Section I: Overview of Cost Recovery

1. Background and philosophy
2. Public Good and Private Good
3. Guiding Principles
4. Levels of cost recovery
5. Uses of recovery funds

A. Background and Philosophy

This section outlines Extension's basic philosophy toward cost recovery as it relates to program delivery. Terms that are not immediately familiar or clear may be found in the Terminology Appendix.

Extension programs and services benefit society as a whole or as broad cross-sections of that society. (Program areas described at: http://www-bos.ag.ohio- state.edu/admin/.) Programs are targeted toward individuals and families, community and government groups, and businesses and industries. Delivery of these programs enhances our social and physical environments.

Extension is frequently asked to provide customized programming for exclusive or private audiences. With its existing resources Extension cannot support the growing demand for this customized programming without compromising its mission of providing educational programs for the public good, however.

To meet this need, Extension is initiating guidelines and strategies for recovering some costs associated with programs and services for the public good as well as recovering full costs for customized programming for exclusive audiences. When a small easily defined exclusive group benefits from Extension's efforts, Extension will take steps to recover the full costs related to providing programs and services.

Recovering costs associated with Extension programs and services is not a new idea for Extension. Extension has been charging fees to cover some of the costs of existing programs for a long time. Sometimes, the costs of some Extension programs and services targeted for specific audiences have been fully recovered through grants, contracts, agreements, and MOUs.

Partial or full cost recovery provides opportunities for Extension to:

• Respond to specific requests from exclusive audiences for customized, high quality programming.
• Assure that Extension does not unfairly undercut private providers of commercial services by providing a "free" publicly subsidized alternative.
• Assure that public funding for Extension programs and services that benefit society as a whole or as broad cross-sections of that society is available for that purpose.

B. Public Good and Private Good

Extension programs and services that are offered for the public good are not always easily distinguished from those offered for the benefit of an exclusive group. Customized programming for exclusive audiences or individuals may be easier to identify, however. The chart below illustrates the major differences between the programs and services available for the public good and those provided for a targeted private or exclusive good.

Extension offers many targeted public good programs and services that fall somewhere between these two categories. When an Extension program or service is not defined clearly as a public good, or private or exclusive good, Extension professionals must use their judgment to determine the extent to which costs associated with the program or service should be recovered.

Recovering costs associated with Extension programs and services allows Extension to meet the needs of Ohio residents, and promotes the public good for societal and individual improvement, by extending, expanding, and/or improving program delivery, accessibility, and implementation beyond the public's usual expectations of Extension.

Decisions about recovering costs associated with Extension programs and services should be part of every Extension professional's program planning process. By utilizing cost recovery practices, Extension is able to continue to provide high quality programs and services for the public good, and at the same time, respond to requests from exclusive audiences for customized, high quality programming.

C. Guiding Principles

1. Extension supports the recovery of costs associated with programs and services for the public good and those associated with developing and implementing high quality customized programming and services that result from specific requests from exclusive audiences. Cost recovery efforts must advance Extension's Mission of "Engaging people to strengthen their lives and communities through research based educational programming." Extension supports cost recovery processes that have:
   • Policies and strategies that are consistent with its land grant mission.
   • Consistent guidelines and tools for determining costs related to a specific program
   • Flexibility to allow the needs of specific program areas and audiences to be met
   • Consistent practices throughout the organization regardless of the unit or location
   • A fair system of distributing the revenues to benefit participating staff, faculty, and administrative support services, and inspire support for cost recovery efforts throughout the organization
   • Active administrative support and assistance
   • Broad communication on and off campus among faculty, staff, and customers

