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THE STATE OF THE HERITAGE YMCA GROUP
AN ANNUAL REPORT
Presented at the Annual Meeting on January 15, 2010
Good morning and Happy New Year!
On behalf of our staff I want to wish you and your family best
wishes for a peaceful, happy and healthy New Year.
I want to thank each of you for
taking time today to join us for this annual meeting of the Heritage
YMCA Group. To those who are here and serve on our branch Boards,
thank you for joining us this morning as well. At the very least,
this is proof positive we do actually begin our Corporate Board
meetings at 6:30 AM.
Each month I am asked to provide an
update or report to address the most pressing issues that are
affecting our business operation and programming. These comments
generally cover a wide range of topics and the format is fairly free
flowing. Once each year, at the annual meeting, I attempt to
provide a more thorough summary and scripted review of our
operations.
Let me begin this morning by thanking
Mike Schoppe and Brent for hosting us this morning in this great new
location for our Oswego operation. This site and program is one of
the highlights of our 2009 year of operation. If you have not had
the opportunity to tour this facility, please do so this morning.
The partnership between Dan O’Donnell’s school district #308 and the
YMCA is a shining example of how a community can come together to
efficiently provide a vital program to a community in a very cost
effective manor.
If I were asked this morning to
summarize my thoughts about the year just past in one word, I would
say it would be “proud”. We are all acutely aware of the challenges
that businesses, government, individuals and families faced in
2009. Very few were spared some degree of challenge and pain. The
YMCA was certainly not exempt from that challenge.
Incredibly I am in my sixth year with
this YMCA. For those of you that have been at my side on our staff
or on our Board, you know we began our work in 2004 in a
circumstance where our backs were against the wall even in a strong
economy. We had an $8.7 million capital indebtedness, we had lost
over $500,000 in operations in 2003 and much of the community was
unaware of the good work of the YMCA and many did not understand the
YMCA was even a charity. Today we should be proud because we have
assembled a staff and volunteer boards that have consistently risen
to the challenge and allowed us to not only survive but, in fact,
thrive in the face of unprecedented economic challenge.
The reports from our branch chairs
are a reflection of the success we have enjoyed. This would not be
the case if we did not have strong boards and able staffs on the
ground at our branches. At the corporate level I am blessed to be
surrounded by a staff that is committed to our work and passionate
about serving kids and families. We can never forget that our
corporate staff exists solely to support the work of our branches.
Once again this year we have not experienced turn over in key branch
leadership or in the corporate office staff.
I am also proud of the continuing
development and strength of the Corporate Board and our officer
team. Through the good work of the Board Development Committee and
Bruce Glawe’s leadership we have developed a Board that has the
skill sets to address the goals outlined in our strategic plan.
Matt Gambs and Tom Carroll have been strong leaders as chair and
vice-chair as we have worked to better engage a talented and able
Board. I have said before and I will say again, our work begins and
our work ends with good people and I could not be more proud of the
work of our boards and staff.
So let’s visit about the successes we
enjoyed in 2009. Today I am very pleased to share that we finished
the fiscal year of 2009 with a net operating surplus of over
$149,000. Our budget plan called for a net gain of $217,000 so we
will need to wait until the audit is completed to determine if we
were successful in meeting the covenant tests but I could not be
more proud of the fact that we completed the cash basis year with a
significant net gain in this environment. This result was
accomplished despite the fact we paid nearly $700,000 in fees,
principal and interest payments on our debt out of operations, we
received over $280,000 less in camp revenues because of the economy
and we continued our investment in the operations in Oswego and
Aurora at a total cost of more than $400,000.
Most of you know that we are an
organization that depends on membership income. Over 40% of our
revenue is driven by membership. Our membership income in 2009 was
down less than 1% from 2008. This is an impressive accomplishment
in the current economic environment and in view of the fact that we
did not raise membership rates in 2009. It is interesting that we
actually closed 2009 with a net gain in members with 20,660 members
of record at the conclusion of the year.
There are several reasons for this
strong membership result. Dee Dee McDevitt has done an excellent
job of designing and structuring our annual membership promotions.
Dee Dee and her staff have proved we can bring new members into the
facilities. The challenge is to retain them. The churn and burn
experience so frequent in the health club business is not a model we
seek to replicate. One of the very real ways we can distance
ourselves from others is how we engage, serve and retain our
membership.
Hunter Byington has been instrumental
in helping us provide a framework of operation that will result in
better customer satisfaction and member retention if we can work the
plan. In 2010, our branch membership and program staff will work
very hard to follow up to make new members feel welcomed and
engaged. Every % we can improve retention is a huge financial
victory for the Y.
While we are talking about financial
victories in turbulent economic times, I must tell you how proud I
am of the work we did in the financial development area. Last year
we had a goal of $550,000 for our Strong Kids Campaign. As a point
of interest, in 2006 we raised $366,454. We set our $550,000 goal
in late summer of 2008 just before the world changed so
dramatically. At the end of the campaign year on September 30th,
we had recorded gifts and pledges of a record $613,995. Walter
Johnson and our campaign leader Lauren Visher, working with Tom
Miers and Denice Gierach led this incredible effort. Our branches
were all successful and our branch executives and boards seem to
understand that a successful Strong Kids Campaign is an important
victory.
Because this is an annual meeting
agenda today and we do not have the time on the agenda to have key
committee reports, I have promised that I would not only mention but
stress the importance of the Strong Kids Campaign kick off which is
scheduled for Tuesday, February 2nd at Zaidi’s beginning
at 11:30 AM. I not only want to encourage each of you to attend but
if you could bring a friend it would be wonderful. This kick off
event is a pretty laid back affair with a free lunch at Zaidi’s
where we will visit about the impact of the Strong Kids Program on
kids and families. We are very slowly building a very sound fund
raising practice which is now beginning to show great results. This
kick off lunch is a critical part of this strong practice, so
please, if you can, join us on the 2nd of February.
