SR-903-001
F:utilsrvr/users/jhigbee/data:cemetery2000
Meeting: June 13, 2000 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to Adopt a Plan for the Long-term Operation and
Maintenance of Woodlawn Cemetery
INTRODUCTION
This report recommends that the City Council adopt a plan for the long-term
operation and maintenance of Woodlawn Cemetery.
BACKGROUND
The City purchased the Woodlawn Cemetery, located on Pico Boulevard
between 14th and 17th Streets, in 1897. The Mausoleum was purchased in
1976. More than 51,000 Santa Monicans are interred on the 26.6-acre site. The
Cemetery is operated as an enterprise by the Utilities Division of the
Environmental and Public Works Management Department. Services provided
by the Cemetery include selling gravesites, niches or crypt spaces, selling vases,
urns and mausoleum markers, interring and disinterring remains, and placing
markers. The Municipal Code restricts sales of gravesites and crypts to Santa
Monica residents. Sale of cremation properties (niches and urn graves) are not
restricted. Cemetery operating expenses, including the present staff of 6
permanent and 2.4 as needed positions, are significantly supported by sales
revenue.
1
When a gravesite, niche or crypt space is sold, an endowment care fee of 15% of
the cost is collected and placed in the Cemetery Endowment Care Fund or the
Mausoleum Endowment Care Fund as appropriate. The funds are held in a
professionally managed trust account. The primary purpose of these funds is to
produce interest income to cover the costs of maintaining the Cemetery and
Mausoleum in perpetuity when all space has been sold and the facility is closed
to new business. The dividend and interest earnings from the Funds also are
used to offset a portion of current Cemetery operating expenses.
Since 1997-98 the Cemetery Fund has been supplemented by General Fund
loans. Projections of cemetery operating and capital expenses indicate a
continuing operating deficit requiring loans from the General Fund. This report
presents staff?s recommended plan for the Cemetery to achieve self-sufficiency
while maintaining Woodlawn Cemetery as an important community resource.
DISCUSSION
L. F. Sloane Study
L.F. Sloane Consulting Group was selected in August 1996 to conduct a
comprehensive analysis of long-term costs and projected revenues of the
Woodlawn Cemetery and to develop recommendations for the management,
operation and financing of the facility. The study assessed the existing physical,
financial and market conditions and recommended measures to minimize the
potential General Fund subsidy to the Cemetery while providing proper care for
the site and preserving its historic value to the City. The Sloane study
ascertained that the Cemetery had been used prudently and was nearing the end
of its active commercial existence.
2
The Sloane study?s principal recommendations for Woodlawn included the
creation of additional inventory (both gravesites and niche spaces), as well as a
recommendation to more effectively market its services through the development
of a marketing plan. The marketing plan recommendation was intended to
successfully position Woodlawn to compete for business in a market comprised
primarily of profit-based, privately-owned and operated cemeteries.
Not included among Sloane?s recommendations was a strategy for the financing
of capital expenses, nor did the study address cemetery maintenance staffing
levels. Moreover, in staff?s opinion, the Sloane study overstated future sales
projections.
Staffing, Maintenance, and Care
Woodlawn Cemetery receives in excess of 100 visitors daily. On holidays, the
visitor count often exceeds 500. On Memorial Day, cemetery staff prepares the
site for an event honoring veterans organized and presented by local patriotic
organizations. Over 1,000 people visit on this day. Woodlawn has hosted this
event for over sixty years.
Over the years cemetery staffing levels have been adjusted to remain within the
means of the Cemetery Fund. Since 1982, a period characterized by declining
revenues, staffing was reduced from 14.2 FTE to 8.5 FTE, a 40 percent
reduction. Of the 8.5 FTE positions, 4 permanent and 2 as-needed FTE?s
perform maintenance, burials and custodial services. Staffing levels directly
affect the frequency and scope of routine and specialized maintenance.
