CC - Item 4D - Adjustments to Preschool and Contract Instructor RatesE M F
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ROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: OLIVER CHI, CITY MANAGER
DATE: APRIL 22, 2008
SUBJECT: PROPOSED ADJUSTMENTS TO PRESCHOOL AND CONTRACT
INSTRUCTOR RATES
SUMMARY
The City of Rosemead has not increased program or service fees since 1991. As a
result, MuniFinancial, a financial consulting firm, was hired in 2007 to conduct a fee
survey. Specifically, they were to evaluate the City's revenues and expenditures to
determine to level of cost recovery-how much the City spends for its operations as
compared with the revenues generated from its programs and services. MuniFinancial's
preliminary analysis of the Parks and Recreation Department suggests that we recover
less than 6% of the costs associated with the department's efforts. For fiscal year 2006-
07, the Parks and Recreation Department generated $337,900 in revenues as
compared with its $5.8 million budget. While we cannot expect to reach 100% cost
recovery, six percent is extremely low and necessitates a very high degree of subsidy
for the programs and activities Rosemead offers.
As part of our current budget process, staff has conducted its own evaluation of several
programs to determine how we might lessen existing subsidies.
Cities are prohibited from charging fees that exceed 100% cost recovery in many of the
services they provide. Others, however, can be determined by market demand (what
the public is willing to pay). In consideration of these factors, staff has evaluated
Rosemead's preschool program fees and the percentage of contract class fees paid to
instructors. Preschool fees are limited by cost recovery, while Instructor-City fee ratios
are market driven.
City of Rosemead Preschool Program
The City of Rosemead has offered a preschool program to residents for nearly twenty
years. Currently, we offer quarterly morning and afternoon preschool classes for 3 to 5
year olds at four sites. The preschools teach the building blocks for learning to read and
write, emphasize social and motor skill development, and introduce students to music,
art, and literature with the primary goal of kindergarten readiness. Classes are taught by
instructors with a minimum of 11 years of experience. Rosemead's preschool programs
APPROVED FOR CITY COUNCIL AGENDA: 0
City Council Meeting
June 13, 2006
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have a total annual capacity of 768 students and serve resident and non-resident
families. Thirty-three (17%) of our spring quarter students are non-residents.
The program currently operates five days per week. The fee for 12 weeks of instruction
is $195 ($1.08 per hour). This results in $37,440 in quarterly revenues when classes are
full.
Effective July 1, 2008, the Preschool Program will cost approximately $198,000 in
salaries and benefits and $12,000 for the purchase of classroom supplies. To recoup
the $210,000 solely expended for direct instruction would require participant fees of
$274 per student per quarter.
In addition to evaluating direct instruction costs, staff compared Rosemead's fees
against those of ten local cities and seven private Rosemead preschools. Cost
comparisons are as follows:
Approximate
City
Instruction
Fee
Hourl Rate
Notes
5 days/3 hours
Rosemead
12 weeks
$195
$1.08
Alhambra
N/A
Arcadia
N/A
Baldwin Park
N/A
Parental in-class
2 days/2.5 hours
assistance
El Monte
8 weeks
$65
$1.63
required
2 or 3 days/5 hours
Includes $32
Montebello
8 weeks
$196; $257
$2.45; $2.14
materials fee
5 days/2.5 hours
Monterey Park
4 weeks
$60
$1.20
Pasadena
N/A
San Gabriel
N/A
Classes offered for
2, 3, and 4-5 year
San Marino
5 days/3-4 hours
$428-$571/mo.
$6.58-6.59
olds
South El Monte
2 days/1 hour
$20/mo.
$2.31
2 or 3 days/3 hours
Temple City
11 weeks
$220;$290
$3.33; $2.93
Preschool
Days/Times
Cost
Notes
Bethel Daycare &
Mon-Fri
$525-600/mo.
2 - 6 yrs. old
Preschool
7 a.m. - 7 p.m.
2 meals and 3 snacks
7732 Emerson Place
Little People School
Mon-Fri
$195/week
Infant-6 yrs. old
4715 Rosemead Blvd
6 a.m. - 6:30 p.m.
Breakfast, lunch, and snack
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City Council Meeting
June 13, 2006
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Maryvale Educ. Daycare
Mon-Fri
$580-796/mo.
9 mo. - Kinder
7600 Graves Avenue
7 a.m. - 6 .m.