Hopefully you are all crystal clear
on why we raise our Strong Kids dollars. As we have worked to
reposition the YMCA in the eyes of the community, we have very
openly promised to serve all interested kids and families, even if
they cannot afford the cost of participation. This past year we
very quietly provided our members who suffered the loss of their job
an initial six month membership at no cost. And there were many
such families. Again this year over 100 families in our Safe ‘n
Sound program enjoyed fee assistance and moms and dads were able to
work knowing their children were safe and in good care. Over 100
campers attended our day camps because of our financial assistance
program. And the list goes on and on. A sheet listing the costs of
sponsoring various programs is at your table this morning. We can
never forget that our commitment to serving all is what distances us
from those who are viewed as our competitors in the marketplace.
If we want to visit about improved
practices, I must tell you how proud I am of the work Dee Dee
McDevitt has done this past year with her staff and the tremendous
gift of time and energy we have received from John Norman and the
team at the Design Resource Center. During 2009, there has been a
distinct improvement in our brand image through more contemporary
design and emotive photography. Over time, our brand became very
fragmented and lost continuity in how we presented it in the market
place. You will now see a creative strategy that delivers
consistency in everything we produce. We had believed our materials
were well done and, in fact, produced positive results over time.
But there was not the consistency that you associate with an
organization which understands its market and how to engage them.
The improvement we have seen in “branding” is one more example of
our team addressing and improving key segments of our business with
the hope that, over time, we will become a more stable, successful
organization.
You have heard from our branch board
chairs about the great work that is being done each day at the local
level so I will not comment further on that work except to say
again, we should all be very proud of the impact we have each day on
kids and families. But the beginning of a New Year is always a
time to look forward. I think it is safe to say that our challenges
are not behind us. The disciplines which allowed us to succeed in
2009 cannot become distant memories in 2010.
So let me comment briefly on the
primary challenges and opportunities that face us in the year
ahead. First we need to resolve the status of the Aurora Family
YMCA facility on Garfield Avenue. The ideal result would be the
sale of the facility with the opportunity to continue our child care
services in a financially responsible manner. It is our belief that
we simply cannot continue to own that property and this is a top
priority for this year.
Additionally we need to mobilize all
of our best resources system wide to support the success of the
Oswego Family YMCA in this new location. A healthy YMCA operation
in Oswego is a good result for the entire Heritage YMCA Group
because it eliminates the annual subsidy we have provided each year
and brings more membership and program activity to kids and families
in a growing market.
We will continue to work on improving
the program at the Field House. Our plan is to relocate the Safe ‘n
Sound offices from that facility to another location and then move
the exercise equipment from the lower level to the mezzanine. This
combined with additional parking on the ComEd right of way northwest
of the Field House would allow the Field House to flourish. There
is much work to do but success would make a dramatic difference in
that operation.
Earlier this week we reviewed
exciting renovation possibilities for the Fry and Kroehler Family
YMCA facilities. Obviously any capital improvement plan will
require funding and we all know we cannot borrow additional
capital. One certainty in our world is if you do not have a plan
you will never inspire others to give. We now have plans for Fry
and Kroehler that are exciting. At Fry we need to add family locker
rooms, modestly increase program space and rearrange the studio,
cardio and free weight areas. At Kroehler we need to greatly
improve the operational efficiency of the overall facility and
reconfigure the interior spaces to better serve a more sophisticated
user group. As we approach the 100th anniversary of the
YMCA in Naperville in 2011, there could not be a better time to move
forward on a focused improvement plan that will serve Naperville for
decades to come.
And finally, it will be wonderful
some day to attend an annual meeting and not hear a comment about
our indebtedness. The bad news is we have a $6,400,000 debt. The
good news is that is down from $8.7 million in 2004. Yes we are
making our payments but the question is “at what cost?”
In July we may enter a third year
without raises for our staff. Our facilities look clean but lurking
in the background are equipment and facility replacement and repair
issues. Clearly our annual debt payment of nearly $700,000 hampers
our creativity and makes risk taking in the program development area
unrealistic. We will continue to work to reduce the debt, manage
the operational budget and expand programming.
The exploration of creative options
to assist our YMCA Group must also be explored. One question should
drive everything we do and that is “How do we insure that YMCA
programming will exist into the future in the communities we
serve?” We continue to visit about the opportunity for us to
explore a relationship with another YMCA that would result in great
efficiencies and expanded services. The concept of consolidations
and mergers is no stranger to anyone in business today and this
concept is being strongly encouraged by the YMCA of the USA’s
national office.
Obviously the Chicago Metropolitan
YMCA would be a likely partner. Again anyone in business will tell
you that successful consolidations are always driven by cultures
that are compatible. As your President and CEO I believe I would be
remiss if I did not lead our Board and staff in a thoughtful
exploration of these opportunities.
So I will return to where I began and
that is to say once again how proud I am of the work we are doing in
the communities we serve, how honored I am to serve with you as we
work to better serve our kids and families and how excited I am
about the future.
I continue to believe that the need
for the programs and services of the YMCA have never been more
important. Who can dispute that there is a not a great need for an
organization that instills values in kids today so they will make
better decisions tomorrow. Or who can question our commitment to
developing leadership skills or building stronger character or
offering programs that lift a child’s self esteem? And in this
difficult economic circumstance who cannot applaud our promise to
serve all interested children even if they do not have the financial
ability?
Please always know that your
commitment to our work is appreciated and we look forward to another
successful year in 2010.
Tom Beerntsen
President and CEO
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