2020-2021 Budget Proposal Report

REPORT OF THE POALH BUDGET COMMITTEE-PROPOSED 2020-21 BUDGET

The 2020-21 Budget Committee submitted the attached fiscal 2020-21 Budget to the Board of Governors for their approval and the Board approved the 2020-21 Budget at a recent meeting. The Budget Committee, in a series of meetings, met with committee chairs, officers and individuals responsible for specific line items in the Budget to discuss and question the amounts requested. An Association wide Town Meeting was held to discuss the proposed budget before it was submitted to the Board. Throughout the process there was excellent dialogue on the components of the budget. The result of this extensive process is a 2020-21 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, their families and guests.

HIGHLIGHTS OF THE 2020-21 OPERATING BUDGET:

MILL RATE-The mill rate to fund the 2020-21 Budget is estimated to be approximately the same as 2019-20–4.3425 mills. The actual mill rate will be based on the actual October 1, 2019 Grand List to raise $196,100 of taxes in the 2020-21 Budget. The mill rate will be set by the Board in the spring of 2020 after the Town of East Haddam finalizes the Grand List of the Association.
TAX REVENUES AND INTEREST ON DELINQUENT TAXES-Taxes are projected to be $196,100 which represents 100% collection rate of the estimated current year tax billings. It is estimated that delinquent tax payers will pay approximately $800 in interest charges because of their failure to pay their taxes on time.
TOWN OF EAST HADDAM REIMBURSEMENTS-The Association continues to receive reimbursement from the town’s budget through the efforts of members. The reimbursement amounts to 50% of qualified expenses related to the invasive weed treatment of Lake Hayward, lake improvement efforts and various other lake related education programs subject to a maximum reimbursement limitation of $7,500 in 2020-21.
TRANSFERS FROM ASSOCIATION RESERVES-The amount of reserve transfer to the 2020-21 Budget is $14,845 which is the unexpended balance of the 2018-19 Operating Budget. Operating Revenues exceeded the Operating Budget due to a) taxes being billed in excess of the Association approved budget ($11,395) and b) expense reimbursements from the Town exceeding the budgeted amount ($3,768). Consistent with prior practice, any amount not spent from the most recent prior year (2018-19) is held in reserve and utilized as a revenue source in the second succeeding year (2020-21)
BANK INTEREST, DONATIONS FROM EAST SHORE RESIDENTS AND MISCELLANEOUS INCOME-We reexamined the Association’s investment policy and decided with Board approval to invest our reserve funds and excess cash in a higher yielding money market investment product offered by the Association’s bank. We expect the yields to remain at the 2.5% level during 2020-21. The East Shore residents continue to contribute to the cost of treating the lake and other lake related activities. Contributions have continued to increase, and we estimate the level of contributions in 2020-21 will be approximately $3,000. We continue to receive a small amount of miscellaneous contributions and we have budgeted for that amount to increase from $200 to $257.
PROPERTIES-The Properties Committee budget continues to fund an aggressive list of current and deferred maintenance projects including: mowing, trimming, spring and fall cleanup; hiring service providers to perform the many maintenance tasks required to keep our facilities safe and clean including Pavilion maintenance, beach raking, new beach sand for each beach area, cleaning our purchased sanitation facilities and trimming and removal of hazardous limbs and trees on Association properties. In addition, both the tennis courts and the basketball courts need periodic maintenance and there is an increasing demand for more boat racks given that more families are bringing their kayaks and canoes to the lake. We will continue to survey two rights of way to determine boundaries.
COMMUNICATIONS-The Communications budget covers the cost of printing the Spring Packet, the weekly Newsletters, postage and supplies. One suggestion regarding the Spring Packet is that it be delivered via e-mail which would reduce substantially the cost which is around $3.50 to $4.00 each when considering paper, printing, postage. Only a modest reduction was made in the Communications budget until it is determined how many members would accept delivery of the Spring Packet via e-mail. This question will be raised at the Annual Meeting.
SOCIAL/EVENTS- This budget covers 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 for adults and children, fishing, card and golf tournaments and men’s and ladies’ nights. In order to maximize the utilization of this budget, it was suggested that the adult activities, to the extent possible, be operated on a breakeven basis which would increase the number of events that could be held during the summer and fall season.
INSURANCE-Insurance costs remain stable with an estimated 3% increase in costs for 2020-21 over actual 2019-20 costs of $27,022. 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 insurance, Directors & Officers’/Crime policies and an Umbrella Excess Liability policy recommended by our insurance agency.
