo adopted a cost recovery policy and

methodology for recreation services that has become a regional model. The policy states that “specific cost recovery thresholds shall be established for each recreation activity area at the most specific programming level that is administratively practical.” It further states that the thresholds shall include both minimum and target levels of recovery. The policy provides a framework as well as flexibility. We believe such a policy would be beneficial in Palo Alto. San Mateo categorizes its class-related expenses into five types7 and then prepares an annual cost recovery plan. In the plan, minimum and target cost recovery levels are set for each kind of class (summer play camps, adult music/drama, etc.). Palo Alto could similarly adopt minimums and targets based on the three categories (direct, indirect, full) identified in this report. For example, swimming lessons might have a minimum recovery level of 75% of direct costs and a target level of all direct costs. Appendix G shows San Mateo’s cost recovery plan.

RECOMMENDATION #1: CSD should propose and the City Council should adopt a cost recovery policy that includes cost recovery goals for broad categories of Community Services classes. Included for each category should be: (1) a minimum level of acceptable cost recovery (2) a target level of cost recovery, and (3) other fee-setting considerations. The policy should take into consideration direct, indirect, and overhead costs.

Annual cost recovery analysis and more consistent price setting practices needed

At the start of a fiscal year, the Recreation and Youth Sciences Division (REYS)8 budgets for anticipated cost recovery by program.

7 San Mateo’s expense categories are: (1) direct (2) program direct overhead (3) facility overhead (4) operating indirect overhead (5) facility indirect overhead. In Palo Alto, the categories we identified in the audit could be used (direct costs, departmental indirect costs, Citywide indirect costs). 8 In FY 2005-06, the Community Services Department reorganized and created the Recreation and Youth Sciences Division (REYS). Open Space became its own division.

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Assuming the City adopts a cost recovery policy, the Department should review actual cost recovery annually and document revenues, direct costs, departmental indirect costs, and Citywide indirect costs for broad categories of classes. CSD should adjust prices based on the results of the annual review, the City’s plan, and market pricing. If changes to the policy are warranted, revisions could be noted in the annual Municipal Fee Schedule. A description of the methodology we used to allocate costs is included in Appendix A for future reference. The Department may be able to better utilize SAP (the City’s accounting system) categories to expedite such calculations by isolating class costs into their own categories. RECOMMENDATION #2: The Community Services Department should annually review and document actual cost recovery results for broad categories of classes. Data from such a review should be used to adjust pricing in accordance with City’s cost recovery plan and other relevant factors.

CSD lacks department-wide practices for setting individual class prices. In general, CSD staff make decisions about class pricing after consulting with the instructor. REYS program coordinators fill out a template to calculate class prices, based on budgetary targets. Arts and Culture does not have such a template. For purposes of consistency and to track pricing assumptions against actual outcomes, Department-wide templates should be developed and specify the factors to be taken into consideration in setting class prices, suggest possible methodologies, and require documentation of assumptions in setting prices. The templates should provide a framework that is flexible enough to take differences among programs and classes into account.

RECOMMENDATION #3: The Community Services Department should: (1) set prices that take into consideration the cost recovery policy adopted by the City Council (2) provide staff with updated templates to facilitate price-setting; and (3) retain price-setting templates to document the assumptions underlying pricing decisions.

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A large number of refunds and transfers impact workload

In FY 2004-05, staff processed about 1,000 refunds and 2,000 transfers. One reason was that nearly 10% of classes that were offered were cancelled – often due to insufficient enrollment. This increases administrative costs. We recommend tracking and reducing the number of refunds, transfers, and cancelled classes.

An estimated 1,000 refunds and 2,000 transfers in FY 2004-05 increased workload

CSD does not compile precise data on refunds but we estimated that the Department issued about 1,000 refunds in FY 2004-05 to class participants. This means about five percent of all class participants received a refund.

When participants change their mind about taking a class, they pay a $12 processing fee and receive a refund. If the City cancels the class, no fee is charged and a full refund is issued. If the participant paid for the class by credit card, then a refund is issued against the same credit card. CSD handles these transactions. If the participant paid for the class by check, the Administrative Services Department (ASD) issues the refund check. Available data did not allow us to identify how many refunds were by check but CSD staff estimates it is about 20%. (CSD staff further estimates that about 40% of class registrations now occur online.) ASD estimates that it costs about $29 to issue a check. If 20% of the refunds issued in FY 2004-05 were by check, the City would have spent $5,800 issuing refunds. While the $12 processing fee would have offset some of this expense, the fee is not charged if the City cancels the class.

