Res 2019-103/approving a Fee Policy that incorporates a cost recovery methodology

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This level provides more INDIVIDUAL and less Community Benefit and should be priced to reflect this. O This individual fee recovers more costs or has a higher cost recovery goal than programs and services that fall within the lower levels of the pyramid. Group 4: Highly Individual Programs/Services - Represents specialized services generally for specific groups with a competitive focus. In this level, programs and services should be priced to recoverfull costs. Group 5: Mostly Individual Programs/Services - Represents specialized services generally for specific groups with a competitive focus. In this level, programs and services should be priced to recover full cost including all direct, overhead, and indirect cost and may also include an additional fee. Step 2: Reaching Out to Stakeholders Stakeholder feedback is a key component in the implementation of cost recovery. Stakeholders may consist of formal advisory boards, staff members, or the general public. Each department may define their stakeholder groups differently for executing their goals and meeting the needs of the community. The benefit groups within the pyramid structure will be assigned by city staff then presented to stakeholder groups for feedback. Step 3: Determining Cost Recovery Levels In recognition of the wide variety of service levels and revenue generating potentials of various fee areas, specific cost recovery thresholds shall be established for each area at the most specific programming level O that is administratively practical. The thresholds shall include both minimum and target levels of cost recovery. Fee areas unable to meet their minimum threshold shall be reviewed by department staff and governing advisory board for consideration of recommending appropriate action: reduce costs; reduce cost recovery target; eliminate fee area. Activities that have achieved or exceeded their target threshold shall be evaluated to determine if the target can/should be increased. Step 4: Defining Costs The definition of direct, overhead and indirect costs can vary across departments. The most important aspect to understand is that all costs associated with directly running a program or providing a service are identified and consistently applied across the system. Direct costs typically include the specific, identifiable expenses associated with providing a service. These expenses would not exist without the service and may include variable costs. The Departments have defined direct, department overhead, and indirect costs as follows: DIRECT COST: Direct costs are those costs that are directly attributable to efforts to put on a program or service. Examples are direct personnel costs to include benefits, supplies, direct marketing, facility rates, transportation, and direct contract services. DEPARTMENT OVERHEAD COST: Direct supervision of the fee area, and minor miscellaneous items such as supervisormileage, administrative support, custodial services, facility maintenance, and utilities. 16