Secretary-Treasurer Financial Report FY20 Q1

Governmental Activities
Secretary/Treasurer’s Summary
Remarks delivered at the Quarterly Meeting – Friday, October 11, 2019

Secretary-Treasurer Arthur “Archie” LaRose

This quarter was very busy with the new Twin Cities Office building acquisition, meetings, and the Constitutional Convention Committee. The Wild Rice season ended with a good harvest that will supply us with delicious Manoomin for the coming year. The pow-wow season was one of our best yet, along with the many other events and happenings that represent the values and commitment of the Leech Lake Band of Ojibwe.

As we end our first quarter of the fiscal year, our financial health remains strong. We have had some obstacles such as an issue with billing the State of Minnesota for services in our Opioid Treatment Program. We are working with the State in an effort to resolve the issue as expeditiously as possible. The issue has not affected current operations and we continues to serve our people at the Opioid Treatment Program.

Our new Cedar Lakes Casino is open and bustling with renewed activity. The Cass Lake area businesses surrounding the new Casino all appear to be just as busy with the renewed traffic to the area. We have also expanded the Leech Lake Transit Program which allows for use of federal and state grants for transporting all employees to their worksites as well as providing better public transportation. Our Tribal Development Division and Leech Lake Financial Services has been holding home ownership informational meetings to assist residents with financing opportunities amongst many other economic development ideas and plans.

We passed the FY 2020 budget with a slight surplus which allows this administration some breathing room as we continue to prioritize the many programs and activities that we operate while keeping aligned with the Band’s mission statements to provide responsible operation of government. We will be starting our FY 2021 budget process in November and we will need your input. During the months of January and February we will hold public hearings in each district on the content of the budget. Your voice is needed on development of priorities and how to commit resources to those priorities.

Our Gaming and State tax and license revenue projections for FY 2020 are:

Where the money comes from:
Gaming Transfers$13,800,000
State Tax/License Revenue$11,500,000
Interest Revenue$300,000
TOTAL$25,600,000
Where the money goes:
Homeland Security $38
Homeless Assistance$2,743
Indian Land Tenure Fndtn $4,516
CC RES/REF $6,214
G-O Vote $6,632
SL LIC $7,374
Inger LIC$7,374
BC LIC$7,374
Bena LIC $7,374
Kego LIC$7,374
SugarPt LIC $7,374
Onigum LIC $7,374
OakPt LIC $7,374
CL LIC $7,374
Mission LIC$7,374
Penn LIC $7,374
TwinCty LIC $7,374
Winnie LIC $7,374
Deer Rvr LIC$7,374
Buck Lk LIC$7,374
Duluth LIC $7,374
Bemidji LIC $7,374
Conservation Enforcement $8,070
Assurance 16 $8,122
THPO NPS 2019 $14,088
Political Action Totals$15,000
Mini-Workers $16,000
Back Pack Project$18,234
MN State Headstart$18,889
Perch Jerk/Contributions$24,443
Land Self Gov $24,503
Special Pow wows $25,906
JOM Admin $28,578
Trib Service$33,110
Honor Guard$38,700
Nature’s Lake – PW$43,419
Inger – PW$44,339
Battle Point – PW$44,886
Toys for Children$45,536
Onigum – PW$46,289
Ball Club - PW $52,497
DMV $56,715
Duluth Office $60,466
PowWow Admin $64,594
Sports 03 $65,578
Comm Devel $68,308
Hert Sites Admin $70,000
Valleyfair $70,209
CCDF 19 $71,753
Labor Day – PW$73,094
Energy $74,208
LL Wild Rice $79,995
Summer Youth Emp$80,653
Memorial Day – PW$89,312
Enrollment$97,106
Radio Station $100,429
4th of July - PW $102,000
Tribal Engineer $119,428
Food Dist Nutr/Other $149,426
SVRpShp$154,324
Sp Ed PtB (Bug – School)$163,019
Legal Serv $168,947
Base (Bug- School)$169,887
Econ Dev $172,132
Twin Cities Office $181,346
Newspaper$189,831
Motor Pool $195,105
O & M $243.914
Elec Board$260.000
Vets Services $279.893
Gov't Relations$284.502
DRM Admin $304.096
Nigaane $357.960
MARRS 2003 (Bug School)$359.653
Billing (Bug School)$374,128
Arts/Crafts/1030$378,380
Herm $411,432
Higher Ed $426,153
Public Relations $488,290
Education Admin.$492,237
Educ Incent Asst (Endowment)$500,000
Land lease $519,342
Traders Bay PUD $546,489
Trib Court $561,904
Youth Activities Pgm$580,226
RTC/SDS $637,672
Tribal Transportation $720,587
PROPERTY ACQ$750,000
Solid Waste $973,492
Const Services$1,394,621
Temp Emply $1,672,164
Tribal Ref $1,767,217
General Fund – RBC / Other$1,687,507
Tax Rebate ($250)$2,425,000
Police $2,937,076
TOTAL$25,917,910

The above represents only the Gaming and State Tax/License revenues portion of the total budget and the portion subsidized to the programs. Many programs also receive other funding through grants from Federal, State and other grants and program fees revenues for an additional $75 million for a total annual budget of $100 million. Also, we used some General Fund reserves from prior years for the large capital items such as the Education Endowment Fund equal to $500,000 and Property Acquisitions equal to $1,250,000.

The Band contributes to other entities operating budgets such as:

Leech Lake Tribal College = $500,000
Leech Lake Boys and Girls Club = $150,000 (Cass Lake)
Leech Lake Boys and Girls Club = $109,238 (Onigum)
Cass Lake Fire Dept = $ 51,508
S. Lake Fire Dept = $ 1,600
Walker Fire Dept = $ 8,000
Deer River Fire Dept = $ 7,200

A long term goal of this administration is to remain as stable financially stable through development of sound business practices and the adoption of adequate internal controls. Annual budgeting is the first step in this long term goal. We invite everyone to ask questions and make comments regarding this report and the following financial statement presentations and to attend our annual budget hearings.

Migwitch!


Leech Lake Gaming
Summary of Operations
Quarter Ending September 2019

Revenue
Once again, revenue has continued an upward trend for Leech Lake Gaming. The first two months of fiscal year 2020 saw revenue totaling $21.4 million. Compared to the previous fiscal year 2019, that is a $943 thousand increase. The 5-year trend shows a revenue increase of $4.8 million. In these two months, you see the closure of the Palace on July 22nd and opening of Cedar Lakes on August 1st, approximately a week and half of no revenue from one site.
Expenses
Comparatively to last fiscal year, operating expenses have had a slight increase of $94 thousand. Payroll expenses and Cost of Goods Sold saw increase, while Operating Expenses saw a decrease. Total expenses through August 2019 was $15.2 million. Cost of Sales were $4.2 million, Payroll expenses were $6.7 million and Operating Expenses were $4.3 million.

Net Profit
Net profit also saw an increase these two months of the fiscal year. Total net profit equaled $6.1 million, compared to last year of $5.2 million that is an $849 thousand increase. Similarly, if you are looking at the 5-year trend, that is an increase of approximately $1.4 million.

Forecast
From revenue to expense to net profit, all areas saw increases. Even with the closure of the Palace, where we didn’t see revenue from one casino for about 10 days, we have seen increases in revenue and profit. Cedar Lakes has been doing well in bringing in additional revenue and profit for Leech Lake Gaming, with hopes that will continue to trend upward for profit.