“Watch out for what is better for others.” – Philippians 2:4
OK, so it was just an accounting procedure (as the money was already on our books), but on Friday, Toko Thompson reported to the finance committee of our board of directors that the $4 million loan we received back in October, as part of the federal relief program for businesses (CARES Act), was now entirely “forgiven.” In other words, Toko was able to slide the $4 million from a liability on our books to an asset. When I received Toko’s email announcing that the Small Business Administration had approved our application, I was ecstatic. It was probably the most excited I have ever been about a simple accounting procedure. Yes, we no longer have to repay the $4 million, which is significant, but now we will finish the year in a much stronger fiscal position; for our partners at Wells Fargo Bank, this is particularly favorable news.
Our relationship with Wells Fargo is extremely important – they hold our $40 million debt incurred over the past 15 years to build the Tom Taylor, Haselwood, and Gordon Family YMCAs. Toko works closely with the bank, carefully monitoring our management of this debt and our compliance with the covenants. As Toko reminds us, we will need to achieve a positive net of at least $1 at yearend to comply with a critical bank covenant, something now assured for us with the “forgiveness” of that $4 million. In total, we received nearly $7 million in federal money in 2021, $3 million of which came from the Employee Retention Tax Credit. Though we have seen membership revenue slowly increase since September, it has not been enough for us to satisfy our financial commitments (July 2021 was the only month throughout the pandemic we generated enough revenue to fulfill our commitments). In July, we had the greatest participation in youth programming, and there was no mask mandate, resulting in our highest membership numbers throughout the pandemic. Because of the challenges we faced, the board made the decision to defer the interest payment on our debt until the maturity of the loans, which is in 2039. This decision was made carefully and in collaboration with the bank.
For the past two months, our leadership cabinet, along with the executive directors, have been charting the course for 2022. Since the beginning of the pandemic, Toko has had us focusing on quarterly trends; with so many changes occurring in such short timeframes, the annual framework is virtually irrelevant. In 2020, we projected membership to reach between 60% and 65% of pre-COVID numbers, but the mask mandate kept those numbers much lower. Nevertheless, we are seeing membership inch forward, currently at 52% of pre-COVID numbers. Once again, we will use the 65% pre-COVID number as the projection for membership growth in 2022. It is never easy, or comfortable, to project growth, particularly in an uncertain climate such as we are in, but the team came together and we do believe we are positioned to reach this target.
In building our plan for 2022, we focused on narrowing our key priorities. With our current limited resources, we recognize we cannot do everything. For months, we have been carefully looking at what would best position our Y to grow in 2022 and beyond. We have already invested in virtual programming, and with Michael Marquez, Annie Doyle, and Bruce Caudill leading the way, we will continue to move forward and develop this body of work as a vehicle to augment the membership model. In addition, we are heavily engaged in discussions, exploring opportunities to operate additional early learning centers as a tenant, similar to our current model in University Place. In addition, we are partnering with the Tacoma, Clover Park, and Franklin Pierce school districts to offer more programming to their students (we are continuing to develop these relationships and possibly engage other districts). The final area of development we have been assessing is the covered outdoor arena. We are currently raising funds for new, lighted turf fields adjacent to both the Gordon and Tom Taylor Ys, and we are hoping to raise community interest to support covering those fields. In addition, we will continue to pursue funding support to renovate the Mel Korum Sports Park as we believe it will help us test the outdoor model. Though these are important ventures, they will continue on their current trajectory without investing more of our resources.
As we were working through the process, it became clear: while these areas will help us grow, the most critical area of focus needs to be our staff. For one, the labor market has been making it extremely difficult to fill key positions, especially in childcare, an area that could generate more revenue if we had enough staff to deliver services. The pressure the labor market upheaval has been causing has been painful, resulting in significant turnover in our team; if we are going to hold onto our staff, we need to make changes – in compensation, in learning and development, and in the culture in our association. On Friday afternoon, an email was sent to everyone announcing our commitment to our team. Effective January 1, 2022, a prorated salary adjustment will be made based on when you joined our association, and there will be an increase to 8% in the retirement contribution made by the association. Furthermore, by the end of first quarter 2022, we will complete an individual performance assessment with a merit determination and subsequent salary adjustment recommendation. In addition, we have contracted a third-party consultant to help us begin analyzing our salary structure. When we broke it down, it became evident that this was a serious commitment (and a significant investment), but it was necessary.
In building our plan for 2022, investing in our team clearly needs to be our number one priority. As part of that investment, we have determined we will carefully add people to our team, positioning us to take the necessary steps to grow. Under Scott Smith’s leadership, we will add four new staff to the marketing team. This is a critical step to engage our communities and welcome people back into our centers. In addition to adding staff to position our Y, we restructured our current team to strategically align ourselves to best address our key areas of focus. Membership, program development, school relationships, and our virtual platform all require greater attention, and we felt it was necessary to realign ourselves to meet the needs.
We have worked hard to persevere through these past two years; everyone has leaned in to get us to this place, positioning us to take that step forward into 2022. I am confident about what lies ahead for us because I believe in all of you and your commitment to the team. When it came down to what our number one priority needed to be, it was clear it needed to be about you – to acknowledge the hard work and dedication all of you have displayed throughout this pandemic and to invest in furthering your development. Investing in you is the right use of our resources, and the best plan to advance our Y forward. You are the true difference makers in this organization. Thank you for your commitment.
#OneY #StayStrong #StayWithUs