Archived decisions
Sir George Staunton Country Park Joint Management Committee
21 November 2006 Item 8
Revised Budget 2006/07 and Draft Forward Budget 2007/08
Report of the Treasurer
Contact : Bevis Ingram 01962 847508
(With the concurrence of the chairman under Section 100(b)(4)(b) of the Local Government Act 1972, this matter is included on the agenda to ensure that the Revised Budget 2006/07 and forward budget 2007/08 may be approved.)
1 Introduction
1.1 This report presents the revised budget for the Park for the current year (2006/07) and a draft forward budget for next year (2007/08).
1.2 Appendix A gives an overall comparison of the budget and forecast outturn for the current financial year (2006/07) and the draft forward budget for 2007/08 including proposed contributions from the Partner Authorities. Appendix B breaks the revised budget down into its operational elements and Appendix C does this for the draft forward budget for 2007/08.
1.3 The main financial challenge facing the Park in the short term is the need to pay off the historic accumulated deficit. The bottom line of the forecast outturn for the current year is very close to the original budget, although this will require very tight control of expenditure, particularly on supplies and services in the latter part of the year. If achieved this will pay off more than half of the deficit. The plan for 2007/08 is then to achieve a surplus sufficient to pay off the remaining deficit and provide a financial cushion against future difficulties (eg no Easter in 2008/09). Overall the finances of the Park are moving in the right direction, but the challenges faced by the management team to achieve this should not be underestimated.
2 2006/07 Revenue Budget
2.1 The first half of the year has seen an exceptional rise in visitor numbers on last year which has outstripped the budget predictions and the figures in the Ten Year Plan. Visitor numbers are up by almost 32%, and entrance income has risen by 24% on the same period last year. The difference is explained by the growth in repeat visits from season ticket holders (members). Visitor numbers for the whole year are expected to show an increase of over 20% on last year, and income from gate receipts has been increased by 9.5% on the original budget.
2.2 As a result of the increase in visitor numbers the total income in the shop and Tea Rooms have also risen, but not by the same margins. Spend per head in the shop is significantly down by about 25% to £0.80, while spend per head in the Tea Rooms has dropped slightly by 5% to £1.50. While the day to day operation of the Tea Rooms is good, the original budget included a significant profitable element from catering for the conference business, which has had to be revised downwards.
2.3 The main disappointment in the year has been the slow take up of the Conference business. Costs have been reduced by the work being undertaken by the management team rather than by employing a dedicated Conference, Functions and Events Manager so that although the volume of business is relatively low, the net contribution in the original budget will almost be achieved. On the positive side, there have already been bookings for four weddings in 2007/08, and the Conference room is now being used more frequently, so the future is looking brighter.
2.4 Unplanned expenditure in the year replacing the refrigerator in the Tea Room, purchase and hire of agricultural plant and equipment, increased utility costs, and extensive path and fencing renovations due to health & safety concerns. However, Appendix A shows that total expenditure for the year in line with the budget. This has been achieved by holding vacancies for Park staff and the Conference, Functions and Events Co-ordinator, and by postponing the refurbishments in the Gift Shop, and tightly controlling spending on supplies and services.
2.5 The operational surplus for the year has been revised to £10,053. The effect on reserves will be to reduce the opening deficit of £16,230 to £6,826 after potential interest payments have been taken into account.
2.6 The variations against the original budget within the budget headings are summarised below.
a) Employees (-£20,800)
There has been no appointment to the Conference, Functions and Events post, and a vacancy which has arisen in the Landscaped Gardens and Parkland team is being held at the moment. Small turnover savings across the various operational sections have been partially offset by increased staff costs in the Tea Rooms and the management team.
b) Premises (-£13,300)
Savings have been achieved by postponing the planned refurbishment of the Gift Shop, and cutting expenditure on the Conference Rooms. However these savings have been reduced because of additional work on renovating and lengthening the network of paths, and on replacing fencing in the back paddock being undertaken following concerns over health and safety issues. The increased costs of utilities has also reduced the effect of the savings.
c) Transport (+£10,500)
The increase in this budget is due mainly to the purchase and hire of agricultural plant and equipment for the Farm and the Landscaped Gardens and Parkland.
d) Supplies & Services (+£24,400)
Additional provision has been made for the increased cost of ICT , marketing, postage, and extra stock for the shop and Tea Rooms. Unforeseen costs have been incurred in replacing equipment such as the walk-in refrigerator in the Tea Room. This has been partially offset by savings on planting schemes, cycle hire, education materials, and conference materials and equipment. As usual, the Management Team is taking every opportunity to minimise expenditure.
e) Income (+£400)
Income from visitors is forecast to exceed the budget by almost £25k as a result of the predicted 20% increase in visitor numbers for the year. Income from other sources, on the other hand, is forecast to be down by over £24k on the original budget due almost entirely to the unrealised income from conferences which has been partially offset by increases in income at most other operational sectors from sales and grants.
