SUBMITTED AGENDA ITEMS:

Review the 2005 FC yearly calendar and work plan
· No changes

Review of July financial statements
Reviewed the July financial statements. Everything is still looking good. Wages are well within budget both in terms of dollars and as a % of sales. Wages are picking up, though, due to extra staffing and we'll see the increase starting in August. Net Income from operations is better than budget $205,000 YTD. In Non-Ops notice the donation of $5736 that is the donation from the patronage refund. The unredeemed refunds will be taken back into income. Net Income is $231,959 better than the budget YTD. The North store is doing very well. The difference on the balance sheet in cash is due to payment in trade payables. Owner shares have a net increase of 39. Additional Equity has been increased from owners putting their patronage refunds into additional equity on their shares.
§ Payroll in July for employee medical costs are half of budget?
There was an adjustment that was made due to an over payment in June which has been corrected in July.
§ What's the status on the rack system and possible rebate from the energy trust?
The rack system is progressing on schedule. We're going to be getting money back, but the final numbers aren't in yet.
§ Prepared foods doesn't look like it's achieving the budget that was set for it last year.
No, they're not meeting projections Part of it has to do with unforeseen problems and setbacks. There's also been a delay in getting the new case installed here at the South store that was supposed to have come in June and is now waiting on the rack system. This case was budgeted to increase sales at the South store and not having it yet is part of why the sales aren't as high. Sales at the North store are above budget. At this point I'm going to give them a longer extension to continue to improve their numbers. Their sales are a lot better compared to last year. The department is very popular with customers, so I'm going to keep working with them to improve.
§ I've notice that the North store is way over budget and the South store is under.
Yes. During the budgeting process last year I expect growth at the North store to slow down sooner and the growth at the South store to have increased faster. This timing issue in putting together the budget has created the budget variations. This trend has started to turn around in July and August, where the North store's growth has started to slow and the South store to pick up.

Work Plan item 7. Review practices for monthly financial reports
· Discussed the layout of the sales growth graphs and decided to leave them as is for now.
· Everyone decided that they were satisfied with the reports as they are currently formatted.

Audit engagement letter for 2006
· There are concerns with timing that need to be discussed with Nick to be sure of our desire to have the audit in time for the annual report next Spring.
· We'll continue with Spectrum for this year and see how it goes.
· The finance committee may decide to review the audit firm every five years or so.
· I think trying to push the timing is going to be difficult. It is understandable that they would be hesitant to commit to the earlier deadline.
· If the timing turns out to be unreasonable by an industry standard, then we could use management's financial statements, which are generally accurate and note on the Annual Report that the figures are unaudited.
· What is the difference in cost difference between a review and an audit?
· It's about dbl for an audit vs. a review.
· Dana will get the engagement letter from Spectrum and bring it to next month's meeting.

Possible change in by-laws for patronage refund
· The bylaws were discussed at the board meeting and there has been follow up with the attorney.
· Having been on the Bylaws committee, I'd like to express my concerns regarding Laddie Lushkin. These bylaws that were passed last year were developed in close consultation with Laddie and now he seems surprised and concerned about the wording he helped develop. These issues should have been addressed in that bylaws rewrite. It may be a good idea to look at a different attorney to work with on our bylaws. There are attorneys in Oregon that specialize in non-profits. I feel uncomfortable about Laddie's advice anymore. This is a major oversight from rewriting the bylaws just last year.
· Laddie doesn't seem to be as familiar with Oregon law, but whomever we use would have to familiar with coop law.
· Most coops across the country use Laddie. We could look at using our local attorney instead.
· I just feel really uncomfortable with Laddie's advice at this point. A review by another attorney seems like a good idea.
· I feel somewhat disposed to continue to use Laddie.
· It was a big section that we went through with Laddie two years ago and now he's saying that it's not correct. It seems like he's giving conflicting advice.
· He was very specific with Michele that the dividends had to have a 90-day deadline and now we're seeing it as a conflict with the way the bylaws were written under his supervision.
· Michele and Dana will consult with our local attorney, Ray Cihak, and get his opinion.

Possible change in committee membership
· Max has officially resigned from the Finance Committee. Sandra is going to ask to step down as chair in the foreseeable future due to health reasons, especially with the budget cycle upcoming. At the Board retreat they'll discuss the committee membership.

Continue discussion related to "below-the-line" community outreach and education expenditures
and allocation of profits

Work Plan item 6. Explore using a set amount for non-operations budget items rather than percentage of sales
§ Discussed the budgeting process for the below the line items and focused on which programs the Board has more specific influence on.
§ My concept of the budging process is that management prepares and gives recommendations and the Board gives feedback and has to give final approval. There are some programs that are more driven by the Board and some that are more driven by management. Some are in between. The finance committee is the sounding board between the Board and management
§ I believe that their might be better buy in to community outreach and education if their were more of a programmatic pitch for the programs and the Board would have a way to evaluate them and budget for accordingly.
§ I think that gets the Board too far into the detail of the programs. I think that it would be hard for a group of ten people to come to a decision on that level of detail. It's better that the Board tells the GM the direction they want and have the GM develop the programs that follow that direction.
§ It would be good to find out from the current Board what they want in terms of community outreach. I think a lot of the reason this came up as an issue was driven by a knee jerk reaction to the 2003 financial situation by certain Board members at the time. Our current fiscal situation is looking fine and the members of the Board and their priorities may be entirely different. The basic question to the Board is do you want to increase or decrease the percentage of sales for the below the line budget without getting in to the details of the individual programs and what percentage of sales that might be.
§ The reason that we capped the 1% program was that at the last retreat the Board was trying to increase the bottom line so that there would be a net income to give a patronage dividend out of and explore having the owners direct the programs by donating their refunds back.
§ It's important to note that growth and income has been doing very well now that the new store is established. Community outreach has to be a growing thing and have continuity from year to year. I don't think we need to save money and should keep our programs going strong. We already evaluate programs from time to time to be sure that they are meeting our goals in the community.
§ Our reaction to the patronage refund as an owner was why bother. It's such a small amount of return for each individual owner that the money is much better retained by the coop and spent collectively on community outreach. I would not want to cut back on outreach for a patronage refund.
§ In my mind what I need to know is 1) Do they want to decrease the amount of money going towards the below the line and the 2) what is the purpose if trying to save money and reduce the below the line into the chance of an increased dividend. Until I have that information, I can't decide on this topic.
§ I felt that sending out the patronage dividend was an inefficient way of using our cooperative resources. Individually our dollar or so of patronage dividend doesn't make much of a difference, but all of us pooling our resources together at the Coop and having the Coop use those resources for the community makes a big difference. We should be focusing on what we do with our resources collectively in the community not what each of us get back.
§ One reason we changed to the cooperative structure, though, had to do with the giving the owners back a portion of the profits and if we get to a point where we can do that meaningfully, it is part of the purpose of the being a coop.
§ We have explored the set amount idea and Sandra will take these thoughts to the Board for the Retreat discussion.

Meeting adjourned: 6:45pm