RSFA Fiscal 2024 Budget

Chart showing where RSFA assessments get spent (the pop out is money coming back in from the golf loan repayment).

This past week was public budget week at the RSF Association where the Association’s Finance Committee, Board, and Members all received presentations on the fiscal 2024 budget. Just a reminder that due to the unique way we assess dues (based on property tax rolls), the Association’s fiscal year goes from July to June every year, so this new budget is for July 2023 through June 2024.

The budget is prepared every year by our staff and rolls up input given by all our department heads, such as Golf, Parks & Rec, Tennis, Patrol, Osuna, etc. When preparing their budgets, each department takes into account policy and strategic objectives as set by the Board.

The Finance Committee ensures that the budget leaves the Association in solid financial shape, making sure we have appropriate cash cushions for emergencies (like Covid!) as well as appropriate equipment replacement reserves as mandated by law.

The Board reviews the budget and typically asks questions related to whether it addresses its objectives.

Members also get to weigh in via the various meetings. The Finance committee meetings tend to be more informal and allow Members to ask questions and have a back and forth discussion, while the Board meetings are more constrained (3 minute member comment times).

Finally, be aware the the budget has zero costs or revenue from the various clubs such as Golf, Tennis or Osuna since these clubs run off their own member fees.

2024 Budget As Presented

Here’s the budget presentation given by our CFO Seth Goldman to the Board on May 4th. I highly recommend you download the slide deck and peruse it. Key points:

  • Assessments will increase from $0.14 to $0.15 per $100 assessed property value.
  • One new hire in the Building department (3 new hires in Golf, but that doesn’t affect Association dues, only golf member dues).
  • Restaurant amenity cost share with the golf club was set at $350K (but this was changed subsequently, see below).
  • $150K to be spent on the golf course ring trail tree planting project.
  • $200K on to be determined infrastructure projects.

The assessment increase has been brewing for a few years. Covid cost us in decreased revenues and thus poorer margins in our operations. Last year, when the Board kept the assessment unchanged at $0.14, the CFO warned us that the fiscal 2023 budget would probably be negative $500K or so, which is what has transpired. Since we keep an operating cash cushion in the $4M to $5M range, we could afford such a budget, but it isn’t sustainable.

Note that since the 1980s, assessments have been as high as $0.22. It has only been during this historic and unusual low inflationary period that we’ve been stable at $0.14. So from a macro economic perspective, it isn’t surprising our assessments need to go up. And while housing sales in our community do increase assessment dollars received (due to increased tax property values), they are no where near the amount of actual inflation.

Member Feedback

It was nice to see a decent number of people showing up to the various meetings where our CFO gave his budget presentation. My sense is that once people heard Mr. Goldman give his talk and realized how professionally run the finance department is, they felt better about the whole process.

The Budget As Modified

Read the companion article, Restaurant Cost Share if you’d like some background on the restaurant cost share part of the budget.

At the May 11th meeting, the Board adopted the presented budget with the change that the restaurant cost share would be $500K instead of $350K. This would have left us with another deficit budget of around $67K, so Goldman proposed that we reduce our Association reserve allocation by $67K this year to result in a balanced budget. This will still leave us as one of the most fiscally sound HOAs in California.

The author, Phil Trubey, is a current RSFA Board Director.