3
Since the period of staffing reductions began in 1982, approximately 5,000 new
cemetery and mausoleum sites have been added (approximately 300 per year)
and must be maintained. With completion of the new cemetery fence along Pico
Boulevard (part of the Pico Streetscape project), it will be necessary to augment
the level of maintenance and cleaning to preserve the appearance of this new
feature.
In recent years, Cemetery Division and EPWM management staff has explored
and implemented various options to improve cemetery maintenance through
productivity and operational improvements. In FY 1997-98, the Cemetery
property was added to the city?s annual tree-trimming contract. During FY 1998-
99, a portion of the thirty-year-old irrigation system was replaced with a resource
efficient system connected to the central irrigation controller thereby relieving the
Cemetery staff from constant repair and hand watering. The new irrigation
system includes separate piping for future use of recycled water. Two
lawnmowers were purchased in the last two fiscal years replacing thirty-year-old
machines in constant need of repair, and a small mower vacuum built by Fleet
Maintenance replaced the vacuum that was no longer operable.
Even with the increased productivity generated from the above enhancements,
the maintenance needs of Woodlawn?s 26.6 acres present a significant challenge
to the existing 4 permanent and 2 as-needed FTE?s on the Woodlawn
maintenance staff. This equates to 4.43 acres per FTE. In addition to general
grounds maintenance, the Cemetery staff also performs custodial services for the
Mausoleum and maintenance shed (approximately 19,000 square feet), and
performs all work related to burials and funeral services (approximately 1,900
hours in 1998-99). In comparison, the Parks and Sports division maintains the
4
city?s parks and open spaces with a staffing level of 2.76 acres per FTE, and
each Parks and Sports custodian maintains an average of 5,277 square feet
(parks facilities are cleaned four to five times a day).
A total of 9 FTE?s (compared to the 6 currently budgeted) would bring
Woodlawn?s staffing levels in line with current Parks and Sports Division
maintenance standards. The 9 FTE?s consists of 7 FTE positions for grounds
maintenance, one custodial FTE (Mausoleum would not require as frequent
cleaning as parks facilities), and one FTE for burials.
Staff also explored the possibility of outsourcing cemetery maintenance. A
proposal for grounds maintenance was solicited from a landscape contractor
familiar with the city?s landscape maintenance standards. Theservices included
,
in the proposaladdressed only turf, tree, and hardscape maintenanceand did
not include supervision, burials, custodial services, repairing graves, or setting
markers. The annual cost proposed for these services equates to 4.5 FTE
Maintenance Worker I positions. Adding to this one FTE for supervision, one
FTE for burials, and one FTE for custodial needs creates a total equivalent staff
of 7.5 FTE.
In light of this comparison, and given the existing and projected financial
circumstances at Woodlawn, staff believes the conversion of 2.0 as-needed
Maintenance Worker I positions to permanent status, and adding one additional
Maintenance Worker I FTE to permanent status, creating a total maintenance
staffing level of 7.0 FTE, would more consistently achieve the desired
maintenance standards. Additionally, this would be more cost effective than the
outsourcing alternative, as well as serve to enhance the productivity and pride of
5
ownership among the caretakers of the cemetery. Maintenance staffing
requirements are summarized in Table 1 below.
TABLE 1
COMPARISON OF CEMETERY MAINTENANCE STAFFING REQUIREMENTS
(in FTE's)
FY 1999-2000 Budget 6.0
(includes 2.0 as-needed positions)
Parks and Sports Standards 9.0
Outsourcing 7.5
Proposed FY 2000-01Budget 7.0
(permanent positions)
Long-range Operating Scenarios
Staff has developed three operating scenarios which provide alternate means of
addressing the long-term care and operation of Woodlawn Cemetery. The
scenarios are summarized in Table 2, and detailed in the attachments. The
scenarios forecast financial self-sufficiency and repayment of interfund transfers
at varying horizon dates.
Scenario One
In Scenario One, the Cemetery would cease all sales in 2001-02. This is
essentially the cemetery closure scenario.
