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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

 

Our Mission

To enhance the quality of life
for families through programs reflecting Christian principles to build healthy spirit, mind and
body for all.


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