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Treasurer’s report: Revenue shortfall offset by expense savings

By Dwight Walker

GRF treasurer

 

For the first six months of 2020, GRF Operations, Mutual Operations and the Trust Estate Fund combined for a revenue shortfall from budget of over $1.3 million, resulting from the impact of COVID-19. But due to diligent management decisions, the organization remains in a strong financial position.

It is important to understand how GRF Operations, Mutual Operations and the Trust Estate Fund have been impacted and effectively managed.

In GRF Operations the revenue shortfall of $541,000 was offset by expense savings from budget of $741,000, resulting in a net surplus to budget variance of $200,000 year-to-date.

The largest single shortfall from GRF Operations revenue was golf of $183,000, which is improving month by month but not back to budgeted levels yet.

Other revenue shortfalls continue to grow because of the health directives curtailing levels of service offered. Those include bus grants, totaling $28,000; excursions and recreation events, net of expense $57,000; and personal training for $42,000.

Expense savings from budget have been substantially realized with $382,000 employee-related expenses as a result of unfilled positions.  Other savings have been found in maintenance supplies ($112,000), legal services ($63,000) and utilities, except water, ($42,000). Water is over budget for the first six months by $40,000.

Mutual Operations returned to full operations on May 5 and its shortfall from budgeted revenue of $234,000 largely resulted from the shutdown prior to that date. However, continued reduced property sales have resulted in lower revenue of $58,000 in the Alterations/Resale Department.

The Trust Estate Fund continues to be adversely impacted by fewer property sales, resulting in lower Member Transfer Fees being collected through June by $559,000 from projections at the beginning of the year. Through the first six months of 2020, $1.5 million was collected versus $2.1 million during the same time period in 2019.

The lower revenue in the Trust Estate Fund has forced the GRF Board of Directors to put a number of capital projects on hold, totaling just under $1.5 million. The fund is currently forecasted to meet its targeted minimum fund balance of $2.2 million at year end by maintaining a hold on capital projects in recognition that MTF revenue has not returned to normal levels yet.

The cash position for GRF remains strong at the end of June. Proceeds from the Paycheck Protection Loan provide a cushion in the short term, in the event of a resurgence of COVID-19 resulting in another shutdown.

As noted in last month’s report, 2020 remains a financial challenge on many fronts. Management, the GRF Board and the GRF Finance Committee are diligently working to protect the financial well-being of Rossmoor.

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