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STATE OF THE HERITAGE YMCA GROUP
CEO ANNUAL
MEETING COMMENTS
PRESENTED TO THE BOARD ON FRIDAY, JANUARY 18, 2008
Let me begin by wishing
each you a very Happy New Year. On behalf the staff, I want to
extend best wishes to you and your family for a healthy and
peaceful 2008.
As you are all aware, I
am asked each month to comment on the challenges and opportunities
that face our YMCA. I attempt, in those monthly comments to hit
the high points that might not be mentioned during the regular
meeting in the hopes that each of you will be up to date on our
business operations and our work with kids and families in the
communities we serve.
At our January meeting
I am asked to be more detailed in my comments and provide a recap
of our work during the past twelve months and comment briefly
about where we are headed in the next year and beyond. To make
certain I accomplish this in a complete and effective manner, I
have scripted myself so that I will stay focused and have a
written record of my perception of our current condition as a
YMCA.
Let me begin by simply
stating that I believe we are in a significantly better condition,
in every area of our operation as a YMCA, than we were three years
ago. The sad reality is that our great performance is masked by
the onerous debt load we assumed to construct our Fry and Field
House Family YMCAs and the liabilities we assumed when we merged
with the Aurora YMCA in 2000. We have this tremendously effective
YMCA that continues to serve over 20,000 members, and many more
community participants, each and everyday. We are recognized as
having a renewed commitment to our mission work and we are
instilling values in kids which will help them to make better
decisions as they grow up and become our next generation of
leaders. Our business is about changing people’s lives and we are
doing exactly that each and every day.
I am privileged to be
surrounded by a staff which comes to work every morning believing
that, by the time they return home at the end of the day, our kids
and families will be a bit stronger and our communities a bit
better because of what we are doing as a YMCA. It truly does
begin and end with leadership.
I work most directly
with nine professionals who report directly to my office. Jane
Bowers, Walter Johnson, Ginny Maloney, Joe McBride and DeeDee
McDevitt support and lead the work of the corporate office and Jen
Bartels, RJ Bartels, Judy Ellertson and Jeff Piontek ably direct
our branch operations. Every one of these individuals is
committed to making our YMCA one of the finest YMCAs in America
and I am delighted to work with them.
Equally important is
the quality of the volunteers that serve on our board of
directors. Each year our board has become stronger and more
diverse. The unique genius of the YMCA in America is that each of
our 1000 YMCAs are autonomous operations directed by local boards
of directors. We can not reach our full potential unless we are
led by a committed, talented and grounded board of directors.
Together we are faced with a number of significant challenges. I
am comforted by the talents, commitment and stature of our Board
and I thank you for your service.
So then, what is the
State of the Heritage YMCA Group? Right or wrong, most of us
assess the performance of the Y, or any other business, by looking
at the financial performance of the operation. This year, for the
first time in the past three years, we did not break even on our
annual operation. You will see on our 2007 year end report that
we were $104,344 below break even on a cash basis and $293,211
behind the budget we established a year ago where we had hoped to
improve our cash position by $188,877.
In a moment I will
share the reasons for this performance with you. There are a
number of ongoing operational issues which adversely affected our
performance. One additional factor which had a huge negative
effect was the closing on our letter of credit one month early.
As you all are aware we decided at mid year to change our primary
banking relationship from Fifth Third Bank to Citibank at the
conclusion of our five year letter of credit agreement with Fifth
Third Bank. It was decided in late fall to move that closing date
to December 20th. That decision brought a total of
$81,376 of added expense into this year’s operation. Over $65,000
of these expenses would have been budgeted for and incurred in
2008 under the anticipated schedule for the transfer of our
banking relation. Unfortunately there is nothing I can say that
will change the result. All we can do now is learn from the year
end result and improve next year.
Everyone here today
understands that one of the most important responsibilities that I
have as your President and CEO is to deliver a balanced budget at
the beginning of the year and then lead an effort that meets or
exceeds that expectation. We clearly failed to meet that
expectation and that responsibility rests with me and the office I
occupy.
I can not change the
result. It is important though to understand and appreciate the
fiscal strength in what seems like a very bad result.
In the development
area, our year end result exceeded budget by $122,000. That is
$200,000 ahead of 2006 and $450,000 better that 2004. Our Strong
Kids Campaign exceeded our $400,000 goal by $70,000. This is not
only important from a financial perspective, it is vital for our
future work because we raised these funds the good old fashion
way; we sat across the table from donors, one on one, and
explained why the YMCA deserved their charitable contribution and
how their gift would make a difference in the life of a child or
family. We live in an events driven philanthropic community and
our long term best interests are best served by focusing on
raising money by telling our story, one on one, over and over and
over again.
Our Branch operations
were actually very healthy. Jen Bartels exceeded her budget
numbers at both Safe ‘n Sound and Oswego. Judy Ellertson
completed her first year at Fry and leads one of the most
productive YMCA facilities in America. On a cash basis that
operation, excluding debt payments and corporate overhead, netted
over $1,300,000. That is an incredible result given the
challenges we have experienced in ramping up our child care
facility and given the very competitive market in south
Naperville. Even our 98 year old Kroehler facility, under the
leadership of RJ Bartels, came within $23,000 of meeting an
aggressive, budgeted net of $180,000.
On the expense side of
the budget, the overall operation finished the year over $250,000
below our budget. Our challenge was on the revenue side.
