HB 2360: An Analysis

Earlier this year the Washington state legislature passed HB2360 which amends the preneed funeral and cemetery trust laws to require that the assets of such funds be invested under a prudent investor standard. The amendment was signed by the Governor on March 30, 2012 and became effective on June 7. Before the amendment was passed, preneed trust assets were only permitted to be invested in insured accounts in a public depository or in federally insured instruments while the investment of endowment care trust funds were governed by the Prudent Investor standard. This new standard for preneed assets allows the trusts to be invested in more than one asset class, thereby minimizing risk through diversification, and provides a uniform investment standard for all funeral and cemetery trust assets. The following summary briefly explains why HB 2360 was proposed and passed.

The prudent management of investments begins with understanding the nature of a portfolio's liabilities. More importantly, matching assets with a portfolio's liability is critical to maximizing return while minimizing risk. For example, liabilities that are short-term in nature would generally lead a prudent inestor to invest in lower return/lower risk investments. On the other hand, long-term liabilities allow prudent investors to allocte assets to higher return/higher risk investments given this more lengthy investment horizon.

Given the longer-term nature of the liabilities typically associated with preneed funeral and cemetery portfolios, it is believed that such portfolios should have the ability to invest in a prudent allocation of non-government securities (i.e. U.S. Equities, International Equities, Investment Grade Corporate Bonds, etc.) to ensure that assets are positioned to grow at a pace that will meet liability requirements. Without the ability to invest in higher returning asset classes, the Trustor and Beneficiary both risk failing to meet the required investment objective of earning enough return to meet future liabilities.

The pre-amendment investment requirements, however, emphasized lower volatility strategies such as government fixed income securities. While these instruments may incur lower volatility in the short-term, we believe they impose a greater risk for preneed funeral and cemetery funds - insufficient growth of principal. Under the old law, it was almost impossible to diversify the preneed portfolio among a variety of assets and Trustors had no choice but to put all their assets in one investment basket. The new investment standard, however, gives the investor the option to diversify.

To support this perspective, long-term  historical data reveals that fixed income has provided investors little growth in excess of inflation. Instead, investors have been required to invest in equities to achieve higher returns.

Source: Ibbotson Associates and LCG Associates

While the risk of loss of principal should always be considered for long-term investments, it is as important to consider the risk associated with  not achieving growth of principal over a long-term time horizon. Ultimately, a portfolio's long-term total rate of return must be sufficient to cover its liabilities, as well as inflation and expenses. By adopting the prudent investor standard for the investment of preneed funeral and cemetery assets, the legislature has given funeral homes and cemeteries the opportunity to invest in a manner which more appropriately meets their needs.

Thanks to Steve Schacht from Service Corporation International for providing this information.

Pet Burial Trends

Today and in the future 

As a fourth-generation pet cemeterian, I often think long and hard about what the future will hold for pet cemeteries. I have to. Like everyone else who has an ownership stake in a cemetery, I have to plan for the future and make sure that the decisions I am making today will be in our long-term interests.

As I speculate about the future of my family's business, I am keenly aware of forces working in our favor, as well as some trends we will have to be aware of in order to ensure continued success. This article examines several topics that have been on my mind lately when thinking about how to best care for my family's business.

First and foremost, cemeteries have to search for ways to maximize revenue. I am absolutely shocked by the number of established pet cemeteries that do not collect some sort of maintenance fee, eithre annually or up-front, to provide for continued care of the land. Talk about digging yourself a hole!

A cemetery is an expensive endeavor. Even if your operating revenue is enough to provide for maintenance, this might not always be the case. Charge a maintenance fee, and take every measure you can to secure your cemetery's financial future. There are others in the profession much more educated than myself when it comes to financial planning, but it should be plain to see that if there is an opportunity to collect revenue that will help protect the future of your cemetery, you should take it. It is an obligation you have to your clients. You won't get the time back, but you almost certainly incurred considerable expenses having to do with the maintenance and upkeep of your cemetery.

Another way to boost revenue is by implementing a decoration program or providing additional services. Despite continuing concerns about the economy, 2011 was our best year for decorations. People ordered thousands of decorations for the gravesites of their pets, including boughs, sprays, wreaths and hanging baskets. We also offer fresh sod for existing graves if the pet owner wants new grass. In short, it isn't terribly difficult to raise new revenue from existing clients, but you have to give them the items and services they want.

