Thursday, August 13, 2009

School's Finances- what is the REAL reason then?

Since posting this blog last night, I have received numerous emails, voicemails and tweets regarding our little preschool. This email string stood out to me as something I had to share. In this email we see how an association memeber questioned the preschool's finances and RESPONSIBLY worked to develop a plan of action to help. Best to let the letter do the talking .

"Hi Carol - That's pretty interesting news about the pre-school. I am surprised, based on a little bit of involvement over the last couple of years.

In the interests of full disclosure, I am one who has questioned the school's finances. I served on a committee about three years ago that looked at that subject and helped, I think, in getting new tuition rates that put the school in the black. Director Ron Allen chaired the committee. There was much support for the school, never any thought nor discussion about closing the school, just getting it on a self-supporting basis.

Early this year I noticed that the school's 2008 numbers were again showing a loss. The discussion between Cynthia and me is in the EMails below. Her answer seemed reasonable to me, that over the long term the school was profitable and that "has been a benefit to the entire membership". So, at least in Cynthia's mind, profitability had been OK, through early this year. And I agree entirely that a $5000 deficit now seems like very small potatoes, in my mind hardly a credible reason for the extreme action of closing the school. Note also Cynthia's comment that the Board believes the school to be a "valued amenity". Seems like maybe there is something else going on.

Your son-in-law writes a great letter - and I saw some things there that never came up in our committee meetings in 2006, one being the "open enrollment" prior approved by the Board, I'm sure for some very good reasons.

So there you are. Please feel free to use this info if it will be helpful. Call if you have any questions about all this.

Regards H

Hugh & Mary Ann McConahey

----- Forwarded Message ----
From: cvaldes
To: Hugh McConahey
Cc: lfca1boardofdirectors
Sent: Thursday, February 12, 2009 10:11:55 AM
Subject: RE: Pre School Operating Results
Hello Mr. McConahey,

In the past several years, the Preschool has budgeted and realized a profit which has been a benefit to the entire membership. In 2008 the Board of Directors approved two increases in the fees effective September 2008 and June 2009. During the Fall last year the preschool experienced a reduction in enrollment due to the economy; parents who had lost their jobs. This resulted in a loss of $4,900 for the year ending December 2008. The enrollment has increased as of January and we are working to maintain the enrollment and continue to realize a profit for the Association.

The Board believes the Preschool is a valued amenity to the community, however, they are closely monitoring the operation. If you have any further questions or concerns please give me a call or stop by the Clubhouse.

Best Regards,

Cynthia Valdes
General Manager
Lake Forest Community Association
22921 Ridge Route Drive
Lake Forest, CA 92630
949-837-6100 Main
949-837-0216 Fax

-----Original Message-----
From: Hugh McConahey
Sent: Wednesday, February 11, 2009 8:51 AM
To: lfca1boardofdirectors
Subject: Pre School Operating Results

Two or three years ago I served on a committee chaired by Ron Allen, convened in part to look at the deficit situation in the preschool operation. Subsequently fees were raised and the school operated in the black for quite a while. Now I note, based on the Financial Statements published in the Village News, that the school operated at a year-to-date loss for the last five months of 2008. It looks like almost $13,000 in the red for the whole year.

If I am misinterpreting what I see in these financial statements, then maybe others are also, and perhaps some clarification would be good. If these are real losses, though, then there is cause for concern. What these numbers may mean is that the entire association membership is subsidizing those who utilize the preschool. While I guess it may be possible to rationalize this for those preschool families that are members of the Association, I'm not sure how we justify it for those who are not members. When the above-mentioned committee considered this situation before, we noted that a significant number of preschool
families were not LFCA members.

Would appreciate your thoughts on this, particularly if I am misinterpreting the numbers that I am seeing.

Thanks & Regards
Hugh & Mary Ann McConahey

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