2020 Budget Update Delegate Meeting September 17, 2019
Budget Schedule 11/19 06/24 - 08/9 9/17/19 10/07 06/10 Delegates' Finance, Staff & FC recommendation to BOD Direction CEO Budget recommendation BOD / BOD Adopts to CEO Planning Meetings to BOD Budget 08/20 10/16 Draft Budget Publish Proposed Presented to Budget and Present Delegates to Delegates 06/03 - 08/16 08/19 - 10/01 10/07 - 11/19 Budget Creation Budget Review & Finalization Budget Adoption 08/19 - 10/01 Budget Review & Finalization 09/16 08/26 09/9 09/23 08/19 Facilities & Maintenance / Aquatics / Arts & HRCAA / HRCSF Final Review Backcountry / Cap & Rsv 5 Yr Ed / Sports & / HR / CIS all staff / all Board HRBCEF Plan Fitness Admin Wrap Up / all FC Rec Wrap Up
2020 Challenges / Issues Cost Increases - ($ in 000's) Mandated Minimum Wage - 8.1% $ 145.5 Health Insurance 4% (market average 5% to 7%) $ 42.6 Property/Casualty Insurance 4.7% $ 17.0 Information & Technology - compared to 2019 forecast $ 36.0 Utilities - Water 6.5%, Electric 6.5%, Natural Gas 5% $ 31.0 Information provided by Centennial Water & Sanit., CenterPoint Energy, Xcel PUC request Cost of Living/Merit - 1.9% $ 165.0 Tight labor market, CO unemployment at 2.9%, hard to find & retain qualified employees Metro Denver wage increase expected to be 3.1% - July 29,2019 Denver Post I/T Director -($100K to $150K estimate) - outsourced or direct hire? $ 130.0 $ 567.1 Revenue Reduction - ($ in 000's) Fines/Liens/Late/Legal & Architectural Fees (down $168K from 2018 actuals) $ (92.0) 3 Net Income Impact $ 659.1
2020 Budget Reductions Reductions incorporated into budget ($ in 000's) Community cleanup reduction compared to 2019 budget $ 40.0 Reduce facility hours Friday nights by 1 hour, close at 9pm - need BOD approval $ 17.5 Reduce onsite desktop support hours $ 15.6 Covenant Improvement Serv. Office Supplies vs. 2019 $ 12.5 Scale back 4th of July Celebration (does not include parade or fireworks) $ 12.5 Aquatics combination of 2 swim teams into 1 $ 11.0 Migrate servers to the cloud annual savings $ 10.0 Eliminate scholarship rewards ceremony & employee development/motivation $ 8.5 Backcountry reduction of Non-Program seasonal archery staff $ 4.0 $ 131.6 Other potential reductions Reduce facility hours Sunday's by 1 hour , close at 7pm $ 20.0 Reduce facility hours Sunday's by 2 hours , close at 6pm $ 20.0 Lengthen existing AED equipment lifespan $ 2.0 $ 42.0 Capital expense reductions Eliminate shade structure for ER ODP & fence for pitching structure $ 21.0 I/T reductions $ 25.0 $ 46.0 4 Total Reductions $ 219.6
2020 Revenue Opportunities Revenue opportunities incorporated into budget ($ in 000's) Increase Non Resident memberships from 50 to 100 memberships $ 38.0 Fee Increases Guest Fee Increase - $1.00 per guest $ 30.0 Birthday and Facility Rental increase $ 6.5 $ 74.5 Potential Revenue Opportunities Increase nursery fee from $4.00 - $5.00 per visit $ 8.0 Charge Non Profits for facility reservations $ 4.0 $ 12.0 Total Identifed Revenue Opportunites $ 86.5 5
2020 Proposed Assessments Quarterly Annual Assessment Increase % Change Assessment Increase % Change Admin $ 12.99 $ 0.24 $ 51.97 $ 0.97 Rec $ 141.89 $ 2.64 $ 567.55 $ 10.55 Total $ 154.88 $ 2.88 1.9% $ 619.52 $ 11.52 1.9% CPI Homeownership benchmark of 2.63% allows for an increase up to $156.00 Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) source – U.S. Bureau of Labor and Statistics 1.9% 6 Consumer Price Index Homeownership – U.S. Bureau of Labor and Statistics 2.63%
Proposed Assessment of $154.88 = $359,400 of revenue 7
Cost Reductions & Revenue Increases 8
Rec Reserve Capital Projects ($ in 000’s) Northridge Westridge Asphalt Surfaces 143.0 Replace Heatrex unit (dehumidifier) 400.0 Replace EPMD Roof (rubber membrane) 110.0 Replace playground equip./floor 73.0 Outdoor lap resurface 80.0 Replace exercise equip. 52.2 Replace exercise equip. 50.0 Replace whale slide 45.0 Additional façade work 50.0 Restrooms and changing rooms 35.0 Boiler replacement 40.0 Replace sand filters 17.0 Hot water storage tank 34.0 Pool equipment 15.5 Replace laterals & filer media 30.0 Interior doors 14.0 Other projects 109.4 Other projects 91.1 Total Northridge 646.4 Total Westridge 742.8 Southridge Information Technology Replace circuit equip. 95.0 New computers & printers 35.6 Replace exercise equip. 67.0 Website upgrade 25.0 Renovation of fitness floor 55.0 Contract labor (PM, NS, Adapt.) 22.5 Replace interior lighting 37.0 Network equipment 21.5 Pool equipment 21.0 Software 20.5 Replace filter sand 18.0 Servers/UPS & assoc. software 18.8 Replace stretching area floor 15.0 Wireless 7.1 Asphalt maintenance 14.0 Out of scope labor 5.9 Other projects 82.5 Other projects 7.2 Total Southridge 404.5 Total I/T 163.9 Eastridge Other Leisure pool re-surface 110.0 Emergency Reserves 100.0 Replace paddock pool filters 105.0 Replace circuit equip. 95.0 Replace exercise equip. 66.8 Renovate pool party room 50.0 Architectural design work 40.0 Replace parking lot lights 20.2 Pool equipment 17.8 9 Other projects 133.2 Total Eastridge 638.0 Total Projects 2,695.6
