2015-05-05_PR Comm Packet - Laserfiche WebLink

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