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Refunds, coupon reduction among recommendations from task force

Finance task force recommends how to handle budget surplus

By Sam Richards

Staff writer


Refunds to Rossmoor’s Mutuals and some degree of reduction in the coupon should get the lion’s share of an estimated $3.77 million GRF budget surplus, according to a GRF Board finance task force.

That task force voted 5-0 on Thursday, Aug. 12 to formally recommend those actions to the GRF Finance Committee, which will in turn pass on its own recommendations to the full GRF Board. No date has been formally set for committee action on these new recommendations.

Other prospective dispositions of budget surplus money unanimously approved by the Finance Task Force were adding $450,000 of the surplus to fund the GRF operating reserve; using about $383,000 to compensate Mutual Operations Division for an operating shortfall it experienced last year; and about $250,000 to reimburse the GRF trust for COVID-19-related expenses incurred over the past year, including needlepoint ionization systems to scrub the air of various Rossmoor indoor spaces.

Exact money figures are uncertain at this point. Chief Financial Officer Joel Lesser said the exact amount of the surplus won’t be known until results of an audit are available. CEO Tim O’Keefe said a solid number will be needed by the time annual GRF budget discussions begin in early September.

Similarly, these task force recommendations approved Aug. 12 could be modified by the Finance Committee and/or the GRF Board.

The surplus in question was money GRF had originally set aside to repay a $3.57 million U.S. Small Business Administration “Paycheck Protection Program” loan, used to continue to pay GRF/Mutual employees during the pandemic. That loan was forgiven on June 9, but GRF had already squirreled away about $3.77 million to cover repayment of that loan, if it became necessary. It is the fate of this money, which with the loan’s forgiveness has now become surplus, that will ultimately be decided by the GRF Board. The budget surplus minus the forgiven PPP payment is about $202,000.

The idea of refunding the bulk of the money to the various Mutuals, rather than lower the coupon, was favored by several task force members because, as member Bill Dorband said, the Mutuals are the “beneficiaries of the Trust.” It is the Mutuals that fund GRF operations, with the residents’ coupon payments funding the Mutuals.

During the Residents Forum, two residents calling into the Zoom meeting told the task force they agreed the surplus should be directed either to the Mutuals or to the coupons.

“It seems that that which is above (what is) budgeted should be refunded to the Mutuals,” said Mary England.

Some at the meeting, including Mutual Operations Director Paul Donner, cautioned that if refund money resulted in a substantial decrease in this coming year’s coupon, a return to standard charges could be an unpleasant spike to residents’ pocketbooks the following year.

O’Keefe noted that there is no mechanism for GRF to refund money directly to Rossmoor residents; money can be refunded to the Mutuals, whose leaders could decide to do personal refunds or spend that money in other ways, or GRF could apply money directly to residents’ coupon amounts. And GRF Board President Dwight Walker said the complexity of the Board providing refunds to individual residents could become a “nightmare.”

Several other suggestions for how to distribute the surplus money were considered, and then rejected for various reasons. These included setting aside money for a fund to help pay for damages caused by landslides like a large one in 2017; to help pay the deductible for GRF’s earthquake insurance policy; to help pay for future valley-wide fire abatement efforts; and to help fund the GRF pension fund.

In some cases, task force members and other GRF officials said, the contributions that could come from the surplus wouldn’t be significant enough to divert the money from other things. Others said that some or all these other things would be better served by being funded from proceeds from the sale of the former John Muir Health building on Tice Valley Boulevard, owned by GRF. A sale of that building is pending.