Guest Commentary: RCSCW needs to get a grip on finances, IRS

Posted 5/29/21

I find it amazing that in a short three years the Recreation Centers of Sun City West has managed to potentially destroy Sun City West’s community by merely not paying attention to daily financial practices.

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Guest Commentary: RCSCW needs to get a grip on finances, IRS

Posted

I find it amazing that in a short three years the Recreation Centers of Sun City West has managed to potentially destroy Sun City West’s community by merely not paying attention to daily financial practices.

Having read Mr. Tom Slade’s letter to the editor (“Club, IRS issue shines poorly on Sun City West,” Sun City West Independent, May 12, 2021) I am inclined to agree with him. However, I feel it necessary to share some additional information that possibly not many of the residents, especially more recent members of the community, may be aware.

Mr. Slade is correct as to where the responsibility lies for keeping the community safe from the Internal Revenue Service. The IRS has been trying to find errors in the rec centers’ bookkeeping for years, and yet the finance department has always been diligent in its efforts to ensure the clubs follow the rules.

Two things have occurred over the past three years that have impacted the tax issues. A new general manager and chief financial officer were brought on board, and the Recreation Centers of Sun City West Governing Board, without announcing to the Sun City West community, elected to change direction in their function. Since it’s beginning the governing board has acted as a policy board. In other words, their primary responsibility was to ensure that current rec center policies were kept up to date and changed accordingly as time and community needs change. These policies are what the general manager and his staff use as guidelines for their daily operations.

During the 2018-19 board season, the board, without public knowledge, converted to an operational board; therefore, essentially playing the role of lord and master of the organization.

With the introduction of a new general manager and CFO, the change seemed to progress easily, especially since the newly hired staff leaders weren’t totally aware how such a change would affect their day-to-day management of staff and finances. From that day forward, the board president has directed the general manager’s daily activities.

I know, many of you are asking, “So what’s the problem?” The governing board is made up of individuals just like you and me. Their involvement is 100% voluntary and in many cases they come with little or no board, and in many cases, management experience, especially in critical finance issues. This leads to many opportunities for misjudgment in management decisions.

So why is this important? There are two reasons. First, daily management by those who direct management and staff based on limited or no knowledge of community needs is dangerous; and, being unaware of laws governing Sun City West is another and even bigger issue.

Sun City West is defined as an active 55 and over adult community. It is a tax deferred, not-for-profit organization, which provides its residents certain benefits not allowed in regular communities, such as in Surprise. The rec centers is defined as a 501(c)(4) community, allowing it to operate as a not-for-profit organization. With the exception of two rec center clubs, all clubs are 501(c)(7), the remaining two are 501(c)(3). These ratings come with specific legal tax requirements they must follow!

So, where does all this take us? The answer is clear. The RCSCW and all it’s chartered clubs must follow the rules or stand the chance of losing their tax-exempt status.

Why should you care as a resident and member of the RCSCW? If the rec centers loose the tax exemption status, all residential taxes most likely will go up! The rec centers would no longer be able to continue to operate in the manner members are accustomed. 

Woe is me, woe is me, what should I do? Good question. We can follow Mr. Slade’s suggestion and bring in new management, hoping they don’t fall into the same trap, or bring forth pressure on the governing board to stay out of daily operations! Keep in mind the latter would take a re-indoctrination of the general manager and CFO responsibilities since they do not seem to be able to go to the bathroom without permission from the board president, a direction and control passed down from its previous board president in 2019.

Hopefully, everyone who reads this will pass it on to their neighbor and seriously think about the ramifications involved if the rec centers doesn’t get on top of the tax issues haunting the clubs, and the governing board seriously needs to resort back to being a policy board and stay out of daily operations! After all, that’s why we pay the general manager and CFO first-rate salaries. 

Editor’s Note: Marion Mosely, a Sun City West resident since 2010, formerly served on the Recreation Centers of Sun City West Governing Board and was board president in 2014-15.

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