2. Cost recovery increases program impact as it supports and encourages teamwork and interdisciplinary efforts.
3. Cost recovery practices must be ethical and legal, and not compromise the integrity of the organization.
4. Ohio Extension programs are customer and stakeholder driven. The process is efficient and user-friendly.
5. Cost recovery practices are not intended to limit audience participation, impact, or involvement. Ohio State University Extension programs are open to all regardless of individual ability to pay or source of funding. (Excludes programs for private or exclusive use that are fully funded by that group or audience.)
6. The magnitude of cost recovery practices is not a determining factor in performance appraisals.
7. Cost recovery strategies value and honor current and future partnerships. Strategies are shared with traditional funding sources such as county commissioners and state legislators.
8. All Extension professionals are responsible for recovering costs associated with Extension programs and services.
9. Extension strives to help its employees simplify and standardize the development of budgets that will recover costs through the availability of worksheets, spreadsheets, guidelines, workshops, other training and tools.
10. Decisions regarding a program's future and whether to continue it with base (institutional) funding are made in a timely and informed manner, since programs and services supported by fees do not continue without those fees. The program Assistant Director has the final responsibility for determining whether cost recovery programs are appropriate.
11. The total cost of programming, including costs related to general Extension system (administrative) support, should be identified and considered when determining the cost of programs.
12. Cost recovery efforts may include the use of non-traditional employment models including part-time, short-term, non-tenured, and contract employees.
13. Extension supports comparable/equitable pay for comparable work for all Extension professionals, regardless of source of salary and support funds, realizing that market forces may affect final compensation
14. Incentives are provided for achievements of: 1) Individuals and teams that successfully generate additional dollars for the system through fees and grants: and 2) New types of program delivery by all Extension professionals.
15. Agencies or individuals that partner with Extension in the development and delivery of Extension programs and activities that involve cost recovery may be reimbursed for their direct costs. Those involved in planning the program should agree on issues related to reimbursement while planning the program, prior to collecting any monies.

D. Levels of Cost Recovery

The type of audience for which the program is intended guides the extent to which fees should be charged to partially or fully recover program costs. There may be programs for the public good and the private good that are part of Extension's base plan of work and/or are beyond typical Extension programming. Full recovery of costs associated with any atypical program or service should be seriously considered.

Cost recovery may be more clearly understood by viewing it as a continuum with relation to programs for the public good and the private good:

Public Good Programs - Programs that are primary and fundamental to the mission of Ohio State University Extension. These programs may have no charge or may recover direct program costs.

Examples: Community meeting on the impact of new legislation on the local area; Financial Literacy classes open to the public; Workshop about after-school activities open to the public; Food safety class for high-risk individuals.

Targeted Public Good Programs - Programs/services that are targeted and content specific. These programs/services are based on existing programs, and are modified or customized for a specific individual, business, or narrowly defined group that is the primary beneficiary. These programs/services could be adapted for other audiences. These programs are offered with a fee that recovers the direct personnel costs, including salary, benefits, and travel.

Examples: Food safety workshop adapted for restaurant association member; Perennial plant care series adapted for nursery industry employees; 4-H projects adapted for teacher workshop about hands-on science; Food & Nutrition program; Pathways to Money for Department of Jobs and Family Services; Keep Food Safe.

Private or Exclusive Good Programs - Customized program developed for a specific individual, group, or business that realizes primary economic benefits. This might also include on-going one-to-one advising for a specific individual, group, or business that realizes primary economic benefit.

Examples: Food Safety certification program for restaurant workers; Strategic Planning Retreat conducted for a local non-profit agency; "Be Well, Eat Well" for a company's employees; Investing; Commercial pesticide applicator training for a company's employees.

E. Uses of recovered funds

Discussions and agreement about how costs that will be recovered and returned to the Extension unit will be used should occur as the project is being developed. The needs of the Extension unit and the Extension employee responsible for generating the funds need to be balanced.

These funds may be used to:

• Hire backup support for the staff member whose time is released to work on the project;
• Hire temporary personnel to develop and /or teach programs;
• Provide additional travel and professional development funds for the staff member whose time is "released" to work on the project;
• Purchase new equipment or resources for the unit; or
• Supplement the unit's operating budget.