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Flower Mound CFO outlines five-tier cost-recovery policy, plans survey and analysis
Summary
Chief Financial Officer John Zagurski presented a draft cost-recovery policy modeled on Plano that sorts town services into five tiers (from community/public goods to individual/private goods), excluding capital costs, and said a short council survey will be followed by a 3–4 week analysis to guide fee-setting decisions.
John Zagurski, the town’s chief financial officer, presented a draft cost-recovery policy during a work session of the Flower Mound Town Council, saying the document is intended to provide “a framework for recuperating the appropriate cost associated with providing programs and services.”
Zagurski said the draft — modeled after a policy used by the City of Plano — uses a five-tier structure to determine how much of a program’s cost should be recovered by fees. “The biggest question in cost recovery is, who's the beneficiary of a program or service? Is it the individual or is it the community?” he said, explaining tiers range from primarily community benefit (tier 1) to primarily individual benefit (tier 5).
He told council capital costs are not included in the cost-recovery calculation: “I will tell you all of this excludes capital cost because once we get into a 100% true cost recovery, that's when we're talking about private goods,” Zagurski said, noting capital costs can still be quantified to show total public subsidy.
Zagurski gave examples to illustrate the scale: animal control as a likely tier 1 public service with little opportunity for fee recovery, and recreation programs such as swim and tennis at the CAC that are close to full cost recovery. He cautioned that under Texas law a fee that “exceeds the actual cost of providing a service” can be treated as an unlawful tax, and recent state legislative actions have tightened how local governments may assess certain charges.
Council members asked how vendor, sponsorship and end-user revenues would be split and requested consistent policies across programs. Zagurski said the finance team can break out revenue sources and show net revenue versus expenses for specific programs and vendors. Council members also referenced the CAC project while discussing capital versus operating costs.
Next steps: Zagurski said he will distribute a short survey asking council where specific services should fall on the tier scale; once returned, he estimated 3–4 weeks to produce a full analysis and recommended tracking the policy annually to keep targets current.
The council did not take action on the policy at the meeting; Zagurski said he will return with analysis and recommendations after the survey results.