To retain class participants, the City encourages transfers between classes prior to the second class meeting. No fee is charged to transfer and the paperwork is handled by CSD. In FY 2004-05, an estimated 2,000 participants transferred classes. This represented about 10% of all class participants. Reducing refunds and transfers would reduce workload Reducing both refunds and transfers would reduce workload for CSD as well as ASD workload by reducing check-issued refunds. Starting in Fall 2006, CSD will implement a new policy for customer-initiated cancellations (refunds) and transfers. The policy will require written notice at least five days before the start date of the class. According to the policy, requests for refunds and transfers will not be honored without the written notice. Similarly, for summer camps, participants may receive 50% refunds up until 2 weeks before a camp begins. After that, no refunds will be granted. Transfers will be allowed into an activity that a child has been on a waiting list for. CSD staff notes that one goal is to improve customer satisfaction.

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The City of Sunnyvale offers a program called Try It! in which participants can buy a $5 pass to try out the first session of selected classes. If they like the class and choose to enroll, the $5 fee is credited towards their enrollment. If they decide not to enroll, they simply paid the $5 for one session and the City did not have to process an enrollment and then subsequently process a transfer or withdrawal. Creative ideas like this could be used in Palo Alto to reduce the volume of refunds and transfers.

The City could consider increasing the refund processing fee or implementing a transfer fee. However, only one nearby city charges a refund processing fee higher than Palo Alto’s (Menlo Park charged $15) as shown in Exhibit 6. Two cities charge a $5 transfer fee.

Exhibit 6: Refund and Transfer Fees in Nearby Cities

Refund fee Transfer feeSan Mateo None None Mountain View $5 None Santa Clara $5 $5 Redwood City $5 None Sunnyvale $109 $5 PALO ALTO $12 None Menlo Park $15 None

RECOMMENDATION #4: The Community Services Department should reduce refunds and transfers, and track the number of refunds and transfers processed as a workload measure in the annual budget. The Department should identify creative ways to reach the goal. Possibilities include a processing fee for transfers and a “try out” class pass.

Cancelled classes increase the number of refunds In FY 2004-05, 10% of classes CSD originally offered were cancelled. Exhibit 7 shows the breakdown by quarter. Minimizing cancellations would reduce workload for both CSD and ASD. The most common reason for cancellations was insufficient enrollment. In an interview with staff from the City of Mountain View, they stressed that they try to keep cancellations below about 7% because planning and then cancelling a class adds significantly to their workload. To minimize cancellations, they said they carefully assess the potential demand for a new class.

9 Sunnyvale does not charge the fee for refund requests made more than 14 days before the start of a class. Between 13 days and the day before the second class, the $10 processing fee is charged.

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Exhibit 7: Cancelled Classes as a Percent of Total Classes Offered (FY 2004-05)

ENJOY! Catalog

Number of classes cancelled

Percent of classes cancelled

Summer 2004 47 14% Fall 2004 65 13% Winter 2005 59 15% Spring 2005 77 6%

TOTAL 248 10% RECOMMENDATION #5: The Community Services Department should reduce the number of cancelled classes, and should track the percentage of classes offered that are cancelled as a performance measure in the annual budget.

CLASS system not closed timely

The CLASS system is the registration and payment system CSD uses for its classes. After each quarter ends, the classes in that quarter are sometimes not closed out for a significant period even though the classes have ended. In April 2006, classes from FY 2004-05 remained open in the system. Staff explained that this was to allow flexibility in processing requests for refunds for people who registered for a class but did not attend and might request a refund up to a year later. Granting refunds long after the fact was not a common practice, but it was cited as the explanation for why the classes remained open. Leaving the system open for such adjustments creates a risk for fraud as does granting refunds long after a class has finished. CSD should instead follow its stated policy of not granting refunds after the first class session (which will change in Fall 2006 to requiring 5 business days written notice before the class starts to get a refund). RECOMMENDATION #6: CSD should decide on a reasonable amount of time that classes should remain open in the CLASS system after a quarter ends, and ensure that the system is closed timely.

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Minimum enrollment targets were not consistently met

CSD sets class-size minimums, but sometimes offers classes even if minimum enrollment levels were not met. We recommend minimum enrollment levels be tied to cost-recovery. We also recommend that CSD set criteria to decide whether to offer a class that doesn’t meet its minimum enrollment.

