Post by Admin on Feb 25, 2017 9:22:13 GMT -7
Glastonbury 2016/2017 Financials - How to make sense of them
As required by Montana law the Glastonbury Landowners Association (GLA) sends financial statements to every land owner at the beginning of each year. The Forum received 2016/2017 copies and posted them here. It is our opinion that the GLA financial statements are far too complicated and almost worthless as a result of including too much information. Most of the information is not pertinent. Does a landowner living on Capricorn in North Glastonbury really need to know how much money was spent on road maintenance for Leo Drive in South Glastonbury? Does anyone on the GLA Board really understand the difference between cost and accrual accounting? Should a current Balance sheet contain information from previous years? The IRS does not allow Profit and Loss statements to be filed using both an accrual and a cost method. Why do we get both?
The Forum has studied the Financial statements and below are the most important figures so you may understand the financial health of our community and where your hard earned money is spent.
The 2017 budget expects to collect $141,248.00 from assessments. Only 90% of the landowners are expected to pay their assessments; 10% will not and that money is not counted towards the budget.
The GLA has a savings account which at the end of 2016 held $168,262.00. This money is NOT in the budget but all except $12,317.00 may be spent on anything the Board chooses at any time. The interest collected on the $168,262.00 amounted to $150.00 for 2016.
The Covenants require that the GLA spend 51% of the budget on our roads. For 2017 the GLA expects to spend $17,295.00 for snow removal and $74,418.00 for road maintenance. The total budgeted for roads is $91,713.00 or 65% of your assessments dollars. Put another way; for every dollar you pay in assessments 65 cents is budgeted for road maintenance and snow plowing.
So were does the rest of your money go?
$1,785.00 goes to pay for maintenance on the old soccer field in North Glastonbury. No one plays there anymore and has not for years. But the fields still get watered and mowed. Rotting wood is repaired and painted. The electricity was never shut off. The soccer field maintenance costs each landowner 1 and 1/4 cents per dollar paid in assessments. A tiny amount but many people think the money is wasted.
$6,100.00 will be spent on current litigation which deals with the O'Connell lawsuits. Our old liability insurance covers most of the legal costs for the O'Connell suits which has saved the GLA well over $100,000.00. The GLA no longer has liability insurance to protect landowners from future lawsuits. Lawsuit expense per dollar of assessments paid comes to 4 and 1/3 cents. More than the soccer field but still a small amount in terms of the overall budget.
The second largest expenditure after road maintenance is administrative costs. The GLA was once made up of dedicated volunteers. Over the years that has changed and now very few directors wish to do more work than attending monthly meetings. The administrative budget is $41,800.00 for 2017. That represents 30% of the overall budget. Or for every dollar in assessments you pay 30 cents will be spent on administrative costs. For comparison most non-profit corporations spend less then 10% of their budget on administration. Well run non-profits manage to keep their administrative costs to around 5% or 5 cents on every dollar spent.
You may download the 2017 budget and study it here.
We skipped the Profit and Loss statements because they contain too much information and are presented in both a cost and accrual format. If you do not have training in accounting chances are great that the Profit and Loss statements will come across as nonsense.
The Balance sheet is a little better and contains a few important figures. As discussed before the GLA has both a savings account and a checking account. The GLA collects money in several ways. Landowners pay assessments, building fees are paid and sometimes past due assessments are collected.
Past due assessments are NOT put into the budget. Instead they are deposited along with unused budget funds from previous years into a savings account. The Balance Sheet under "Total 003" shows the total amount of money in the GLA savings account to be $168,252.34 at the end of 2016. This money is separate from the budget. Put another way; the GLA has enough landowner money in their savings account to pay for the entire 2017 budget even if not one landowner paid their 2017 assessments.
At the end of 2015 the GLA had $133,749.07 of landowner funds in their savings account.
The savings account money could have been spent on roads but instead it just sat in the bank. The only benefit landowners received from the GLA savings account in 2016 was a paltry $150.00 in interest.
To summarize. The GLA expects to collect $141,248.00 from landowner assessments in 2017. $41,800.00 or 30 cents of every dollar you pay will be used for administrative costs. Just 65 cents of every dollar you pay will actually go towards snow plowing and road maintenance.
The GLA maintains a separate savings account which contains $168,252.34. That money is not in the budget but $ 155,935.34 may be spent on anything the GLA Board desires. A new snow plow, more administrative costs, chip sealing, pavement, gravel, etc. Although some funds are "allocated" the Board can change that with a simple majority vote.
The Balance Sheet also contains the total amount of outstanding assessments that are past due; $222,532.84. That is up from $217,437.03 at the end of 2015 and exceeds our entire 2017 budget. Despite a bloated administrative budget the GLA has not been able to collect enough past due assessments to return our accounts receivable to a manageable level.
