Council Mergers/Reductions Post Bankruptcy

[1980Scouter]

How many LC are going to have to merge after making their contributions? Many rely on interest from investments to fund a large portion of operations. 

Take away most of the investment earnings and they are in trouble. 

[Eagle94-A1]

On 4/22/2023 at 8:45 AM, 1980Scouter said:

How many LC are going to have to merge after making their contributions? Many rely on interest from investments to fund a large portion of operations. 

Take away most of the investment earnings and they are in trouble. 

Actually in one set of court documents, National plans to reduce the number of councils by 2/3s.

[vol_scouter]

1 hour ago, Eagle94-A1 said:

Actually in one set of court documents, National plans to reduce the number of councils by 2/3s.

That is about what I remember the BSA having in a document regarding how to be financially solvent going forward.  At first this did not seem to make much sense.  There have been in the past a few small councils that the BSA had to support, and I have no information that those councils became financially solvent before bankruptcy.  So forcing a merger for those few councils would seem to be something that the BSA would have to do.  However, that is a handful of councils not going from ~250 to ~80.  All other councils are independent, so they do not cost the BSA.  Why force mergers?  My explanation is in the merger, the BSA might be able take control of some of the councils to be merged and to then sell excess properties (camps, service centers, etc) to help to replenish the loss in liquidity following the bankruptcy.  This is simply my thoughts having no information to support my theory.

[Eagle1993]

1 hour ago, vol_scouter said:

 My explanation is in the merger, the BSA might be able take control of some of the councils to be merged and to then sell excess properties (camps, service centers, etc) to help to replenish the loss in liquidity following the bankruptcy.  This is simply my thoughts having no information to support my theory.

Most bankruptcies allow businesses to lower their debts and exit in better financial health.  BSA is exiting this bankruptcy, addressing the debt of the past sexual abuse, but not really addressing anything else.  They are in far worse financial shape than they entered.  They took out massive loans on HA bases, spent their endowment and have far less cash on hand ... this with about 1/2 the registered members they entered bankruptcy.

So, National BSA likely needs to pull in more cash quickly and member fees won't do it.  I see two paths.

1) Direct donations ... in the hearing, there was mention of a need to immediately raise $400M in donations within 1 year (at the National level).

2) Council payments ... I expect National sees councils having funds in endowments & property (even after bankruptcy).  They easiest way for them to access that is to increase the council annual registration fee.  BSA can force council consolidation by greatly increasing that national charter fee (10x, 100x, etc).  I expect that would result in massive consolidation of councils without National BSA having to work through the specifics. 

They had a target of 80 total councils but changed that to a more generic target of council optimization.

These are just guesses based on hearing a year ago, so we will have to wait and see what really. happens.  I'm sure their plans & strategies have been refined over the years.

[Eagle94-A1]

25 minutes ago, Eagle1993 said:

2) Council payments ... I expect National sees councils having funds in endowments & property (even after bankruptcy).  They easiest way for them to access that is to increase the council annual registration fee.  BSA can force council consolidation by greatly increasing that national charter fee (10x, 100x, etc).  I expect that would result in massive consolidation of councils without National BSA having to work through the specifics. 

(sarcasm on) My council should be rolling in the dough. They sold one camp for over 10x the court appraised value, and that paid more their share of the settlement. (sarcasm off)

Unfortunately councils will pass on their costs to the Scouts, making it more prohibitive for some folks. 

And some council are in denial about mergers. I am a rumor-monger for bringing that up at a public meeting. Funny thing is, so far all my "rumors" are turning out to  be true.

For that I am thankful to everyone here.  I get more accurate and timely info here than in my council. Heck I found out about the 2017 membership survey here, and my SE was not going to do anything about it until others started posting it on social media.  

 

[fred8033]

Merging councils is long overdue to reduce cost and benefit from economies of scale.  If anything, bankruptcy delayed some mergers and bankruptcy could help national by driving more mergers.

Edited April 24, 2023 by fred8033

[vol_scouter]

34 minutes ago, fred8033 said:

Merging councils is long overdue to reduce cost and benefit from economies of scale.  If anything, bankruptcy delayed some mergers and bankruptcy could help national by driving more mergers.

It only reduces cost to the BSA for those very few councils that are not solvent.  Otherwise, councils just pay money to the BSA for charter fees and membership.  Do you know of somehow else that a small, marginally performing council costs the BSA?

[fred8033]

13 minutes ago, vol_scouter said:

Do you know of somehow else that a small, marginally performing council costs the BSA?

Registrars are national employees.  A small council might need one or two.  A larger council can function smoother with 2 or three.  I believe there are a few other similar national roles.

Economies of scale is not just national cost.  It's variety and quality.  Small councils can't offer the number of camps or training or opportunities.  Larger councils can benefit by targeting objectives that small councils can't staff correctly.  Many, many reasons.  It's not 100% about cost.  By improving quality, then scout retention and national membership goes up.  That helps the bottom line.

[mrjohns2]

45 minutes ago, fred8033 said:

Registrars are national employees. 

I don’t believe this is the case with our council. We have 2 registrars at this point, half the year both focus on registration and half the year they focus on camp registrations. 
 