PROFESSIONAL FEES-These are fees paid to independent accountants to conduct a financial review of the Association’s financial statements and legal fees paid to our law firm for assistance on various legal matters of the Association.
PUBLIC SAFETY-The Public Safety Committee works closely with the East Haddam Police Department and Connecticut State Police to provide a police presence at 10 Association events including providing police presence at peak periods. Other costs include signs for specific events.
REAL ESTATE TAXES-Real Estate taxes are expected to remain at the same level absent a significant increase in the Town of East Haddam’s mill rate.
STIPENDS-The only changes in Stipends is the creation of the Property Manager position $4,000 and a $13 increase in the Financial Advisor to $1,000. Given the continued lack of volunteers to provide assistance and the need to manage more service providers, it is deemed critical to have a paid part-time properties manager.
WASTE MANAGEMENT-The cost of waste management services will remain the same as in prior years. Collection of property owners’ waste occurs once a week in the fall, winter and spring and twice a week collection in the summer months while seasonal residents are at the lake.
LAKE QUALITY IMPROVEMENT-These costs include the cost of the annual lake invasive weed treatment contract with our contractor-Solitude; in season weekly beach water testing; limnologist fees to analyze lake water samples during the 12 weeks of summer and provide us with a report; and education events for Association members that provide information on steps members can take to improve the quality of lake water.
CAPITAL RESERVE CHARGE-The $25,000 charge is to continue to build this reserve to fund long-term Capital projects. The two-page preliminary Capital Reserve analysis shows the proposed 5-year specific Capital Project needs and the second schedule illustrates a 15 year Estimated Reserve buildup to fund the projects in the pipeline and provide a reserve for additional projects. The specific projects requiring approval at the Association Meeting on August 18, 2019 are: $10,000 for Dam Repairs; $2,000 for an AED at 3^rd Beach; and $12,500 for the purchase of a lot on Hay Field Road that is discussed in the Newsletter, dated August 10, 2019. (This last expenditure is a Board specific request and was not included in the Budget Committee report since the Association’s offer had not been accepted). In addition to these projects which will be funded during 2019-20, there are three projects that need membership approval as part of the 2020-21 Budget. They are: $7,000 to repave the Basketball Court; $3,000 for a Lake Hayward sign at the south entrance of lake; and $15,000 for the development of a Watershed Management Plan. All these projects will be funded from the Capital Reserve account. The dam is currently undergoing an inspection as part of a seven-year inspection cycle. According to DEEP, the owner of the dam (POALH) must pay for the inspection and the Association has contracted with a qualified engineer to inspect the dam and provide a report to DEEP and our insurance carrier who insures our property. When we receive the inspector’s report the Board will review the recommendations and determine what improvements/repairs need to be made. It is expected that Board will develop a plan with its consulting engineer’s assistance and present it to the members next year for funding approval.
WEBMASTER EXPENSES-This budget amount covers all the costs of maintaining the Association’s web site except for the Web Master’s stipend
UTILITIES-This budget line item includes: electricity, water, cable system for Association’s security system, and the Association’s e-mail and records retention system.
TAX COLLECTOR EXPENSES-These expenses include the cost of the Association’s on-line property tax and collection system and printing the tax bills. Other costs include: postage, envelopes, membership in the Connecticut Tax Collector’s Association and paper and toner.

RECOMMENDATIONS OF THE 2020-21 BUDGET COMMITTEE

The Committee recommends the Board complete a long-term Strategic Plan by the spring of 2020 and present it to the members at the June 2020 meeting. The Board should also consider appointing a separate committee to complete the Strategic Planning process if the Board is unable to complete the task by spring of 2020.
The Committee also urges the Board to consider the recommendation of the Communication Committee chair to use e-mail to distribute the Spring Packet. The Association has over 300 e-mail addresses of members. This will save considerable time and labor if the Spring Packet is distributed by e-mail. Family members can share copies of the Spring Packet with other family members so that the information in the Spring Packet is more widely disseminated. This issue will be raised at the Annual Meeting.
One issue raised at the July 2019 Town Meeting was to charge for the use of the Pavilion for private parties. This question has been raised in prior years but has never gotten any traction. At the Committee’s urging this question will be raised at the Annual Meeting to get members’ opinions.

SUMMARY

The Budget Committee thanks all those members who were involved in the 2020-21 Budget process for their cooperation, input and efforts to make the 2020-21 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, Lee Griffin, Treasurer, Dave Edgington, Kim Jonah, Randy Miller

August 8, 2019