Proposed 2020 Budget By Fund 2020 2020 HRCA 2020 Budget Admin Fund Rec Fund Totals ($ in 000's) Admin BC BC Debt Serv Rec 2020 2019 2018 Operating Reserves OSCA Total Operating Reserves Operating Reserves & Plant Total Budget Fcst Actual Revenue Assessments ($154.88 per Quarter) 1,630.6 1,630.6 17,194.5 17,194.5 18,825.1 18,480.7 18,816.8 Program, community & other * 1,426.4 1.8 127.1 1,555.3 6,263.9 - 562.9 - 210.0 7,036.8 8,592.0 8,481.7 7,302.5 Total 3,057.0 1.8 127.1 3,185.9 23,458.3 - 562.9 - 210.0 24,231.2 27,417.1 26,962.4 26,119.3 % Change 1.7% 3.2% Expenses ** 3,186.6 71.0 - 3,257.6 16,720.3 36.0 964.2 96.0 3,444.2 21,260.7 24,518.3 24,063.5 23,266.3 % Change 1.9% 3.4% Gains (losses) - - - - - - - - - - - - (236.2) Excess (deficiency) of revenue over expense (129.6) (69.2) 127.1 (71.7) 6,738.1 (36.0) (401.3) (96.0) (3,234.2) 2,970.6 2,898.8 2,898.9 2,616.9 % Change 0.0% 10.8% Transfers (118.6) 118.6 - (4,891.8) 2,631.2 405.0 10.0 1,845.6 - - - - - Change in fund balance (248.2) 49.4 127.1 (71.7) 1,846.3 2,595.2 3.7 (86.0) (1,388.6) 2,970.6 2,898.8 2,898.9 2,616.9 Fund bal, begin of year 1,044.0 569.3 5,199.4 6,812.8 518.2 3,203.0 37.3 1,002.7 26,327.3 31,088.5 37,901.0 35,002.2 32,385.3 Fund bal, end of year 795.8 618.7 5,326.5 6,741.0 2,364.5 5,798.2 40.9 916.7 24,938.7 34,059.1 40,799.9 37,901.0 35,002.2 Note: * Budget includes approx. $75K of new revenue opportunities but does not include $12K of potential new revenue ** Budget includes approx. $132K of cost reductions and excludes $42K (close Sunday's 2 hours early) of potential reductions and excludes capital expense items of $46K 10
Decision Points Before Final Approval • Consumer Price Index • CPI-W – 1.9% July 2019. CPI-W historic measure used by HRCA - in budget • CPI “Homeownership” – 2.63% July 2019 recommended by Winzenburg, Leff, Purvis & Payne LLP • Cost of Living/Merit Increase – 1.9% or closer to projected 3.1% Metro Denver - 1.9% in budget • Budget Reductions • Reduce facility hours • Friday nights 1 hour, close at 9pm - $17.5K savings – in budget • Sunday nights 1 hour, close at 7pm - $20K savings – not in budget • Sunday nights 2 hours, close at 6pm - $40K savings – not in budget • Scale back July 4 celebration (not parade/fireworks) - $12.5K savings – in budget • Eliminate capital expense - ER ODP shade structure - $13.5K – not in budget • Eliminate capital expense - fence for pitching structure - $7.5K – not in budget • Revenue Additions • Non Resident memberships from 50 to 100 - $38K revenue addition – in budget • Guest Fee increase by $1.00 - $30K revenue addition – in budget • Birthday & facility rental increase - $6.5K revenue addition – in budget • Nursery fee increase by $1.00 - $8K revenue addition – not in budget • Charge Non Profits for facility reservations - $4K revenue addition – not in budget • I/T Director • Outsourced or Direct hire? 11 • Price Range - $75K to $150K - $130K in budget
Assessment Considerations • The “ceiling” set by the CPI • Adhering to HRCA Fund Management & Reserve Study Policy 12
Next Steps • Finalize Staff presentations to the Finance Committee • Joint Board and Finance Committee meeting September 23, 2019 • Presentation of proposed final draft budget to Delegates in October 13
QUESTIONS? 14
APPENDIX 15
Annual Assessments vs. Homes (from June 18, 2019 Meeting) $58.88 increase from $152.00 1995 – 2019 $93.12 16
Annual Assessments vs. CPI (from June 18, 2019 Meeting) 37.17 % behind cumulative CPI-W from inception to current 17
Annual Assessments vs. CPI (from June 18, 2019 Meeting) $38.39 increase in assessments to $190.39 / quarter Equivalent to $92.84 increase from 1995 – 2019 18
CPI-W from the BLS 19
CPI-Homeownership from the BLS 2018 2019 256.591 263.339 6.748 2.63% 20
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