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Responses to "Fully Funded Cemetery Maintenance Funds - Now and Forever?"

Responses to "Fully Funded Cemetery Maintenance Funds - Now and Forever?"
by David Zinner, Executive Director of Kavod v'Nichum

Dennis N. Britson, Executive Director, North American Cemetery Regulators Association

The North American Cemetery Regulators Association (NCRA) has discussed the issue of laws and regulations designed to assure adequate financial resources for the future care and maintenance of cemeteries. This issue is of interest to our membership. In fact, it was the subject of a panel and open forum discussion at the NCRA's 2001 conference in New Orleans. The participants included John F. Llewellyn, author of "A Cemetery Should Be Forever," and Hayden Burrus, an actuary. [See How to Put Aside Enough Now To Cover Cemetery Costs Later at]

I've already circulated your article as an email. We can also print this or other articles/editorials on the subject in our newsletter. We welcome your thoughts and comments. If you would like to discuss this or other matters further, I would be happy to discuss them by email or telephone.

John S. Gerard, Deputy Director of Subdivisions, State of Arizona Department of Real Estate

As I'm sure in other states, the State of Arizona has laws addressing the creation of an endowment care fund for the continued maintenance of a cemetery. In Arizona an initial deposit is made by the developer of a cemetery. The amount of the deposit is based on the population of the community it intends to serve. Future deposits are required for each sale consummated and are based on the product purchased, such as, a plot/grave, niche or crypt. It is the intent of this fund to be used solely for the continued care of the cemetery and should never be used for the development, improvement or embellishment of unsold portions of a cemetery.

John F. Llewellyn, author of "A Cemetery Should Be Forever", Forest Lawn Cemetery

I would agree with you on a few points.

  1. Many, if not most, cemeteries are not on track to have adequate funds to fully take care maintenance when they are substantially sold-out. I view this as a failing of boards of directors/trustees to fulfill one of their most important duties.
  2. State governments do not review adequacy of trusting requirements. Generally, they set minimums rather than attempt to determine adequacy. The last time the cemetery industry in California proposed increasing the contribution amount, the state Department of Consumer Affairs actually opposed the bill!

However, I would disagree with your conclusion that more government regulation/oversight will help the problem. It is virtually impossible to establish uniform, one-size-fits-all approaches to determining how much should be put into funds for future maintenance. This is because there is great variation in the needs of cemeteries. For example, in the Los Angeles area we irrigate our lawns all year to keep the grass alive and (mostly) green. In other parts of the country, it is accepted practice to rely solely on rainfall to water lawns. Cemeteries vary hugely in the amount of improvements they have. At Forest Lawn we have a very large collection of statuary and complex garden areas. Our maintenance expenses will be higher than another similar sized cemetery in our market area. Similarly, each cemetery has its own idea of what the right level of maintenance is. Some mow quite often, others do not. Some trim around memorials frequently, others do not. Some have large numbers of deciduous trees that create a maintenance problem with fallen leaves in the fall while others have only evergreen trees. The differences go on and on.

I do believe that it is the responsibility of each cemetery's management and governing board to determine what level of funding is right for that cemetery's future maintenance. At the risk of being immodest, in my book, A Cemetery Should Be Forever, I spend many pages talking about endowment care (maintenance) funds and an approach to testing their adequacy. At Forest Lawn, we do an annual projection of fund size, income, and future maintenance expenses. The goal set by our board of directors is to have the fund large enough to cover all maintenance expenses when the cemetery is 80% sold. The theory behind this is that if we are way off on our projections we will still have a chance to correct the situation before we reach the proverbial end-of-the-road.

I don't see this as really being the same as the savings and loan industry problems. States usually set minimum contribution requirements, but leave the decision about amount of funding to the cemetery. States not only just set minimum funding amounts, most do not regulate all cemeteries within their borders. For example, it is estimated that California has over 1,000 active cemeteries. However, only 200 are actually licensed and regulated by the state.

If you have access to past copies of International Cemetery & Funeral Management magazine, Hayden Burrus, an actuary, [see his response below] wrote a series of articles last year on funding care funds. Although I don't think the analysis necessarily needs an actuary, my MBA like financial approach to modeling adequacy of care funds will probably come out in about the same place as Hayden's more rigorous actuarial approach.

Lastly, if the states have a problem with setting adequate standards, I think getting the federal government involved is just asking for complexity and solutions that don't work.

I suspect that at this point I've probably given you more of a response than you wanted, so I apologize for my wordiness. You can probably tell from this response, though, that this is a subject of great interest to me.

Hayden Burrus, HB Actuarial Services, Inc., 100 Northeast 6th Street, Suite 200, Delray Beach, FL 33444 - 561-279-2323

This is an excellent summary of key issues related to perpetual maintenance funds. I agree with all of the points made in your article. I see that the focus of this article is encouraging closer government monitoring of perpetual maintenance funds - a concept I support as well.

Appropriate percentages depend on a lot of things including how early the cemetery began setting aside perpetual care $. One detailed study I performed suggested that 25 to 30% was adequate for that client. I haven't heard of any states with decent legislation.

When I spoke at the regulators meeting, it seemed their general attitude was: "Yes, perpetual care adequacy is important, but we aren't daring enough to be the first state with tough legislation ensuring perpetual care adequacy." I'd be glad to be helpful to you in the future.

Lisa Carlson - Funeral Consumers Alliance

Good article. I copied it to the FCA discussion group.

Doug Kinzer - Florida Cemetery Manager and Consultant - Boca Raton, Florida

WOW is all I can say - your article casts a dim light on the care and maintenance of the countries cemeteries because of underfunded care and maintenance trust funds. You failed to mention that some cemeteries collect care and maintenance monies for the care of memorials placed in the cemetery which adds to the buildup of funds, additionally, I believe the Sate of Alabama and the Commonwealth of Puerto Rico have no provisions for care and maintenance trust funds whatsoever.

I would hate to see the Federal Government get into the cemetery arena since they (current administration) have enough problems of their own trying to figure out if you and I will be able to collect social security when the time comes, instead, maybe there should be some "advise" handed down from Alan Greenspan to quell this Care and Maintenance Irrational Exurberance!!!!

From what I have seen in Florida, cemeteries that contract out their mowing, cutting and edging are paying around $45/acre/cut so a 50 acre cemetery would pay $87,750 for 39 cuts per year to keep the cemetery presentable. The trust fund earning 4% annually would have to have a corpus of  $2,194,000 which would not take into consideration monies to maintain roads, mausoleums and maintenance of records UMMMM you may have some validity to your report!!!!

David Kaler, Sales Director, Garden of Remembrance Memorial Park, Clarksburg, MD

Great article.