DO WE NEED HIGHER DUES IN SUMMIT HOUSE?  Those who serve on our Summit House Board need and deserve our support. We owners need to help them by keeping all eyes on the big picture. We all agree, dues must be high enough to maintain our property but not so high as to accumulate excessive amounts of reserves. Big reserves are vulnerable to theft and mismanagement. We've already been robbed once. We can help Board members by reminding them management decisions based on the actual history of all projects together are more accurate than those based on speculation about the life of individual assets such as an elevator or our roof.

 

In the discipline of finance, which is a different discipline from accounting, the recommendation to Summit House would be simple: Match the projected total flow of money out for capital projects to the flow of money in from our dues. The recommendation would not be to speculate about the life and cost of individual projects.

 

We can help Board members by reminding them of the concept called "return to the mean (average)." You have all heard of this but as a review, here is an explanation: In random events, extreme numbers are likely to be followed by less extreme numbers. The long-term average is more stable than short-term fluctuations.  

 

In Summit House, we have had years of big spending and years of little. But the average annual amount is remarkably stable. Spending on long-term projects reverts to a mean. Adjusted for inflation, our mean seems not to change.

 

When projects are contemplated in Summit House, it is easy to create the illusion the mean has risen when it has actually stayed the same. My concern is just such an illusion might be coming. Some big projects are contemplated. Let's urge our Board to remember that years of high needs in Summit House have, historically, been followed by years of lower needs. The level of needs returns to the mean.

 

What is our mean? On average, spending for long term projects is $50,000 per year (adjusted for inflation). Our good fortune is that currently, the annual amount available for long-term projects is that number, $50,000. That is, with our current dues we are covering the long-term needs of our building. There may be a time when this is not the case. Until then, our current dues are adequate for the future of Summit House.