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Budget guidance reviewed for next fiscal year

By Greg Ellison

(Oct. 22, 2020) With the covid pandemic making revenue and expense projections especially challenging, Budget and Finance Committee Chairman Dick Keiling reviewed the group’s guidance for the next fiscal year operating budget during the board meeting on Saturday.

Keiling said the budget committee has requested an updated accounting of Payroll Protection Program funding, as well as a contingency plan if the loan ends up being deemed payable by the Small Business Administration.

“The general manager [John Viola] is thinking to develop a line item if it is an issue to address any potential payback of PPP money,” he said. “It’s the belief of the GM and the team that we’re doing all that we’re suppose to be doing and that the payback, in all likelihood, will not be necessary.”

Keiling said significant financial deficits have been paid over multiple years in the past, and that the approach is still an option.

Keiling proposed analyzing variances between last year’s budget and prior years. He also said each department and amenity would need to show three years of historical actuals.

“We do recommend adding a column to compare variances between previous budget years and the new budget year,” he said. “It would be helpful in understanding are we getting back on track with what we budgeted the previous year given the covid situation.”

Viola questioned the effectiveness of the proposed column addition.

“I have a forecast and I have years of data,” he said. “Doing budget to budget, honestly, I don’t see the benefit [because] we have so many variances.”

Keiling said the covid situation and related financial impacts would affect traditional forecasting information.

“Any department increase or decrease of 5 percent or $5,000, whichever is less, requires justification,” he said.

Also any proposed changes in fee structures for membership would require detailed analysis.

“Revenue projections should be reflected for each category of membership showing increases or decreases,” he said.

Keiling said any department staffing changes would require complete substantiation.

“Managers for each fee-based amenity should provide comprehensive details on new revenue-generating proposals,” he said.

The budget guidance also dictates amenity management should back up other budgeted revenues.

“I think we’ve done a good job in the past year or so of conservatively looking at our revenue base,” he said.

Turning to food and beverage operations, Keiling said the related budget should be based on the contract with the Matt Ortt Companies and its outlook for the next budget year.

“Budget and Finance would like to see Matt Ortt’s outlook on banquets in the 2021-22 period following this very unusual year,” he said.

Keiling said a separate capital budget should be presented apart from the operating budget.

“Any new capital expenditures must be financially justified,” he said.

Keiling said any prior year losses must be addressed with a plan, along with recommendations for any budget surpluses.

“We’ve been talking about a reserve study update and the GM has put forth a recommendation that we do that reserve study in the spring,” he said. “It’s a good time to revisit the assumptions we previously made and see if they still hold water.”

The Budget and Finance Committee has already met with Viola and anticipates dates for budget process will be published in the near future.