Reserves Cancel The title field is required!

1. McDonagh Patrick

   
   1/29/2014 1:01 PM

   We are a Municipal golf course that is operated as a separate entity from the rest of the Village.
   I was wondering how much do you keep in reserves for you facility. We basically generate a profit for 6 months out of the year so I am thinking we should have enough to cover the 6 months that we don't make money.

   
   
   
   
2. Christian Pekarek

   

   0 posts
   
   1/29/2014 2:01 PM

   Hi Patrick,
   
   Our plan is to not allow our reserves to fall below 50% of our operating budget at any time during the year. Our golf season begins as early as mid-March and ends mid-November. We have had as little as 6 months cash reserve and as much as 20 months in reserve. We have always demonstrated the need for our reserves to our board. Our cash reserves are at their lowest in January most years. We want at least 1.5 million in the bank on a 3 million dollar budget at our low point in January. I think having 6 months operating cash in the bank is the minimum you need. If your facility is in need of significant capital expenditures in the near future, I would add the capital expenditures into your reserves.
   
   If your course is subject to extraordinary events such as flooding, you may need more like 12 months in reserve.
   
   Chris Pekarek
   Glen Ellyn, Illinois

   
   
   
   
3. Steve Nelson

   

   0 posts
   
   1/30/2014 7:01 AM

   We have three reserves in our golf enterprise fund. The operational cash reserve is mandated by council to equal roughly 8% of our annual operational budget. We run on thin margins so this helps manage cash flow througout the year.
   
   The depreciation reserve fund is to replace rolling stock and major capital improvements. When we depreciate something, muni law requires us to put money into a reserve account. So if we buy a tractor implement say for $10k and assign it a 10 year life, we put $1k per year into the reserve for 10 years. We built a new clubhouse a few years ago so we are putting in about $325K per year into this fund that is charged as an operational expense. Balance is currently around $2M or so.
   
   The third is the capital improvement fund. This is to fund any new things or unforseen capital expenses. Any excess revenue for the year (after ensuring cash reserve requirements are met) goes into this fund, currently around $1M.

   
   
   
   
4. Melvin Waldron

   

   43 posts
   
   1/30/2014 8:01 AM

   Steve Nelson, CGCS said: We have three reserves in our golf enterprise fund. The operational cash reserve is mandated by council to equal roughly 8% of our annual operational budget. We run on thin margins so this helps manage cash flow througout the year.
   
   The depreciation reserve fund is to replace rolling stock and major capital improvements. When we depreciate something, muni law requires us to put money into a reserve account. So if we buy a tractor implement say for $10k and assign it a 10 year life, we put $1k per year into the reserve for 10 years. We built a new clubhouse a few years ago so we are putting in about $325K per year into this fund that is charged as an operational expense. Balance is currently around $2M or so.
   
   The third is the capital improvement fund. This is to fund any new things or unforseen capital expenses. Any excess revenue for the year (after ensuring cash reserve requirements are met) goes into this fund, currently around $1M.

   
   
   Thanks for posting Gus; you've answered my questions from the other post.
   
   Like how you guys are operating it. We are still making payments on some sod for one of our three courses and the bond payment on the construction of it. Once that is done, hopefully maybe we can do something similar.
   
   As far as our reserves, I have not heard of a certain percentage they are trying to achieve, but they are trying to set up a rainy day fund similar to Gus's capital improvement fund, for unforeseen pump issues and the like. Funny thing there is the other two courses seem to have all those issues not us? We are an enterprise fund too.
   
   Mel

   
   Melvin H. Waldron III, CGCS, Horton Smith Golf Course, City of Springfield/Greene County MO
   
   
5. Steve Nelson

   

   0 posts
   
   1/31/2014 7:01 AM

   Thanks Mel,
   I think the reserves are important to have. Of course there is constant pressure on us to spend them to 'take it to the next level'. Of course if we did that then they wouldn't really be reserves. Part of our mission statement is that we are going to preserve and protect the course to ensure future generations can enjoy the same recreational golf experience. Understanding the mission and setting up programs to achieve it, whether agronomic or financial, is the real key to long term success at a muni. The voices in the crowd that want you to spend it all now for their benefit tend to be silenced if you can confidently explain how your programs relate to the mission statement. It also allows you to have a consistent approach to dealing with that kind of 'public input'.

   
   
   
   
6. Melvin Waldron

   

   43 posts
   
   1/31/2014 9:01 AM

   I did find out that we are supposed to have a 6% reserve at the minimum. Don't know if they consider the whole department with that 6% or not.
   
   I also don't know if it's legislated in, or if that is just a guide or mandate that the park board or city requires (we are too far down the food chain).
   
   Gus,
   
   I hear you sometimes we get pressed to spend a little more on items, or at least spend our budget, but when we have bad weather like we've had, then it's like, revenues are down, watch what you spend.....it's crazy sometimes. We will concentrate on our agronomic programs and try not to cut from them, worse case scenario we might skip an application of something maybe a pre-emergent app on fairways, figuring we can spray post only where needed. We might not level the tees we had planned or rebuild that bunker to save.
   
   As for our rates I will post a link, one of our courses does charge more, since it is the crown jewel. I do think we are raising greens fees a $1 in March.
   
   http://www.parkboard.org/golf/horton/fees.htm
   
   Thanks!
   
   Mel

   
   Melvin H. Waldron III, CGCS, Horton Smith Golf Course, City of Springfield/Greene County MO