Budget Crash of 2008!

The Foundation’s Goals and Community Standards

Budgets are the money expression of the goals and objectives of a Common Interest Realty Association (CIRA). The board of directors’ responsibility to approve the annual budget and establish assessment levels places special emphasis on the board’s stewardship duty to allocate control and wisely utilize community resources.

The budget’s effectiveness depends on the board’s willingness to take prompt corrective action on unfavorable variations from the budget as indicated by the monthly financial reporting system, the on going monitoring of property conditions and feed back from the community.

Roles and Duties in the Budget Process

Staff and Management

Based on based predetermine goals, standards and policy the staff and management must prepare, present, defend and be held accountable for the budget it prepares and presents for consideration and approval.

Every major category and classification of income and expenditures has a standard time tested proven method of measuring and determining budget line item amounts. As a minimum, backup budget preparation schedules should be used to calculate personnel, utility, contract, supply and capital reserve cost.

Presentations of the budget for board and community’s approval and consideration has to be professional prepared and include a comparative analysis of historical, current and future revenue and expenditures. The budget must include rational and reasonable explanations and justifications of program recommendations, income and expenses calculations and analysis of trends, variances and conditions affecting costs.

Board of Directors

The Board of Directors is responsible and accountable for the assets, operations and finances of the Village’s. The budget is the financial plan and the primary tool that allows the board to effectively meet these obligations.

Each board member should:

• Understand his or her financial duties and obligation; the requirements, standards and community goals address in the budget and how the budget is prepared.
• Be willing to challenge and questions all aspects of the budget.
• Hold the staff and management accountable for results and
• Openly, effectively and truthfully communicate and engage in a two way dialog and communication with the community on the merit of the budget.

The Membership

Only then can the property owner members in the Village have a level of confidence in the budget preparation and communication process to judge whether those with power, duty, obligation and influence are:

• Preserving, maintaining and enhancing its property and assets.
• Providing maximum value from the assessment dollars.
• Enhancing and contributing to the Village’s quality of life.
• Effectively delivering customer services to the members and
• Impacting positively on the equity value of common and individual property.

The Approval of the Empty MVF 2008 Budget Package

The MVF Board of Directors and staff should feel an under whelming sense of failure, shame and regret for preparing, presenting, communicating, adopting and approving the MVF 2008 budget and assessments at the October 25^th board meeting.

The only community goals and standards articulated were “no new initiatives” and to “raise the assessment ceiling”. The budget did not address plans to improve customer service delivery or a strategy to restore the function, structure and aesthetics to the Village’s neglected common facilities, landscaping, shore lines, paths and lighting to a community standard of maintenance, care and management.

Missing was a sense of urgency, commitment and capital plan that would restore life to the Village’s crumbling infra structure.

The MVF staff’s2008 budget preparation, presentation and performance lacked supporting schedules, understandable calculations, meaningful explanations, valid comparisons, intelligent analysis or valid rational.

The proposed budget was published without any apparent aspect being questioned or challenged internally by staff, the Audit Committee, or individual boar members.

For the last 6 months Interim Director of Finance and Administration and now “Consultant” Lois Campbell in her role as MVF’s chief financial spokesperson mobilized the public relations misinformation surge, not about the merits of the proposed budget, but to promote a campaign to “raise the assessment ceiling”.

Raising the assessment ceiling has always been the only mission of the MVF village leaders and foundation staff. Open, effective and truthful communication in which all parties engaged in a two way dialog with the community on the merit of the budget was never a consideration.

Lois, in her assumed capacity of MVF Communications Czar, authorized unlimited space the Village News’ September, October and November editions to promote a raise in the assessment ceiling to the over 10,000 Village households.

A willing force of contributors from The Village News editorial staff, former Interim EVP Pat Huson, as well as tenured board members Keith Silliman, Richard Wright and Gerald Donovan contributed articles skillful avoiding the details of the proposed budget.

