Conversation with Kent on Budget Matters Tuesday, January 16, 2018 Santa Rita Springs Anza Room

State of the Corporation – Before 2014 No formal, Board Approved, Budget Development process GVR’s Annual Audit had qualifications because no Reserve study methodology GVR had no plan for establishing and funding Reserves GVR approach to long-term facilities planning is unwritten, disjointed and underfunded

State of the Corporation – Before 2014 Investment decisions made without: Investment policy Consistent professional advice Volunteer involvement Outcome: Minimal returns Limited confidence No accountability

State of the Corporation – 2014 onward State of the Corporation – Board of Directors undertakes to: Develop and adopt a Budget Development Policy per By-Laws requirements Engage a professional firm to conduct a Reserve Study and begin funding Appoint a volunteer-led Investment Ad Hoc Committee Engage professional Investment Advisors Commission a long-term strategic facilities plan

State of the Corporation – After 2014 Board of Directors undertakes to: Direct staff via CPM to develop budget and dues proposals that: Maintain a dues levels to keep pace with inflation consistent with CPI and Social Security changes Include the newly established annual Reserve provisions Provide for Center Assessment priorities Assure the provision of quality programs

Budget Development Policy (Per By-Laws) Board of Directors establishes: Dues Operating Budget Capital Budget Guided by: Actual operating expenses Reasonable Reserve Objective – self sustaining operating basis

Budget Development Policy (CPM) (Next FY) Jan/Feb – Staff solicits GVR Clubs and Facilities Center Assessments (capital and operating) Mar – P&E prioritizes Club Requests Apr/May – Staff prepares prioritized project lists (maintenance & replacement) June/July – Staff prepares operating and capital budget proposals

Budget Development Policy (CPM) (Next FY) Aug/Sep – Staff prioritizes facility center and reserve evaluations P&E identifies priorities from Long-Range Strategic Plan Fiscal Affair considers Proposed operating budget Schedule of dues & fees Recommendations from P&E FAC sends dues & budget to Board

Budget Development Policy (CPM) (Next FY) Oct/Nov – Board of Directors approves: Final Operating Budget Capital Budget Dues

Budget Development Policy (Per By-Laws) Remember that the Board of Directors establishes: Dues Operating Budget Capital Budget

Dues Setting Process CPM Outlines starting point as sum of: 50% of CPI-W 50% of Social Security change for current year Factors considered that may impact final dues: Operating costs Maintenance projects Appropriate reserves Fiscal Affairs may deviate from starting point.

Impact of Reserve Study Decision Annual Provision Amounts substantial Current Year Corporate Net Income BEFORE provision must be equal to or greater than provision amount. In every “for-profit” entity this is called a “profit”. For GVR a positive net is mandatory to fund the reserves. Reserve Study amounts: 2016 $900,000 2017 914,400 2018 940,000

Budget Approach and Reporting Revenue determinations derived from: Prior year averages Prior experience Current projections of: Existing Revenue producing activities Potential new sources when identified

Budget Approach and Reporting Expenses Finance Staff provides guidelines and materials to: Managers and supervisors with budget responsibility Managers prepare budgets based on experience, required and devised plans Budgets submitted to CFO for compilation and review Staff compile data, projections, calculations, estimates, etc.

Budget Approach and Reporting Budget finalizing CEO, CFO & Mgrs. meet to arrive at final budget CFO finalizes budget materials for presentation to: Fiscal Affairs Committee which sends to Board of Directors Final step is action by Board of Directors.

Revenue and Expense Categories

Thank You for your Time and Interest in GVR Submitted Questions Thank You for your Time and Interest in GVR