metro >> on the cover
Fixing The
Deficit
JCC losses "worse than projected"
says Financial Oversight Committee.
Jackie Headapohl
I Managing Editor
The JCC building in West Bloomfield
CONTINUED FROM PAGE 1
According to Lester,
this fiscal year, projected
losses from operations
f)
..—
have virtually been cut
in half and now stand at
. .
$700,000. Most of that,
he says, is attributable
It
to expense reductions,
Matt Lester
including a freeze on
pension benefits for
non-union employees that netted $90,000
in savings, salary reductions through attri-
tion and other reductions.
"There was no magic bullet:' said
Federation CEO Scott Kaufman, "just lots
of little things. But we know we can't cut
our way to financial stability"
ing the helm, each of the Center's many
businesses was creating its own market-
ing materials, doing its own printing and
advertising. Issner has now consolidated
that function. "We're getting the biggest
bang for our advertising dollar now" he
said.
Issner and the Futures Committee are
also looking for revenue enhancements
and are considering changes to member-
ship dues and other pricing. "The ulti-
mate goal is to break even," Lester said.
"We've got more work to do. There isn't a
day goes by that some form of opportu-
nity doesn't present itself. This puts us in
a position where we're hopeful the deficit
can be eliminated:'
JCC's New Culture
Righting The Ship
After Issner, widely known as a turn-
around specialist, came on board four
months ago, each of the 40 different busi-
ness units within the JCC were required to
more intensely analyze their budgets and
put forth specific projections, Lester said.
Issner said the Center
is working in tandem
with Plymouth-based
Financial One, which
is acting as the Center's
emergency financial
adviser, as well as the
Financial Oversight and
Jim Issner
Futures committees
on internal financial
controls and getting the
Center's balance sheet in order. He has
been concentrating on adding rigor to the
financial management of the Center.
"We're running everything as a busi-
ness:' Issner said. "This is a complex
organization. I'm trying to bring everyone
together to understand how the Center
operates as a whole. We need to under-
stand where our money is coming from.
We're looking closely at financials to
ensure every dollar is properly spent and
accounted for:'
Issner has found several ways to
improve efficiencies, in marketing and
advertising, for example. Prior to his tak-
Despite Lester's optimism, the JCC will
require additional capital this year to
keep it operational. The committee's
analysis reports that $3.3 million will be
needed by year's end.
In January and February, the United
Jewish Foundation gave disbursements of
$950,000 and $800,000, respectively, from
its general fund to the JCC in order to
keep it afloat.
"The Foundation's
contributions have been
significant," Kaufman
said. "Our sense is that
there are private stake-
holders, foundations
and major donors who
have a deep affinity
for the role our Center
Scott
plays
in our commu-
Kaufman
nity. We think there is
a likelihood there will
be significant support so we won't have
to keep going to our own resources. The
Foundation stepped up first because it
was the right thing to do, but now we
need a coalition of the willing:'
Benyas added that the JCC is paying all
its current bills and has not taken on any
additional debt since the crisis began late
last year. Old payables, $631,119 accord-
ing to the report, have not been paid.
8 July 10 • 2014
Use Of Restricted Funds
Some of that additional capital is needed
to replenish restricted funds — those
earmarked by the donor
for a specific purpose
— which were used for
operational expenses,
according to the analysis.
That practice ended in
January, according to
Benyas.
Dorothy
"When donors make
Benyas
gifts for specific pro-
grams, it's very impor-
tant that we use those
funds in accordance with the donors'
wishes" Benyas said.
According to the committee's analysis,
more than $1 million in funds taken from
restricted funds needs to be replenished.
"Many of those restricted funds have
been repaid, but not all:' Lester said. "We
are more than halfway back to righting
those accounts:'
He added that Federation representa-
tives are in discussion with donors whose
restricted funds have not yet been repaid.
According to Kaufman, "It was the clas-
sic robbing Peter to pay Paul situation.
And although the practice is not unusual
in the business world, we feel very strongly
that the JCC should only spend money as
it's earned and for the specific use it was
intended:'
To that end, since January, tighter finan-
cial discipline has been put on the JCC by
Federation and the Financial Oversight
Committee. As revenue comes in, it is
"siloed" or put in a bucket for the purpose
intended.
"We thought it was important to change
the culture of the JCC's business:' Kaufman
said. "In a sense we're being overly careful
now because we want to make sure all the
very best business practices are put on its
new business model:'
Added Lester, "It also helps to determine
what programs are not living within their
budgets and puts some discipline on the
people operating those programs"
The analysis also revealed an annual
Financial Oversight
Committee
Matt Lester (Chair)
Michael Berger
Alan Kaufman
Brian Kepes
Beverly Liss
Larry Nemer
Ben Rosenthal
Brian Siegel
Steven Weisberg
Larry Wolfe
cash crunch at the JCC, due, in part, to its
practice of spending "deferred revenue"
from JCC summer camps at the end of
its current fiscal year in February-May,
instead of saving it for use it in the sum-
mer and the new fiscal year.
The use of deferred revenue is not
unusual in the business world. For exam-
ple, if a customer makes a hotel reserva-
tion and puts in a deposit, the hotel uses
those funds before the customer actually
stays in the hotel.
The Financial Oversight Committee,
however, recommends that the JCC stop
that practice and instead establish a work-
ing capital fund in an amount sufficient to
avoid the practice going forward.
"No spending money until it's earned:'
Kaufman said. "That's a new added disci-
pline:'
JCC Footprint
One of the main challenges the JCC
faces is the West Bloomfield facility
itself, according to Lester. The JCC is a
400,000-square-foot, 40-year-old building
that was "perhaps never ideally designed"
he said. "There is over 100,000 square feet
of non-rentable common area that you
have to heat, light and keep clean. It's a
very expensive facility to run and main-
tain:'
The Detroit Jewish community has
never had a 40-year-old JCC because the
Fixing The Deficit on page 10