Cost Recovery and Revenue Enhancement

We recently had visitors from Ireland’s Teagasc agency (The Irish equivalent to Cooperative Extension). Back in the late 90’s they moved from a no-fee system like ours to a fee-based approach for services that directly benefited individuals and/or companies. We wouldn’t be the first state extension system to do this. Others such as Penn St., Ohio St. Wisconsin, Michigan, Iowa St., and Kentucky, have already built new delivery models that include programs and services with that run the continuum of no charges, partial cost recovery, full cost recovery , and even revenue generation.

How do you feel about incorporating more cost recovery and revenue enhancement strategies into VCE’s playbook?

— Joe Hunnings

8 thoughts on “Cost Recovery and Revenue Enhancement

  1. Karen Vines

    I recently reviewed a promotion and tenure packet for an agent in Florida and the information provided included monetary contributions arising from her activities including soil test kits and presentations.

    Reply
    1. Joe Hunnings

      Many states that have cost sharing and revenue generation models, also now have metrics in their performance evaluation system to measure their success . Those systems also recognize that agents should not be developing programming just to chase the dollars, but that programming still needs to meet identified needs.

      Reply
  2. Anonymous

    Fully support cost recovery. The fees collected should be based on a well thought out business plan though. How should fees support the organization? Should they go back to the unit or should a portion go to central office for use on non-programmatic concerns? How about centralizing all the fees collected and have them go into the general fund distribution handed out at the beginning of the next fiscal year? What programs should be assessed fees? What about exceptions for sensitive audiences? If only some programs are charged, should those that assess a fee cover the cost of other no-fee programs or would that be unfair?

    Reply
    1. Joe Hunnings

      I agree. Cost recovery seems like a no brainer. At least for those programs where there is some private benefit and an ability to pay. For programs such as our FNP efforts, the ability to pay even “cost recovery” expenses might be difficult. Plus there is a significant “public good” to those efforts. in those cases seems we may need to stick with our “no fee, no cost recovery” approach. What do others think?

      As far as distribution of fees and cost recovery revenue, there are several models out there, but it appears that most commonly the local program that generated the funds, receives the bulk of it. Some also might go to support program development for the “program team” that the work is associated with, and sometimes a small portion goes for discretionary spending by the Director.
      All these things that would have to be worked out for VCE, if we decide to change the way we do business.

      Reply
  3. Anonymous

    To more robustly respond to this I’d have to know what is meant by “partial cost recovery”. In many ways we have done this with many programs for many years. The specific costs of a specific program are covered either by registration fees, sponsors or grant dollars. The only thing rarely covered in our current SOP is our time. Right out of the gate I would feel uncomfortable with recovering the value of my time in a given program. For one, I’m so well compensated that it’ll really increase the costs.
    Secondly, this would impact, probably reduce, our existing partnerships as we become more “business appearing”. When the local SWCD or a sister state agency helps us, is my time more valuable than theirs? And when Programs are put together with equal investments of time by partners, I can’t sit at the table and tell them I’ve got to cover my time or even my mileage!
    Thirdly, I’m a public servant operating for the public good. Even if I help an individual farmer with a nutrient recommendation, there is a significant public good in that. It’s seems untenable to me to define which programs are “significantly public good”.

    Reply
    1. Joe Hunnings

      I guess it would be up to us to define what “partial cost recovery” means, but most commonly what i see from other states is it refers to “out-of-pocket” expenses only. So including the cost of a meal, the rental fee for the facility, or an outside speaker’s fees would be “partial cost recovery.” It would not include the cost of the agent’s time or probably not even the agent’s travel expense associated with preparing for and conducting the meeting. But it could include printer expenses for handouts, long-distance charges to take care of meeting arrangements, and an amount to cover the wear and tear of a multimedia projector, among other things.

      You raise a good point about how to decide whether to charge for work that primarily assists an individual farmer, when that work crosses over the line to also serve the public good. How do you decide what fee is appropriate, if any? Hopefully some other state Extension systems can give us some insights on how they handle that scenario.

      Reply
  4. Michelle Prysby

    I’m at a national Extension conference today. Moments before reading this post, I was speaking to a colleague with another university who was telling me that she is unhappy with the negative effects of the new cost recovery strategies there. In fact, she is so unhappy that she is applying for other jobs in order to get out. I haven’t done a lot of research on the different cost recovery strategies, but I wanted to share this story just to point out that while administrators of other institutions might say cost recovery is working great, you might hear different perspectives from the front lines.

    Reply
    1. Joe Hunnings

      Thanks for sharing Michele. I suspect that is true in many places. I had one administrator say that initial attempts in their state to adopt revenue generation were not well accepted and it required them to go back to the drawing board after a few years.
      And very commonly what I have read and heard about these strategies is that the internal angst is greater than that by clients, partners and stakeholders.
      I think the cost recovery ideas will be less troublesome than the ideas about revenue generation. Many people already do some form of cost recovery. What will be important there will be to provide some consistency in how to calculate what costs should be recovered and when.
      So just what costs should be recovered and when?

      Reply

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