Classes were sometimes offered even if minimum enrollment levels were not met

CSD sets minimum enrollment targets for its classes. The stated policy is that if a class does not meet its enrollment target, it is not offered. CSD offered about 2,360 classes in FY 2004-05 (excluding classes that were cancelled). Of that, 163 classes (or about 7%) did not meet the Department’s minimum enrollment target but were offered anyway. If the target is set to result in a certain cost recovery level, not meeting the target impacts cost recovery. Even when minimum enrollment targets were met, it was not clear they were established to achieve a certain level of cost recovery Even when classes met their target, it was not clear that the target had been established to ensure a certain level of cost recovery. After a cost recovery policy is adopted, the Department should set and adhere to minimum enrollment targets consistent with the policy’s goals. If the Department decides to offer a class even if it does not meet the minimum, that decision should be based on clearly defined criteria.

RECOMMENDATION #7: The Community Services Department should establish minimum enrollment levels that relate to cost recovery goals, and document the criteria that will be used to decide to offer a class that doesn’t meet its minimum enrollment.

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The differential that Palo Alto charges for nonresident class participants is lower than that of several nearby cities

About 16% of class registrants are nonresidents. Palo Alto may be able to increase the price differential for some classes while taking into account market pricing and reliance on nonresident enrollment.

Palo Alto’s nonresident differential is generally lower than that of surrounding cities Palo Alto, like most nearby cities, charges a higher price to nonresident class

participants than to residents. In FY 2004-05, 16% of registrants were nonresidents. See Appendix F for details. Exhibit 8: Percent of Class Registrants Who Were Nonresidents (FY 2000-01 through FY 2004-05)

NonresidentsFY 2000-01 17% FY 2001-02 17% FY 2002-03 18% FY 2003-04 14% FY 2004-05 16% Source: Service Efforts and Accomplishments Report FY 2004-05

Palo Alto’s nonresident price is typically about 15% higher than the resident price. A

review of seven nearby cities revealed that four often charge a higher percentage, two cities charge about the same as Palo Alto, and one city does not charge a differential. In some cities, the nonresident differential varies by class. Exhibit 9 shows the results of a review of 11 class titles in the seven cities compared to Palo Alto.

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Exhibit 9: Nonresident Differential for Class Prices10

PA MP SM MV RWC CUP SV SC Ballet – Youth 16% 35% N/A 8% 0% 19% 15% 20% Swimming – Youth 15% 36% 24% N/A 0% N/A 24% N/A Tap Dance – Adults 15% 35% 26% N/A 0% N/A 13% 28% Soccer – Youth 15% 33% 20% 14% 0% 20% 16% 25% Watercolor – Adults 15% N/A 26% N/A 0% 20% 15% N/A Ceramics – Adults 15% N/A 23% N/A N/A N/A 16% 23% Yoga – Adults 16% 29% 25% 22% 0% 20% 21% 28% Day Camp – Youth 13% N/A 25% N/A 0% 20% 13% 22% Gymnastics – Youth 15% N/A N/A 7% 0% 20% N/A 16% Tennis – Youth 14% 34% 24% 21% 0% 12% 9% 27% Salsa – Adults 15% 33% 24% N/A 0% 21% 16% 26%

Based on Exhibit 9, CSD may be able to increase the nonresident differential for some classes. However, CSD staff believes that nonresident enrollment allows the City to offer a broader array of classes in many cases. This benefits Palo Alto residents. To the extent those classes are fully cost-recovered, we agree. As shown in Exhibit 10, 51% of adults taking art classes were nonresidents. On the other hand, 85% of youth taking art classes were residents.

Exhibit 10: Resident/Nonresident Percentages in FY 2004-05 Art Classes

Adults Youth Overall Resident 49% 85% 71% Nonresident 51% 15% 29%

Total 100% 100% 100% Hourly class price, compared to other cities, should also be considered. For 6 of the 11 classes listed above, Palo Alto’s hourly class price was highest among the cities surveyed. See Appendix D for a detailed list of comparative hourly class prices. The non-residential differential does not need to be the same for all categories of classes. Pricing strategies may vary in cases where nonresident participants are a significant percentage of participants and/or where the City is already charging at the high end for an hourly rate RECOMMENDATION #8: CSD should consider increasing the class price differential for nonresidents when it is reasonable in the context of market pricing and reliance on nonresident enrollment.

