Eastman G&A Costs Increase by 55% in FY 2014!

On Page 51-52 of The ECA FY 2015 Budget, the ECA General & Administrative Expenses for FY2014 are projected to be $1,194,263 – a phenomenal 55% cost increase (+$430,988) over the previous Fiscal Year (FY2013) of $763,275.

WHY?

The major categories of cost increases occurred in the following Line Items:

1.    Insurance—355% Increase

2.    Professional Fees—92% Increase

3.    Wages and Benefits—35% Increase

4.    Taxes—86% Increase

•       Where is the explanation to the Member/Owners to educate us why our Insurance bill went up 355%?

•       Where is the explanation why our Professional Fees almost doubled to 92%

•       Why did Wages and Benefits increase 35%?

•       Why did the taxes climb 86%? Normally there is a correlation between tax cost increases in this cost center and wages and benefits. However taxes increased 50% more than the 35% wage and benefit increase.

The magnitude of the above increases and the failure of Board Members and the General Manager to explain the increases in an open, transparent way to the community is not respectful to ECA Member/Owners. The Board and General Manager have not fulfilled their Financial Accountability to owners.

Certainly the D&O Insurance Policy that Mr. Goldman cited as covering all elected and appointed members of governance including Council Members could be a significant expense to the community. Another component at play here is the re-engineering of our Financial Reports to shift costs from more directly accountable Cost Centers such as Golf, to the vagaries of an all-encompassing Cost Collection Bucket called General and Administrative.

As the Financial Header Columns below show, I am using FY 2013 Actuals and FY 2014 Projected. If for some reason the ECA Board wants to put in the Actuals as of the end-of FY 2014 they could update this chart however given the fact that the FY 2015 is built on the FY 2014 Projected, they would need to produce all three columns for an updated meaningful comparison. 

Some major General and Administrative (G&A) cost items for the two years and the % they increased are shown below.

	FY--2013	FY--2014	% Increase
Cost Category	Actual	Projected
Insurance	31,416	143,000	355%
Professional Fees	77,558	148,500	92%
Wages + Benefits	406,960	549,307	35%
Taxes	119,263	221,836	86%

The Board, in passing the Budget, totally approved of these increases.

Submitted by Robert Logan