Questions and concerns raised by those in attendance of the September 25^th budget information meeting and the October 18^th meeting of MVF representatives were dismissed as not germane to the vote to raise the assessment ceiling. The questions covered:

• A comprehensive examination of the budget by line item,
• A plan to contain cost,
• MVF existing budgeting and spending philosophy,
• Accounting and reporting credibility,
• Cost effectiveness of Village wide spending programs

“Letters to the Editor” of The Gazette from Jane Hatch, President of the Board of Northgate Homes Corporation, and The Village News from Eileen Fishman a resident of Northgate, Michael Sheib a resident of Normandie on the Lake II and Mark j. Firley, President of Board of South Village Homes Corporation cried out for :

• Greater accountability and efficiency from MVF operations
• Stopping the abuse to those who dare to question the accelerating demand for money by the Foundation and,
• The abusive comments to those who express a contrary opinion.
• A need for civility and a cease to neighbor to neighbor hostility.
• Current year actual to budget results and detailed line item budget justification before budget decision can be made.
• A reexamination of 2007 results and the 2008 budget assumptions early in 2008.
• Accountability and explanation to residents of condominium communities of the cost of Village wide spending programs.

All the letters were received with silent indifference except to Michael Shieb’s letter in which then Interim EVP Pat Huson’s responded “When people do not acknowledge and support the efforts of the Foundation, they not only do a disservice to MVF, but to themselves and the community as well.”

Mr. Shieb you must realize that there is a long standing MVF board approved policy that when any person publicly express a comment, opinion and/or concern or asked a question about MVF financial matters or services preformed they will be ignored, deionized, patronized, judged unworthy, treated rudely and declared a disloyal enemy of the Foundation.

Relying on the staff prepared and presented 2008 fiscal year budget with the endorsement of the Audit Committee, the board with only Katherine Gray and Scott Johnson voting against, approved a defective financial non plan destined to follow the rocky road to “The MVF Budget Crash of 2008”.

Financial transparency and public comment and approval had been successfully hi jacked and held hostage as ransom in return for a raise in the assessment ceiling.

Budget Crash 2008 The Observers’ Projections and Predictions

Despite the refreshing and open leadership of Bob Hydorn, the good intension and efforts of Hydorn and fellow board members Scott Johnson, Katherine Gray and Bob King to effect financial reform and the hiring an Executive Vice President and Director of Finance and Administration the approval of the 2008 fiscal year budget indicates little progress has been made.

The events over the past 90 days were a series of missed opportunities. The hold over board members from the Wright-Silliman-Zakian-Huson-Campbell regime are still in control promoting the corrupted MVF financial, operating and governing policies and practices of the past quarter of a century.

The most amazing revelation is that Lois Campbell, 3 months after William Blum became the Director of Finance and Administration and 2 months after Dave Humpton was hired as Executive Vice President, in her new capacity as “Consultant” is still in control of Foundation’s communications and financial operations and exercise unchallenged influence over board and committee deliberations. John Zakian, as much of a control freak as he was, exercised less power and control and in The Observer’s view, wasn’t not nearly as dangerous.

If the Foundation embraces the MVF 2008 fiscal budget and continues its past financial policies and practices The Observer predicts the following will happen:

1. There will be a shortfall in non-assessment income of $1,439,549. The assessments only account for 56% the $ 8,585,527 expenses and reserve contribution budget. The Foundation has a history of substantially under estimating non-assessment income and 2008 will be no different. (See schedule C)

2. The Foundation will end up the 2007 fiscal year with a financial deficit in excess of a million dollars, and if the Board of Directors does not take appropriate action the 2008 fiscal year deficit is project to be $ 1,532,636.(See schedule A)

3. The combined deficits from the Community Management and Maintenance Activity Funds will be $$1,415,594 in fiscal year 2007 and $1,533,636 in fiscal year 2008. (See schedule J)

4. These deficits will be funded, as in the past, from funds intended as contributions to the Reserve Fund and curtailing spending common property maintenance and capital expenditures.

5. At the urging of the Audit Committee and influential board members Lois Campbell will be continue to retained as a paid financial consultant to further educate Bill Blum, Dave Humpton and newly appoint Treasurer Darcy Bingham on MVF financial policies, traditions, accounting and reporting practices, produce the November and December 2007 financial reports and work with Regardie, Brooks & Lewis on another “Clean Audit” for the 2007 fiscal year.