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First Alternative Board of Directors
Meeting Minutes Tuesday, November 15, 2005 |
| Board Members present: | Joanne McLennan, Colin King, Margaret Jack, Toni Hoyman, Max Jones, Chris Bentley, Esther McEvoy, Dave Hockman-Wert, and Steve Albright |
| Board Members absent: | None |
| Staff present: | Michele Adams, Dana Allen, Evelyn Hall, and Colleen Jess |
| Board Advisor: | Marcia Shaw |
| Consultants present: | Marty Schultz |
| Owners present: | Carl Hartzell, Riu. Rivas, and John Nichols (8:35) |
| Scribe: | Kevin Oder |
| I Owner Comment:
· Mr. Rivas & Mr. Hartzell introduced themselves. |
| II Approval of Consent
Agenda: Motion 11-2005 (#1) Motion to adopt the consent agenda items as written including: approval of October Board meeting minutes, approval of November Board agenda, approval of committee meeting minutes, and approval of GM report. M/S Chris/Colin. Motion passed 8-0-0. |
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III Approval of Minutes: |
| IV Announcements
and Affirmations: · Thanks to Feast Alternative for a wonderful meal with the owners · Chris will not be able to attend the December meeting · Appreciate everyone who filled in last month while Joanne was gone. · Welcome to Colleen training as the back up board scribe |
| V Board Calendar and
Timeline · ORC is now meeting once a month on the first Tuesday from 12:00 to 1:30 pm |
| VI Questions/Comments
on Committee/Meeting Reports Board Development Committee: No questions Executive minutes: No questions Finance minutes: No questions Owner Relations: The ORC minutes appear to be vague as to whether a decision was made by the Board regarding the report on the owner worker program that ORC had submitted for the October Board meeting. Discussed whether the Board made a decision about the ORC review of the owner worker programs at the October Board meeting. There were differing takes from that meeting. This will be put onto next month's Board agenda to discuss further to finalize. |
| VII Major Financial
Issues & Assumptions for 2006 Budget: Presented by Marty Schultz on behalf of the finance committee and management. This agenda item is being submitted to the Board to approve the different major issues and assumptions 1) sales for the store, 2) payroll, 3) operating expenses, 4) other income & expenses, & the capital budget that final budget will be based on. Marty went over the different items and the proposed figures by the GM, Finance Mgr, & Finance Committee. Marty presented comparison figures for the area, other cooperatives, and market forces. Questions/Comments: · Does the sales growth figure look reasonable at 14.59%? The figures look reasonable to me. These figures are always a guess, but Dana (Finance Mgr) is generally very accurate and these figures have been well thought out and look reasonable based on historical trends. · What kind of impact will parking (or lack of) have on the sales growth? o It does have some impact on us during the busiest times of the day, but we're not at a point where it's negatively impacting sales, yet. · How do variations in achieving the budget figures affect the results? What if we budget wrong? As long as all of the budgeted items as a percentage of sales stay in line with the budget, then variations in actual dollars are okay. Budgeting is always a best guess, but the most important thing is keeping the percentages in line with actual sales. All of these figures are closely monitored during the year and adjustments to expenses are made as needed to react to actual sales results. The budget is done conservatively and then we monitor and adjust as necessary. · Is your primary dial for reducing labor costs the paid sub labor? o It's one of the things we look at, but we look at each department individually. Each departments labor is budget and monitored separately. · Dana is said to be typically very conservative, so when you project 14.59% sales growth is that optimistic? o I'm (Dana) risk adverse and all of the factors are gone through dept by dept balancing realistic growth projections with the understanding that these sales projections drive labor. After having sat down and reviewed all of the factors with each department, I'm very confident about this sales growth figure. · I look at the trend and this looks optimistic, but I don't have all of the information. o We have a lot of changes coming this year that will increase sales. · If we're too conservative, does that impact things for the Board. o The Board is only approving percentages, not actual dollars. If we have more or less sales, the percentages will drive the dollars. The sales growth assumption appears reasonable to me. Labor as a Percentage of sales is being budgeted for 23.43% of sales.
Health insurance will be going up as well as wages. At first I thought
this was a little low, but with the growth in sales it will help average
the fixed costs of health insurance down. This is you largest expense.