Starting a Pet Cemetery?

Your plan has to be airtight, with little to no margin for error, if you are planning on starting a pet cemetery from scratch. In fact, unless you had a very compelling business plan, land that you could use for this purpose (that you are already obligated to own or maintain for the foreseeable future), and a quantifiable demand for pet-burial services in your market, starting a pet cemetery is going to be a challenging proposition. After all, a cemetery should be forever. read more

ICCFA testifies in support of combos

ICCFA Executive Director Bob Fells, who is also association general counsel, and Christine Toson Hentges, CCE, of Tribute Companies, which operates cemeteries in Wisconsin, at the Wisconsin State Capitol ready to testify in behalf of ending the ban on combination operations.

 On March 6, a hearing room in the Wisconsin State Capitol at Madison was packed with supporters and opponents of Assembly Bill 523, which would repeal the state's longstanding (since 1933) prohibition on jointly owned cemeteries and funeral homes. Wisconsin and Michigan are the only states that completely ban the common ownership of cemeteries and funeral homes, even if they do not operate in tandem. The ICCFA testified in support of the bill and was represented by Bob Fells, executive director and general counsel. Fells noted that ICCFA has members in Wisconsin on both sides of the proposed legislation.   

The ICCFA Model Guidelines for State Laws and Regulations were approved by the Board of Directors in 1998. Among the 28 guidelines is one that supports the concept of joint cemetery-funeral home establishments. The ICCFA testimony in Wisconsin is consistent with the association's long-held position. More than 40 states permit such combined businesses and most states have never restricted these entities. The earliest "combos" date back to the 1930s, and possibly earlier. The ICCFA testimony stated, "Today, joint cemetery-mortuary operations are controversial only in the few states that do not permit them."    

Following the hearing, Fells made the following observations: "Most ICCFA members are familiar with the reasoning in favor of combos but we haven't heard much from the other side that opposes combos. As I listened to the testimony against the bill, the more effective witnesses suggested that they were not so much 'anti-combo' as anti-change. One witness stated that the market for traditional funerals and traditional burials is already in decline due to the consequences of cremation and other societal changes. Therefore, to change the market dynamics at this point when the existing market is soft if not fragile, is not a good idea. This is perhaps the most cogent argument in favor of maintaining the status quo.  

Read the complete testimony here. 

 from ICCFA Magazine for May 2012 reprinted in its entirety with permission   

Wisconsin Combo Repeal Bill Dies in Committee

Madison - The Wisconsin State Assembly's Consumer Protection and Privacy Committee has decided not to vote on Bill 523, which, if passed, would have repealed the state's anti-combo law prohibiting a licensed funeral director from operating a funeral establishment or mausoleum in a cemetery and prohibiting a funeral home from being located on cemetery grounds.  

The bill was introduced February 3, 2012, by Reps. Evan B. Wynn, Joel Kleefisch and Chris Kapenga and referred to committee. At the February 28 hearing, which was attended by a reported 100 funeral directors opposed to the measure, along with a number of proponents, members decided not to vote it out of committee.  

The Wisconsin Funeral Directors Association had asked its members to call their legislators to express opposition to the bill. The association's position is that the bill would: 

• Decrease consumer choices.
• Diminish federal consumer protection.
• Undermine Wisconsin consumer protection. 

While the bill is dead for the current legislative session, proponents of the repeal expect the bill to be re-introduced in future sessions. from the NFDA Director magazine May 2012

INTRODUCING A NEW SUPPLIER MEMBER:

In today's cost-conscious environment, every penny counts. GroupSource is a group purchasing organization (GPO), giving smaller companies an opportunity to compete when they can do business at aggressive price points.

Initially formed over 16 years ago to give small physician practices access to hospital pricing, GroupSource has since evolved to offer price discounts on goods and services to both medical and non-medical firms.

GroupSource has national contracts in place with corporate vendors, and is the only GPO in the country which audits those vendors. Popular categories experiencing savings include: Office Products, Medical/Surgical Supplies, Janitorial/Cleaning Supplies, Credit Card Processing, Health Insurance, Forms/Printing, Laundry/Linen Services, just to name a few.

Recent cost studies for funeral homes in Washington and Oregon show GroupSource savings of 35% on medical and cleaning products, 17% on office supplies and 10-20% on print and promotional items.
 
