Bagnato: Variances impacted by decisions

Posted 4/26/21

In the Recreations Centers of Sun City West E-News edition of April 14, 2021, there is a link to commentary by RCSCW Chief Financial Officer Pete Finelli.

While any information is appreciated, the …

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Bagnato: Variances impacted by decisions

Posted

In the Recreations Centers of Sun City West E-News edition of April 14, 2021, there is a link to commentary by RCSCW Chief Financial Officer Pete Finelli.

While any information is appreciated, the importance of it is determined by how timely and comprehensive it is. Mr. Finelli points out that operating income for the period ended February 2020 was ahead of budget — a good thing, but by the June 30, 2020 fiscal year end, the variance had turned negative and this had an “unfavorable impact upon funding for future repairs and replacements and new capital spend.”

All well and good, but that information covers an annual budget period ending June 30, 2020. A significant driver of this negative impact may very well have been the decision by General Manager Bill Schwind to keep employees on the payroll while our community was shut down. Mr. Finelli did not disclose just how much of a negative variance there was. The preliminary June 30, 2020 financials indicate the figure at $468,000, driven mostly by a big decline in golf revenue from the myopic decision to close our courses for three weeks last April.

So much for transparency.

Moving on to the current fiscal year, Mr. Finelli’s comments are equally vague, perhaps intentionally so as not to rile up the natives.

Here’s what you need to know.

For the period ended Feb. 28, 2021, operating revenues — primarily member dues and golf revenues — were lower than budget by $668,000. Golf revenues were actually ahead of budget, though not by much. Most every other revenue category was behind the 8-ball and contributed to the negative variance.

Here’s where it gets interesting. Total operating expenses — mainly wages and benefits — were significantly below budget, to the tune of $1.44 million. How much of this is due to our continued practice of budgeting for employee positions that are never filled is not disclosed. As recently as this week (April 12-16), 22 positions in landscape and maintenance were open.

Nearly every other expense subcategory produced a positive variance. Only two of the 11 were negative. The end result is that by the end of February 2021, our operating cash inflow, also know as operating profit, was ahead of budget by an eye-opening $769,000.

Not one word of this appears anywhere in Mr. Finelli’s missive.

Also missing are details on how we are doing year-to-date with capital-related income and expenses. In this case, we took a realized gain on investments of $3.1 million and Asset Preservation Fees of another $3.1 million, the latter nicely ahead of budget by almost $400,000.

Bottom line, by end of February our community was doing very well financially. The proposed new budget may not have a dues increase in it, but it surely should have had a dues decrease — and it doesn’t.

Suffice to say, I have the professional background to know my way around financial statements. The numbers quoted above are from Sun City West financial statements — I did not pull them out of my hat. Now you tell me, are you happy with the poor transparency regarding our community’s finances, even when it’s good news? Do you think it’s right that this 2020-21 surplus is probably going to be syphoned off into reserves, already bloated at over $37 million, including cash on hand? You shouldn’t, because it’s dead wrong.

This community is run by someone whose background, to the best of my knowledge, has been in municipal government positions his entire life, living off the taxpayers. He wants to drop an estimated $130,000 on some consultant to develop yet another Sun City West “master plan” for a completely built-out community already having too many costly amenities.

This “plan” should be done exclusively by our elected representatives — the board. Instead, they did away with the Long Range Planning Committee but for some reason need a new committee to decide where to hang a few pictures.

Hello, is anyone home? Sun City West residents are not taxpayers, we are owner-members. We deserve to be treated better by a board willing to question everything. Bill Schwind has got to go.

Frank Bagnato
Sun City West

finances

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