Tuesday, March 27, 2012

Can Edina Sustain Its Youth Sports Subsidy?

The City of Edina provides organized sports activities for youth aged six to 15, in partnership with 14 non-profit, volunteer-led sports associations.  These associations ranged in size from about 60 youth, to over 1,700, and serve over 10,000 youth annually.
In 2011, each association was assessed an $11 fee per participant, a two dollar increase over the 2010 rate.  The assessment was the same for youth and adult leagues.  The assessment is included in the costs charged to participant by individual associations, which may be higher, to includes costs for referees, uniforms, etc.   In 2010, Edina collected $95,697 in revenue from youth sports associations.
One perceived problem with the existing free structure is that total maintenance costs are distributed equally to each participant, and are not based on the variable maintenance costs attributed to each sport.  In 2010, youth fees covered 34% of total youth maintenance costs attributed to youth athletics. Youth fees are estimated to cover 32% of maintenance costs in 2011.

An additional problem with the fee structure is that the City of Edina ends up subsidizing roughly two-thirds the cost of youth athletics.  In 2010, that dollar amount was $188,942, and was estimated to increase to $203,703 in 2011.  Given the current economic climate, it’s not surprising that policymakers would reconsider the fee structure; the general political preference for user fees over taxes makes it almost inevitable.
A team of student consultants at the University of Minnesota’s Humphrey School of Public Affairs evaluated the current structure on four criteria:  Efficiency, Equity, Adequacy, and Feasibility:
Efficiency:  The current structure is inefficient in that it does not cover all of the associated expenses, and creates a subsidy that artificially lowers the cost of participation, which may induce changes in consumer behavior.  But, this may be mitigated by the positive externalities of healthier youth that are less like to engage in criminality.  Score:  3.5/5
Equity:  The current structure does not account for variable costs; the fee is same for each sport regardless of the maintenance costs.  But, the fee does require one to pay for benefits received (participation), and the city’s cost (the subsidy) could be considered a payment for healthy kids and lowered policing costs.  Score:  4/5
Adequacy:  While the fee structure is highly stable (no one can participate without paying), it falls quite short of generating sufficient revenue to cover costs.  Additionally, the fee is not indexed for inflation or increases in variable costs.  Score: 2.5/5
Feasibility:  The fee is easy to collect, but political feasibility is mixed.  Youth sports associations naturally oppose any fee increase.  But faced with increasing maintenance costs, Edina might have no choice but to raise the fees, since raising property taxes is not a viable option.  Score: 3/5
The student consultant team is likely to recommend a phased change to the fee structure that more accurately reflects variable maintenance costs, and preserves at least some of the subsidy to youth sports.  They will present their findings on Wednesday, March 28th.

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