Management Discussion of Fiscal Year 2018 Financial Results

This page provides a discussion of the descriptions and disclosures contained in CHA's fiscal year 2018 audited financial statements and the corresponding fiscal year 2018 Form 990. The discussion is divided into two parts, as follows:

CHA's Financial Condition — Fiscal Year 2018 — This section is management's discussion of CHA's financial results based on the audited financial results. The Form 990 financial disclosures reconcile to the summarized audited financial data. The reconciliation of audited data and Form 990 income and expenses can be found in Section D of the Form 990, sections XI, XII and XIII.

Explanation of Fiscal Year 2018 Salary Disclosures — This section explains the salary disclosures on Schedule J of the Form 990. Note that all salary information contained in Section VII of the Form 990 is a summary of the disclosures on Schedule J. Salary disclosures are not part of the audited financial statements.

CHA's Financial Condition Fiscal Year 2018
According to Generally Accepted Accounting Principles (GAAP), CHA posted a net increase in unrestricted net assets of $4.0 million for fiscal year 2017. This increase consisted of long term investment income and gains of $2.6 million and a surplus from operations of $1.4 million.

Per the Form 990, page 1, the financial results for CHA would appear to be less favorable than those under GAAP. However, the instructions for page 1 require the Association to exclude unrealized gains and losses on long-term investments, which were a significant factor for CHA during 2018 and 2017. Schedule D, page 4, provides a reconciliation between the amount reported on page 1 and the net results per CHA's audited financial statements.

CHA continues to be in strong financial health. As of June 30, 2018, CHA held long-term investments of $36.9 million, which represents funds sufficient to cover more than one year of total budgeted expenses.

Savings in various cost categories and greater-than-budgeted revenues allowed CHA to avoid utilization of any long-term investment resources to support operations, versus budgeted utilization of $1.4 million. The amount of long-term investment resources budgeted to be used is determined by carefully balancing the size and liquidity of the portfolio, strategic priorities, and the ability of CHA's members to pay dues.

Explanation of Fiscal Year 2018 Salary Disclosures
(As reported on Schedule J of the Form 990 for 2018)

Schedule J provides detailed compensation information for certain employees. Specifically, members of the President's Advisory Council are listed as "key employees" if their compensation exceeds $150,000. In addition, the top five highly compensated employees, excluding key employees, are also listed, provided that their compensation also exceeds $150,000.

The descriptions below provide an overview of the composition of the four compensation columns (B, C, D, and E). Note that for Sisters Carol Keehan and Mary Haddad and for Father Charles Bouchard, all amounts in column B, except for certain fringe benefits included in column (B)(iii), were paid to their respective religious orders.

The amounts listed in column (B)(i) represent the employees' base salary, including any adjustments during the year. For example, if an employee received a raise on October 1, 2017, the amount listed in column (B)(i) is the sum of 9 months at the old salary level and 3 months at the new salary level.

The amounts listed in column (B)(ii) are payments awarded under the non-executive performance management program or the executive incentive compensation program.

The amounts listed in column (B)(iii) are: payments in cash in lieu of contributions to the defined contribution pension plan for compensation that exceeds the federal compensation limit for calculating and making pension plan contributions; payments in cash in lieu of contributions to CHA's defined contribution pension plan for those not eligible to participate in the plan due to their membership in a religious order; and other applicable taxable fringe benefits.

The amounts listed in column (C) represent contributions made by CHA into the Association's defined contribution pension plan.

The amounts listed in column (D) represent the premiums paid for health, vision, dental, disability, life and accidental death insurance, less the employees' contribution to the health, vision and dental premiums and less the taxable portion of the life insurance premiums included in column (B)(iii).

Column (E) is a sum of columns (B)(i), (B)(ii), (B)(iii), (C), and (D).