Let’s Improve the Budget Process

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A friend and I joined several other member-owners and staff for the April 18, 2018 budget presentation held after the Board’s approval of the budget and four days before the membership’s April 22 budget vote. Using a PowerPoint presentation, Rick Mausert led the meeting, ran through projected current fiscal year revenues, expenses and those budgeted for next year, and fielded many questions.

Included in the presentation were the Board’s Critical Objectives — those goals guiding the development of the 2018-19 budget:

  1. Pay down debt and reduce future interest;
  2. Pay shareholder loans as they come due;
  3. Prepare for wage increases and related costs;
  4. Prepare for increased property taxes as our PILOT expires in 2022; and
  5. Stay on top of projections to ensure continued sound financial performance.

These Critical Objective topics were also included in the 2017/18 budget. It’s pretty dry stuff but certainly reasonable for a company with an expected $27 million in sales for fiscal year 2018/19 and a sizeable debt.

We left that budget meeting with three thoughts about next year’s budget.

First, we wondered: how well did we do last year? What were last year’s actual revenues and expenses? How had last year’s budget assumptions measured up against reality? If last year’s budget assumptions had accurately predicted last year’s actual revenues and expenses, could we assume the same would be true for this budget? We assume last year’s financial results were referenced while this year’s budget was being prepared. If, however, results from the prior year’s audit are included in the budget presentation, member-owners and staff can also evaluate how well budget assumptions for the prior year measured up against reality.

Our second thought concerned next year’s Critical Objectives. What will they include? At the April 18 budget presentation, we heard a staff member express her disappointment that this year’s Critical Objectives did not mention the issue of wage compression. This month’s Editor’s Reflection explains this issue and how the Board is now looking at solutions. It seemed important to us that the budget objectives of staff and member-owners also be solicited and addressed when next year’s budget is being developed.

And that led us to our third take-away from the April 18 budget meeting. How can the timing of our budget review process be tweaked to improve engagement from all stakeholders in our co-op community? Is there some way to study the budget, learn its goals and see how well it reflects next year’s revenue and expenses, before approval by the Board? Even though the Membership can’t vote on a budget the Board has not yet approved, there must be a better path to sharing information and resolving disagreements and disappointment than waiting to vote down a flawed budget, or work with the Board to find solutions after the fact.

It appears to us that staff and member-owner input needs to be actively solicited while the budget is being prepared. We know the Finance Committee meeting schedules are posted but we are unsure, in hindsight, how detailed its agendas are. While an agenda tab is available on the website, details for past meetings are not. Therefore, we have a series of suggestions that we are asking the Finance Committee to review and either adopt or explain why it need not or cannot:

  1. Ensure that member-owners who are versed in the world of finance are invited to participate on the Finance Committee;
  2. Publish and disseminate Finance Committee meeting agendas ahead of time to ensure wide-spread attention;
  3. Involve staff and member-owners while the Committee is reviewing next year’s budget, particularly the Critical Objectives, by personally inviting participants who have spoken up on these issues in previous years;
  4. Respect and accept staff and member-owner suggestions by explaining, if not adopted, why their suggestions are not included; and, lastly
  5. Provide the prior year’s actual results while the budget is being prepared, and at presentations.

This budget cycle demonstrated to us that proactively involving member-owners and staff can produce a better product. Next year, let’s not wait for the budget to be passed before discovering and trying to fix what may be missing. Let’s all work together through every aspect of the budgeting process.

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Mollie Lampi became a Co-op Voice Editor in March 2018. She has worked in the Co-op Plants Department and as a courtesy clerk bagging groceries since 2016 when she retired from a 37-year career as a consumer rights and energy lawyer. She is a past-president of Upper Hudson Planned Parenthood and currently serves on the Board of the Friends of Voorheesville Public Library. She loves writing, gardening, running, reading and travel.