By Josh Davis, Associate Editor
(Aug. 23, 2018) The numbers themselves were far from encouraging, but Ocean Pines Treasurer and Budget and Finance Committee Chairman John Viola was well received following a thorough financial presentation given at the association’s Aug. 11 annual meeting.
Viola said total operating losses in fiscal 2018 were $1.247 million. He said the lion’s share of about $1 million was because of overaggressive budgeting for food and beverage operations.
“A big part of that, last year, was the excessively optimistic food and beverage numbers,” he said. “There was a plan the association had [to] try something different. Sometimes you get very good results, sometimes whatever. But, lessons learned from it. That happens. Doing it again – that’s another story.”
Pressed to give more detail, he said the budgeted revenue numbers were “higher than we ever had before,” adding that the budget and finance committee “did not agree” with those numbers.
With unprecedented revenue projections, Viola said Ocean Pines also should have budgeted for higher expenses.
“You had a lot of overtime … thinking that these sales would come by being open later,” he said. “Sometimes change brings chaos – a little chaos – sometimes a lot of chaos … the main thing is to transform from it and I really believe, as an association, everybody is looking to do that.”
In addition to food and beverage expenses, legal costs were $110,000 over budget, information technology consultant fees were over budget by $116,000 and accounting fees were $26,000 over budget, he said. Bad debts added $70,000, for a total of $322,000.
Viola said the bright spots included budgets for police, public works, parts and recreation, racquet sports, and aquatics that were “all pretty much in line.”
“It’s almost a tale of two cities there – there was a lot of good, some not so good,” Viola said. “The not so good we’ll work on and, I’m sure, we’ll transform from that.”
He said the two-year total loses now stood at about $1.611 million, including about $367,000 lost during the previous fiscal year.
On the bright side, Viola said assessments over the last five years had increased by just $37, representing about 4 percent, or 0.8 percent per year.
He said reserves totaled $7.89 million as of April 30 and were projected to be $7.49 million on April 30, 2019. Some reserve money would be used to pay for the in-progress forensic audit, Viola said.
Also on reserves, he said the Design Management Associates study was “pretty much complete.” Earlier this month, the budget and finance committee submitted recommendations for reserve escalation and inflation rates, and the company is adjusting for those numbers.
Because Ocean Pines is “coming off two years of losses,” Viola said, “my feeling is that if somebody can do something better than us, we should look at that.”
“That doesn’t mean we do it, but … [in] every department we should have benchmark information [and] metrics to give us a guideline where we stand,” he said.
He said food and beverage operations had already been outsourced and appear to be improving.
“That doesn’t mean outsource everything,” Viola said. “We do have a lot of departments doing very good jobs.”
He added because of many changes in the finance and information technologies areas during the last two years, “I believe that that can be transformed and I believe it can be at a viable, acceptable cost.”
Summaries of several presentations given during the annual meeting can be viewed online at http://oceanpines.org/wp-content/uploads/2018/08/2018-Annual-Meeting-Presentation.pdf.