Other operating expenses are estimated at 10.65%. As some of these items
are fixed in dollars, as sales go up, the percentage of sales goes down. COGS is being budgeted at 62.82%, the same as 2005. This is slightly
higher than large stores but low for extra large. As Feast Alternative
sales go up as a percentage of store sales, it pushes the margin up. Reviewed historical and projected inventory levels. Looked at turns and they look good and are typical for your peer group. Overall conclusion by Marty is that the budget assumptions seem reasonable and are well thought out. Motion 11-2005 (#2) Motion to approve the major financial assumptions
for the 2006 budget as presented. M/S Chris/Max. Motion passed 8-0-0. |
| VIII Non-Operation Budget Presented the Finance Manager This is to discussion is to get feedback from the Board on the non-operating budget to assist in building the draft budget that will be submitted to the Board at the December meeting. There isn't any need for a vote on these items tonight. This is all of the outreach, owner worker items, support workers, governance, low-income discounts, Thymes, etc. Many of these items are discretionary and can be reduced or eliminated if necessary in the event of reduced income. The board discretionary is proposed at a higher level this year due to many new board members. This can be reduced if the Board doesn't feel it is necessary. Some of these programs are partially self-supporting like the Thymes, which sells ads. I would like some guidance from the Board as to whether the programs should be kept as is and are they funded at adequate levels if there any changes that you'd like to incorporate into the 2006 draft budget. · General discussion about various trainings available for the board now (CCMA, Provender, as well as a potential new on-site training by an NCGA trainer). It was agreed that that training is essential to an effective Board and advised Dana to budget the board discretionary amount at $8,000 to cover trainings and the 2006 retreat. · Discussed the amount for R&D, which is where research into potential projects is budgeted. Market studies for potential expansion or growth come from this budget. · This year we're going to spend $7,500 on the market study from the 2005 budget. I (GM) decided after our last meeting that the market study does need to be done. I thought there was going to be potential to grow at the North store, but after looking into the situation further, I realized that there really wasn't. Last month when I was bringing it to the Board, it was with specific store development in mind (a Monroe store), but now its just research for general growth and guidance with no specific plan. I'm going to find out where we can grow, what is the market for natural food dollars in Corvallis overall, and what portion of that can the Co-op expect to capture. If there is potential for growth, how much, what rate, and where is the best place to grow. We'll use this information to guide for budgeting. The study is already in the process and the results should be ready to be presented to the Board in December or January. I realized that there was already money for a market study in the 2005 budget. There are monies proposed in the 2006 budget in case we decide we need to expand the scope of the market study or if we decide to research a specific location. · Discussed outreach wages and the changes with Laurie Heilman having left and Donna Kaiser overseeing two assistants in her place. · Discussed the Blue Sky proposal that was brought to the Board last month by an owner and if we were to participate, what part of the budget those dollars would come from. Different perspectives were held on this topic. · Discussed the non-operating programs and general and that there needs to be developed a set of criteria that new programs are evaluated by as well as an evaluation process for existing programs to help guide decisions on program funding each year. Decided not to make any changes to the non-operating programs for budgeting purposes right now while this evaluation process is developed. There were differing perspectives on whether the Co-op should be funding these programs directly or if the dollars should go to the owners first through a patronage dividend and then let the owners decide if they then want to fund the programs by donating the dollars back. · Discussed the non-ops budget based on the goals from the Retreat, Education & Outreach, Community Outreach, & Owner Outreach and whether we're putting dollars in the non-ops budget to fulfill these goals. Part of the focus from the Retreat was on education and it was decided to add $3,000 to Education & Outreach so there will be dollars in the budget this year that can be used to fund any new efforts the Board decides on. There is already and additional amount in the budget for the combination mailer that will be going out tot the owners in 2006. Finalized the discussion on the non-ops budget with a straw poll for $3,000 added to outreach, $2,000 to discretionary, everything else stays the same as Dana has proposed based on historical trends. These changes will be reflected in the draft budget presented to the Board in December. Straw poll passes with 7 votes in agreement. |
| IX Retreat Follow-up Questions/Comments: · Continued to next month |
| X Montessori Parking
Lot Lease · There's no money involved in this agreement. It's an agreement about how we'll use their property. There was concern about the clause for cleanup that we're responsible for. As it's a Montessori school and not a business like Evanite, it doesn't seem like there should be a problem with the clause. Joanne will go ahead and sign on behalf of the Board. |
| XI GM Report Questions/Comments Questions/Comments: · None |
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XII Monitoring Report for L-11
Policy (Financial Condition) Motion 11-2005 (#4) Motion to send report back to Michele to clarify the time frame of the financials Dave/Colin Motion passes 8-0-0 Review of L-11 |
| XIII Preview of L-13
Policy (Data Privacy) Revision date: 2/16/05 Discussion: · Have there been situation where you've been tempted and how've you resolved that? · Please tell us what you do use the data for. · I'd like to know about discussions with staff about our POS system and are there other options. |
| XIV Preview of L-14 Policy (Community,
Info, Education & Outreach) Revision date: 2/16/05 Discussion: · Under promoting social responsibility and the use of plastics are the ones we use recyclable and are there alternatives to the use of these plastics. · Choices regarding using organic and environmentally sensitive flowers and plants. What guidelines do you use in choosing the vendors for live plants. · How many people do we reach with our various programs and how do you evaluate that. · It seems like a lot of the goals from the retreat are related to L-14. It would be good to have an evaluation of the current situation as a baseline to work from · Can you speak to cooperative ventures and how are we promoting cooperative ownership. |
| Meeting Adjourned: 10:30pm |