Member NoGPL1 commented on the blog post Year 2020 budget reveals: Spend MORE on legal & payroll, LESS on property maintenance & LESS reserve (click to view): There is so much more wrong with this budget. This budget is boldly unbalanced.
Click to view the Year 2020 budget prepared by the CEO.
NoGPL1 commented:
There is so much more wrong with this budget, it is difficult to know where to start. But this is serious, so I’ll just dive in.
The highlighted points in Part 1 and Part 2 of this blog post are excellent... but wait, there’s more. The worst being that the Members, yet again, are getting bamboozled, hoodwinked, well just lied to by management and the three ring board members.
Instead of giving all of the answers, let’s go through a ‘normal’ budget process, shall we?
In a ‘normal’ annual budget process, the overall fiscal health of the Corporation is looked at by a ‘qualified’ financial professional who then provides guidelines to the person responsible for preparing the initial budget submission. (By the way, our bylaws state the board president submits the budget, but apparently this is another duty abdicated by this board to an employee, at whim, as they state there is no job description with outlined duties.)
Once the guidelines are given, things like reduce or keep expenses flat, increase or anticipate a downturn in revenue, etc. are the very basic assumptive guidelines generally given, based on fiscal health, trends, known or anticipated market conditions, etc. Then the tough work begins. Unlike the budget submitted (for reference look to columns “Proposed” and “Requested”), most submitted budgets show relevance and thoughtfulness to reality which is reflected in this wacky budget in column “2019 Average”. Normally, a budget would show a column titled, “2019 Actual”. This budget format can’t do that because it is based on Cash Accounting and has no idea what it’s actual costs are, per budget category, per line item, per month. Yes, another reason why Accrual Accounting is the best way to reflect and record your financial data. If bills are not paid, monthly, which we know they are not, we have no idea what true costs are, per month, for anything.
Example: If you ran your household like this and skipped your mortgage payment in November and paid it in December, you would falsely think you have more money at the end of December than you do. Eventually, that missed payment catches up to you and chances are, January would be a rough month!
So let’s get back to “Proposed” and “Requested”. Without giving the answer, take the total of each of those columns and divide them by the number of homes in our association. What’s that number? That is the “Proposed” or the “Requested” Member Dues, per household!
Now, to be fair, you could back out any revenue before you derive at the dues amount. But honestly, with the true trends of the revenues of the association, the revenues are negligible. Since there is zero funding for marketing, pr, infrastructure preparation to “ready assets to produce revenue”, it’s a negligible number. But, to be fair, you could deduct ‘revenue’ from the totals, before the division by number of homes to reach the “Proposed” and “Requested” Member Dues Amount. What numbers did you get? Was there an increase over what you pay now? A decrease? The same amount? Hmmmm....
So back to those guidelines... or “targets”. Guaranteed, the above exercise was done. The Member Dues did not hit the “target”. The “target” appears to have been: No Dues Increase.
This is not a bad target for Members. However, if it sincerely costs more to keep the association running than the current dues support. What is the responsible thing to do?
Is it responsible to just raise dues to $400 per month? Or is it responsible to cut maintenance, infrastructure, building reserves, marketing our assets which increases revenues and then spend more on legal costs which has produced nothing for the association, to date, increase spend on labor because existing (highly paid) staff is absorbed with legal matters versus management of our facilities and working on increasing revenues?
Does that seem like a reasonable approach? Because it’s what this budget reflects. Ever heard the term, “balanced budget”? It has many meanings. In this scenario, this budget is boldly unbalanced. A seasoned business person facing this challenging situation, would “Propose” and “Request” a balanced budget that takes ALL of the needs of our association into consideration. And, shockingly, it may require sacrifices, but not stagnation and neglect as this budget proposes.
Fellow Members, that’s the cost of ownership. We made the monumental decision to manage a complex facility with laws, regulations and a hornet’s nest of unknown costs, needed repairs and no plan on how to take it over on Day 1. Shame on us for not expecting the, then board, to plan better.
Instead, the president of that board was hired to manage the transition - still without a plan. And now, a year later, a really, really poorly designed budget like this comes out from that same person. This is setting us up for more failure. Time to stop doing the same mistake over and over again.
We need knowledgeable management and a responsible board that knows their roles and doesn’t abdicate them to inexperienced staff. We need to right this ship, keep our independence, maintain ownership of our association and have it run properly. The Members deserve that. It is about the Members and our Association.
NoGPL but no losing our association to poor management either.
Vote for change.
Still haven’t voted?
Bottom line, revenues are down and expenses are up and increasing. We will have to pay to fix it unless we change the board.
It's your money. Can you afford another year of $175K budget deficit (as of Nov. 2019) and a possible assessment?
Vote Yes! On the recall.
Cast all 5 of your votes for these 3 candidates: Allan-Cohen-Siegel.
Yes, each candidate can receive more than 1 vote from you.
It’s too late to mail the ballot,
Bring it to the club on the 19th at 7:00 PM;
or,
Email LLHOArecallpetitioner@gmail.com and we’ll have someone pick it up and bring it to the meeting for you on the 19th.
Vote! Let your voice be heard!
If you like this post, you may like the following posts, click to view:
Year 2020 budget reveals: Spend MORE on legal & payroll, LESS on property maintenance & LESS reserve
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