10 PA = Palo Alto; MP = Menlo Park; SM = San Mateo; MV = Mountain View; RWC = Redwood City; CUP = Cupertino; SV = Sunnyvale; SC = Santa Clara; N/A = not applicable because that class was not offered by that city

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CONCLUSION

During FY 2004-05, CSD classes recovered a significant portion of their costs, but even so, the General Fund subsidy for classes was about $757,000. A cost recovery policy that includes cost recovery goals for various types of classes would facilitate price-setting. The large number of refunds and transfers impacts staff workload and thereby increases administrative costs. Minimum enrollment targets were not consistently met; this may also affect cost recovery. In addition, the differential that Palo Alto charges for nonresident class participants is generally lower than that of several nearby cities. RECOMMENDATIONS RECOMMENDATION #1: CSD should propose and the City Council should adopt a cost recovery policy that includes cost recovery goals for broad categories of Community Services classes. Included for each category should be: (1) a minimum level of acceptable cost recovery (2) a target level of cost recovery, and (3) other fee-setting considerations. The policy should take into consideration direct, indirect, and overhead costs. RECOMMENDATION #2: The Community Services Department should annually review and document actual cost recovery results for broad categories of classes. Data from such a review should be used to adjust pricing in accordance with City’s cost recovery plan and other relevant factors. RECOMMENDATION #3: The Community Services Department should: (1) set prices that take into consideration the cost recovery policy adopted by the City Council (2) provide staff with updated templates to facilitate price-setting; and (3) retain price-setting templates to document the assumptions underlying pricing decisions. RECOMMENDATION #4: The Community Services Department should reduce refunds and transfers, and track the number of refunds and transfers processed as a workload measure in the annual budget. The Department should identify creative ways to reach the goal. Possibilities include a processing fee for transfers and a “try out” class pass. RECOMMENDATION #5: The Community Services Department should reduce the number of cancelled classes, and should track the percentage of classes offered that are cancelled as a performance measure in the annual budget. RECOMMENDATION #6: CSD should decide on a reasonable amount of time that classes should remain open in the CLASS system after a quarter ends, and ensure that the system is closed timely. RECOMMENDATION #7: The Community Services Department should establish minimum enrollment levels that relate to cost recovery goals, and document the criteria that will be used to decide to offer a class that doesn’t meet its minimum enrollment.

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RECOMMENDATION #8: CSD should consider increasing the class price differential for nonresidents when it is reasonable in the context of market pricing and reliance on nonresident enrollment.

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Community Services Department

MEMORANDUM

From: Frank Benest, City Manager

By: Richard James, Director, Community Services Department

Date: October 17, 2006

Subject: Response to Auditor’s Class Recovery Audit

The Community Services Department (CSD) is pleased to respond to the City Auditor’s “Audit of CSD Class Cost Recovery.” Overall, staff agrees with the audit’s recommendations addressing the need for an updated cost recovery policy and will begin a program to implement the specific recommendations. The department offers a wide range of Class programs to both residents and nonresidents encompassing youth, teens, adults, and seniors. Program areas are inclusive of recreation, sciences, arts, culture, and open space. The programs received a rating of either good or excellent by 87% of Palo Alto residents participating in the National Citizen Survey in 2005. Staff will continue to strive to maintain the strength of the programs while addressing the need for a cost recovery policy. Below are staff’s responses to the audit’s eight recommendations. RECOMMENDATION #1: CSD should propose and the City Council should adopt a cost recovery policy that includes cost recovery goals for broad categories of Community Services classes. Included for each category should be: (1) a minimum level of acceptable cost recovery (2) a target level of cost recovery, and (3) other fee-setting considerations. The policy should take into consideration direct, indirect, and overhead costs. This recommendation is consistent with CSD’s Strategic Action Plan which includes development of cost recovery targets that both maximize core service value and cost recovery. Staff recently identified all services for determination of core services and will begin to develop an updated cost recovery policy that segments recovery levels by categories of programming such as youth sciences, youth performing arts, and adult recreation. The policy will allow for ranges of cost recovery inclusive of direct, indirect, and overhead costs. Once adopted by City Council, the policy will be implemented across all three divisions of the Community Services Department offering fee-based programs: Recreation and Youth Sciences, Arts and Culture, and Open Space. RECOMMENDATION #2: The Community Services Department should annually review and document actual cost recovery results for broad categories of classes. Data from such a review

