When I opined that most directors do not comprehend capital project and reserve management I did not mean to limit my comment to just current directors. Rather, my "universe" of directors includes all the directors I have known since I moved here in 2002.

The theory and practice of reserve and capital budgeting, accounting and financial management is very difficult to grasp, especially for new directors who are called upon to make decisions on these matters as soon as they are elected. Although these issues are covered at the annual directors' orientation meetings in September, they constitute only a small portion of what is attempted to be covered in these two days of orientation "seminars" so there is a lot of info directors are trying to absorb.

I do not fault directors for not being conversant with these issues. I do fault OPA administration for not making these issues easier to understand via improved reporting. For example, OPA still focuses almost all of its variance reporting on the operating fund and little to no focus on replacement capital/reserve variances. As another example, when I first served on the Budget & Finance Committee (2003-2006) OPA did not issue ANY periodic reports on replacement reserve/capital spending or variances to the BoD.  

The primary driver of costs in the operating fund are labor and associated benefit expenses and these are "relatively fixed" as they are based on the number of OPA employees which tends to remain "relatively constant" year to year. As a result, a large portion of the operating fund impact on assessments is "relatively fixed".

The replacement reserve "contribution" portion of the assessment is driven by capital asset management and consequential replacement decisions. Reserve "contributions" (assessments) will fluctuate from year to year as long as OPA operates without effective capital asset management and long-term planning. Reserve and replacement capital spending budgeting will remain much more contentious than it needs to be. Unfortunately, these factors, coupled with the lack of a working understanding by most directors about these matters will not make it any easier for directors to make coherent decisions from year to year.

Gene