2019-2020 Budget Proposal Report

REPORT OF THE POALH BUDGET COMMITTEE-PROPOSED 2019-20 BUDGET

The Budget Committee submitted the attached fiscal 2019-20 Budget to the Board of Governors for their approval. The Board reviewed the operating budget proposed, made several changes with the concurrence of the Budget Committee and voted to bring this Budget to Association members at the Annual Meeting on August 19, 2018. The Budget Committee, in a series of meetings, met with the chairs and committee members, officers and individuals responsible for specific line items in the Budget to discuss and question the amounts requested. Finally, this year following a practice started last year, the Budget Committee and the Board of Governors provided Committee chairs and other responsible persons for Budget line items an opportunity to challenge the recommendations of the Budget Committee. This meeting resulted in a few changes to the Budget that is being submitted to members for their approval.

The result of this extensive process is a 2019-20 Operating Budget that is reasonable, meets the needs of the Association and its members and maintains and improves the quality of Lake Hayward and the Association’s services to its members and their families and guests.

Highlights of the 2018-19 Operating Budget:

Mill Rate-The mill rate to fund the 2019-20 Budget cannot be determined at this time. However, if we use the October 1, 2017 Grand List as the basis for the calculation of the mill rate and the Grand List does not change significantly, the mill rate will remain at 4.6 mills. The Town of East Haddam conducted a property revaluation as required by law as of October 1, 2017. The result of that revaluation increased the Association’s Grand List by 5% and a property tax increase levy of approximately $11,200. The actual mill rate for July 1, 2019 property tax bills will be set in the spring of 2019 after we receive the actual Association Grand List from the Town of East Haddam and we determine the rate of tax delinquencies from this year’s tax levy. This proposed budget assumes a mill rate of 4.6 mills consistent with the prior year.
Tax Revenues are projected to be $207,470 which represents a 100% collection rate of estimated current year tax billings and collection of any prior year delinquent taxes. With the collection procedures the Association has put in place, it is estimated all delinquencies will be collected by June 30, 2019. Interest on late payments of property taxes estimated to be $1,000.
Town of East Haddam Reimbursements-Over the past several years, the Association through the work of members of the LQIC Committee, has consistently received reimbursements from the Town’s Budget for costs related to the Association’s treatment of Lake Hayward and various other lake related education programs. It is anticipated that these reimbursements will continue and the amount that is estimated to be received from the Town will be $6,667.
Transfers From Association Reserves-The amount of reserve transfers for 2018-19 is $4,379 which is the unexpended balance of the 2017-18 Operating Budget. Consistent with prior practice, any amount spent from the most recent prior year (in this case 2017-18 is held in reserve and utilized to reduce taxes in the second succeeding year (2019-20). In addition, the Contingency reserve of $15,000 approved as a part of the 2017-18 Budget is returned to Unallocated Reserves.
Capital Improvements-The Properties Committee has two projects in its 2018-19 capital budget: expand and repair the 3^rd Beach parking lot and purchase additional docks
Communications-The Communications budget is used to print the Spring Packet, the Weekly Newsletters (a reduced volume of copies due to a decision by the Board to have copies available at each of the three beaches and urge members to access the Newsletter from the Association’s web site), postage and other supplies. The cost of the website has been reclassified into a new expense category-Web Master Expenses. Both the reduction in the number of paper copies of the Weekly Newsletter and the reclassification of Web Master expenses account for the reduction in this expense category.
Events and Recreation-These expenses cover the net cost (after deducting any revenue associated with specific events we charge for) of all activities the Association holds for its members and families including band concerts, Lake Hayward Days’ activities, arts & crafts activities, fishing and card tournaments and golf events and other children’s activities.
Insurance and Bonds-Insurance costs remain relatively stable with an estimated 3% increase in costs for 2018-19 year. The Association has approximately $500,000 of tangible property that is covered under its Property Insurance policy. In addition, the Association carries General Liability, Workers’ Compensation, Employee Dishonesty, Directors & Officers Liability and Umbrella Liability policies as recommended by our insurance agents.
Professional Fees-Professional fees represent fees paid to independent accountants to conduct a financial review of the Association’s financial statements and legal fees paid to our law firm to assist in Association legal matters.
Properties Committee-This budget continues to fund an aggressive list of current and deferred maintenance projects including: hiring part-time help to perform the many maintenance tasks required to keep our facilities safe and clean; Pavilion maintenance; beach raking; new beach sand for each beach area; mowing and grounds maintenance contract; providing sanitation facilities; tennis court and basketball court maintenance; expansion of boat racks to meet the present and growing demands for additional boat racks; trimming and removal of hazardous limbs and trees on Association property; surveying Association properties to determine boundaries; and reclaiming Association rights of way by establishing boundaries, clearing them of brush and trash, clearly marking them so members can use them for passage ways to the beaches.
Public Safety-The Public Safety Committee works closely with the East Haddam Police Department and the Connecticut State Police to provide a police presence at 10 Association events, providing police presence at peak periods; replacement of 10 street signs to improve accessibility for police and EMS emergencies and the reissuance of parking permits
Real Estate Taxes-Taxes are estimated to remain at the same level as 2017-18. We cannot predict the impact of the October 1, 2017 Town of East Haddam revaluation on our tax liability.
Stipends-Stipends will remain the same as in 2017-18
Tax Collector’s Expenses-These expenses include the cost of the Association’s on-line property tax billing and collection system and printing the property tax bills. Other costs include training, postage, envelopes, paper and lien fees and other recording fees. Lien fees and other recording fees are charged back to the tax payer requiring such charges. The offset is included in the Revenue Account-Liens and other fees.
Utilities-These costs include: electricity, water, cable system for the Association’s security system and the Association’s e-mail and records retention system.
Waste Management Collection-The cost of waste collection will remain the same as those in 2016-17. Collection of property owners waste occurs once a week in the fall, winter and spring and twice a week collection in the summer while seasonal residents are at the lake.
Lake Quality Improvement-These costs include the weed treatment contract with our contractor; educational programs; hiring a limnologist consultant to assist the Committee; testing the water at each of the three beaches during the swimming season; and a contribution to the Connecticut Federation of Lakes, a not for profit entity that provides invaluable assistance to all Connecticut lakes.
Web Master Charges-This newly established line item (previously in Communications) covers all the costs of maintaining the Association’s web site except for the Web Master’s stipend.
Capital Reserve Charge-The Budget Committee and the Board of Governors spent a significant amount of time discussing whether to continue to add any amount to the Capital Reserves. Both decided to suspend increasing the reserve in the proposed 2018-19 Budget. The existing Capital Reserve will have a balance of $140,000 at June 30, 2018. Both the Budget Committee and the Board believes it is necessary to keep the proposed mill rate flat with no increase yet continue to fund other budget line items to the level necessary to achieve Association objectives. The Board’s strategic planning committee is still working on its five-year plan with one project being considered for approval at the August meeting. Future budgets will consider appropriate annual increases to the Capital Reserve.
Operating Budget Contingency Reserve-The Budget Committee and the Board request approval to allocate $10,000 for an Operating Budget Contingency Reserve to be used only after the Board reviews each budget line item and reallocates the budget to achieve Association objectives and there are on-going projects or tasks that need to be completed before the end of the fiscal year, the Board can use the Operating Contingency Reserve to fund those projects up to a limit of $10,000. This procedure has allowed the Committees to complete important projects in a fiscal year and not have to wait until the next fiscal year. When the Association budgets 15-18 months in advance, it is sometimes difficult to gauge how many of the projects will be accomplished and even with the reallocation of unspent budgets, there still may not be enough budget funds to fund those remaining projects. In 2016-17, the Board authorized the utilization of $8,949.12 of the 2016-17 Operating Contingency Reserve. The majority of this amount ($8,200) was spend on 4 Sanitary Stations that will save the Association approximately $2,000 per year in charges.