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should be used to adjust pricing in accordance with City’s cost recovery plan and other relevant factors. Upon implementation of a cost recovery policy, staff will review, document, and track recovery results for consideration in adjusting pricing. In addition to review of actual cost recovery levels, market pricing will also factor into program pricing. Recently, the City’s pricing levels were determined to be the highest in 6 of 11 programs compared on a per unit basis with local cities. Of the six programs, the City’s rates were 38% higher than the average. RECOMMENDATION #3: The Community Services Department should: (1) set prices that take into consideration the cost recovery policy adopted by the City Council (2) provide staff with updated templates to facilitate price-setting; and (3) retain price-setting templates to document the assumptions underlying pricing decisions. Staff concurs and will set program fees in accordance to a City Council adopted cost recovery policy. Pricing models will be provided for programmers to set fees and the factors influencing the results of the models will be documented. RECOMMENDATION #4: The Community Services Department should reduce refunds and transfers, and track the number of refunds and transfers processed as a workload measure in the annual budget. The Department should identify creative ways to reach the goal. Possibilities include a processing fee for transfers and a “try out” class pass. Staff has begun to reduce transfers and cancellations by implementing a new policy requiring one week notice prior to the start date of a class. A tracking process will be implemented and be included as a benchmark measure in the annual budget when sufficient data is available for a full fiscal year. RECOMMENDATION #5: The Community Services Department should reduce the number of cancelled classes, and should track the percentage of classes offered that are cancelled as a performance measure in the annual budget. Staff concurs. Tracking the percentage of cancelled classes will be included in the annual budget when sufficient data is available for a full fiscal year. RECOMMENDATION #6: CSD should decide on a reasonable amount of time that classes should remain open in the CLASS system after a quarter ends, and ensure that the system is closed timely. Staff agrees and will discuss with the CSD Business Committee to determine a reasonable time frame to close each quarterly session. RECOMMENDATION #7: The Community Services Department should establish minimum enrollment levels that relate to cost recovery goals, and document the criteria that will be used to decide to offer a class that doesn’t meet its minimum enrollment. Staff concurs. Minimum enrollment guidelines will be tied into the cost recovery policy to be presented to and adopted by City Council. This policy will determine minimum enrollment

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criteria and establish guidelines to determine whether a class is cancelled or offered when low enrollment exists. RECOMMENDATION #8: CSD should consider increasing the class price differential for nonresidents when it is reasonable in the context of market pricing and reliance on nonresident enrollment. Staff concurs and will begin to perform pricing and enrollment analysis. When appropriate, the resident and nonresident price difference will be increased beyond the current 15% spread. Conclusion The Community Services Department acknowledges the detailed work by the Auditor’s Office and thanks them for the ideas from the audit. Staff will work towards implementing an updated cost recovery policy in light of budget constraints to establish future programming guidelines. As these recommendations are implemented, staff will also monitor the effects on enrollment as compared to current levels and keep Council apprised through the annual budget process.

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Appendix A: Allocation Methodology To calculate “Direct Costs” (1) Identify SAP cost centers that include revenue and expenses from classes (2) Make adjustments to data in each cost center to isolate class-related revenues and expenses. To calculate “Indirect Departmental Costs” (1) In SAP, identify functional area administrative costs (for example, Arts and Culture Administration) (2) Identify number of Regular FTE in each cost center in the functional area (for example, the number

of Regular FTE in Children’s Performing Arts) (3) Allocate functional area administrative costs to the area’s cost centers based on Regular FTE (for

example, Arts and Culture Administration gets allocated to each of Arts and Culture’s cost centers) (4) In SAP, identify CSD Administration costs. (5) Allocate department level administrative costs to each broad functional area (for example, Arts

and Culture) (6) Take the amount allocated to each functional area and allocate it to each cost center in that

functional area (for example, the CSD Administration amount allocated to Arts and Culture is now allocated to each cost center within Arts and Culture).

(7) The amount allocated in step # 3 plus the amount allocated in step #6 equals the cost center’s “Indirect Departmental Costs.” 11

To calculate “Citywide Indirect Costs” (1) Identify in SAP the Cost Plan Charges allocated to CSD. (2) Allocate the Cost Plan Charges to the major CSD functional areas based on Regular FTE. (3) Take the amount allocated to each functional area and allocate it to each of the cost centers in the

functional area based on Regular FTE. To calculate the cost recovery percentages: (1) For percent of Direct Costs recovered, divide class revenue for a given cost center by the direct

costs in the cost center. (2) For percent of Direct Costs plus Departmental Indirect Costs recovered, divide class revenue for a

given cost center by the direct costs plus the departmental indirect costs in the cost center. (3) For percent of Full Costs recovered, divide class revenue for a given cost center by the direct

costs plus the departmental indirect plus the Citywide indirect costs in the cost center.

