Parks and Rec - How do the finances work?

The past couple of weeks marked the first meeting with new members for several Town Committees. I watched the Parks and Recreation Commission meeting to inform myself about the ongoing projects (eg. Fairbank, Feeley Field, Haskell Playground) and listen to any new ideas that they had for this new fiscal year.

One major takeaway that I have from the meeting is that the finances for the Parks and Recreation programs in Sudbury are somewhat complicated and perhaps not understood well. There is money in the Town operating budget under Culture and Recreation, there are Enterprise Funds, there is a division of the Department of Public Works for Parks and Grounds, there are Revolving Funds, and there are large capital project asks.

How does it all work?

Enterprise Funds

First let’s talk about the Enterprise Funds. There are 2 enterprise funds for Parks and Recreation functions in Sudbury, the Pool Enterprise Fund and the Recreation Field Maintenance Enterprise Fund.

An enterprise fund gives communities the flexibility to account separately for all financial activities associated with a broad range of municipal services. It establishes a separate accounting and financial reporting mechanism for municipal services for which a fee is charged in exchange for goods or services. Revenues and expenses of the service are segregated into a fund with financial statements separate from all other governmental activities. The budgets of an enterprise fund should be self-sufficient, and they shouldn’t carry deficits.

In layman’s terms, for services which the Town wants to be separate and self-sufficient, an enterprise fund can be established.

Sudbury voted to establish a Recreation Field Maintenance Enterprise Fund at the April 2009 Annual Town Meeting (Article 8). The Pool Enterprise Fund was voted on at the April 1987 Annual Town Meeting (Article 3).

So, any revenue that is generated by the Pool stays with the Pool. And any expenses incurred by the Pool need to be offset by the Pool’s revenue. If revenues exceed expenses, then the excess revenue is saved in “retained earnings.” Same for the Recreation Fields. Ideally, these retained earnings go towards future capital projects. For example, there is a gentleman’s agreement that $10,000 per year in retained earnings for the Field Enterprise Fund goes towards the Field Stabilization Fund, which is a fund to be used to help fund the replacement of Cutting Field when the time comes. Keeping these services separate from the rest of the budget keeps them from being a financial drain on the town in the case that revenues aren’t keeping up.

But what happens if the revenues don’t keep up with expenses? First, retained earnings are tapped to cover any shortfalls. If there is still a deficit, then the Town is responsible for this deficit and must raise the funds in the next fiscal year in the tax levy or other funding source. Obviously, this is to be avoided, but sometimes there are extenuating circumstances. For example, during the Covid pandemic, both Pool and Fields revenues were not coming in as expected because of so many cancellations. The Town took a proactive step to subsidize the Pool and Field enterprise funds with an amount that would sustain them for approximately 2 years. We may see a similar issue arise for the Pool during the Fairbank construction, so stay tuned for information about that in the next budget cycle.

The details for the enterprise funds can be found in the Town Manager’s Budget (pages 86-89).

Revolving Funds

Revolving Funds are a way to collect money for services, and monies from these funds can be expended by the associated Town department. The maximum amount that can be collected in these funds is voted on at Town Meeting every year. The Parks and Recreation have 3 Revolving Funds:

Recreation Programs - Maximum Amount is $650,000

Teen Center - Maximum Amount is $10,000

Youth Programs - Maximum Amount is $200,000

These are the mechanisms by which, for example, the Park and Recreation department can collect fees for Summer Camp and other programs and then can expend them accordingly. This is another mechanism to make sure that the programs are self-sufficient.

Town Operating Budget - Culture and Recreation

Salaries for Park and Recreation staff, who are not associated with an Enterprise Fund, are covered in the Town Operating Budget under the Culture and Recreation departments. So, for example, the Parks and Recreation Director’s salary is paid from this bucket. The salaries for the Pool staff are not because those salaries are part of the Pool Enterprise fund.

Several years ago there were some portions of the Pool staff salaries and benefits which were getting paid out of the Town Operating budget. Thankfully, our previous Town Manager worked diligently to correct these issues.

Town Operating Budget - Department of Public Works, Parks and Grounds

Salaries and Expenses for staff to maintain our recreation facilities comes out of the Department of Public Works budget, more specifically, out of the Parks and Grounds division. Any maintenance that is not covered by an enterprise fund, is covered here. For example, if a swing breaks at Haskell playground, then the funds to pay a person to fix it and the cost of the new swing would come out of this budget. On the other hand, if a diving board needs repair, then that cost should be covered within the Pool Enterprise Fund.

Capital Needs

Capital needs are separated into 2 categories. Items which can be covered under the Town Manager’s capital budget (non-maintenance items < $100,000) and large capital projects (items > $100,000).

For example, a new truck for the Parks and Grounds department ($85,000) would fall into the Town Manager’s capital budget. Renovation of Haskell Playground ( > $300,000) would be a large capital project that requires a Town Meeting article. More about Capital Projects in a later post.

Conclusion

I think that covers how various components of Parks and Recreation are funded. If anyone finds a mistake or if I’ve missed something, please reach out and let me know. Thank you!