Outsourcing Sun City’s financial reporting and processing has proven to be a challenge for the community’s staff managers.
In working to resolve some communications and administrative concerns, local and east coast financial officials of First Service Residential (FSR) have adopted a familiar, but sometimes elusive, attitude of patience. They have also done a lot of evaluation and thinking both short and long range.
(Illustration by Got Credit/ Flickr)
FSR is the management company that provides the staff resources to administer Sun City’s myriad programs and activities, and maintain its common-area facilities. Outsourcing landscaping and maintenance and repair functions to local contractors is common in active adult associations. Outsourcing financial matters is less common. At Sun City, the move was made late last year after 15 years of local management, and a lot of new and unfamiliar procedures had to be developed in a hurry.
Late last fall, the association board of directors was faced with a shortage of local staff due to the departure of two key financial managers. They decided they needed to act quickly to maintain a proper level of financial services for Sun City’s activities, facilities, and personnel. There was a board consensus to out-source financials to FSR for administrative management reasons as well as cost-savings. FSR was consulted, and advised the board that Outsourcing to the firm’s eastern office would result in a savings of about $110,000 a year.
The board consulted with the Finance Advisory Committee, and the committee told the board they weren’t ready to make a recommendation on such a move. The board decided to proceed with Outsourcing effective on January 1, on a one-year contract with FSR.
A significant bump in the road came last month, when two key members of the Finance Advisory Committee, William Berendt and Robert McGouey, resigned in the middle of their latest two-year terms. Berendt, who served on the committee on and off for almost six years and also is a past president of the board of directors, said he resigned because he was dissatisfied with Outsourcing activities and with FSR’s performance. He declined to comment further. McGouey, who has served as chairperson of the committee this year, was unavailable for comment at press time for this report.
“We had some concerns when we started with timely receipt of reports from FSR, but we have worked on them and resolved some of them,” said Dennis O’Leary, who is former vice chairperson of the committee and now is an association board member. “We are still evaluating this move as we proceed with it. We tweaked it in January and February, and made some progress. But this is a work in progress. We have taken short and long range approaches to our financials, and asked ourselves, ‘what is the best option for us in the short and more importantly, long range?’ The board has taken two actions in the last two weeks.”
1. Solicited letters of interest from residents to find replacements for Berendt and McGouey as soon as possible. The letters should be sent to Lauren Lee, executive director. Financial backgrounds are considered helpful.
2. Began formation of a four-member ad hoc committee to review and evaluate the outsourced financials currently being done by FSR. Financial background would be helpful, according to Lee’s latest e-blast.
“This group will play a key role in helping us decide if we will continue to out-source next year and beyond, or if we will bring everything back in house,” O’Leary said. Applications to serve on this group should also be sent to Lee.
According to O’Leary, this situation, including the vacancies on the committee, was discussed at a board/finance committee meeting on July 8. The vacancies occurred at a critical time, since the board is about to begin the process of preparing the 2016 budget for discussion and approval later this year. Next year’s budget must be approved no later than the third week in December. The finance committee plays a major role in the budget process.
Lee did not provide additional information on the July 8 meeting, since it was an executive session.
“We believe the Outsourcing has worked well enough to justify continuing it beyond this year,” said Lee. “We have recently been receiving information in time for finance committee and board meetings, and the process is improving. So far, we believe the $110,000 annual cost savings is worth the effort to continue it.”
