JOSH DAVIS/BAYSIDE GAZETTE
Ocean Pines General Manager John Bailey on Friday released details of the proposed fiscal 2020 budget. Bailey later addressed the association budget and finance committee during a series of public hearings this week.
By Josh Davis, Associate Editor
(Jan. 10, 2019) If Ocean Pines General Manager John Bailey has his way, community assessments will not increase this year, based on a budget draft released last Friday.
The proposed budget, developed by Bailey and his staff, would keep assessments at the same level as last year and cut another $100,000 from association deficits accumulated during fiscal years 2017 and 2018.
According to an executive summary included in the budget draft, “The Proposed Budget for the Fiscal Year 2019-2020 accomplishes many things that will be new to the association’s operating budget, however, it does not propose an increase to the annual assessment.
“In order to understand this major consideration, and to generally understand the entirely of the budget, one must look strategically at what the proposed budget accomplishes and how it creates a foundation for the next three annual budget cycles.
“The assessment was raised $30 last year, along with a reduction in overall expenditures to the tune of about $30 more dollars per lot, to begin to deal with the association’s deficit that we owe ourselves from the prior two years of about $1.6 million. The savings and the increase combined to pay $600,000 towards the deficit and another $224,000 to be set aside to pay for the forensic audit. (The $224k was originally placed into the budget to fund Road Depreciation.) The fiscal year ending April 30, 2019 will have seen the deficit reduced to $1 million and will have completed the forensic audit. The completion of the forensic audit in this year will free up that $224k that is already built into the assessment.
“One of the budget guidance terms was to provide a three or four-year plan for eliminating the prior years total remaining deficit of $1 million. The Proposed Budget includes a four-year plan to do just that. The remaining deficit is to be paid down over this budget and the next three budgets on a schedule of $100k, $250k, $325k, and $325k. Thus, the Proposed Budget includes $100k for deficit recovery.
“The above brings us to the following: The Association has $225k (previously used for the forensic audit) and $500k (previously used for deficit recovery) to work with to begin to accomplish the many idea and needs that have been illuminated during community discussions this past year. That’s a total of $725k.”
With that $725,000, the proposed budget would provide new funding for several items: $120,000 for deferred maintenance, $178,000 for drainage, $275,000 for “pay study adjustments,” and $152,000 for “other adjustments … throughout the operating budget.”
The draft includes additional funding increases of $305,000 for deferred maintenance from replacement reserves and $620,000 for drainage from road reserves.
In total, $425,000 would be spent on deferred maintenance and $915,000 would be spent on drainage, according to the proposal.
Also in the draft budget is a one-year waiver of the $19 per-homeowner fee for bulkhead contributions, with annual bulkhead contributions “only paid by those members with private bulkheads.”
According to the summary capital requests submitted for budget consideration totaled $425,714, but only one request was included in the proposal: $6,500 for “Police Department-specific software.”
The draft fully funds pay adjustments identified in a pay study completed by an Ocean Pines human resources specialist.
According to the proposal, “The study found that we had many positions that are currently under funded, thus the Proposed Budget includes $128,000 to bring those positions into better alignment with the competing marketplace.” That apparently includes a 2 percent “labor pool increase to be distributed based on merit achievement” and a 10 percent increase in medical benefits “based on the advice of the insurance professionals.”
Also noted in the draft, while assessments would not increase, “most user fees are proposed to increase an average of three percent,” meaning it would be slightly more costly to use Ocean Pines amenities.
The executive summary concluded, “As the budget schedule indicates, this is a process,” meaning at least some of the numbers are likely to change as the board of directors, budget and finance committee and other association members weigh in during the coming weeks.
Three days of budget and finance committee hearings began on Monday and upcoming meetings include a budget hearing with Bailey and Treasurer John Viola on Jan. 12, board work sessions Jan. 14-16, a board budget hearing on Feb. 2, and a final budget hearing on Feb. 16.
To view the proposed budget, visit www.oceanpines.org/forms-docs-cat/budget-for-fy-2019-2020.