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Acquiring financial resources
Increasing demand for more and better services
Upward spiral of costs
Increasing emphasis on fiscal responsibilities
and accountability
Unwillingness for taxpayers to support higher
taxes
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Financial management is the process of
planning for, acquiring and using funds to
achieve pre-determined organization goals and
objectives.
Three major functions of financial management
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Determine the scope and content of fiscal policies
Obtain the best possible mix of financing alternatives
Establish fiscal guidelines and controls to ensure that
funds are allocated and spent wisely and responsibly
to achieve the highest quality products and services
possible
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Common components of finances include
budgeting, financing or revenue generation,
purchasing, accounting and auditing
Public agencies must frequently make financial
decisions to provide programs and services
based on the needs of the community, not the
ability of the users to pay for them
Traditionally use tax money as their primary
source of revenue
User fees and other funding sources
supplement taxation
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Non-profit agencies have the same objective
but their programs and services are primarily
for members or targeted constituencies
Generate revenue in excess of expenses and
accumulate reasonable working capital and
fund balances needed to accomplish their
missions.
They can not operate for financial benefits, they
must re-invest any capital gain back into the
organization
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Financial conditions vary from organization to
organization, but consideration must be given
to the following conditions
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Economic conditions – local, state, and national
Consumer demand
Community needs and interest
Professional standards - CAPRA (Commission for
Accreditation of Park and Recreation Agencies)
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Increased skepticism relative to fiscal responsibility
Efficiency of service delivery methods
Competition from other organizations
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Failure to be proactive to prevalent financial
conditions can lead to inadequate financial
resources and eventually to the reduction or
elimination of programs and services or the
business itself.
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Provide a general plan of action that governs the
financial management function of park and recreation
organizations.
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Accountability - recreation and parks managers recognize to
whom and what they are answerable
 Requires that park and recreation managers identify
organizational goals and objectives and measure performance
outcomes these things are done by:
 Assessing the needs and wants of the constituents
 Ensure that those needs are met as effectively and efficiently as possible
from both a programming and physical resources prospective
 Monitor employee performance
 Evaluate programs and services on a regular basis
 Solicit feedback from those who have provided money to the
organization
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Capital Project Funding – a key policy issue is that of
paying for capital projects out of current revenues
versus borrowing money
 Encouraged to spend no more than the revenue
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available for a specific fiscal period
Money saved from not having to make interest
payments can be used for other purposes
Minimizing premature commitment of funds for
annual debt service payments permits greater financial
flexibility in the future
Debt capacity is saved for times of emergency
A legacy of paid-for infrastructure is made available for
the next generation
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Debt Policies – usually contain the following
things
Purposes for which debt can be incurred
 Maximum allowable level of indebtedness
 Debt instruments that may be used
 Role of short term and long term debt in the capital
structure
 Interest rate
 Term of the debt
 Criteria for approving the refunding of the debt
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Cash Management – financial activities undertaken
to maximize the availability of cash and to secure
maximum yield on the short term investment of
idle cash
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Cash management program elements:
 Forecasting – calculating and projecting revenue and
expenditures using current and historical data
 Mobilizing and managing cash flow – collecting debt owed
to the organization, control deposit and safekeeping of
revenue from collection locations, and control of the
disbursement of cash
 Investing idle cash – determine how much cash can be
invested and for how long, forming sound policies and
procedures for investing, selecting a financial institution to
provide services, selecting appropriate investment
instruments
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Privatization policy – Divestiture or Outsourcing.
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Divestiture is putting ownership and control aspects
in the hands of private parties.
Outsourcing is contracting to an outside organization.
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Enterprise funds – an accounting mechanism
where the delivery of a particular park and
recreation service is funded through user fees,
leases, and other non-tax revenue sources
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Insurance Policies – Organizations must have a
risk management program in place.
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Insurance policies govern which aspects of the
organization are to be insured and what kind of
insurance and how much is to be carried.
Professionals need to consult an attorney and
insurance professional before making insurance
decisions
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Entrepreneurship – is the process of searching
for changes and trends, combining and using
resources, and taking risks to create or improve
products and services
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Public and non-profit sectors have increasingly
adopted a market-oriented or entrepreneurial
approach
Pros to this approach
Increasing profitability
Fostering economic growth
Stimulating creation of technology, products and services
Introducing change, innovation, and a new order within an
organization
Bringing resources, labor, materials and other assets into
combinations that increase their value
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Revenue Forecasting – prediction of the
financial status of the park and recreation organization
Not typically used in public or non-profit sectors
Types
 Short term – relate primarily to the development of
the annual budget and related budget and revenue
projections
 Medium range – used to address problems such as
revenue shortfalls before the problem reaches crisis
level
 Long term – involves the examination of internal
and external factors of the organization
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Past trends and present conditions of the
organization
Population characteristics and trends
Revenue philosophy of the organization and its
stakeholders
Projected economic conditions such as the rate
of inflation and changes in employment
patterns
Projected new and expanded products and
services
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Projected use cycles of existing programs
Market penetration of existing program
services
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Taxation
- Local governments have
traditionally used tax money as the primary
revenue source for park and recreation services
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Property taxes – 2 types real property tax and
personal property tax
 Real property tax – levied against land and
improvements (buildings and structures)
 Personal property tax – ex. Motor vehicles, business
inventory
 Tax rates are expressed in terms of “mills”. One dollar
equals 1000 mills.
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Special taxes – some governments levy special
taxes to support public park and recreation
agencies. Revenue is usually placed in a
special account and is used as a funding
source.
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ex. Hattiesburg has a 2% restaurant and hotel tax to
fund the convention center
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Bonds – typically finance capital projects
that represent a form of deferred payment in
which a the bond issuer commits to repay a
certain sum with interest at a stated rate at
some specific date.
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8 different types of bonds that range from:
 using collateral to get a loan
 using a bond issue vote (citizens vote for the bond
issue so that the government can levy a tax)
 Selling bonds to the general public through an
investment bank
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Fees and Charges - user fees and charges
are a significant revenue source.
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Specialized facilities such as golf courses, pools,
tennis courts which require intensive maintenance
Services involving special privileges such as lighting
on a tennis court at night
Programs requiring higher than average costs of
materials such as a ceramic class
Rental of specialized equipment such as golf clubs
etc...
Programs requiring specialized instruction
Exclusive use of a facility, program or service by an
individual or group
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Concession Operations – can be done
by:
 A fund raising group
 A private contractor
 The organization itself
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Grants -
are a way to get financial aid from
the federal and state government.
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These can be matching or non-matching grants
Federal funding to support local parks and
recreation have been significantly reduced in recent
years.
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Fund Raising –
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Can generate revenue for program
offerings to capital projects
ex. Buy a brick, cookie sale, raffle,
auction
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Corporate Sponsorship – most
frequently used to support sport and
athletic programs
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Includes
 Team sponsorship
 Land
 Equipment
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Gifts and Donations –
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Major gifts of land, buildings,
equipment and money from private
individuals or groups
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Partnerships – cooperative relationships
with others
Done to achieve a specific goal
 Must create a win-win situation
 Success is measured in terms of programs and
services delivered, resources used efficiently, and
participant levels of satisfaction
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