THE 2009 FINANCIAL ADVISORY COMMITTEE REPORT ON

PROPOSED AMENDMENTS TO THE CONDITIONALLY-APPROVED FISCAL YEAR

2010 OPERATING AND CAPITAL BUDGET

COMMITTEE MEMBERS
Chair: James Howard, Long Reach
Vice-Chair: Dan Woodruff, Dorsey's Search
Roger Hultgren, Harper's Choice
Alan Romack, Owen Brown

COLUMBIA, MARYLAND
FEBRUARY 12, 2009
 The 2008 Financial Advisory Committee

February 12, 2009

Miles Coffman
Chair, Planning and Strategy Committee
Columbia Association, Inc.
10221 Wincopin Circle
Columbia, Maryland 21044

Dear Mr. Coffman,

Please accept the attached report from the 2008 Budget Committee on “Proposed Amendments
to the Conditionally-Approved Fiscal Year 2010 Operating and Capital Budget.”

As always, members of the Financial Advisory Committee are available for future consultation
regarding this report or other matters the Board of Directors or the Planning and Strategy
Committee require. The other committee members and I sincerely appreciate the opportunity to
have served the Columbia Association and residents as members of the Financial Advisory
Committee and on their behalf, I remain,

Respectfully,

James P. Howard, II
Chair, Financial Advisory Committee
 Proposed Amendments to the Conditionally-Approved Fiscal Year 2010 Operating and Capital Budget 1

Charge
The Columbia Association Board of Directors (Board) asked the Financial Analysis Committee
(FAC) to review CA staff proposed amendments to the conditionally-approved fiscal year 2010
operating and capital budget, covering the period May 1, 2009, through April 30, 2010. The
Board is interested in the reasonableness of the staff’s projections, calculations, and options.

Conclusion
The Financial Advisory Committee concludes that, on balance, the staff recommendations are
reasonable in pursuit of the CA's mission.
 Proposed Amendments to the Conditionally-Approved Fiscal Year 2010 Operating and Capital Budget 2

Background
CA budgets on a 2-year cycle. The current operating and capital budget covers fiscal year 2009
(May 1, 2008 – April 30, 2009), and the conditionally-approved fiscal year 2010 budget is for the
period May 1, 2009 – April 30, 2010.

The conditionally-approved fiscal year 2010 operating budget projects total income of
$61,214,000 and total expenses of $58,348,000 (including interest and contingency funding).
The proposed amendments reflect revised estimates for total income of $60,902,000 and total
expenses of $58,252,000 (including interest and contingency funding). The original budget
estimate for the net increase in assets was $2,866,000; the revised estimate is $2,650,000.

The conditionally-approved fiscal year 2010 capital budget totaled $9,695,500. The staff
recommends net increases of $298,500, which would bring the total to $9,994,000.

Observations

Revenue estimates
The staff’s estimated decrease in revenue is $312,000, primarily due to lower receipts from the
annual charge and reduced returns on investments. The staff estimates reduced income from the
annual charge ($249,000) and reduced income from investments ($100,000) will be partially
offset by increased receipts of $37,000 from promotions by the Communications and Marketing
and Community Services divisions.

The net change is a decrease of about 1/2 of 1 percent of the original total revenue estimate.

Operating expenses
The staff’s estimated net decrease in operating expenses is $96,000. Increased expenses for
personnel costs, rental of space, new identification cards, computer upgrades, and depreciation
(totaling $371,000) are offset by decreases in other personnel costs (totaling $240,000) and lower
interest expense (of $227,000) due to changes in capital projects.

The net change is a decrease of less than 2/10 of 1 percent of the original total operating expense
estimate.

Capital expenses
Among the revisions recommended by staff for the capital budget are decreases of $284,000 for
the Open Space Management Division and combined increases totaling $582,500 for the Sport
and Fitness, Community Services, Communications and Marketing, and Administrative Services
Divisions. Forty-six percent of the increase is for expenditures in the Sport and Fitness Division.

Generally, major changes are in the Sport and Fitness and Open Space Management Divisions.
 Proposed Amendments to the Conditionally-Approved Fiscal Year 2010 Operating and Capital Budget 3

The staff recommendations consist primarily of savings by deferring equipment replacement and
postponing some revisions or upgrades to CA facilities and property. Some of those savings are
offset by previously unforeseen upgrades and new priorities. On balance, the staff
recommendations are for a total increase of $298,500 in the capital budget.

The net change in the capital budget is an increase of about 3 percent of the original total capital
expense estimate.

Conclusion
The Financial Advisory Committee concludes that, on balance, the staff recommendations are
reasonable in pursuit of the CA's mission.