Sunday, December 07, 2003
Copyright © Las Vegas Review-Journal

Officials: Audit shows public-private partnership paid off

YMCA-run center more efficient than facility run by city

The YMCA-run Durango Hills facility ran a deficit of $267,000 in 2002, an audit shows. A city-run center's deficit was $831,000. Photo by Ralph Fountain.

When Las Vegas hired the YMCA of Southern Nevada to operate a new community center in 2000, officials touted the public-private partnership as a bold cost-cutting experiment.

The controversial agreement was the first time Las Vegas had allowed an outside firm to compete with one of its own departments, in this case Leisure Services, for a government services contract.

Officials believe an audit of the Durango Hills Leisure Services Center's finances released last week shows the experiment paid off. And some expect it will pave the way for more public-private partnerships in the future.

"I think we're compelled to look at this as our budgets tighten and labor costs escalate," said City Manager Doug Selby. "We're compelled by our aim for good government to look at other options."

Las Vegas built two community centers in 1999. Both were located in fast growing, relatively affluent areas. Both had nearly identical facilities, 41,000-square-foot buildings with gyms, fitness rooms and adjoining swimming pools.

The biggest difference was the way Las Vegas staffed the centers.

At Veterans Memorial Leisure Services Center, not far from Charleston Boulevard and the Las Vegas Beltway in Summerlin, the city used employees from its Leisure Services Department.

But at the Durango Hills center, located near Durango Drive and Cheyenne Avenue in the northwest valley, the city turned over operations to the YMCA.

"It's a perfect test case," said Councilman Larry Brown, who pushed for the YMCA partnership. "We said, `Let's compare how the city offers leisure services and the nonprofit offers leisure services and find some strengths and weaknesses.' "

A comparison of their 2002 finances carried out by City Auditor Radford Snelding over the past six months found both centers lost money, but the YMCA-run facility lost considerably less. The YMCA's deficit for the year at Durango Hills was $267,000, while the city-run center's was $831,000, according to the audit.

Despite the disparity in deficits, a separate survey found more than 90 percent of residents were satisfied with both facilities.

"Straight up, it appears that the Durango Hills center is run more effectively and efficiently," said Steven Frates, senior fellow at the Rose Institute of State and Local Government at Claremont McKenna College, who reviewed the audit for the Review-Journal. "But some of those things are judgment calls to a certain extent."

The YMCA succeeded in making its services come closer to paying for themselves. It covered 84 percent of its expenses through class fees, membership passes and contributions, while the Veterans Memorial center covered only 39 percent of the cost of its services.

Part of the reason was the city charged significantly less for passes to Veterans Memorial. On average annual memberships at the city-run facility cost $120 per year, while the YMCA charged $429.

Councilwoman Lynette Boggs McDonald, who represents the area, said she believes the city should learn from that and look at raising its rates. "If the demand is so strong we might want to slightly adjust the fees," she said.

Boggs McDonald also noted costs were pushed up at the city-run center because it offers a broader range of services than the YMCA, some of them catering to the elderly or people with disabilities. "Those are very much in demand," she said.

Added Leisure Services director Barbara Jackson, "If you look at the very nature of what public recreation is ... it never recoups the entire cost of its programming."

But Brown believes a big reason the privately run facility was more efficient is it focuses on what the public wants. It's an approach the city should use at the facilities it runs, he said.

"At Durango Hills, if programming doesn't get any response that program is canceled," he said. "At times I think we need to ask, can the city afford to be all things to all people?"

When the idea of allowing the YMCA to run a community center was first proposed it drew protests from the city employees union. They argued the deal would take jobs away from city employees.

Tommy Ricketts, president of the Las Vegas City Employees' Association, said, "Our position is city facilities should be operated by city employees."

Using private sector workers, however, is the reason taxpayers usually come out ahead when government uses public-private partnerships, according to Frates.

"When a city hires an employee and once they vest you've got a longtime cost, until they die," he said. "That makes a huge, huge difference."

The audit showed staffing expenses at the two facilities equaled about half of their total operating costs. However, for its payroll expense the YMCA had 32 more employees.

The annual costs of pay and benefits for a salaried employee was, on average, $17,000 less at the YMCA-run facility. For hourly employees the gap was smaller, with the YMCA paying an average of $10.86 an hour to the city's $11.11.

The YMCA also saved about $30,000 by recruiting volunteers to staff the front desk and help with its sports leagues and youth and family services.

Veterans Memorial doesn't use volunteers.

As cities around the country have tightened their budgets recently, the first things to go have usually been the leisure programs, Brown observed. That's motivation for officials to find the most efficient way of providing the programs and facilities that increase the city's quality of life, he said.

Although neither Brown nor any other city official believes the audit shows the city should turn to public-private partnerships in every instance, Brown believes it may be the best option as growth brings the need for more community centers.

COMMUNITY CENTER AUDITS

Center	Durango Hills	Veterans Memorial
Revenue	$1.43 million	$542,000
Expenses	$1.7 million	$1.3 million
Deficit*	$267,000	$831,000
Avg. salary	$49,000	$66,000
Avg. hourly wage	$10.86	$11.11

*Doesn't include $203,000 in utility expenses at Durango Hills paid for by the city. Utility costs at Veterans Memorial were not accounted for either.

SOURCE: Las Vegas city auditor report