The prepared statement about the 2010 budget delivered by Rancho Murieta Association Director Andy Keyes at Tuesday night's board meeting:
Well my friends here we are again at the moment of truth. We are here to approve the budget for fiscal year 2010.
Last week we held a vote to decide between two budget concepts. The budget concept known as the white budget was approved at that time. It was prepared by RMA staff and was properly reviewed by the finance committee. Even though the finance committee recommended a different budget model, and I stated that the approved budget violates the interpretation of the bylaw Article 7 Section 1 as submitted by the AdHoc Committee, and will no doubt open the board up to future litigation, I stand with the board. The board has decided a course of action, and I will abide by the code of conduct on this matter to close ranks.
On Monday of this week, less than 24 hours ago, I received the details of what has become known as the beige budget. This new budget, in summary format only, was presented during the budget workshop on Saturday without having been requested by the Board. On the surface I can say I liked it as it would further reduce the assessment to 115.65 per month. But the devil they say is in the details. This budget is a fraud. The Beige budget has NOT been reviewed by the Finance Committee and contains a provision that would use $85,000 of this year's excess revenues, to offset the costs of an additional programming channel while appearing to hold the total assessment and basic television programming fees to a zero cost increase.
Now this is where it gets complicated as you have to follow this Three Card Monte game very closely. First let's consider that suddenly the Giants Comcast channel is being added into this budget. Our process for adding a channel is: First have a contract in hand, then that proposed contract is considered in the Communications Committee for approval. If it is acceptable, it is then submitted to the Finance Committee for review by the Chief Financial Officer of the association (ME) and his committee for approval. Then and only then, are channel contracts submitted to the board for approval.
Lets return to the beige budget now that seemingly, painlessly inserts the Giants Comcast channel back into the basic cable television lineup, at an estimated cost of 72000 per year, for subscribers. Now to get there and hold the combined dues and programming cost increase to zero, the added cost in the dues had to be found somewhere. Well it was found in this year’s $212000 budget surplus which the finance committee was told was untouchable. The 85000 dollars offsetting the cost of adding the Giants station would be spread over the 2320 dues paying members assessment equaling the cost of the channel for FY 2010. It would seem that we are keeping the dues + cable television fees the same when the reality is that the subscribers are paying out 72K per year but the association is taking 85K from this years surplus. 13K is going somewhere other than for programming but we will come back to that at a later date if necessary.
This my friends is a ticking time bomb that will go off in FY 2011. As of this moment neither the Communications Committee or the Finance Committee has laid their eyes on a contract yet we are being asked in this budget that the Association should sign up for a 3 year contract with Comcast with a blank check for the true costs. This is poor business practice and no successful corporation would ever consider obligating is members to a contract with no cost defined. The lack of definitive costs is the primary reason we have been unable to consider adding the Giants channel back to the lineup for the last 9 months.
The Costs of this game escalate in years two and three of the contract. As costs rise continuously for programming, that one time offset robbed from this years operating surplus will not be there. Thus either the dues increase for 2011 is guaranteed to be at least 3 dollars if not more or 85000 in cuts will need to be found.
Let me say personally that I am not against bringing the Giants channel back, but I would not advocate bringing it back in this manner. When the content provider can provide a contract, and the Communications committee concludes that a sufficient number of subscribers, want that content, then I would be happy to bring it to the board for approval. If it is imperative to add the channel to the lineup, then this board should follow the long established process for adding or subtracting a channel. If not then we should simply allow the board president and a couple of friends to do the job of all the committees appointed by this board to provide it the advice necessary to make its decisions.
I find it undermining that neither the Treasurer or the Finance Committee were given this budget for consideration and adding the Giants channel back to the lineup was never a part of any of the budget concepts until Saturday. I also find it disconcerting, that the Finance Committee was told specifically that returning revenue excesses to the membership in the form of dues reduction was full of problems. That statement is misleading and untrue when reviewing the details of this budget. As your Treasurer I cannot in good faith say that I am performing my fiduciary duty to the corporation in even considering a budget that is so full of fraudulent schemes. The membership deserves to know that this has nothing to do with the cable issue. It should have everything to do with a continuation of established good management and fiscal control practices. Our board should consider only the budgets that have been properly reviewed through the established process of budget approval. It is by this check and balance system spelled out in our bylaws that illegal practices are stopped.
As a director and your Treasurer, I take my responsibility to this corporation very seriously. This budget does nothing but rob our membership during a very financially unstable time. It sets up RMA for a fall not unlike what MTI has seen recently. As your Treasurer, I do not advise that you consider a budget where 85000 dollars of the member’s money is spent for the sole purpose of bringing a single channel back to accommodate a few board members representing an unknown number of the members of the association. My goal this year was to advise RMA on prudent and conservative spending practices. That accomplishment should not be squandered on the shortsighted albeit somewhat popular activity of a few on this board. This board debated at length over a 4 dollar increase in the dues last year yet seems to be out of the debating mood when it comes to using 85000 dollars in instant gratification for the few. Therefore I make a motion to consider approval of the white budget, its summary and fee schedule fixing the dues for this year at 118.70 and cable television fees at 22.30 and return of all excess revenues collected in FY 2009 to the dues paying members of record as of November 1, 2009, to be divided equitably as a one time payment before the end of this fiscal year thus avoiding tax obligations of the corporation. That amount should equal or exceed 91 dollars per member household. Further as a part of this motion I recommend acceptance of the reserve study contained in budget/fee schedule/reserve packet.