ANALYSIS by Dean Silver
The Golf Course is in the Red by $209,679
That’s right, that’s not a typo. The golf course expenses so far this year have exceeded revenues by $209,679. That’s for seven months.
But that’s not all. The Senior Services Division is in the red even more, $225,247 to be exact. That’s also for seven months.
These are not figures that were discussed in the budget report, but they are there. It takes serious scrutiny of the numbers to discover these uncomfortable facts. Read on to learn more.
The Background
The March 9, 2022 Regular Business Meeting of the Ashland Parks and Recreation Commission featured the “FY22 Quarterly Budget Update”. That’s what it was titled, but not what it actually was. Although the memo stated “APRC staff prepares a budget summary report for the Commission to review each quarter and at the end of each fiscal year (FY)”, it went on to state, “The report being presented at this time is the monthly budget report for January 2022.”
When asked about the discrepancy between the stated subject of the memo and the actual content, APRD staff analyst Tara Kiewel explained, “The Parks Commission is updated quarterly on the budget, but we present the most current budget available at the time. In this case it was the report as of January 2022. To avoid confusion going forward I can include the quarterly summary as well. The goal is to provide the Parks Commission and public with the most up to date budget information available. “
It is appropriate for financial reports to be as current as possible, and thus the January figures (the latest available) are the most useful at this time. The questions remain: why wasn’t the quarterly report presented last month, and why was this monthly report described as the quarterly report instead of the current monthly report?
But these questions pale in the light of other, more concerning problems found in the report. The overriding rules of accounting are that it must be accurate and consistent. There were a number of errors and omissions in the report that would not be apparent without close scrutiny. These problems could mislead the APR Commissioners and the public. A budget report should be designed to present an accurate picture of the finances in question. The purpose of my examination is to clarify and correct those errors and omissions, and to present a more accurate description of the numbers discussed in the memo and presentation.
You can access the agenda item with the update memo here: https://www.ashland.or.us/SIB/files/APRC/2022/APRC%20Commission/03_09_2022_APRC_RegularMeeting_Packet.pdf
Two Different Tables, Two Different Totals
City commissions and committees always publish the agendas of their meetings prior to the meetings so that the public can be informed about what is to be discussed. It is common practice to include illustrations, tables, and charts in the agendas. It is also common to see those same items displayed on screen at the meetings.
In this case, the agenda included several more tables than were presented by staff online at the meeting. More information is always appreciated. But the one table that was presented on screen differed considerably from everything that was included in the agenda. That caught my attention. (see below)
The table that was presented online showed expenses. It was a condensed version of the more complete table included in the agenda packet. In the more complete “agenda” table, expenses were broken out for each division of the department in at least two categories: “personnel”, and “materials and services”. This is standard practice. What I noticed was that there were no entries for personnel or M&S listed on the online table, just subtotals. When I compared the on-line table to the agenda packet table, I saw that the “grand totals” did not agree. Looking further, I noticed that ALL of the subtotals were identical except for “administration”. Further investigation showed that the entire category of “personnel” had been removed from administration and not included in the calculations. Thus the subtotal for administration was incorrect, and therefore the grand totals were incorrect by the exact amounts that were listed for administration ”personnel” in the more complete “agenda” table.
The information presented to the commissioners at the meeting and to the public watching online was incomplete and incorrect. The only way to discover that was to compare that table to the one included in the agenda packet. The totals were short by the exact amount of the administration personnel expenses.
This may have been a simple mistake. On the other hand, anyone used to working with spreadsheets might doubt that explanation. But again, it is far less important than the revelations to come.
A Most Unusual Presentation
Most budget reports present revenues and expenses together, in similar formats, so that the numbers can be easily compared. That was not the case for this presentation.
For the online presentation, the aforementioned expenditure report was presented first. Next, a table (see below) was presented listing the general fund revenues for the recreation division, including golf and the senior services, which are separate, dedicated divisions for budgetary purposes. It showed that the revenues for leasing space on the Calle were a whopping 251.5% of budget. Likewise, the ice rink revenues were 124.1% of budget. Even revenues for the pool were at 99.58% of budget for the entire year. Miscellaneous revenues (whatever they are) were at 107.9%. All of these excellent results are after only seven months. Even golf was on target at 58%.
Some of the other categories were low, as would be expected during the pandemic. Facility rentals were at 24.6%. The Nature Center was at 10.4%, but it has been closed for almost two years. “General Recreation” and “Recreation Event” were low. But the all inclusive total showed 71.66% of budgeted revenues for the entire fiscal year were realized after only seven months. This would appear to be excellent results.
A Very Misleading Presentation
But what about the golf course and the senior center? As noted above, the presentation was unusual in its format. Revenues and expenses of the various divisions were not presented side by side, or even one after the other, so that they could be easily compared. So for your convenience, I have included one below. (Expenses include FYTD plus encumbrances. Negative numbers are shown in parentheses.)
| Revenues | Expenses | Total | |
| Golf Course | $216,221 | $425,900 | ($209,679) |
| Senior Services | $5,663 | $230,910 | ($225,247) |
Obviously, these are not results that the management of APR would want to emphasize. But they cannot be denied. An error of omission is not to be excused.