However, there are approximately 1,400 properties sold as pre-need and it is
estimated that it would take ten to fifteen years for the burials to take place.
Currently budgeted FTE?s are not reduced in this scenario since maintenance,
6
burials, and office operations would continue. At an appropriate time, the
Cemetery Superintendent position would be eliminated and oversight of burials
would be combined with another position. The Cemetery Superintendent
position could be converted to one or more maintenance positions. Office staff at
some level would continue to be budgeted.
Operating revenues would drop from $386,000 to $49,400 in 2001-02 since no
properties will be sold. The remaining revenue is for marker settings and
disinterments and includes a one percent fee and rate increase per year. After
2015, assuming all the pre-need burials have taken place, marker setting fees
will cease.
Operating expenses are estimated to increase at two percent per year. Capital
improvement expenses are for maintenance only. The Mausoleum Electrical
Repair project (currently on hold) would proceed. The second floor
office/conference room budgeted for $205,000 in FY 1997-98 would not be built.
No new inventory would be developed.
Interest on both the fund balance and outstanding loan amounts from the
General Fund is calculated at five percent.
The endowment care fund principal is assumed to grow at ten percent per year
(6.5% appreciation and 3.5% income). Of the ten percent growth, 3.5 percent is
transferred to the Cemetery Fund to pay for a portion of the endowment care
costs. The remaining 6.5 percent is reinvested in the fund until it grows to
approximately $40 million, when the income exceeds the operating and capital
expenses. In 2023-24 the endowment care fund is projected to reach
7
$40,625,939. The 3.5% income from the endowment care funds ($1,421,908)
will exceed the operating and capital expenses ($1,319,722). In 2024-25, the
entire income and appreciation (10%) is transferred to the Cemetery Fund to
accelerate the payoff of the General Fund loan. Payoff occurs in 2032-33.
The attachment entitled ?Scenario One? details the financial projections.
Scenario Two
In Scenario Two, the Cemetery would cease only pre-need sales. Pre-need
sales account for approximately 60 percent of all sales.
Operating revenues would drop from $389,860 to $157,503 in 2001-02 since pre-
need properties will not be sold. Revenues include a one percent fee and rate
increase per year.
Niche space and gravesites are developed as necessary within the operating
budget. It is anticipated that no new crypts will be developed, as it would require
a significant capital expenditure with minimal return.
The existing Cemetery office and customer reception area would be relocated to
the second floor and a private conference room for customers would be added.
The Mausoleum Electrical Repair project (currently on hold) would proceed.
Two as-needed Maintenance Worker I positions are converted to permanent
status, and one more permanent Maintenance Worker I is added for a total of
three permanent Maintenance Worker I positions. As the approximately 1,400
8
pre-need properties (sold prior to 2000-01) are filled in approximately 2010-11,
the Cemetery Superintendent position will be deleted.
Operating expenses are estimated to increase at two percent per year. Capital
improvement expenses are for maintenance only.
Interest on both the fund balance and outstanding loan amounts from the
General Fund is calculated at five percent.
The endowment care fund principal is assumed to grow at ten percent. Of the
ten percent growth, 3.5 percent is transferred to the Cemetery Fund to pay for a
portion of the endowment care costs. The remaining 6.5 percent is reinvested in
the fund until it grows to approximately $40 million, when the income exceeds the
operating and capital expenses. In 2023-24 the endowment care fund is
projected to reach $41,216,521. The 3.5% income from the endowment care
funds ($1,442,578) will exceed the operating and capital expenses ($1,270,595).
In 2024-25, the entire income and appreciation (10%) is transferred to the
Cemetery Fund to accelerate the payoff of the General Fund loan. Payoff occurs
in 2032-33.
The attachment entitled ?Scenario Two? details the financial projections used
above.
Scenario Three
In Scenario Three, Woodlawn Cemetery is preserved as a community and
cultural resource. Sales continue at approximately 100 per year. Cemetery
fees and rates increase on the average at one percent per year.