Breakfast, lunch, and snack
Sunny Garden Daycare
Mon-Fri
$600/mo.
2 - 6 yrs. old
2739 Stin le Avenue
7 a.m. - 6:30 .m.
Breakfast, lunch and snacks
Sunshine Educ. Center
Mon-Fri
$635/mo. (F/T)
2 -6 yrs. old
3107 Gladys Avenue
7 a.m. - 6:30 p.m.
$508/mo. (P/T)
Breakfast, lunch and snacks for FIT
1 meal and snack for P!T
Top Kids Preschool
Mon-Fri
$650/mo.
2 - 6 yrs.
2608 New Avenue
7a.m. - 6 .m.
2 meals, 2 snacks, back ack/t-shirt
Wonder World Preschool
Mon-Fri
$625/mo.
2 - 6 yrs.
1630 Del Mar Avenue
5:30 a.m. - 7 .m.
2 meals and 1 snack
It is clear that our rates are significantly less than those charged by all area programs
surveyed. At current rates, the City subsidizes more than 30% of the cost of the
preschool program (more than $60,000 annually).
In an effort to decrease the existing subsidy, it is proposed that a three-phase fee
increase be implemented as follows:
Fall 2008: Increase to $225 for 10 weeks of instruction ($1.50 per hour)
Spring 2009: Increase to $250 for 10 weeks of instruction ($1.67 per hour)
Summer 2009: Increase to $274 for 10 weeks of instruction ($1.83 per)
The City may also want to consider a $25 non-resident fee to further offset the subsidy
for families that do not live in Rosemead.
It is important to note that while this will result in an increase of approximately 25% in
preschool revenues for fiscal year 2008-09, it does not achieve 100% cost recovery (as
administration, maintenance, facility, and other costs are not included). Even with these
increases, Rosemead remains very competitively priced and continues to offer a high
quality program.
Contract Class Instructor Fees
The City of Rosemead strives to offer the broadest range of recreational activities to the
community. Part of its success is in its ability, like most cities, to offer hundreds of
contract classes annually through contract agreements with instructors. These
instructors teach a variety of skills including dance, cooking, music, exercise and
nutrition, and art each quarter. The City provides facilities, registration, advertising, and
staff support. For their services, Instructors receive 80% of the fee paid by each
participant. For example, if students pay $25 for a six-week dance class, the Instructor
receives $20 of each student's fee and the City retains $5 per student.
This fee ratio has remained unchanged for decades. Even as other cities have adjusted
for inflation, Rosemead has not. Again, staff conducted a survey of local cities to assess
their rates as compared to Rosemead. The results are as follows:
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City Council Meeting
June 13, 2006
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City
Instructor-City Fee Ratio
Rosemead
80120
Alhambra
65/35
Arcadia
70/30
Baldwin Park
70/30
El Monte
75/25
Montebello
70/30
Monterey Park
70-80/30-20'
Pasadena
70/30
San Gabriel
75/25
San Marino
70/30
South El Monte
70/30
Temple City
70/30
"sliding scale based on number of registered participants
As indicated, Rosemead is lowest of all cities in the immediate area. Therefore, it is
recommended that the City increase its portion of instructional class fees from the
current 20% to 30% effective July 1, 2008. This will result in a net gain of 50% in class
fee revenues compared to current levels.
Staff Recommendation
Staff recommends that City Council approve as follows:
• the proposed three-phase fee adjustments for the City's preschool program,
• institute a non-resident fee of $25 per student per quarter, and
• decrease the percentage of participant fees paid back to contract class
instructors to reflect a 70% to 30% split.
These adjustments in rates will be effective beginning with summer 2008 registration
which is held the last week of June.
ANALYSIS
The proposed adjustments could result in a significant increase in existing revenues.
• At current attendance levels, adjusted registration fees for the preschool program
would generate additional revenues of 25% ($37,250) in Fiscal Year 2008-09 and
40% ($60,675) annually thereafter.
• Non-resident fees would generate approximately $1200 in annual revenues.
• A decrease in the percentage of fees retained by class instructors from the
current rate of 80% to 70% would produce approximately $20,000 in additional
revenues next fiscal year.
City Council Meeting
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These changes amount to slightly more than $800,000 in additional annual revenues by
Fiscal Year 2009.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
S
DAVltPT TG(OMERY-SCOTT
Parks Re ation Director