Treasurer's Report Comments Related to February 28, 2006 Star Hospitality Financial Statements

My comments are relative to the standard Income/Expense Statement, Balance Sheet and some related supporting reports, which have been and will continue to be generated by the Star Hospitality bookkeeping and internal control systems.

The Statements are as of February 28th, the latest statements made available to me in time for this April 10th meeting. My hope is that, in the future, the previous months' financial reports will be made available to me regardless of their level of completion and accuracy.

Nevertheless, our financial reports, when they are published for the Months of March and April 2006 will be assembled using the original budget approved by our previous board of directors. This is the original budget that supports the $150.00 monthly maintenance fee and the $12.00 monthly Lake A Assessment. The corrections to errors in the original budget, noted in our Treasurer's report during our March 2006 monthly meeting, and forming a part of our recorded minutes, will be incorporated into a revised budget.

Later in our meeting today, I will be recommending to the board this revised budget which we have collectively and unanimously indicated preliminary approval in our workshop sessions, since our annual meeting in March. Our actions today, after its' presentation, will make this revised budget effective May Ist, the earliest possible date given the constraints of your new boards' short transition period.

However, for the two months ended February 28th, our Income/Expense Statement received from Star Hospitality reports a bottom line surplus of $22,708.11. This surplus is effectively worth $23.24 of our $150.00 monthly maintenance fee for each of the months of January and February and occurs entirely in our Operating Fund and not in our Reserve Fund. ,

It is my position that these accumulating monthly surplus results of operations of this magnitude are unnecessary, however, they will likely continue through the month of April, as it was not possible to quantify and justify any corrective actions before our proposed revised budget effective date of May I".

One might guess what caused this surplus. Frankly, excess revenues collected in monthly maintenance fees caused it. Simply, expense spending during January and February could not keep up with this level of funding. Consequently, this over-funding fell to the bottom line as this reported surplus. If allowed to continue, this surplus could accumulate to something in excess of $130,000, if our recent spending pattern is any worthy indication!

It is not our objective to make a profit. When we do, we pinch pennies and find ourselves not doing the projects we intended to do in the budget. In short, we shouldn't be funding a budget then denying approval of the request for funds when the project is set to commence.

We're supposed to be a non-profit organization. Our objective is to fund exactly what our anticipated expenditures are going to be. The success of this effort is measured in not how much money we saved to create a surplus, but the value received, on the services provided, for the funds we spent, while maintaining and improving our financial position through adequate and responsible funding of our reserves.

Your Board of Directors will be presenting a revised budget that moves us closer to this ideal.