11 For several cost centers, we included only a percentage of the calculated “Indirect Departmental Costs” and “Citywide Indirect Costs” in the final calculation. The reason why was that for these cost centers, classes made up only a small portion of the cost centers’ revenues and expenses. Therefore, we apportioned the two categories of indirect costs based on class related expenses as a percentage of total expenses in the cost center. We set a floor of at least 10%.

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Appendix B: Revenues and Costs of Classes Sorted by Recreation, Open

Space and Sciences and Arts and Culture (FY 2004-05)

Revenue Direct costs

Departmental indirect costs

Citywide indirect costs12

Total cost

Income/

(subsidy) Recreation, Open Space and Sciences Jr. Museum and Zoo Classes $80,096 $73,023 $16,567 $17,503 $107,093 ($26,997)Therapeutics – Special Needs $5,771 $26,008 $14,496 $9,689 $50,193 ($44,422)Foothills Park Interpretation $7,028 $13,566 $7,343 $8,127 $29,036 ($22,008)Middle School Athletics $89,700 $170,421 $40,591 $38,281 $249,293 ($159,593)Baylands Interpretation $29,960 $41,177 $7,343 $8,127 $56,647 ($26,687)Sports – Youth/Teen Camps $219,123 $250,069 $20,295 $24,491 $294,855 ($75,732)Teens – Youth/Teen Programs $74,001 $77,900 $28,993 $19,379 $126,272 ($52,271)Jr. Museum and Zoo Camps $160,045 $165,180 $16,567 $17,503 $199,250 ($39,205)Day Camps $168,635 $163,495 $20,295 $13,565 $197,355 ($28,720)Aquatics – Youth/Teen $120,256 $113,055 $12,211 $56,161 $181,427 ($61,171)Aquatics $3,972 $3,600 $2,899 $5,418 $11,917 ($7,945)Special Classes – Youth/Teen $392,273 $340,075 $34,791 $34,202 $409,068 ($16,795)Special Classes -- Adult $137,236 $113,803 $34,791 $24,432 $173,026 ($35,790)Recreation, Open Space and

Sciences - Total $1,488,096 $1,551,372 $257,182 $276,878 $2,085,432 ($597,336) Arts and Culture Children’s Performing Arts $65,681 $91,243 $7,591 $21,027 $119,861 ($54,180)Children’s Music/Dance $65,503 $79,455 $2,934 $12,331 $94,720 ($29,217)Adult Performing Art $79,811 $94,098 $12,101 $33,521 $139,720 ($59,909)Studio/Classes $196,267 $189,442 $7,293 $20,203 $216,938 ($20,671)Children’s Studio Classes $199,998 $163,535 $8,509 $23,568 $195,612 $4,386

Arts and Culture - Total $607,260 $617,773 $38,428 $110,650 $766,851 ($159,591)

Grand Total $2,095,356 $2,169,145 $295,610 $387,528 $2,852,283 ($756,927)

12 Citywide indirect costs include facility maintenance costs in the Public Works budget. Other maintenance costs not included in the Public Works budget (such as athletic field maintenance) are in “Citywide indirect costs.”

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Appendix C: Revenues and Costs of Classes Sorted by Adults and Youth/Teens (FY 2004-05)

Revenue Direct costs

Departmentalindirect costs

Citywide indirect costs13

Total cost

Income/

(Subsidy) Adults Therapeutics – Special Needs $5,771 $26,008 $14,496 $9,689 $50,193 ($44,422)Foothills Park Interpretation $7,028 $13,566 $7,343 $8,127 $29,036 ($22,008)Adult Performing Art $79,811 $94,098 $12,101 $33,521 $139,720 ($59,909)Aquatics $3,972 $3,600 $2,899 $5,418 $11,917 ($7,945)Special Classes -- Adult $137,236 $113,803 $34,791 $24,432 $173,026 ($35,790)Studio/Classes $196,267 $189,442 $7,293 $20,203 $216,938 ($20,671)