2 2007/08 Revenue Budget
2.1 The budget for 2007/08 has been prepared on the basis that the Park will return a surplus of £36,922. Increased income should be generated as there are two Easters in the 2007/08 financial year; an additional Easter should generate about £15,000 in income. This will wipe out the deficit in reserves and show a positive balance of £24,519 in March 2008. However, this balance will then be needed in 2008/09 as there is no Easter in that financial year - so all other things being equal, income is likely to be £30,000 lower in that year. The figures for 2007/08 are summarised in Appendix A and detailed in Appendix C.
2.2 The salaries are forecast to rise by 3.25% due to the yet to be agreed national pay award (estimated at 2.25%) and the notified increase in Employer's contribution to Superannuation. Inflation on non-salary budgets has been applied to only a few budget heads at 2.5%. The inflation on the requested contributions from the partners has been restricted to 2.5% which reflects the efficiency savings made within the Park. This is in line with County Council policy at other similar Joint Managed Committees.
2.3 The Joint Management Committee could consider freezing partner contributions in 2007/08. This would reduce the Park's reserves at the end of the year and benefit the finances of the partner's instead. This course of action is not recommended as it does not take account of the need to build up reserves to deal with longer term difficulties faced by the Park (such as no Easter in 2008/09) or unplanned on off expenditure necessary to keep the Park operating.
2.4 The major variations from the 2006/07 revised budget are as follows:
Employees (+£95,500)
Nearly £30k of this increase is due to the pay award and increments. The majority of the additional budget is because of appointing to the new Conference, Functions and Events post, appointing to the currently vacant ranger posts, increasing staffing in the Tea Rooms and the Gift Shop. This is funded by the forecast increase in income.
Premises (+£30,000)
This increase is due mainly to the inclusion of the planned refurbishment of the Tea Rooms and the Gift Shop, and to more expensive utility costs.
Income (+£149,900)
Most of this increase (£121k) is due to the forecast rise in visitor numbers (only partly due to the two Easters) and the higher entrance charges. Income from grants and sponsorship is forecast to rise, but the greatest increase (other than from gate receipts) is predicted to be in the commercial areas of catering, shop and conferences.
2.5 The Partner contributions are allocated against the Management budget. The Entrance income is apportioned across the Management and Operations budget. Sales and grant income are shown against the relevant Operations, Education and Commercial budgets. The Commercial operations are expected to generate their own income and will make a contribution to the overall running costs of the Park, and to the Reserves.
2.6 Members may recall from several years ago the aspiration to reduce the contributions from the partners to below 50% of the Park's gross expenditure. This was achieved in 2000/01 prior to the Park being hit by Foot and Mouth. Below is a table showing how the contributions have dropped as a percentage of the gross expenditure from 57% in 1998/99 to 26% in 2005/06, with the intention of reducing it to 22.8% in 2007/08. It is interesting to note that although gross expenditure has risen by 111% between 1998/99 and 2005/06, the total partner contributions are lower by 2.5% in cash terms, and by over half as a proportion of the gross expenditure. This is an indicator of the success of the Business Plan, and the significance of the income derived from the commercial operations at the Park.
Gross Exp Contrib'ns %
1998/1999 393,771 224,699 57.1
1999/2000 388,115 220,489 56.8
2000/2001 426,114 205,889 48.3
2001/2002 469,601 313,889 66.8
2002/2003 507,249 205,834 40.6
2003/2004 604,114 207,243 34.3
2004/2005 737,610 212,700 28.8
2005/2006 832,880 219,082 26.3
2006/2007 885,200 225,653 25.5 budget figures
2007/2008 1,013,900 231,322 22.8 budget figures
RECOMMENDATIONS
1. That the revised budget for 2006/07 as shown in Appendices A and B be approved.
2. That the partner contributions for 2007/08 as shown in Appendices A and C be approved.
3. That the budget for 2007/08 as shown in Appendices A and C be approved.