Committee vets first draft, hears from dept. heads
(Jan. 9, 2020) Work on the Ocean Pines Association’s budget for the next fiscal year got underway in earnest on Monday, when the budget and finance committee received presentations from the individual departments.
Those presentations, Committee Chairmen Dick Keiling said, provided the committee with raw information about what the departments are thinking, and vice versa.
Keiling also expressed gratitude for General Manager John Viola preparing the budget binder ahead of schedule and providing the committee members copies before the end of last month.
“We’re glad we have it up front to review and it will be helpful going through the budget process,” he said. “Ultimately, at the end of the day, it’s up to the board to bless a budget and they will take our recommendations and do with what they see fit.”
Viola reminded the committee that the proposed draft budget was a working document compiled with input from both the budget committee and individual department leaders.
“It was prepared bottom up as the guidance was directed from budget and finance,” he said. “Every department head had total input … as well as the team.”
In addition to providing the budget committee with copies of the proposed budget on Dec. 19, Viola said budget recommendations would be published Jan. 24.
The review process will carry into February, with a vote for final adoption slated for Feb. 18.
Viola said after initial budget deliberations, the possibility exists to reduce the $986 annual assessment charge levied during the current fiscal year.
“When we consolidated all the departments and came up with one number, it’s $23 favorable on the $986, within our proposed budget that we’re presenting today and this week,” he said. “We did pull out a key component, which are the salary adjustments,” he said.
Based on a recently completed compensation study by the Sibson group, an additional $30 from assessment charges would be required to bring association employees in line within minimum regional pay scales.
Further proposed increases to assessment rates would include $19 for bulkhead reserves, $9 to compensate for medical and inflationary costs, plus $13 to account for assets depreciation.
In contrast, improved bottom line figures for association amenities look to chop $26 off assessment fees, as well as potentially dropping the $30 charge dedicated to deficit recovery efforts.
“A couple of years ago, we had an operating deficit of about $1.6 million,” he said. “The board mandated last year that this should be paid down over a three-year period.”
After the related $30 charge netted about $250,000 to address past debts this year, the tally was cut to about $640,000 at present.
“For this budget process ,we have included a forecast for this current year and believe we will be at least $250,000 favorable,” he said.
As currently configured the draft budget would set assessment rates at $978 for fiscal 2020/2021.
Director of Finance and Operational Logistics Steve Phillips, who reviewed proposed financial figures for the general administration department, said interest income is anticipated to drop and is being estimated at $100,000.
“We’ve been leveraging two banks against each other to create competition, Union Bank and the Bank of OC,” he said. “The reality is with the marketplace and the rates that number is not going to be as favorable as it was the last year or two.”
Another significant ledger reduction is bad debt, which Phillips said could cut about $50,000 from the association’s bottom line.
“Our numbers been around $200,000. However, this year we feel we’re going to be within that $150,000 budget we put in there,” he said.
Not all numbers are shrinking, as Viola noted legal expenses are anticipated to rise slightly.
“This is part of doing business right now,” he said.
Marketing Coordinator Julie Malinowski calculated her proposed budget figures by consulting with other department heads to ascertain optimal funding required to promote services.
“The focus on creating the budget was really talking to the amenities and departments to see what sort of marketing efforts they found most helpful,” she said. “When you see numbers here, it’s really been with the input of those departments.”
Increased revenues have been captured through advertising in the Ocean Pines Association newsletter, Malinowski said.
“We have seen an uptick in the past couple of months in ad revenue,” she said. “We have found that print advertising in this particular market works well, so we have focused a lot of our dollars on newspaper advertising.”
Phillips also presented a proposed budget overview for food and beverage services, in close consultation with Matt Ortt Companies leadership.
“There is some upside potential in the forecast,” he said.
The draft budget figures include about $1.4 million in food sales and roughly $844,000 from beverage sales.
“That’s up significantly versus the 2020 budget and our margins are up as well,” he said.
Presenting budget needs for the Ocean Pines Fire Department was president Dave VanGasbeck and Chief Steve Grunewald.
VanGasbeck said the fire departments proposed budget numbers came in a bit lower than the current year, with about $20,000 cut from capital expenditures.
Recurring maintenance issues were also mentioned by VanGasbeck.
“Our south station is sorely in need of a renovation,” he said. “We’ve been using the Band-Aid approach for the past several years.”
He said the station suffers from leaky roof conditions.
“We found mold recently in our living quarters, so we’re doing that on an emergency basis,” he said.
VanGasbeck said the fire department hopes to plot a course for capital improvements.
“What we’re going to do in the next couple of months is set up a renovation committee within the department,” he said. “We know we can’t afford a new building, but we need to do an addition on to our existing building to bring it somewhat up to standards.”
John Malinowski, general manager of golf operations and maintenance, said luring in new players is hampered somewhat by the 20 other courses along the coast.
“We’re in a market with 20 courses within 35 minutes,” he said.
While no changes have been suggested for residents, a minimal fee increase is being considered for non-members during peak times.
“Days where we had 230 or 240 rounds, the line was long so we thought $5 to $10 more dollars during that time would help our bottom line out,” he said.
Malinowski said although weather conditions are at present less than optimal for golf, marketing efforts continue year-round.
“We’re pushing hard for the spring, and even next fall,” he said. “Our market goes out west to Pittsburgh and north to Canada, with a lot of northern New York people. Our market is very broad … and keeps us busy.”