One of the biggest challenges the public sector faces these days is managing historic customer and community expectations. With the demand for services, facility maintenance and more at an all-time high, one way that a Parks and Recreation agency can navigate those choppy waters is by implementing a cost recovery strategy.
One myth that continues to dog employees in the public sector is the notion that tax dollars foot the bill for most of, if not all, governmental services that community members enjoy, Parks and Recreation offerings included. Even though this simply isn’t true, those expectations are showing no sign of dwindling in the coming years.
The uncharted territory many professionals now find themselves in includes the reality that subsidy dollars can only be directed to those services that provide for the greatest public good. This line of thinking, coupled with this idea that recouping all costs associated with services that supposedly benefit only a few people, make cost recovery a necessary part of any forward-thinking Parks and Recreation agency’s toolkit.
What is Cost Recovery?
Though it has been adopted by several organizations around the world, cost recovery may still be a relatively new concept for some. The basic definition of cost recovery is the method through which expenditures are recuperated to the point where an agency or even a small business can break even.
The point of this methodology is not to make a profit but rather not to be swimming in bills that you can’t pay back. Perhaps even more importantly, it’s about optimizing the benefits that stem from a given investment, both in the community at large and as it pertains to an organization’s movement out of the red and into the black.
Why Cost Recovery Matters More than Ever
The business side of the Parks and Recreation (and arguably, the public sector in general) is at a has been profoundly impacted by several key issues that have put resource allocation under the microscope. Some of these include:
- An increased interest in governmental accountability;
- More competition from the private sector for similar services;
- Revenues that have plateaued or declined in recent years;
- Increased costs across multiple industries for both private and public organizations;
- Rampant, arbitrary pricing of services;
- Antiquated financial accounting processes;
- Large demographics shifts for many municipalities; and
- Deteriorating infrastructure that is beyond repair.
With dozens of solutions urgently needed to plug holes in seemingly every direction, cost recovery is a concept that can help alleviate at least some of the burden that these dominos place upon Parks and Recreation professionals. In short, the smarter you are about where your money is going and what costs you’re incurring, the better off you’ll be.
Sounds simple right? Well, most things sound reasonably simple in theory but, in the real world, putting this kind of methodology into practice is more difficult. It means not only getting a true picture of your organization’s expenses – an experience that can be unpleasant enough for some – but also making some tough decisions down the road.
Is there a recreation program or class that your organization offers that isn’t pulling its weight financially? Does a political roadblock, such as the mayor’s spouse is one of only three or four people who are regularly in attendance, make the decision to cut said class a conflicting one? Those are the kind of judgment calls that may not taste good on the way down but, when the chips are down, significant expense recuperation will like pique the interests of everyone involved.
Where Is Cost Recovery Going?
Cost recovery’s importance to the Parks and Recreation sector moving forward is widespread. Not only does it serve as a methodology that will help shape agencies into responsible, community-conscious entities, but it will also have an impact as an educational tool.
With citizens and professionals alike, understanding the full scope of cost recovery and the different ways in which it can solidify an organization’s fiscal sustainability. Whether that means charging fees for some activities or services, downsizing certain operations or another approach entirely, offsetting expenses should be at the top of Parks and Recreation’s priority list for the future.
Moving forward and building new processes that are built on business principles may feel like a foreign concept to some in the public sector. In fact, it forces employees to act with more diligence, with the underlying expectation being that they should be able to justify how resources are used.
More than that, cost recovery is a means for agencies to meet the public’s demand for specific programs and initiatives. Without the necessary funds to cover those expenses, some communities could be in jeopardy of seeing crucial services, classes, activities or events eliminated altogether. If that were to happen, the excitement and value of that municipality would, in the eyes of residents, decrease precipitously.
Essentially, cost recovery isn’t about scary change that Parks and Recreation should feel uneasy about adopting. It’s more about the opportunity that lies in front of the industry to grow their revenues to the point where they can break even on all of their projects. By continuing to build programs that community members will enjoy, it will strengthen that bond even further and ensure that agencies who take cost recovery seriously will be mainstays with citizens for decades to come.
Want to learn more about the ins and outs of cost recovery? Check out this video from 110 Percent founder Jamie Sabbach now!