9
Niche space and gravesites are developed as necessary within the operating
budget. It is anticipated that no new crypts will be developed, as it would require
a significant capital expenditure with minimal return.
The existing Cemetery office and customer reception area would be relocated to
the second floor and a private conference room for customers would be added.
The Mausoleum Electrical Repair project (currently on hold) would proceed.
Two as-needed Maintenance Worker I positions are converted to permanent
status, and one more permanent Maintenance Worker I is added for a total of
three permanent Maintenance Worker I positions.
Operating expenses are estimated to increase inflated at two percent per year.
Capital improvement expenses are for maintenance only.
Interest on both the fund balance and outstanding loan amounts from the
General Fund is calculated at five percent.
The endowment care fund principal is assumed to grow at ten percent per year
(6.5% appreciation and 3.5% income). Of the ten percent growth, 3.5 percent is
transferred to the Cemetery Fund to pay for a portion of the endowment care
costs. The remaining 6.5 percent is reinvested in the fund until it grows to
approximately $40 million, when the income exceeds the operating and capital
expenses. In 2023-24 the endowment care fund is projected to reach
$42,068,766. The 3.5% interest income from the endowment care funds
($1,472,407) will exceed the operating and capital expenses ($1,419,360). In
10
2024-25, the entire income and appreciation (10%) is transferred to the
Cemetery Fund to accelerate the payoff of the General Fund loan. Payoff occurs
the following year in 2025-26.
The assumptions and conditions used in developing the financial projections are
in the attachment ?Scenario Three?.
TABLE 2
COMPARISON OF SCENARIOS
Maximum Single-Year
Average Annual Cumulative Maximum
Average Annual Capital and General Fund General Fund
Operating Revenue Operating Expenses Subsidy Subsidy
Scenario One
$57,503 $1,184,027 $17,415,765 $566,878 (2001-02)
Scenario Two
$200,450 $1,172,157 $19,761,146 $523,214 (2001-02)
Scenario Three
$460,984 $1,269,721 $5,945,408 $287,367 (2001-02)
In a region where few municipal cemeteries remain, Woodlawn is a significant
cultural asset of the community as it celebrates 100 years of Santa Monica
operation, and it is a prominent landmark in a revitalized neighborhood.
In all three scenarios, financial sustainability occurs when the income from the
endowment care funds eventually exceeds the operating and capital expenses,
excluding any revenue from sales. Cemetery closure (Scenario One) eliminates
sales revenue and significantly increases General Fund dependency. Scenario
Two discontinues all pre-need sales revenue, but includes the personnel
enhancements and capital projects. General Fund subsidy is greater in Scenario
11
Two than the other two scenarios. Scenario Three represents a commitment to
maintaining Woodlawn Cemetery as a community resource for the future
interment needs of Santa Monica residents and their families and represents the
approach and minimizes the total amount and length of General Fund subsidies.
BUDGET/FINANCIAL IMPACT
In Scenario Three, approximately $5.9 million in loans and accrued interest will
be required from the General Fund over the next 12 fiscal years, of which
$987,641 has already been budgeted in this and past fiscal years (FY 1997-98
$360,828, FY 1998-99 $477,103 and 1999-00 $149,710). Payback of the loan
will begin in 2012-13 and end in approximately 2025-26 and the Cemetery will
become a self-sufficient enterprise. If City Council approves this
recommendation, personnel enhancement requests and proposed fee increases
will be submitted in FY2000-2001 proposed budget.
RECOMMENDATION
Staff recommends that the City Council adopt the plan outlined as Scenario
Three for the long-term operation and maintenance of Woodlawn Cemetery.
Prepared by: Craig Perkins, EPWM Director
Gil Borboa, Utilities Manager
Jean Higbee, Utilities Supervisor
Michael Steen, Cemetery Superintendent
Attachments: Scenario 1
Scenario 2
Scenario 3
12