November 14, 2016 Finance Committee Meeting Minutes

Present (phone or in attendance) – Doug Schwallie, Brian LaPrade, Lydia Scott, Prabha Narayanan, Marijke Kemble, Jessica Pirro, Barbara Gasiewicz

Meeting objective – to discuss the September 2016 YTD Financial Results, costs of a new lease, and with initial draft of the 2017 Budget

Summarized 9/30/2016 Results:

9 months ended 9/30/2016 / Budget / Variance (unfavorable) favorable
Total Revenue / $3,519,238 / $3,627,291 / $(108,053)
Expenses
Personnel Costs / 2,687,124 / 2,798,522 / 111,398
Admin Expense / 407,284 / 424,578 / 17,294
Program Expenses / 162,395 / 137,924 / (24,471)
Other Expenses / 90,333 / 90,464 / 131
Net Income / 172,102 / 175,803 / $(3,701)
Total Revenue Key Drivers
  • County and grant spending is unfavorable to budget by ~$206K ($193K at 8/30), largely due to staffing and the timing of the NYS grant. Grant income variance is primarily due to hiring delays and delay in software purchase for the NYS Grant (in Advocate) as well as open positions in the Advocate and the Emergency Mental Health programs.
  • The largest contributor is the Advocate program which is unfavorable by $196K (185K @ 8/30/16). $113K ($108K @ 8/30/16) of this variance is in relation to ~3FTE’s understaffed, which ~$40K of the remaining variance a timing issue with the new Database software we are in the planning stages of developing. It is not anticipated that we will be able to pursue the database software in this fiscal year (only have until 11/2016), so there has been some shift in planning, with the hope of covering some more administrative expenses by this program, and moving the Database into 2017, where it will still be covered by the grant.
  • Noted fundraising income was a positive variance to budget of $35K, however $34K of that was in relation to MWC, which was not in the budget until October.
Total Personnel Costs Key Drivers – all consistent with August 2016 report
  • Salaries are lower than budgeted by $96K largely related toopen positions, with related benefits making up the remainder.
  • There are a couple part time positions which were originally not budgeted for health insurance, however due to regulation and them working 30 hours a week we are required to offer (~$14K). Jessica and Barb to reach out to funders to see if this can be covered in any way.
Other Drivers (with a net bottom line impact)
  • No significant other items to note
Staffing
At 10/5/16 / at 9/7/16 / At 6/1/16 / At 5/4/16 / At 4/2016 / Budget / Avg YTD vs. Budget
FTE's / 74.3 / 74.00 / 70.53 / 72.73 / 71.98 / 78.3 / (4.00)
  • There are still CCP hotline employees covering the Addiction hotline (being paid at a premium based on union agreement) hiring is still under way to fill the remaining positions.
Moving/Building Sale
  • Based on the current offer being negotiated the Foundation will have net proceeds of ~$200K. As this event gets closer will have to work with the Foundation board to determine the future of the Foundation, which has a purpose right now of handling the building. Once the building is sold the Foundation will not have a direct purposes, but will still have overhead costs, including minor bookkeeping and annual costs of filing Form 990.
River Rock Lease
  • Reviewed a cost comparison of the River Rock Lease vs. Current Lease. The annual budgeted costs would be as follows:
  • 2016 - $87,947 under current building lease
  • 2017 - $148,081 in 2017 (6 months in Current lease 6 months in new location)
  • Note that lessor has offered 6 months rent free, however for conservative reasons will leave budgeted
  • 2018 and beyond - $208,214 + rent escalation throughout the 10 year lease, Barb to provide
  • Risks:
  • Significant increase in costs for the agency (keep in mind that our former lease was a related party transaction, so we were not paying market rate, this lease is in line with market rate for Buffalo)
  • Unknown build out costs added to lease could be additional expense (not anticipated to be material if any)
  • We do not have a projection into 2018 to know what the costs will look like in the grand scheme of the Agency financials, but should have a better idea once we see the Step 2 budget to be discussed later.
  • Opportunities:
  • 13,515 SF location would exceed our current capacity but give us room for growth
  • Ability to provide on-site training for revenue growth
2017 Budget

The following is an outline of how the 2017 Budget process will work, a little different than in the past:

  • Step 1 – Barb reviewed an initial Best Case Scenario Budget with the Finance Committee on 11/14. This budget was prepared with the following assumptions:
  • The Agency will be at full staffing for the entire year of 94.95 FTEs (current staffing is ~74).
  • This would include 4 new positions as follows:
  • COO with a July 2017 Hire date, and $35K 2017 expense
  • A Training Specialist to handle all the turnover in outreach with an April Hire Date and $24K 2017 expense.
  • A Program Operations Manager to start in January with a $35K 2017 expense. This position would not be hired if the County does not approve additional funding.
  • Part Time Prevention Education Specialist with $15K 2017 expense.
  • The Agency will move into River Rock building in July 2017 ($44K of expense for the first six months of the year at 2969 Main and $104K of expense for the second six months of the year at River Rock).
  • This budget does not include moving costs (est. $25K), or costs of build out of the new leased location if they exceed what is covered by the lease (unknown).

The purpose of this budget for Jessica and Barb was to present to the County what the true costs of running the agency are at our program capacity. In the past the stance was taken that we would just take what the county gives us, however this budget makes it clear that what we have received in the past is not enough. Jessica plans on meeting with the County to discuss this proposal. The timing of the results of this discussion are unknown at this time.

  • Step 2 – the FC agreed that presenting that budget to the County was a good idea and commend Jessica and Barb for taking a more aggressive stance for the agency. There was some discussion that for the purpose of the Finance Committee recommending the 2017 Budget to the board we would want to see the following:
  • Staffing levels not at capacity but at what we could reasonably expect throughout the year as this can have a significant impact on bottom line.
  • Moving expenses included in the budget if a change in location is included.
  • Build out costs are included in the lease up to a certain amount, and after that are added to the lease. Is the Agency expecting going over these costs, and what would the additional cost of the lease look like?
  • Include the cost impact of Overtime and the new FLSA rules on the budget, based on the staffing levels not at capacity. It would be an educated guess as Barb has alluded to, but nevertheless important to understand going forward.
  • Thinking Beyond 2017. Things to keep in mind in the current budget that would impact 2018:
  • Additional Rent costs of ~$60K
  • Additional Salaries costs of ~$43K to cover a full year of mid-year hires

Barb and Jess are going to wait to see what the county has to say about additional funding ask, and build these items into the 2017 budget. The timing is TBD, however the hope would be the FC would review a revised budget in early December, giving time for any rework, in anticipation of the December meeting for the Budget to be approved.