By Ann Peterson
(Friday, Sept. 24) The GRF Board and Finance Committee support using surplus funds to decrease a proposed 7.88% hike in the GRF portion of the coupon for 2022 – but it balked at the idea of reducing the coupon two years in a row.
The Board and committee members compromised and recommended a 5.99% increase instead, following two long days of discussion last week in a joint meeting on Zoom. The two who dissented in a straw vote were directors Carl Brown, who supported raising the coupon by 5%, and Paul Moderacki, who argued that using too much surplus would lead to a much larger increase in 2023.
The majority supported raising the GRF portion of the coupon to $308.57 per manor per month in 2022 from $291.13 this year, as Rossmoor faces escalating water and insurance costs and staff-proposed programs needed for efficiency and risk management. That amount also includes $57.25 a month for Comcast services.
The recommendation now goes to the Board for approval or changes at its regular monthly meeting on Thursday, Sept. 30, at 9 a.m. on Zoom.
While most in the joint meeting supported new program requests, including additional staff personnel and hours, few supported passing a 7.88% increase on to residents.
“To say 7.8% seems like you will get a huge political backlash,” committee member Adrian Byram said, while suggesting that the 3.8% Consumer Price Index (CPI) growth seemed more reasonable to present to residents. “It’s obvious that what we did last year by not having an increase is turning around to bite us.”
To hold down the cost of the coupon, the Board and committee members suggesting dipping into a surplus generated by expense savings and high golf revenue this year, as well as funds realized from forgiveness of the Paycheck Protection Program (PPP) loan. They used surplus to remove from the budget $315,000 for a Trust Maintenance reserve and an additional $40,000 to lower the coupon by a combined $4.43 per month.
For the 2021 budget, GRF directors passed along a $631,805 surplus to reduce residents’ coupons by $7.89 per month.
But that $7.89 had to be accounted for in the 2022 budget, which is why Moderacki cautioned using too much surplus to temporarily offset costs again.
“We used up all of our flexibility last year,” he said. “The faster we address this and get on a better track, the better off we will be.”
Ultimately, the Board and committee earmarked only a small fraction of the anticipated $3.77 million surplus – most of which comes from the forgiven PPP loan – for reducing the coupon. A Finance Committee task force appointed this summer recommended using up to $250,000 to reimburse the Trust Estate Fund for COVID-related expenses, $383,000 to reimburse Mutual Operations for its shortfall during the pandemic and $450,000 to increase the operating fund reserve.
GRF President Dwight Walker noted that there is still plenty of time to make a decision about how to utilize the remaining surplus. But several directors and Finance Committee members signaled support for building up contingency funds for emergencies, as well as cost overruns for insurance and water.
Broker A.J. Gallagher projected insurance premiums would soar across all categories, including almost 40% for GRF property insurance. Nationwide, natural disasters, actual property loss in Rossmoor and undervaluation of insurance estimates last year prompted this higher-than-anticipated forecast.
Utilities also are expected to rise by a projected 4% for water and 5% for PG&E. Property taxes went up by 2%.
Some directors and committee members questioned whether Director of Golf Mark Heptig had underestimated the budget for water, raising it only $89,500, despite this year’s drought and projections showing a need for at least three times that amount.
Heptig said that if the drought persists, mandatory water reductions likely would keep costs down, especially as he and his staff look at “creative ways” to manage water for the courses over the long term.
A year after non-union employees received no raise, the Board has agreed to a 3.8% Consumer Price Index increase, along with $75,000 for merit/market pool. Security also will increase 3.8% for a total of $73,582, included in the contract with Securitas.
The proposed budget also outlined increased revenue, including $255,500 for facility rentals, excursions, ticketed events, personal training, facilities usage fees and the Creekside Grill lease; $185,000 for golf fees and increased play; and $65,000 for Rossmoor News advertising, including website ads.
GRF managers also proposed restoring staff positions that were left unfilled and unbudgeted in 2021 because of the continued pandemic. With GRF facing the same hiring challenges plaguing the nation – with 10.9 million jobs available but unemployment still relatively high – Finance Committee member Alice Lau asked whether the budget should keep staffing at three-quarters full.
CEO Tim O’Keefe cautioned against that, reminding the Board and committee that when mask rules relax again and the pandemic is less of a threat, residents will be “raring to go” with activities in Rossmoor.
“If you want, we can scale back the budget and anticipate that we aren’t fully opening up Jan. 1,” O’Keefe said, “but recognize that if (health officials) say the coast is clear to reopen everything, we can’t reopen because we won’t have the money in the budget.”
The directors and committee members also supported adding $1.23 to the monthly coupon for new programs. This includes a phone recording system to improve customer service; an offsite data backup facility to keep business running during a major emergency, like an earthquake; and time- and attendance-reporting software, which GRF Secretary Leanne Hamaji said will help bring GRF “into the 21st century.”
They also took the rare step of unanimously recommending the addition of a new full-time Human Resources position, with a focus on workplace safety and employee training and communication. Brown advocated for the addition, noting the need to replace a system no longer available for helping to determine employee compensation.
Finance Committee Chairman Bill Dorband also supported the move, noting the importance of complying with Cal/OSHA safety orders. “This sounds like a risk management opportunity,” he said. “We can reduce the risk of fines and other issues at a reasonable cost.”
The directors and committee members rejected a request for $9,000 to add Rossmoor Television program descriptions to the Comcast TV Guide so individual programs could be recorded. And they opted to see how new technology included with Rossmoor Television’s existing software might provide closed captions to programs at no additional cost.
They also unanimously endorsed increasing two part-time positions to full-time. Executive Services requested moving the administrative assistant position back to full time – after two years at part-time – because the volume of work in supporting the Board has pushed this department into significant overtime. And Heptig asked to make the Golf Shop assistant a full-time position for employee retention and because of the significant increase in golf play time since 2019.
O’Keefe noted that golf is projected to increase its revenue by almost 31% ($271,346) from 2019 to 2022. “For Mark to ask for a third of a position is nominal considering the revenue and tremendous improvement to the bottom line,” he said.
Treasurer Mary Hurt said advocating for the new programs, additional staff hours and overall coupon was necessary.
“Increased expenses are the reality to make this a better place for the residents who live here,” she said. “When you make those additions, you pay more because it’s worth more.”