1. Current Revenue and Expense Analysis 2023 Total Revenue: $6.4 million. 2023 Total Expenses: Approximately $6.17 million. The College's expenses, particularly in human resources, operational costs, and capital investments, have been growing, but the current revenue appears to cover expenses adequately with a slight margin. If we assume that the expenses will continue to grow, let’s estimate a reasonable expense increase based on historical data. 2. Historical Expense Growth Looking at the past few years: 2019 to 2020: Expenses increased by about $200,000. 2020 to 2021: Expenses increased by approximately $400,000. 2021 to 2022: Expenses increased by around $300,000. This trend shows that, on average, expenses have been increasing by $300,000–$400,000 per year. 3. Forecasted Expense Growth Given the above trends, it's reasonable to expect expenses will continue to rise at a similar rate: For 2024, we can estimate expenses to grow by about $350,000. This means the 2024 expenses could be around $6.52 million, compared to the $6.17 million in 2023. 4. Impact of the Proposed Fee Increase The proposed increase of $170 per member could generate an additional $2 million annually, which would increase the total revenue to $8.4 million. 5. Justification for the $2 Million Increase With estimated expenses around $6.52 million for 2024, the additional $2 million would result in total revenue of $8.4 million, leading to a $1.88 million surplus. While maintaining a surplus for future projects and operational improvements is a good practice, this excess seems significantly high. Given that the College has maintained a fairly balanced budget in recent years without accumulating significant deficits, this large surplus would appear excessive unless there are plans for major upcoming expenditures that have not been disclosed (e.g., new programs, large capital investments). 6. What Would Be a Reasonable Fee Increase? Based on projected expenses and historical growth rates, the College would need around $6.52 million to cover expenses in 2024. Assuming no other significant changes in operations, here is a more reasonable fee increase calculation: Current Revenue (2023): $6.4 million. Projected Expenses (2024): $6.52 million. Required Revenue: To cover the projected expenses, a revenue of $6.52 million is sufficient, which is only $120,000 more than 2023's revenue. Thus, a fee increase generating an additional $120,000 annually would be reasonable. Here's a breakdown: Current membership revenue: $6.4 million. Number of members (assuming the increase of $170 would raise $2 million): Around 11,765 members. To generate an additional $120,000, the fee increase would need to be $10 per member, rather than $170. 7. Recommended Fee Increase Based on the forecasted expenses and current financial health, I recommend a fee increase of around $10 to $15 per member. This would allow the College to meet its financial obligations without accumulating an unnecessary surplus. A slightly higher increase might be justified if the College plans to invest in future growth, but the proposed $170 increase is excessive without additional large-scale projects. 8. Recommendations for the College Justify the Fee Increase: The College should clearly articulate any major planned expenditures that would justify such a large increase in fees (e.g., strategic initiatives, capital projects, or new regulatory requirements). Introduce a Smaller Fee Increase: A more modest increase of $10 to $15 per member would be more aligned with the organization's financial trends while still covering expense growth. Provide Transparency: The College could provide a more detailed breakdown of future financial needs to explain why a $2 million increase is necessary, should they choose to proceed with the larger increase.