SPECIFIC DESIGNATED RESERVES

The specific designated reserves include the following:

Capital Reserve-$140,000-Previously approved by members in several previous years’ budgets
Capital Maintenance Reserve-$10,000-Previously approved by members and must be used in 2017-18
2017-18 Operating Budget Contingency Reserve-$15,000-Previously approved by members
2018-19 Operating Budget Contingency Reserve Reserve-$10,000-To be approved by members at August 20, 2017 meeting as part of the approval process of the 2018-19 Budget
Promotional Items Revolving Account-$5,000-Previously approved by members. Budget Committee and Board request that this reserve account be reduced from $5,000 to $1,000. The sale of Lake Hayward clothing and other related items is generating sufficient cash flow so that a reserve (revolving account) of only $1,000 is necessary. Reduction to $1,000 is to be voted on as a part of the approval of the 2018-19 Operating Budget.

SUMMARY

The Budget Committee thanks all those who were involved in the budget process for their cooperation and efforts to make the 2018-19 budget process the most complete, transparent and inclusive process that the Budget Committee and Board have presented to the membership for approval. We welcome your comments before and during the Annual Meeting.

Respectfully submitted,

Ed Bader, Chair

Jon Eckert

Dave Edgington

Lee Griffin

Kim Jonah

Gail Miers