A proposed draft
Roger Hultgren
I am forwarding a proposed draft report on charges B & C. This is in “*.doc” format. I hope that everyone can open it. If anyone has a problem with it, please let me know and I will send it as a “*.pdf” file.
A major change in this draft from the one Nina sent out is in the exhibits. I did not include the spreadsheet on which the graphs are based; I think that just may be too many numbers for the Board. I did include the graphs of CA and the 10 village revenues and expenses; they are exhibits A through K (11 graphs). I did not include the graph of the 10 villages combined. I think that graph is really superfluous; I included it with the spreadsheet I sent to committee members just to give you an overview. I suspect the Board members are really interested in how specific villages have done, and those graphs are included. Exhibit L is the spreadsheet on the horse center.
The other difference in this draft from the one Nina sent out is in tone, as explained below.
When I look at the financials (as summarized in the spreadsheet and graph that I put together), it looks to me like CA is doing just fine, in spite of the recession and the decline in housing values. Columbia has some advantages that should help it weather the current economic turmoil -- first, properties are re-assessed every 3 years, with changes phased-in over the time between assessments; second, we are located in a strong labor market area; and third, BRAC and other changes at Ft Meade will bring thousands of jobs to the area over the next few years and the people who come with those jobs will need housing. I think those factors should prop up housing values, and thus also provide a relatively stable base for CA's assessment revenue.
This does not mean that CA should be complacent, but I do not think drastic measures are called for.
The picture with the villages is a little more complicated. Some villages have operated with surpluses while others have run deficits. No village has run a deficit each year throughout the period of FY2000 - 2010. In the aggregate, the villages ran surpluses in each of the last 2 fiscal years, in spite of the national recession. The draft report contains a table, showing how many years each village broke even or ran a surplus. This table shows the number of such years for each village over the FY 2000 – FY 2010 period (11 years) as well as the last 2 years. I picked the last 2 years because they are within the current recession (James may quibble if FY 2009 and FY 2010 are really “recession years” as the Fed looks at things, but I think it is pretty close. We can use other years, if needed.) Harper’s Choice, Kings Contrivance, Owen Brown, and Wilde Lake broke even or ran a surplus in both FY 2009 and FY 2010; Dorsey’s Search had a deficit in both years; the other 5 villages broke even or had a surplus in either FY 2009 or FY 2010.
Thus, I think the villages have done a good job. Again, they should not be complacent, but I do not see a big problem.
I feel we have not done a sufficient job to support any but the most general recommendations, such as constant vigilance (who would ever suggest that managers not be vigilant?), effective advertising to maintain and possibly expand membership subscriptions, seek new sources of revenue, and promote cooperative efforts and sharing of resources where practicable. Those are the recommendations I put in the draft (this after a paragraph saying we did not have enough time to develop more detailed recommendations). Two other recommendations are that CA monitor events in the labor market, especially at Ft Meade, to attract new customers and that CA or the villages arrange for a comprehensive study (giving enough time for a good job) of revenues and expenses.
I also included a statement that we have not looked at – and do not discuss – the capital expenses. I do not see how that can be done within our deadlines.
I not include Marvin's suggestion of farmers' and antique markets. In 2010, Howard County sponsored five weekly farmers' markets – three of them in Columbia. I do not think CA or the villages should try to compete with those. I agree with Marvin that the existing farmers' markets are not as large or as attractive as those in some other places, such as Madison, WI, but I don’t believe we should be advocating that CA or the villages directly compete with the county. I don’t know what to do about Marvin’s suggestion of an antique market. I vaguely remember that there used to be such a thing, but it seems to have died out. It is questionable that it could be revived. Also, if such a market is to generate revenue, CA or the village would have to charge vendors a fee for space. I doubt the interest is there.
My section on the horse center is brief. My proposed recommendation is that any proposal to expand such contracting should be carefully studied.
After reviewing the earlier reports that Nina forwarded a couple of days ago, I see that I was part of the committee that reviewed certain aspects of the allocation formula. My most vivid recollection of those years was, as I mentioned at our meeting last Wednesday, that a major concern was the salary study. The committee’s comments concerning the allocation formula can be summed up, as in the 2008 report, as “The Budget Committee is concerned about the widely divergent funding levels each village receives through its assessment share. These differences lead to villages funding between one-third and two-thirds of their expenses through their enterprise activities. The Budget Committee recommends the Board of Directors consider this issue in future village funding decisions.” In other words, the committee noticed the wide variation in the allocations but did not recommend a “fix”; instead the committee kicked the issue up to the Board. As I mentioned in my Dec 11 e-mail, this is still the case today. Looking at the spreadsheet I put together on the sources of revenue for each village, you can see that the allocation varies a lot among the villages, and the allocation also varies a lot from year to year for each village. The formula cited in CA’s budget looks fairly straight forward, so much for personnel, janitorial services, operations, and a per capita allowance for special events and communications. One would think that the result would be at least a similar allocation amount for a particular village from year to year. If you look at the spreadsheet I sent out on Dec 11, you can see the allocation amount for each village for years 2000 – 2010, and you should see considerable fluctuation. I suspect there is a lot of give and take between each village and CA on the village’s final number each year. James may be able to correct me on this. (If anyone needs another copy of that spreadsheet, please let me know.)
I hope the attached proposed draft can form the basis of our report.
On the matter of the Marcus proposal, I noticed that the 2004 committee recommended it not be adopted. That committee thought the proposal would result in a significant revenue loss to CA, because many people would abandon the Package Plan membership.
Thank you for reading.
As for Bernard’s invitation, I expect to be home each evening until Dec 23, unless my wife has some plan for me that she hasn’t mentioned yet. Some of those evenings will be devoted to wrapping packages.
*****
Roger Hultgren
grigs...@cs.com
-Nina