Defining Administration Costs Before the Board

At the county board meeting on June 4th Mrs. Virginia Peschke addressed the board members about what administrative costs were.  I respectfully disagree with everything Mrs. Peschke said.  I also wanted to respond with the facts and be able to back them up with sourced data that you can verify.

Mrs. Pescke said:

The McHenry Mental Health Board said they speant six percent on administration and that they were talking about salaries and benefits. And we all know that is the big expenditure and that is what most people think of as administration…

This is her quote taken verbatim and is not out of context.  I would like to supply you with the definition college students around the United States learn when they take accounting.  The textbook is called Introduction to Managerial Accounting and it is published by McGraw-Hill.

The definition of Administrative Costs is located in Chapter One, page 23 and it reads as follows:

Administrative Costs include all costs associated with general management of an organization and not the manufacturing and selling (of a product or service).

There is so much more to administrative costs than just salaries and benefits.  We have building costs and upkeep, the electric bill, water and sewer, computer costs, telecommunications.  The list is long.

I believe Board Member Ken Koehler when he says it is important to know what the facts are… and I really wanted to clarify this statement to the board.

On a personal note, it was really a wonderful experience to stand before and speak to our elected leaders.  It was a very moving moment for me to speak – thank you for the opportunity.