1. JSSA Financial Picture
Structural Deficit and Operating Loss for FY 17

2. RECAP Program Groupings by Financial Performance before overhead allocation
Breakeven or Better
Hospice ($2M surplus)
Specialized Employment (positive margins in all aspects of growing business)
Near Breakeven, small losses
Premier (paper-thin margins, need scale and pricing power)
Senior Services (mix of svc, varying degrees of self-sufficiency; Holocaust is largest)
Loss Leaders, require the most use of agency philanthropy as % of budget
Mental Health ($2M loss, restructuring and pursing new revenue options)
Community Outreach ($500k loss, little fee potential, primarily Jewish audience)

3. Causes of FY 17 Operating Loss vs. Budget
Underperforming Profitable Program Services (negative $442k variance)
Hospice $328k negative variance through March
Specialized employment $114k negative variance through March
Philanthropy is behind budget by $150k, excluding timing of event revenue
Loss Leaders are at or better than budget (not causing budget variance)

4. Year-End Forecast: Expanding Deficit $800k-1M
Negative Factors:
Hospice expected to continue to underperform by $100k monthly
Philanthropy gap will continue to grow through year end ($ k)
April productivity hit across multiple program (holidays)
Positive Factors:
Specialized Employment and Premier: stabilized and trending positive
Hospice: recent increase in referrals outpacing discharges

5. FAQs
Q: Is this a new problem? Have we returned to the financial problems of a few years ago?
A: This is not a new problem, but the approach is different. The agency has had the problem of a structural deficit for years but there is a different strategy now to address the problem with strategic investments in growth versus exacerbating the problem with a starvation cycle
Q: Why aren’t we reducing costs in underperforming programs?
A: Investing in our “profitable” services still makes long-term sense
Q: Why can’t we scale back expenditures on loss-leaders to close gap?
A: We are restructuring in these areas to improve efficiencies and reduce deficits; but we are doing so in a way that preserves service which is slower and more complex. Remember these are the areas that serve the most people.

6. FAQs Q: Why wasn’t this problem evident the last couple of years?
A: Hospice growth and profitability mitigated the problem, but we were taking steps to address the underlying structural deficit and competitive disadvantage.
Q: Does this mean that next year’s budget will be equally challenging?
A: YES and probably more so. The answer to a structural deficit is not a quick fix. We are changing structure and business models, which will take time. Additionally, we need to make infrastructure investments to make us competitive that will add costs without new immediate revenue relief.