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2015-04-07_PR Comm Packet
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2015-04-07_PR Comm Packet
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<br /> <br /> As depicted in the table, the golf course has experienced an operating loss for the past 5 <br /> consecutive years. These operating losses are somewhat mitigated with interest earnings and the <br />sale of excess equipment. This is captured in the Net Change in Assets line near the bottom of <br /> <br />the table. <br /> <br />Collectively, this amounts to total losses of $259,000 over the past 5 years. If we look back over <br />the past 10 years, the collective loss is $354,000; an indication of systemic challenges that <br />preceded the 2007-2009 economic recession. <br /> <br />Let me pause here and talk briefly about the line items for the internal administrative charge and <br />depreciation expense two items that collectively have a significant impact on your bottom line <br />and are oftentimes highlighted when discussing financial results. <br /> <br />Internal Administrative Charge <br />The golf course is operated as an Enterprise Fund whereby all direct and indirect costs are <br />captured and reflected on the financial statements. <br /> <br />Its recognized that there are other city personnel that perform administrative or financial duties <br />such as human resources, accounting, or IT support on the golf courses behalf. This is in lieu of <br />the golf course hiring its own staff or outside services to perform these functions. These <br />administrative costs (charges) are real costs that would not occur if the golf course didnt exist. <br />Therefore we assess an internal administrative charge. <br /> <br />Im certainly open to a discussion on whether the administrative charge is set too high, but I will <br />note that the $20,000 annual charge has remained the same since 2006. <br /> <br />Depreciation Expense <br /> <br />The Depreciation expense is an accounting method of systematically setting aside funds to pay <br />for the eventual replacement of equipment and buildings. The basic concept is that we budget to <br />incur the expense each year, but we dont actually move any money out of the golf courses <br />account. In essence, were committing to NOT spending all of the revenues (green fees) that <br />come in each year so we can build up some funds to pay for capital. <br /> <br />In an ideal world, our cash balance would be going up each year because were saving up for <br />future capital expenditures. In reality, 100% of incoming revenues are being used for day-to-day <br />operations. Further information on the golf courses cash reserves is shown below. <br /> <br />Financial Summary Graphs <br />In an effort to further depict the information presented in the table above, a number of graphs <br />have been prepared. They include a couple of scenarios that depict varying expenditure levels <br />along with a financial projection. <br /> <br /> <br /> 3 <br /> <br />
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