Adults - Total $430,085 $440,517 $78,923 $101,390 $620,830 ($190,745) Youth and Teens Jr. Museum and Zoo Classes $80,096 $73,023 $16,567 $17,503 $107,093 ($26,997)Middle School Athletics $89,700 $170,421 $40,591 $38,281 $249,293 ($159,593)Children’s Performing Arts $65,681 $91,243 $7,591 $21,027 $119,861 ($54,180)Children’s Music/Dance $65,503 $79,455 $2,934 $12,331 $94,720 ($29,217)Sports – Youth/Teen Camps $219,123 $250,069 $20,295 $24,491 $294,855 ($75,732)Teens – Youth/Teen Programs $74,001 $77,900 $28,993 $19,379 $126,272 ($52,271)Jr. Museum and Zoo Camps $160,045 $165,180 $16,567 $17,503 $199,250 ($39,205)Day Camps $168,635 $163,495 $20,295 $13,565 $197,355 ($28,720)Aquatics – Youth/Teen $120,256 $113,055 $12,211 $56,161 $181,427 ($61,171)Special Classes – Youth/Teen $392,273 $340,075 $34,791 $34,202 $409,068 ($16,795)Children’s Studio Classes $199,998 $163,535 $8,509 $23,568 $195,612 $4,386Baylands Interpretation $29,960 $41,177 $7,343 $8,127 $56,647 ($26,687)

Youth and Teens - Total $1,665,271 $1,728,628 $216,687 $286,138 $2,231,453

($566,182)

Grand Total $2,095,356 $2,169,145 $295,610 $387,528 $2,852,283 ($756,927)

13 Citywide indirect costs include facility maintenance costs in the Public Works budget. Other maintenance costs not included in the Public Works budget (such as athletic field maintenance) are in “Citywide indirect costs.”

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Appendix D: Comparative Hourly Class Prices

Palo

Alto14 Menlo Park

San Mateo

Mountain View Cupertino

Redwood City Sunnyvale

Santa Clara

Ballet – Tots Resident Price $112 $121 N/A $126 $52 $100 $67 $147 NR Price $130 $163 $136 $62 $100 $77 $177 # of Class Hours 6 9.33 9 6 6.75 5.25 11.67 Per Hour Price (R) $18.67 $12.97 $14.00 $8.67 $14.81 $12.76 $12.60 Per Hour Price (NR) $21.67 $17.47 $15.11 $10.33 $14.81 $14.67 $15.17 Swimming – Youth Resident Price $65 $25 $46 N/A N/A $60 $70 N/A NR Price $75 $34 $57 $60 $87 # of Class Hours 4 3.33 4 5 5 Per Hour Price (R) $16.25 $7.51 $11.50 $12.00 $14.00 Per Hour Price (NR) $18.75 $10.21 $14.25 $12.00 $17.40 Tap Dance - Adults Resident Price $100 $110 $50 N/A N/A $106 $64 $53 NR Price $115 $148 $63 $106 $72 $68 # of Class Hours 10 13 8 15 8 6 Per Hour Price (R) $10.00 $8.46 $6.25 $7.07 $8.00 $8.83 Per Hour Price (NR) $11.50 $11.38 $7.88 $7.07 $9.00 $11.33 Soccer - Kids Resident Price $98 $88 $150 $72 $94 $87 $76 $75 NR Price $113 $117 $180 $82 $113 $87 $88 $94 # of Class Hours 9 8 20 8 10 9 7 8 Per Hour Price (R) $10.89 $11.00 $7.50 $9.00 $9.40 $9.67 $10.86 $9.38 Per Hour Price (NR) $12.56 $14.63 $9.00 $10.25 $11.30 $9.67 $12.57 $11.75 Watercolor - Adults Resident Price $150 N/A $98 N/A $97 $142 $67 N/A NR Price $172 $123 $116 $142 $77 # of Class Hours 30 16 32 30 14 Per Hour Price (R) $5.00 $6.13 $3.03 $4.73 $4.79 Per Hour Price (NR) $5.73 $7.69 $3.63 $4.73 $5.50