GroupSource offers a free cost-analysis service, giving a line-item detailed report on how our program can save you money. Please contact Laurie regarding categories you feel could use some "sharpening." As a new supplier member to WCCFA, our goal is to keep your funeral home profitable.
 
Laurie Fowlkes
GroupSource - Northwest Account Manager
T 503-277-3700     F 503-761-7083  [email protected]  

Find a grave? Design a cemetery tour? There's an app for that.

If you visit West Laurel Hill Cemetery in Bala Cynwyd, Pennsylvania, don't waste time looking at paper maps in order to find someone buried there. Instead, pull out your smartphone and get diections to navigate directly to the grave. You can do this because West Lauren Hill is the first cemetery to go mobile on a smartphone or tablet device, thanks to another Pennsylvania company, webCemeteries.com.

Other cemeteries have started to follow West Laurel Hill's lead, including Allegheny Cemetery and Gethsemane Cemetery in Pittsburgh and Reading, Pennsylvania, respectively.

The app is fundamentally transforming the way these cemeteries locate graves, serve their fmilies, memorialize the deceased, provide walking tours, create work orders, index and map trees, access documents from the field and more.

Families can create a digital memorial with their loved one's life story, pictures and videos, electronically linked to the longitude and latitude of the grave, viewable from a mobile device. The mobile app relies on the site's longitude and latitude, a reference point that will never change.

At West Laurel Hill, every single grave, whether or not it has a physical marker, has a digital memorial that can be used to navigate to the physical gravesite and to view the life story, pictures, videos and memories shared by friends and family. If the deceased recorded a message, that video can be played.

Helping the public use the app

Each cemetery allows the public to use the app in different ways:

• At West Laurel Hill, visitors can sign a waiver to borrow a tablet device and roam the grounds, navigating to burial sites.
• Allegheny Cemetery offers tablets to visitors and also offers the free app on the Android market. In the first 30 days of availability, more than 140 people downloaded the app.
• Instead of relying on paper pamphlets for walking tours, cemeteries can let their visitors use the app to navigate through pre-loaded walking tours. West Laurel Hill has had success with several tours, including "Congressional Medal of Honor Winners": "Chocolate, Candy and Cough Drops": and "Baseball." It plans to create personalized tours for families with many members buried there.
• West Laurel Hill worked with the families of the famous residents in their walking tours to create short videos and stories to be included in the app. They are now offering this video and tribute service to all of their families through a "legacy" program. Counselors have contacted recent lot holders and offered them the chance to submit photos and stories, or to come to the cemetery and create videos. click to read more

County arranges burial

in a last act of kindness 

Many of King County's homeless die without knowing who will bury them, let alone memorialize them.

That was the case for most of the 154 people the King County Medical Examiner's Office buried Wednesday (June 13) at Mount Olivet Cemetery in Renton.

They weren't without mourners, though. Nine religious leaders and almost 50 people huddled together for the burial ceremony surrounding a plaque that read: "Gone but not forgotten, these people of Seattle, 2012."

More than 50 people gathered for services for 154 people buried in a common grave at Mount Olivet Cemetery

Among the mourners were a small circle of homeless advocates who make sure the remains are laid to rest with a burial ceremony, instead of being unceremoniously pit in the ground.

One of those advocates is lead investigator for the King County Medical Examiner's Office, Joe Frisino.

He has coordinated King County's Indigent Remains Program since 2000 and since 2003 has been helping to organize burial ceremonies - something not legally required for disposal of the remains. The ceremonies take place about every two years, said James Apa, a spokesman for Public Health-Seattle & King County.

It isn't the norm for government agencies to organize burial ceremonies, but municipalities from as far away as Florida and New York have called to learn more about how King County handles unclaimed bodies, Frisino said. Kitsap County has recently adopted the practice.

"Some people call the office saying, 'I've been looking for this relative for years,'" Frisino said. "I'll send them clips and pictures of the ceremony, and many of them tell me it's very reassuring that they weren't just discarded somewhere."

Others who are buried through King County's Indigent Remains Program are remembered best by the people who spent time helping them in Seattle.

Mary Larson, a nurse at Pioneer Square Clinic, remembers Horace Varnon, one of those buried Wednesday, as a patient and subject of a colorful portrait she painted in 2005.

She often paints portraits of homeless patients then sells them to raise money for the Indigent Remains Program's burial plaques and benches. She had a photo of Varnon's portrait at the burial.

