HomeMy WebLinkAboutNB 2 NON-RES SURCHGS 08-18-80DATE:
August 8, 1980
8~'18-80
Inter-Corn
TO:
FROH:
S UB,J ECT:
Honorable I.~ayor and City Council
Royleen A. White, Director of Community Services
FISCAL IMPACT OF NON-RESIDENT SURCHARGES
BACKGROUND:
At a budget workshop meeting July' 14, Council requested staff to investigate the
fiscal impact on Community Services should certain alternatives be implemented
with regard to non-residents. Among the alternatives suggested were:
I. Discontinue mailing newletters to non-residents.
2. Double non-resident surcharge on activity classes.
3. Prohibit non-residents from participating in Community Services
Department programs.
Is is staff's understanding that services to non-residents have been a sensitive
issue for quite some time. While aware of Council's concerns in this area, staff
also feels an obligation to communicate the impact the above alternatives would
have on residents as well. For, in effect, non-resident surcharges subsidize
participation by residents.
Current registration procedures give priority to residents. Tustin residents are
not denied access to any class or activity; non-residents have last priority.
All persons at registration are checked for verification of residency. This
system also allows more classes and programs to be offered, as there are
insufficient numbers of residents to meet many of the class minimums.
DISCUSSION:
I. Legality
The Community Services Department enjoys an excellent working relationship
with the Tustin Unified School District. In addition to an exemplary joint
development project for Columbus Tustin Park, the Community Services
Department utilizes District gymnasium, pool, track, tennis courts, sports
fields, and classroom facilities at several schools. The joint powers
agreement (between City, School District, and County of Orange) regarding
Columbus Tustin Park specifically states that "use of the property shall
be granted to all residents of Orange County on the same basis as residents
· of the City of Tustin may use the property." School District policy
regarding other District facilities is that all persons residing within the
District may not be discriminated against when school facilities are used
by the City to conduct programs.
Technically, we are violating School District policy with our current class
surcharge for non-residents. In off-the-record conversations with a School
District representative, the individual indicated that current surcharge
FISCAL IMPACT OF NON-RESIDENT SURCHARGES
~age Twg
ugust 8, 1980
practice is unofficially condoned because the District assumes the City has
additional costs for non-residents which are not a function of facility fees.
The general consensus was that the District did not wish to make an issue of
current City practice; however, if the City chose to eliminate non-residents
from programs altogether, the Board could not overlook that. It would
endanger the City's use of School District facilities. As stated earlier,
we have an excellent relationship with the District, and do not want to
hinder it.
II. Discontinue Mailing Brochure to Non-Residents
This plan would require contracting a mailing service to make invidivual
labels for residents only, place them on each newsletter, and presort by
carrier code to obtain the lower postal rate. Thanks to Councilman Edgar's
suggestion, all future mailings will be presorted by carrier code to obtain
the lower postal rate of 6.7¢.
Costs of Resident Mailing
Postage (14,000 @ $ 938
6.7C/piece)
Label Processing & 894
Presort
Paper 650
Printing 372
Typesetting 200
COSTS 3~-3,054 ....
Costs listed below are for one issue:
Current Method, Adding Presort (to all 92680)
Postage (18,300 @ 6.7C/piece) $1,226
Labor to Presort 80
Paper 800
Printing 459
Typesetting 200
COSTS !~-2~,765
Current method of mailing to all 92680 zip codes is more economical, because
there is no need for individual mailing labels. Reducing our major marketing
tool by 4,000 copies would not only add to our costs, it would reduce overall
revenues.
Yearly Cost for Residents Only
Yearly Cost for Current Method
DIFFERENTIAL
$12,216
ll,060
~ 1,156
iii. Double Non-resident Surcharge and/or Prohibit Non-resident Participation
It is staff's opinion that the current 50% surcharge is as much as the market
will bear. Should the sqrcharge be doubled or should non-residents be refused
participation, revenue would drop sfgnificantly. Non-resident participants
account for 53% of this Department's classes and cultural arts revenue.
A summary of the past four quarters appears below:
# OF PARTICIPANTS $ REVENUE % OF REVENUE
Residents .2,990 $ 52,587 47%
Non-Residents 2,374 $ 58,578 53%
TOTALS 5,364 $111,165 ~00%
Non-residents account for only 44% of the raw number of participants, but
they represent 53% of the revenues. While there are more numbers of
resident participants, it is the non-residents who bring in the majority of
the dollars. Non-residents are subsidizing participation by residents.
FISCAL IMPACT OF NON-RESIDENT SURCHARGES
Page Three
August 8, 1980
Should non-residents be denied access to programs, staff projects that 35%
of the classes currently offered would have to be cancelled. The City would
be denying access to residents in doing so. Having non-residents subsidize
programs allows the Department to offer residents a greater variety of
activities as well as a greater number of classes.
In addition, resident fees are lower than those of similar agencies due to
the non-resident surcharge creating additional revenues. Should non-residents
be denied participation, resident fees for the remaining classes would have
to be increased.
SUMMARY:
1. To mail to only Tustin residents necessitates individual address labels, and
would cost $1,156 more per year than present method.
2. Exclusion of non-residents would result in:
A. Loss of School District facilities;
B. Loss of approximately $60,000 in revenue;
C. 35% decrease in the number of classes;
D. An inordinate increase in resident fees for those classes which remain.
A further increase in the non-resident surcharge would negatively impact
revenue and participation.
The Community Services Department has been directed to be as self-sustaining
as possible. Since non-resident fees subsidize programs for residents, the
current practice assists the Department in meeting that goal. Should non-
residents be excluded, the impact on this Department and the residents of Tustin
would be extremely negative. In order to become more self-sustaining, staff
requires a certain amount of flexibility in developing and implementing a
marketing plan. The current surcharge accomplishes its purpose of assessing
non-residents a higher fee, yet still allows the Department to function
effectively.
RECOMMENDED ACTION:
1. Continue mailing brochures to all 92680 zip codes.
2. Continue current 50% surcharge for non-residents.
RAW:ss