Feature Article - March 2009
Find a printable version here

Save Some Green

Smart Cost-Cutting Strategies

By Dawn Klingensmith

Line by Line

The major line items in terms of operating costs are labor; energy and utilities; general administrative expenses; marketing; repairs and maintenance; insurance; and, in the case of privately owned facilities, real estate taxes. Spending cuts in all but one of these areas should be considered when money is scarce, according to David Sangree, president, Hotel & Leisure Advisors, Cleveland.

"I would leave marketing alone," he said. "You need marketing money to draw customers, to let them know what's going on and that you're open for business."

Otherwise, Joe the Plumber might rent movies and order pizza on Friday night because he and his kids had no idea there was a "dive in" movie taking place at the family aquatics center.

Finding ways to conserve energy can significantly reduce expenditures. However, when the economy has gone to pot, that's not the first line item Sangree would zero in on.

"In a typical recreational building, energy expenses account for 5 to 10 percent of the budget," he said. "That's a significant expense, but it's far less than labor. When you're trying to face hard economic times, you have to look at your labor costs and see if you can make cuts."

Leading up to its decision to reduce the Rec Pool's hours, UC Davis came to the conclusion that labor costs were consuming too much of the budget.

"The two major expenses to running a pool are heating costs and staffing costs. We had direct control over staffing costs, so we took a calculated look at how we could best serve our customers, while reducing the number of hours we were staffing the pool," Tolla said.

Reevaluating work schedules with respect to slow periods and peak periods usually reveals misjudgments in timing and opportunities for adjusting staffing levels and employees' work hours. Software programs are available to help optimize scheduling.

Insurance is another costly line item. "It's always worthwhile to be shopping around for better rates every couple of years," Sangree said.

While municipal recreation facilities don't pay real estate taxes, at privately owned facilities, property taxes generally account for 5 percent to 10 percent of the budget. However, tax rates sometimes are based on inflated property valuations, so it may be worthwhile to hire an appraiser and appeal the assessment if it's found to be too high.