A lectern holds a picture of Horace Varnon, one of those buried June 13 under the Indigent Remains Program

She recalled asking Varnon what he wanted people to know most by looking at him.

"He tilted his head back just like in that picture and said, 'That I'm a survivor.' And he just kept on repeating that," Larson said.

"I guess it was a little ironic to see his name on the list of people who would be buried this year, but he was such a bright and bold person even though he was regularly sleeping in a car." Article by Alexa Vaughn for the Seattle Times June 14, 2012 reprinted in its entirety with permission. Photos by Dean Rutz for the Seattle Times.

Honoring a friend for 50 years

INTRODUCING A NEW SUPPLIER MEMBER:

The Brickman Group

Pet Burial Trends continued 

In today's world, I think the prospect of starting a pet cemetery makes the most sense in cases where the cemetery is to be tied to a human cemetery or planned for in conjunction with a pet crematory. Those starting pet cemeteries must understand that there will be a certain period of time during which it will be difficult to attain a critical mass. What this means is that until the cemetery is somewhat established, and until it has been around for a period of time, you may have difficulty attracting business. Pet cemeteries often face scruitiny related to staying power. For newer cemeteries, this may be especially true.

In order to be viable, a cemetery started from scratch must be a combination operation, meaning that the cemetery also provides cremation options. A crematory can stand on its own, but a pet cemetery is increasingly less able to do the same. As we have learned through experience, the two complement each other very well. We are even able to capture business from existing cemetery clients and current cremation clients when they change their minds.

At least once a month, a person who has decided to be present for the cremation of his or her pet decides, after seeing our grounds in person, that burial is the better option. Furthermore, when many of our existing cemetery clients decide that they would like a pet cremated, we are the first call they make.

Current trends favor cremation on both the human and pet side. What brings me comfort is knowing that those in pet loss are already dealing with a cremation rate that outpaces conventional burial in a pet cemetery nearly 100 to one. It's probbly not going to change much. There will always be those who choose to bury their pets no matter what. There still may be room for growth in conventional pet burials as pet ownership rates increase and society becomes more accepting of memorialization of pets. What will be key is seeing if the cremation rate over the very long term will be higher than it is now or if it will decrease; be prepared for either circumstance. Furthermore, green burial and alkaline hydrolysis could play a fairly significant role in the ration of burials to cremations, depending on how the public receives them.

Green burial is promising for cemeterians because it offers the ability to reuse land over time. Acreage is not limited by the total numbr of burials but rather by the rate at which the land can effectively handle burials. There is also the potential to drastically reduce upkeep and maintenance costs. Established pet cemeteries may want to look at adding green burial options at their facilities. For new pet cemeteries, green burial may be a lower-risk option due again to the possibility for lower startup and up-keep costs.

Finally, alkaline hydrolysis could very well be a game changer for the death-care industry if manufacturers could produce the number of machines at the necessary price point to spur widespread awareness and acceptance. Equipment manufacuters may want to explore pushing alkaline hydrolysis in the pet market first. After all, baby boomers still have a number of pet deaths left in their lifetimes. What better way to spur awareness and acceptance than to make it an option for our animal loved ones?

Whatever the future holds, I am certain that things will only get better for the pet owner from here. There are more death-care options than ever before, as well as an increased societal acceptability associated with these memorial options. I hope that whatever comes our way, we are able to make the decisions that preserve and protect our cemeteries forever. Article by Jon Remkus for American Cemetery magazine March 2012 reprinted in its entirety with permission

Washington State Funeral and Cemetery Board

WSFDA: Washington State Funeral Directors Association

ICCFA: International Cemetery, Cremation & Funeral Association

CANA: Cremation Association of North America

NFDA: National Funeral Directors Association

CAO: Cemetery Association of Oregon

OFDA: Oregon Funeral Directors Association

MBNA: Monument Builders of North America

PNMBA: Pacific Northwest Monument Builders Association 

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SEEKING INTERNSHIP

My name is Rebecca Emmert, I am a recent graduate of the Pittsburgh Institute of Mortuary Science, Class 143, where I served as the Student Senate President and graduated with a degree in Funeral Service Management. During my education at PIMS, I received my ICCFA Cremation Arranger Certification and the CANA Crematory Operator Certification. I have an extensive customer service and sales management background and am currently seeking an internship as a Funeral Director and Embalmer in the Seattle area.
Please contact me at [email protected] or call 412-657-7811.