14 Data is shown in bold for the city with the highest per hour class price.

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Palo

Alto14 Menlo Park

San Mateo

Mountain View Cupertino

Redwood City Sunnyvale

Santa Clara

Clay Basics - Adults Resident Price $200 N/A $145 N/A N/A N/A $160 $120 NR Price $230 $179 $185 $147 # of Class Hours 30 30 30 18 Per Hour Price (R) $6.67 $4.83 $5.33 $6.67 Per Hour Price (NR) $7.67 $5.97 $6.17 $8.17 Yoga - Adults Resident Price $77 $52 $71 $45 $80 $79 $68 $53 NR Price $89 $67 $89 $55 $96 $79 $82 $68 # of Class Hours 10 10 15 11.25 13.75 11 12 12 Per Hour Price (R) $7.70 $5.20 $4.73 $4.00 $5.82 $7.18 $5.67 $4.42 Per Hour Price (NR) $8.90 $6.70 $5.93 $4.89 $6.98 $7.18 $6.83 $5.67 Day Camp - Youth Resident Price $349 N/A $166 N/A $400 $205 $160 $125 NR Price $394 $208 $480 $205 $180 $152 # of Class Hours 35 109.25 90 45 37.5 35 Per Hour Price (R) $9.97 $1.52 $4.44 $4.56 $4.27 $3.57 Per Hour Price (NR) $11.26 $1.90 $8.33 $5.00 $4.44 $4.11 Gymnastics Camp Resident Price $209 N/A N/A $149 $179 $195 N/A $190 NR Price $240 $159 $215 $195 $220 # of Class Hours 25 15 25 20 15 Per Hour Price (R) $8.36 $9.93 $7.16 $9.75 $12.67 Per Hour Price (NR) $9.60 $10.60 $8.60 $9.75 $14.67 Tennis – Youth Resident Price $69 $122 $63 $48 $58 $66 $79 $55 NR Price $79 $164 $78 $58 $65 $66 $86 $70 # of Class Hours 6 9 6 8 6 8 6 6 Per Hour Price (R) $11.50 $13.56 $10.50 $6.00 $9.67 $8.25 $13.17 $9.17 Per Hour Price (NR) $13.17 $18.22 $13.00 $7.25 $10.83 $8.25 $14.33 $11.67 Salsa - Adults Resident Price $68 $15 $38 N/A $48 $59 $63 $58 NR Price $78 $20 $47 $58 $59 $73 $73 # of Class Hours 7 24 7 6 5 10 6.67 Per Hour Price (R) $9.71 $0.63 $5.43 $8.00 $11.80 $6.30 $8.70 Per Hour Price (NR) $11.14 $0.83 $6.71 $9.67 $11.80 $7.30 $10.94

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Appendix E: Fee Reduction Subsidy by Class Category15 FY 2004-05 Adult Aquatics $248Adult Special Classes $8,245Adult Art Center Classes $7,457Children’s Art Center Classes $31,540Baylands Interpretive Programs $5,677JMZ Camps $24,399Recreation Camps $26,721Children’s Theater $4,910Adult Performing Arts $2,609Children’s Performing Arts $10,665Foothills Interpretive Programs $753JMZ Classes $12,199Middle School Athletics $3,836Youth/Teen Sports Programs $51,756Teen Programs $10,617Therapeutics Programs $529Youth Aquatics $18,287Youth Special Classes $46,832TOTAL $267,282

FY 2005-06 Adult Aquatics $41Adult Special Classes $2,900Adult Art Center Classes $4,543Children’s Art Center Classes $8,873JMZ Camps $413Recreation Camps $1,581Children’s Theater $2,485Adult Performing Arts $1,166Children’s Performing Arts $7,403Foothills Interpretive Programs $295JMZ Classes $12,495Middle School Athletics $6,030Youth/Teen Sports Programs $1,832Youth Aquatics $2,331Youth Special Classes $17,926TOTAL $70,314

15 Tables show the fee reduction subsidy by class category. The reduction to $70,314 in FY 2005-06 from $267,282 in FY 2004-05 was due to the change to a tiered program that provides different levels of fee reduction based on income.

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Appendix F: Resident/Nonresident Enrollment Data

FY 2004-05 Residents Nonresidents Activities 119 7 Art Minicamps at JMZ 175 1 Aquatics 475 262 Art Classes 576 508 Art Workshops 64 65 Ceramics 99 12 Children’s Fine Arts 568 134 Children’s Theatre 360 50 Cultural Healing Arts 29 23 Dance 1,052 465 Design 57 8 Digital Intensives at the Art Center 62 10 Drawing 176 19 Electronic Media 32 0 Fiber Art 10 4 Fitness 64 4 Healthy Choices 204 34 Hikes and Nature 818 100 Junior Museum and Zoo 1,444 200 Minicamps at Palo Verde 68 0 Mixed Media 19 3 Music 240 171 Music and Dance 562 158 Open Space 554 67 Open Space and Sciences Elementary Camps

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6

Painting 87 11 Pre and Post Camps for CFA Studios 10 0 Recreation Camps 761 55 Special Events 5 4 Special Interest 369 147 Sports 3,749 339 Sports Camps 1,447 104 Spring Break Mini-Camps and Intensives

18

1

Summer Aquatics 1,873 200 Summer Intensives at the Art Center

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10

Teen Programs 250 0 Therapeutics 111 85 Therapeutics Camps 17 2 Three Dimensional 37 7 Workshops 18 3 Total 16,797 3,279

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Appendix G: San Mateo Cost Recovery Plan

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