Is the Eastman Fleet too Big to Fail?

Before you read this and go crazy with the numbers, let me summarize. Yes we have almost doubled the fleet in the last 7 years. Yes, we spend 3-4 times what the Town of Grantham does for road maintenance. Why is it so hard to follow the expenses? Because your management wants you to think Golf is profitable so they can please a handful of members who want a bigger, better Center. They have spent hundreds of hours moving these numbers around at your expense, so they can confuse you.

You remember “too big to fail”—the greed of banks, boards and presidents led to the public bailing the banks out. The Eastman Fleet has many BSTs—Big Scary Trucks and coming soon—a Big Scary Maintenance Building. Is it too big to fail?

You probably remember the kid in your neighborhood who had the most Tonka trucks, or wished he did—well, he is living in Eastman. In 2007 the Audit Report stated that Eastman had $1.6 million worth of Equipment and Vehicles. Now in 2014 we have $2.6 million worth of Equipment and Vehicles (FYE2014 Budget) and this does not include the golf carts.  Of these, $1,162,771 worth (30 vehicles—see CIP FY2015-2019) are for use on the Golf Course. This is arguably enough equipment for two golf courses. The rest, $1,476,026 worth (15 vehicles) are for non-golf, i.e. primarily the roads. In addition to all of our vehicles to maintain the roads, we also sub-contract to United Construction, which in FY2012 was $668,912 (FYE2014 Budget) for road maintenance.

By contrast the town of Grantham has $500,000 worth of vehicles which include 3 trucks, a backhoe and a grader to maintain the roads. Grantham, with two full time and one part time employee, do all the plowing, sanding, salting, paving, mowing, culverts, clearing and cutting. They do not sub-contract any work.

Eastman, which has 87 employees (many part time) includes 10 FTE (full time equivalents) allocated to Roads, which means there are at least 10 people working on the roads.

Grantham maintains about 24 miles of roads while Eastman maintains about 50 miles of roads. Twice as many miles, but Eastman has three times the cost, just in equipment. In personnel, Eastman has 4 times the Grantham number.

The Operating Budget for Roads in the Town of Grantham is $310,000 (see Town Report). The Operating Budget for Roads in Eastman is “pick a number”. There is the $669K for United Construction, plus 40 or so vehicles of which 10-15 are used for roadwork. To be used, they must have drivers or they sit idle—rusting and depreciating. Is it any wonder we need a bigger garage? Does vehicle creep lead to assessment creep? You bet it does. Does whoever have the most trucks win?

Let’s say 10 Eastman employees work on roads, regularly augmented by part timers.

The FY2012 Audit states that the:

--Actual FY2012 Maintenance Expenses were $951,704 (see p. 9) which includes an estimated $428,000 for wages and benefits. However the Actual FY2012 Maintenance Expense was reduced in the FY2014 Budget to $824,855 (see p.18) by transferring an estimated $71,000 of maintenance costs to G&A for the following maintenance employee costs:

·      payroll taxes,

·      retirement,

·      health insurance,

·      workers comp,

·      unemployment taxes etc. These are all now being called “G&A costs”(?) as a result of several meetings wherein the Eastman Troika (Goldman, Parker and Ryder) demanded accounting reports that make Golf profitable.

--The FY2012 Audit Report states that G&A Actual Expenses are $944,170.

--The FY2014 Budget states that now the:

·      “Actual” G&A Expenses for FY2012 was $1,137,672 or $193,502 more than the Auditor verified—how does this work??

Your guess is as good as mine. Enron or Bush's fuzzy financials? Take your pick--it's your MONEY.