I am writing to you to give you a short summary of the KBIA finances for the year ending December 31, 2016. I am pleased to report that we have had another successful year at the KBIA whereby our finances continue to be on a solid footing as a result of the support from the KBIA community and our discipline of making the program self-sustainable on an operating basis. Throughout the year we continued to maintain our recent practice of aggressive cost management and conservative forecasting. With another strong year of steady attendance in the program and the continuing support of the KBIA community, the KBIA remains financially stable and well positioned with carrying on the tradition of providing kids an exciting summer program.
Membership was slightly down from 2015, however, it is important to note that 2015 had the benefit of a 9 week program instead of the normal 8 weeks. With that said, if you normalize 2015 for 8 weeks, then our program revenue was up by $5,000 - but we work in the realm of actual numbers so we did see a ‘downturn’ in total revenue of $47,000 from last year.
On the direct program expense side, expenses were down commensurate with the reduction in wages attributed to having slightly fewer staff hours booked and our philosophy of ensuring that the programs are run profitably while keeping our sight on the total operating line to ensure that we are cash positive.
In 2016 the support from the KBIA community enabled us to transfer a large portion of donated funds to the Facilities Fund to ensure the continued upkeep and improvement of the KBIA infrastructure and cover a shortfall in revenue. The Facilities Fund will also allow us to tackle some necessary upgrades in the coming year and include a new floor for our tent, a motor for one of our boats, as well as a few other smaller projects.
As we look to 2017, the KBIA is financially in a strong position, however, the impact of the minimum wage increase in Maine from $7.50 to $9.00 presents a challenge to us given that we operate at a breakeven level for 2017. Wages are our single largest expense item and in order to offset the inevitable rise, the board has decided to increase program fees by 5% ensuring that we do not run a deficit.
Highlights from 2016 include:
- Total Revenue was down 7.5% year over year, expenses were down 4%;
- 27 children attended KBIA on scholarship;
- Average program revenue per member up 4.9% year over year;
- Members stood at 320 down from 356 in 2015; and
- 680 people took classes at the KBIA.
As a result, we had $588,000 of total revenue representing a year over year decline in revenue of 7.5%. While program expenses were down approximately $40,500 or 12%, total expenses of $598,000 were down 4% resulting in an operating loss of $10,000. We did manage to contain our non-program expenses by keeping the administration costs virtually flat, reducing the marketing and communication expenses slightly, but the facilities and maintenance expenses did see an increase this.
In summary, declining top line revenue resulted in a shortfall, hence we incurred an operating loss of $10,000 in 2016. However, through the generous donations of the KBIA community, the KBIA ended the year in the black and funds were transferred to the Facilities Fund to improve and enhance the infrastructure in the near term.
Our objective of making the program self-sustainable on an operating basis is our goal and with the minimum wage about to increase in Maine, we will implement a 5% increase in program fees in 2017. These results for 2016 are a reminder that as we continue to expand our programs and deliver exciting programs to the kids, we need to ensure that our revenue and cost structures are aligned for continuing financial stability of the KBIA going forward.
In 2014 we appointed an Investment Manager for the endowment with the objective of preserving and growing the endowment fund for future facility upgrades and sustaining the scholarship fund. The fund has been preserving its value, but in a low interest rate environment along with a conservative mandate, the growth has been moderate.
We continue to be conservative in our planning and target operational break-even for the programs. And as we approach the summer, the Board will evaluate each program within KBIA and make any adjustments that may be necessary to ensure that the kids have a safe and exciting summer of discovery, where they can build new friendships and make memories in the beautiful surroundings of Kennebunk Beach.
If you have any comments or suggestions, please feel free to contact me.
Treasurer, KBIA Board of Directors