CPRE Finance and Budgeting 3

Question 1

Which pricing strategy sets fees just high enough to cover direct costs but not overhead costs?

Accepted Answer

Partial cost recovery pricing

Answer

Partial cost recovery pricing covers direct costs but relies on tax subsidy or other funding to cover overhead and indirect costs.

Question 2

A park district's operating budget levy rate is most directly limited by:

Accepted Answer

State constitutional or statutory tax caps

Answer

State constitutions and statutes typically impose tax rate limits or levy caps on local government agencies including park districts.

Question 3

In grant management, a match requirement means the agency must:

Accepted Answer

Contribute a specified share of project costs from non-federal sources

Answer

A match requirement obligates the grantee to contribute a defined percentage of project costs using local or other non-federal funds.

Question 4

Which financial metric best indicates whether a recreation program is covering its variable costs?

Accepted Answer

Contribution margin

Answer

Contribution margin (revenue minus variable costs) shows how much a program contributes toward covering fixed costs.

Question 5

A park agency's fund balance policy should specify a minimum reserve level expressed as a percentage of:

Accepted Answer

Annual operating expenditures

Answer

Best practice is to maintain a minimum unassigned fund balance (commonly 15-25%) of annual operating expenditures.

CPRE - Certified Park and Recreation Executive Practice Test