There are three major
areas in which we have been challenged. The Children’s Early
Learning Campus has experienced significant challenge in ramping
up attendance. We have discovered this to be a very competitive,
highly regulated business. The cash commitment to this start up
has far exceeded our projections and it has consumed an
extraordinary amount of time from all levels of leadership. We
have also discovered that the process of throttling down the
facility operations in Aurora have been more complex and time
consuming than anticipated. No one for a moment should question
the validity of the decision we made a year ago. It was correct
then and it is correct now. The reality is that the legal
entanglements we inherited with the merger in 2000 would challenge
the talents of a partnership between Houdini and Henry Kissinger.
And finally, we began the year with a weak membership campaign
effort which cast a shadow over every month of 2007. We can
attribute this result to competition, balmy weather during the
campaign and lack of intensity on our part. The membership
results were also deeply impacted by the elimination of facility
based membership in Aurora.
Our opportunity in the
New Year is to learn from these financial results and get back on
course this next year.
I believe that our
membership numbers in December indicate we will begin 2008 in a
strong position to meet our membership budget in the New Year. We
did enjoy a strong membership response to an early December
promotion and it would seem our current membership campaign, which
ends next Monday, will be successful. We will hopefully enter
February with near record membership numbers after you adjust for
the loss of membership attributed to the closing of our Aurora
facility. Our job now is to retain these members and slow the
cancellation numbers. I do want to recognize Hunter Byington for
his incredible commitment to assisting our membership staff team
in their work in creating systems that encourage membership
satisfaction and renewal.
I am also optimistic
about 2008 because of our growth this past year in camp and
program participation numbers. Program and camp income account
for over 25% of our budget and last year we saw gains at year end
in both of these areas. It is easy to become so bogged down in
the numbers that we forget that these increased revenue numbers
mean we are touching more lives and positively impacting more
families.
Before I conclude I
would like to very quickly summarize the successes we enjoyed in
2007.
In Oswego we now have
an eight acre parcel of land for a new facility on Wolf Crossing
Road. This generous gift from Diane and Gary Blocker is now
annexed in the Village of Oswego and will serve as the focal point
of a capital campaign which is now in the early stages of
organization. I wish I could tell you that success in this effort
will be a slam dunk. In truth this will be time consuming and
challenging. But when we do succeed, the Village of Oswego will
be forever changed in very real and important ways.
In 2007 we did complete
the significant reduction of program operations in Aurora and
committed our YMCA to addressing the most important program
opportunities with a more responsible fiscal model of operation.
Jeff Piontek has done an excellent job for us on the ground in
Aurora. The opening of the YMCA Youth Technology Center at
Jericho Circle was a high point for our entire Association. If
you want to define our heart and soul of what our mission work
should look like, you can point with pride at our program at
Jericho Circle.
While we are far from
the finish line in our efforts to address parking at the Field
House, the willingness of ComEd to provide a lease on their
property west of the Field House is a huge first step toward
making our Field House a more productive program tool. We are now
beginning work with V3, through Rich Lannon, to design a parking
area on the ComEd property.
Also on the facilities
front, our Kroehler/North Naperville Task Force group has begun to
thoughtfully consider how the Y should serve the north side of
Naperville in the next 100 years and what facilities will be
necessary to meet that need. As we approach the 100th
anniversary of the Kroehler YMCA in 2010 we will want to take
advantage of that occasion to feature the YMCA’s first century of
service in Naperville and leverage this birthday to raise capital
funds to assist with the construction of a new YMCA facility.
And finally, you should
all be proud of our ongoing commitment to the Naperville Family
Resource Center. It would have been very easy this past spring
when the Naper Trails Board of Directors decided to terminate our
lease to pack up our tent and discontinue the programming for the
kids and families at Scott and Madison Schools. Through a great
partnership with School District 203 we are now offering a
stronger academic experience to kids at sites on the school
campuses at Scott Elementary and Madison Junior High School.
The Heritage YMCA Group
enjoyed great success in 2007. Our challenge looking forward is
how do we continue and expand our good work within the constraints
of a budget that is obligated to principal and interest payments
that exceed three quarters of a million dollars. I have said this
before and I will say it again, we have an incredible YMCA program
led by staff and volunteers who understand the mission of the
YMCA.
I wish that I could
tell you that our most difficult times and decisions are behind
us. In truth they are not and the hardest work is yet ahead of
us. We will take what we have learned this past year and work to
make 2008 more financially successful while maintaining a program
that attracts and holds members and advances the mission and
values we believe make our YMCA special and worthy of broad base
support.
When I joined you on
this journey three and one half years ago, I had no illusions this
would be easy. Through your good works we have made great
advances. But we are far from reaching the vision you outlined
and desire.
One of the great
realities of being your chief executive officer is that there is
no place to hide when things go less than smoothly. And that is
as it should be. My job is pretty straight forward. I am
entrusted by you to employ and supervise a great staff, assist you
in creating a vision for the future and developing a financial
model of operation that provides sustainability for the overall
operation. Please never question that I understand these
expectations and expect to be held accountable for their
attainment.
But even more
importantly, please know that what keeps me focused and excited
about coming to work is the sixth grader at Jericho Circle who now
has access to a level playing field with first class technology
and leadership, or the high school senior at Neuqua who is
passionate about civic responsibility because of Youth &
Government and believes there is still sanity in our democratic
process, or the child in Y guides and princesses that is spending
time with Dad and will grow up and model that behavior or the girl
in our swim class that will never forget the power of example of
her instructor.
There will probably
never be day when this business is going to be easy. But the
reality is that at no point in the past has what we are trying to
do today with kids and families in the communities we serve been
more important. We truly are far better than we used to be and it
is a pleasure to work with you as we strive to build strong kids
and strong families in communities that are far better because we
care.
Thank
you and Happy New Year.
Tom Beerntsen
President and CEO
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