Home and Landowners associations generally do not horde money unless they are saving for a large capital improvement such as a paved road. They usually try to keep administrative costs low and use all available funds to benefit landowners in the current year. They use all means necessary to collect past due assessments. The GLA operates very differently. Fiscal planning, fiduciary responsibility and critical thinking do not appear to be part of the GLA financial process.
The Forum has studied the Financial statements and below are the most important figures so you may understand the financial health of our community and where your hard earned money is spent.
The 2017 budget expects to collect $141,248.00 from assessments. Only 90% of the landowners are expected to pay their assessments; 10% will not and that money is not counted towards the budget.
The GLA has a savings account which at the end of 2016 held $168,262.00. This money is NOT in the budget but all except $12,317.00 may be spent on anything the Board chooses at any time. The interest collected on the $168,262.00 amounted to $150.00 for 2016.
The Covenants require that the GLA spend 51% of the budget on our roads. For 2017 the GLA expects to spend $17,295.00 for snow removal and $74,418.00 for road maintenance. The total budgeted for roads is $91,713.00 or 65% of your assessments dollars. Put another way; for every dollar you pay in assessments 65 cents is budgeted for road maintenance and snow plowing.
So were does the rest of your money go?
$1,785.00 goes to pay for maintenance on the old soccer field in North Glastonbury. No one plays there anymore and has not for years. But the fields still get watered and mowed. Rotting wood is repaired and painted. The electricity was never shut off. The soccer field maintenance costs each landowner 1 and 1/4 cents per dollar paid in assessments. A tiny amount but many people think the money is wasted.
$6,100.00 will be spent on current litigation which deals with the O'Connell lawsuits. Our old liability insurance covers most of the legal costs for the O'Connell suits which has saved the GLA well over $100,000.00. The GLA no longer has liability insurance to protect landowners from future lawsuits. Lawsuit expense per dollar of assessments paid comes to 4 and 1/3 cents. More than the soccer field but still a small amount in terms of the overall budget.
The second largest expenditure after road maintenance is administrative costs. The GLA was once made up of dedicated volunteers. Over the years that has changed and now very few directors wish to do more work than attending monthly meetings. The administrative budget is $41,800.00 for 2017. That represents 30% of the overall budget. Or for every dollar in assessments you pay 30 cents will be spent on administrative costs. For comparison most non-profit corporations spend less then 10% of their budget on administration. Well run non-profits manage to keep their administrative costs to around 5% or 5 cents on every dollar spent.
You may download the 2017 budget and study it here.
We skipped the Profit and Loss statements because they contain too much information and are presented in both a cost and accrual format. If you do not have training in accounting chances are great that the Profit and Loss statements will come across as nonsense.
The Balance sheet is a little better and contains a few important figures. As discussed before the GLA has both a savings account and a checking account. The GLA collects money in several ways. Landowners pay assessments, building fees are paid and sometimes past due assessments are collected.
Past due assessments are NOT put into the budget. Instead they are deposited along with unused budget funds from previous years into a savings account. The Balance Sheet under "Total 003" shows the total amount of money in the GLA savings account to be $168,252.34 at the end of 2016. This money is separate from the budget. Put another way; the GLA has enough landowner money in their savings account to pay for the entire 2017 budget even if not one landowner paid their 2017 assessments.
At the end of 2015 the GLA had $133,749.07 of landowner funds in their savings account.
The savings account money could have been spent on roads but instead it just sat in the bank. The only benefit landowners received from the GLA savings account in 2016 was a paltry $150.00 in interest.
To summarize. The GLA expects to collect $141,248.00 from landowner assessments in 2017. $41,800.00 or 30 cents of every dollar you pay will be used for administrative costs. Just 65 cents of every dollar you pay will actually go towards snow plowing and road maintenance.
The GLA maintains a separate savings account which contains $168,252.34. That money is not in the budget but $ 155,935.34 may be spent on anything the GLA Board desires. A new snow plow, more administrative costs, chip sealing, pavement, gravel, etc. Although some funds are "allocated" the Board can change that with a simple majority vote.
The Balance Sheet also contains the total amount of outstanding assessments that are past due; $222,532.84. That is up from $217,437.03 at the end of 2015 and exceeds our entire 2017 budget. Despite a bloated administrative budget the GLA has not been able to collect enough past due assessments to return our accounts receivable to a manageable level.
Home and Landowners associations generally do not horde money unless they are saving for a large capital improvement such as a paved road. They usually try to keep administrative costs low and use all available funds to benefit landowners in the current year. They use all means necessary to collect past due assessments. The GLA operates very differently. Fiscal planning, fiduciary responsibility and critical thinking do not appear to be part of the GLA financial process.