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HomeMy WebLinkAbout1996-06-24 City Council (25)City BUDGET 1996-98 City of Palo Alto Manager’s Report TO:HONORABLE CITY COUNCIL ATTENTION: FINANCE COMMITTEE FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES AGENDA DATE: JUNE 24, 1996 CMR:323:96 SUBJECT:RESPONSE TO COUNCIL QUESTIONS REGARDING THE PROPOSED RECREATION AND ARTS AND CULTURE FEE REDUCTIONS PROGRAM FOR LOW INCOME PERSONS REQUEST This report responds to the City. Council’s request to provide additional information regarding the proposed Recreation and Arts and Culture fee reduction program for low income residents. (CMR 280:96) EXECUTIVE SUMMARY On June 20, Council asked a number of follow-up questions to CMR 280:96, Review of Fee Reduction Proposal for Community Services Department. These questions and staff’s response to these questions are detailed below. What, if any, should be the relationship between the proposed fee reductions for low income residents and the Utility Rate Assistance Program? The Utilities Rate Assistance Program is currently in place and has been working well, both in determining economic need and in administering the assistance program. Staff proposes modeling the fee reduction program based on the City’s experience with the Utilities Rate Assistance Program. CMR:323:96 Page 1 of 5 There is nothing in CMR 280:96 regarding recommended income limits. Explain the recommended income limits for the staff proposal and how they compare to the limits proposed by the Human Relations Commission (HRC). Below is a comparison of the fee reduction income guidelines recommended by staff and those recommended by the HRC. Staff is recommending the income limits used in the Utilities Rate Assistance Program for low-income residents. These guidelines are set state- wide by the State’s Department of Economic Opportunity, to establish eligibility for receiving such subsidies as low income energy assistance programs. Staff is recommending consistently using these guidelines, since they represent a standard basis of economic need and have been adopted by an existing City program. The HRC is recommending (June 17, 1996 letter to Council) two sets of guidelines, one for residents with disabilities and one for low-income residents. HRC income limits are based on the County median income as set by the Federal Department of Housing and Urban Development. Persons in Household Staff Recommended: Utility Rate Program Income Guidelines HRC Recommended: 100% County Median Income-Test for People with Disabilities HRC Recommended: 50% County Median Income- Test for Low- Income 1 $16,100 $47,200 $23,600 2 $16,100 $53,900 $26,950 3 $18,900 $60,700 $30,350 4 $22,700 $67,400 $33,700 5 $26,500 $72,800 $36,400 6 $30,300 $78,200 $39,100 7 $83,600 $41,800 ’8 $89,000 $44,500 CMR:323:96 Page 2 of 5 3. Would the current scholarship programs remain in place? The scholarship programs are administered by various nonprofit groups (the Recreation Foundation, the Cultural Center Guild, and the Friends of the Children’s Theatre). Currently, scholarships are not limited to specific age groups. The Recreation Foundation, for example, has historically given a high priority to youth and teens, but adult scholarships were also awarded in 1995-96. Staff will request that scholarship sponsors not change scholarship criteria during the one-year trial of the Recreation and Arts and Culture Fee Reduction Program. After the trial period, nonprofit groups may wish to re-evaluate their practices; and staff will work with these groups. Are the current programs aimed primarily at youth and seniors and, if so, what is the availability of programs for persons who are not in the youth or senior category? The current programs are available to anyone who requests a scholarship. In practice, there are few requests from the general adult population. The predominant number of requests are received from the youth population. If available funding is constrained, it is the practice 6f the Recreation Foundation to focus the scholarships on the youth and disabled populations. In 1995-96, there were approximately 100 requests for scholarships made of the Recreation Foundation. Of these, approximately 5 percent were from disabled persons and 4 percent were from adults; the remainder were from youths. Of the total requests for scholarships, only 3 percent were denied because the applicants did not meet the Recreation Foundation guidelines. What would be the revenue loss from the HRC proposal for low income and disabled residents? Staff is estimating that the population of residents who may take advantage of this type of program could be somewhere between 300 to 500 class registrations per year. Assuming an average charge of $85 per class, and average fixed costs to administer each class, the net revenue loss from this program could range between $3,000 and $5,000. The reason for this loss, despite a potential increase in the number of residents taking classes, is due to the fixed costs for instructors who teach each class. The instructors are paid on a per participant basis. This cost will not change because aparticipant is paying a lower fee. CMR:323:96 Page 3 of 5 o Comparison of Palo Alto’s 15 percent Utilities Rate Assistance Program to other cities. Utility Discount Percentage Utility Type Lodi 10%Water, Electric, Wastewater Los Angeles (LADWP)15%Water, Electric Pacific Gas & Electric 15%Gas, Electric Palo Alto 15%Water, Gas, Electric Southem Califomia Edison 15%Electric ALTERNATIVE After reviewing the Human Relations Commission report on this issue, staffbelieves a viable compromise would be a 50 percent reduction for low-income residents for Recreation and Arts and Culture fees and a similar 50 percent reduction for qualifying residents with disabilities. Low-income status would be determined based on the criteria outlined in the Utilities Rate Assistance Program (as outlined in Table 1 above). The eligibility income level of disabled persons could be set at the HRC recommendation of 100 percent of the median County income. If Council chooses this alternative, staff will have to work on the details of administering the program and what means test would be utilized. Staff will attempt to have the administration issues resolved by August 1, 1996, but may need to take some additional time to be able to administer the program properly. The criteria for disabled status would be established by a letter from a physician or a licensed psychologist. Staff is unable to estimate the revenue loss associated with a 50 percent fee reduction for disabled residents without experience with the program. CMR:323:96 Page 4 of 5 PREPARED BY:Joe Saccio, Senior Financial Analyst Virginia.Harrington, Budget Manager DEPARTMENT HEAD APPROVAL: "Harrison Deputy City Manager, Administrative Services CITY MANAGER APPROVAL: CC: n/a Paul Thiltgen e.~, Director of Community Services / Manager Related staff report: CMR:280:96 CMR:323:96 Page 5 of 5