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Board debates cost-recovery methodology for boat ramp, golf and winter sports operations
Summary
Staff revised cost-recovery slides to include indirect allocations; the change substantially increased reported operating costs for some facilities. Directors asked staff to footnote the approach and return with direct vs. indirect subtotals and benchmarks.
Brent and Sean presented a revised cost-recovery approach that adds fully loaded indirect allocations (accounting and admin time) to each cost center. For example, staff showed the Lake Forest Boat Ramp with budgeted user revenue of $208,000, total revenue $232,000 and budgeted operating expenses of $273,000 after allocations, producing a cost-recovery percentage of 49%.
Directors said the change from normalized averages to fully allocated costs made year-to-year comparisons difficult and requested a clear footnote and a breakout that shows direct operating expense separate from allocations. "So no, Judy. It does not include dredging. What it does include and what the big driver here is the general allocation... the portion of my time like Ramona's time, of the whole accounting department's time that gets allocated to this cost center," Sean said, explaining the presentation change. Staff agreed to return with subtotals and suggested that cost-recovery policy will be a multi-month discussion.