At one point, some councils paid a fee to a national registrar service where their registrars were basically outsourced to national. Our council did not do that. 

[vol_scouter]

48 minutes ago, fred8033 said:

Registrars are national employees.  A small council might need one or two.  A larger council can function smoother with 2 or three.  I believe there are a few other similar national roles.

Economies of scale is not just national cost.  It's variety and quality.  Small councils can't offer the number of camps or training or opportunities.  Larger councils can benefit by targeting objectives that small councils can't staff correctly.  Many, many reasons.  It's not 100% about cost.  By improving quality, then scout retention and national membership goes up.  That helps the bottom line.

At least in my home council, the registrars are paid by the council.  From my knowledge of National, that is usual but I really do not know. for certain.

So I can understand having healthier councils can result in better program and hopefully increased memberships and improved retention.  I think that only goes for some mergers as when a council becomes too expansive geographically, the areas that are far from the council office have less involvement and therefore less fewer members than would be expected.  If my state goes from 6 councils to 1, then the second, third, fourth, and fifth largest metropolitan areas would lie more than two hours drive from the largest city where the logical council office would be located.  It would lose me as a volunteer.

[fred8033]

13 minutes ago, mrjohns2 said:

I don’t believe this is the case with our council. We have 2 registrars at this point, half the year both focus on registration and half the year they focus on camp registrations. 
 

At one point, some councils paid a fee to a national registrar service where their registrars were basically outsourced to national. Our council did not do that. 

Fair enough. I've been out of the scout office too long.  I swear they were, but maybe it's only the scout shop employees.  I thought registrars were too.  

Goes to show my knowledge is fading.  Perhaps time to ride into the scouting sunset.

[mrjohns2]

Just now, fred8033 said:

maybe it's only the scout shop employees.

Many of these are national employees. Ours are. I have heard some aren’t. I assume that is for low volume, or marginal operations national chooses not to staff. Then the council would be the reseller. 

[Eagle94-A1]

52 minutes ago, mrjohns2 said:

Many of these are national employees. Ours are. I have heard some aren’t. I assume that is for low volume, or marginal operations national chooses not to staff. Then the council would be the reseller. 

Actually it is the reverse. Many shops are actually "council distributorships" meaning they are council owned and they have council employees running things.  National shops actually rent space from the council and national pays the workers.

[Cburkhardt]

Mergers.   We will see many of these and for good reason.  The principal reason is to being higher-quality program resources in the form of personnel (volunteer and professional) and facilities. 

The days of the council service center being a critical location for meetings and other activities are long over.  These mostly-underutilized locations are often oversized due to legacy staffing levels.  With Zoom meetings having largely replaced shorter meetings that used to take place there, and mail order having replaced the need for in-store stocking at the service center, the better option is to have smaller rented locations at multiple locations rather than a larger service center.  Distance from a service center is not the issue it once was.

Mergers used to be opposed by unit level Scouters for the sole reason that these placed council camping properties at risk of being sold.  The bankruptcy changed that dynamic, with many of the marginal properties already having been sold to fund the trust.  My sense is that people have moved on from insisting that marginal properties be retained at all cost.  People want fewer and upgraded properties and one way to do that is to merge.

Finally, the willingness of well-run councils to merge will evolve.  Councils that are known for great operations, finances and pristine properties are not interested in merging with nearby councils known for bitter infighting, worn out camps and loads of debt.  I foresee some poorly-run councils lacking merger partners and needing to liquidate before well-run councils are going to be willing to absorb those geographies.  A council that worked hard to survive the bankruptcy and institute best practices is not going to want to introduce unnecessary post-bankruptcy risk in the form of volunteer leadership that has demonstrated shoddy YPT enforcement. 

The merger process will continue to weed-out poor performers the way the bankruptcy has.

[Eagle94-A1]

1 hour ago, Cburkhardt said:

Mergers used to be opposed by unit level Scouters for the sole reason that these placed council camping properties at risk of being sold.  The bankruptcy changed that dynamic, with many of the marginal properties already having been sold to fund the trust.  My sense is that people have moved on from insisting that marginal properties be retained at all cost.  People want fewer and upgraded properties and one way to do that is to merge.

Not all camps sold were "marginal." I know of one camp that until council shut it down for 9 months, was subsidizing the other 2 camps the council owned. Why sell it you ask? The camp was prime real estate, despite what the court appointed appraiser listed, and the PTB wanted the money. That camp paid the council's share of the lawsuit, and then some. And of course all the equipment that the OA and others had donated over the years was taken away while the camp was still in use. Heck the council took equipment that did not belong to them, stuff that volunteers owned and were using to maintain the camp since the council stopped maintaining it before the sale, despite it still being used.

As for the other "marginal" camp sold, they had more attendance at that camp than the "primary" camp that they are keeping. Improvements were being made by the volunteers up to a week before the sale.

The reason why folks at the unit level in my area have been opposed in the past was not because  of camp sales, but rather customer service. As someone who volunteered at the council level of a Metro council, coming to a to work in a rural council that was larger geographically, but a much, much smaller population,  there were challenges that my volunteers and I faced, that I would never have imagined. Customer service is a problem, and sadly over the years it has slowly gotten worse.

Now folks in my area are begging for a merger. Customer service cannot get any worse.