Make no mistake: this is in no way the fault of the analyst who prepared this report. You can rest assured that she was supervised every step of the way by Director Michael Black. If she were not supervised, and if this report was not preapproved by the Director, then he would not be doing his job.
What About Water?
Michael Black made a short statement regarding water:
“We don’t expect there to be much if any irrigation season this summer coming from Talent Irrigation District. So we are working on plans right now, they’re currently underway, we’re formulating plans where we are prioritizing where we will water, where we won’t water and we will bring that information to you and share that with you going forward. As you can imagine when we are generally watering say a park like North Mt. Park with irrigation water and we have to turn that over to culinary water the expense goes up dramatically, so I can tell you right now if we don’t have an irrigation season with TID, we will not be able to water all of our parks. We will not be able to afford that or water in a way that people as used to in a general, in a regular summer if you will. Just FYI on that. I do think that’s also the responsible action to be taken in a year where we do have a drought condition where we have drought conditions and plenty of water to go around. Now the other thing I would say and I’ll talk more about this as we go forward and this isn’t for tonight’s discussion but we do provide opportunities for people to recreate in parks and we you know for the density and things like that within the City of Ashland people do need a place to go and recreate and that’s what we are working on now, is prioritization of spaces and which spaces will be prioritized for water and maintenance as we go forward as we see budgets increase as a result of water shortages. “
It was encouraging to hear him acknowledge that changes would be made in APR’s irrigation practices this coming year. APR management’s policy this past fiscal year, utilizing an enormous amount of potable water for irrigation, was expensive and irresponsible. (You can read more about that here.) The Director tried to put the blame on the excessive heat of this past summer, but the fact is that APR exceeded its budget for water in the previous fiscal year as well.
There is no doubt that this is an existential problem for all of us. We love our trees, we love green grass. But the water just isn’t here. We must adapt. It’s unfortunate that it has taken Michael Black so long to come to grips with this dilemma, but we can only hope that he will be as good as his word, and find better ways to manage the department’s water use in the future.
A welcome benefit will be an additional reduction in the funding that APR has been spending on all of that precious water.
What About That Ending Fund Balance?
All of last year, while Michael Black was complaining about inadequate funding, he kept stressing that the balancing the parks budget relied upon “using” the ending fund balance. This refrain was repeated again during this presentation.
Despite that complaint, however, the ending fund balance as of seven months into the fiscal year has actually grown by $243,701, and is now standing at $2,037,099. This presentation repeated the fallacy that the ending fund balance would be reduced to $493,000 at the end of this fiscal year. If the current trends continue, the ending fund balance will increase at the end of the fiscal year, rather than decrease to less than one quarter of its current level.
You can think of the ending fund balance as money in the bank. It’s money that has not been used for anything specific at any given time. At the end of the fiscal year, the ending fund balance is transferred to the next fiscal year as the beginning fund balance.
It’s also important to understand the difference between the budget and the actual operating statement. The budget is a plan for the upcoming period. It is simply an approximation, hopefully a very educated and accurate guess. What ultimately matters is the actual statement of financial performance—how much was taken in, and how much was spent. In business, it’s profit and loss. In government any “profit” is carried forward—there is no “profit”. The ending fund balance becomes the beginning fund balance, available for appropriate uses. It can be thought of as a kind of “asset” to be used in the coming year. In a budget, it is another resource. But “it” is never “used”.
What’s important to note here is that despite Michael Black’s constant harping on a lack of resources and funding, this report indicates without a doubt that current funding has been adequate. When the excess funding expended on potable water for irrigation and to maintain staffing for programs that have been virtually dormant for the past two years are taken into account, the balance sheet could and should look even better. APR is spending less than it has budgeted. That is a good thing, certainly to be celebrated.
But to ignore the reality of the operating statements, and to claim that more funding is needed, is simply disingenuous. This is especially problematic when the City’s General Fund, which supplies much of APR’s funding, is under extreme stress, as are many essential services that utilize some of the same funding sources.
Our city government has been aware of the challenges facing our finances for at least five years. No doubt, some observers were aware of the problems far earlier. Yet the funding of our governmental services is heading for a deficit within the next few years if nothing is done to reverse current trends, and we have huge infrastructure issues to finance as well. Council has been struggling with these questions, but has made no progress so far
There can be no doubt that the pandemic has thrown everything in our society into uncharted territory. We have all had to adjust and adapt. As the pandemic (hopefully) winds down this spring, circumstances will change again. We will all have to readjust… again, as we always do. The one thing that is constant in life is change.
Let us all hope that our city government will make wise decisions in these difficult times. The Ashland Parks and Recreation Department must be a good partner and act responsibly to help meet our challenges.
NOTE: As of this writing, the video of the meeting had not been posted. When it is, you will be able to find a link on this page: https://www.ashland.or.us/Page.asp?NavID=745
