This work session of the Board of Directors and Finance Committee was a preliminary discussion of GHI’s 2019 budget in which staff discussed projected expenses.
General Manager Eldon Ralph noted that staff salaries and benefits are one of the budget’s largest items. He presented a staff org chart with 45.5 regular employees and observed that staff had increased in recent years due to the Homes Improvement Program (HIP).
He recommends adding two (2) Full-Time Equivalent (FTE) employees for maintenance in 2019. The onset of HIP and asbestos remediation has caused staff to shift time away from routine maintenance work and the fee-for-service program. (Note: GHI members may contact the office to request access to the handout Eldon Ralph provided to the Board and read attachment 3 for more information about the rationale.)
The general manager noted that once crawlspaces are improved and work is completed, GHI must institute a regular inspection program. The plan would inspect masonry home crawlspaces once per year and frame home crawlspaces twice per year; the different schedules due to mechanical components (sump pumps and ventilation fans) in frame crawlspaces that are not in masonry crawlspaces. The program has to start in 2019 because work is already done in some crawlspaces so 0.5 FTEs will be needed in 2019 then 0.8 FTEs when all crawlspaces are improved.
If the Board authorizes the new staff, the general manager recommends also hiring temporary staff with hopes that the staff count will return to pre-HIP and pre-asbestos levels. The crawlspace inspection program may raise the staff count but the overall level could be lowered through normal attrition.
Board member Ed James asked about the impact of WSSC’s proposed plans to replace aging water lines for masonry units on staffing. The general manager replied that WSSC work would probably be two years away so immediate staffing needs are not affected. Read more about the WSSC proposal and its potential impact on GHI.
Board member Steve Skolnik asked what would be the mix of salaries for FTEs due to the blend of highly-skilled and less-technical jobs. Director of Maintenance George Bachman replied that GHI needs journeymen and grounds staff for various tasks and could utilize current staff while using temporary staff for more task-specific work.
HR Manager Maesha McNeill presented budget information regarding staff salary and benefits. A national salary survey conducted by WorldatWork reports that employers anticipate an average 3.2% salary increase as companies are paying more to attract and keep good employees. The 401(k) plan continues and the insurance broker estimates an 11% increase in the health insurance premiums that GHI pays. That is considered a “standard increase” as the broker’s other clients have seen the same or higher increases. The broker is shopping for alternatives to the current life and disability insurance plans and will soon provide 2019 options for GHI’s consideration. Dental insurance costs are also projected to see a “standard” increase of about 4.9% which matches the 2018 increase. GHI has not explored a self-funded dental plan; the vision plan is self-funded.
Director of Finance Joe Perry noted that real estate taxes are one of the largest single expenses for the cooperative. The Maryland Department of Taxation will have new assessed values in January so Perry will use the most recent purchase data and historical data for units that haven’t recently changed hands and generated new pricing data. Audit Committee chair Molly Lester commented that Jeff Williams, City of Greenbelt treasurer, had suggested projecting at least a 3% increase per year for the three-year assessment cycle. City of Greenbelt Mayor Emmett Jordan, who was in attendance, indicated that 3% sounds conservative but reasonable and noted that it’s an election year for the Prince George’s County council so that may affect whether anything changes.
The general manager reported that GHI’s property liability insurance broker predicted a 2-3% increase if GHI does not file a major insurance claim for the remainder of 2018. The workers’ compensation insurance policy premium may see a 4-6% increase due to claims activity and higher payroll costs.
Joe Perry reported that the City of Greenbelt’s 2019 adopted budget shows a nominal decrease in trash collection fees for first half of the year. Board of Directors member Chuck Hess suggested that GHI negotiate with the city for a price break due to smaller homes and the subsequent faster collection times. Molly Lester noted that GHI has negotiated a lower rate in the past. She also noted that another rationale for lower rates is that GHI doesn’t have curbside leaf collection (as the other city residents do) and members must purchase and set out their own leaf bags.
The general manager recommended that the Board increase the tree maintenance budget by $20,000 to handle the increased number of work orders. The current tree hazard rating system assigns priority to determine which trees are trimmed/removed among the current backlog of 100 pending work orders. A member in attendance noted that they would support the larger tree maintenance budget due to:
1) branches falling from the large/old trees;
2) many trees planted 70-80 years ago are at the point in their life cycle in which they need more attention;
3) members feel very strongly about risk of poorly-maintained large trees in an era of more severe storms.
The general manager recommends devising a different plan or raising the tree-waste disposal budget by $16,000 to avoid creating a giant pile of wood-chips in the GHI boatyard. The dumpsters are now being emptied at a recycling center. Skolnik commented that GHI may need a task force to explore solutions.
The general manager noted that the computer system upgrade was postponed to 2019 as it wasn’t budgeted but security upgrades were done. Director of Member Services Neron Adams-Escalera will provide the Board with system upgrade pricing once he receives the vendor’s proposal.
The general manager and HR manager described some of the changes recommended to enhance security in and around the Administration Building compound. One vendor submitted a proposal but GHI must first write a formal request for proposal (RFP).
GHI Assistant General Manager Tom Sporney reported that the RFP for masonry home crack repairs is going out. A major challenge is deciding how many of the repairs to undertake so GHI is bidding out the most critical work to fix cracked brick and block.
Joe Perry reported that the Finance Committee did not change the Parkway Apartments fee schedule so the 2018 numbers will carry into 2019.
George Bachman reported that fee-for-service requests are secondary priority to crawlspace repairs/improvements and HIP-related work. HIP-related fee-for-service requests are accepted but the decision to accept other requests is driven by staff availability.
GHI committee budget requests are due September 30th.
Molly Lester asked if the 2019 budget could include adding microphones to the boardroom. Skolnik replied that there are already four speakers in the ceiling and a sound system in the back of the room which Tom Sporney will test for functionality.
There was casual group conversation about improving the seating comfort for Board members and members who attend meetings but nothing was decided.
Molly Lester asked about increasing the amount of working capital (now at 1%, down from 3%) that new members pay upon purchase then are refunded if/when they sell their home. The additional funds could fund projects or build a savings cushion. She noted that co-ops don’t have a transfer tax so new members avoid that tax when buying into GHI.
The general manager noted that GHI may need to budget for a consultant to revise the member handbook and a consultant to develop a comprehensive communications strategy. Skolnik added that hiring a grantwriter is also in the Board’s strategic plan. The group agreed to budget for the handbook re-write.
Molly Lester asked what is the projected increase for contingency reserves replenishment? Chuck Hess replied that there has not been a vote on that matter and contingency reserves will continue to be funded by surplus monies. Joe Perry commented that the contingency reserves are based on a percentage of the prior year’s budget and any surplus* from the additional collections that are currently in place to pay for crawlspace improvements and asbestos remediation will go to the contingency fund. Once the target contingency reserves balances are reached, the Board will decide whether to continue the collections. *(Note that “surplus” in this instance refers to funds left over after the bills are paid for crawlspace improvements and asbestos remediation.)
Skolnik noted that the cost of hiring a financial planner/broker should be included in the budget.
After remarks indicating that this work session was part of a series that will occur before the 2019 budget is finalized, the meeting adjourned.