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The Effect of Increased Costs on Cemetery Charges

      
Date Published: 
September, 1920
Original Author: 
J.M. Driscoll
Brookline, MA
Original Publication: 
AACS Proceedings of the 34th Annual Convention

Cemeteries render certain services which may be divided into two classes: First, those for which direct charges are made, such as providing burial lots and opening graves; second, those for which no direct charge is made, as for instance, maintaining avenues, shelters and office facilities. Inasmuch as the cost of furnishing and maintaining avenues and buildings is provided for in different ways by the various cemeteries, this paper will treat of those services for which direct charges are usually made. Everyone on whom the responsibility of superintending a cemetery rests has certainly been confronted, and probably will continue to be, with the difficulty of adjusting charges to meet the ever increasing costs. To some the difficulty of securing sufficient labor and a fair output has been perhaps more urgent than that of securing sufficient funds to pay those they have. The output per man per hour has generally decreased as the number of hours’ labor per day increased. The actual cost of operations must be known to intelligently fix the proper charges for these operations.

For a concrete case, perhaps foundations for monuments furnish a good example. If labor costs were 15 cents per cubic foot and material costs 17 cents per cubic foot and profit or overhead was 8 cents, foundations were built for 40 cents a cubic foot. When labor advances to 45 cents and material to 40 cents and profit and overhead is still 25 percent, the sum of labor and material costs the charge per cubic foot should be $1.06. The cost of foundation includes excavating and removing earth, very frequently three handlings, to say nothing of wheeling and teaming. The size of the foundation is in very many cases so small that extra material must be excavated, to give a man room to work, and then replaced and the surface re-sodded. The sand, stone and cement must be wheeled sometimes fifty or more yards. Where the headstones are set by outsiders, no matter how carefully, there is inevitably more or less repair necessary to the lawn surfaces. The high costs of monumental work is doing more to reduce the size of monuments and headstones than all the cemetery superintendent's advice and counsel to lot owners ever could. Sometimes the maker of a two by one headstone will compare the cost of a cemetery foundation, containing about twelve cubic feet, with the cubic yard price of mass concrete in engineering work requiring thousands of cubic yards. But let not his comparison or the unthinking lot owner's amazement at "such a terrible price" deter the superintendent from figuring all the elements of cost when readjusting his foundation prices to a higher level.

The charges for opening graves are so largely a matter of labor. whether in the field or in the office that the percent of increase paid grave diggers for this labor applied to former charges is somewhere near the proper charge. However, in many cemeteries the interment charge formerly included besides the labor of digging, filling and removing surplus earth, the use of the lowering device, the laying of board walks, covering with evergreen and even the use of tent and chapel. Whether it is wise to continue to give all these extras under one charge or whether it would be better to make some, or all of these, the matter of extra charges, rests with the particular cemetery. In a cemetery catering to all classes, it does not seem fair to make those who do not want these extras pay for them. The trend of the times seems to be away from the good old table d'hote to the a la carte method, and perhaps this simile may be a bit strange, yet it is well for cemeteries to observe the operation of natural economic changes that are going on.

The charge for flowers, planting, grading, watering annual care and such matters are all to be figured on the same basis; namely the charges must meet the costs of doing the work and doing it according to the standard previously established by the cemetery. There is a certain human tendency to trust that soon the time will come when things will right themselves and by keeping along and slighting the work that somehow one will get by until that time. But it seems a wrong thing to do where annual charges are made that may be revised as occasion requires. In the matter of annual care some cemeteries must find themselves in a quandary. For instance, in an old cemetery which is now selling lots only with Perpetual Care, many of the old lots were sold without Perpetual Care. Some of these old lots were under annual care, but many were absolutely uncared for. For the general appearance of the cemetery these uncared for lots have been fixed up and grass cut, without any payment by the lot owners to the cemetery. The annual care received may be small, if the cost is materially increased as it should be; some of those who have paid for years will probably refuse to continue. Then the cemetery will have so many more lots to care for without direct return, or it may give up caring for all lots which do not pay. The result will bring a generally unkempt appearance which no amount of care lavished on new and Perpetual Care lots can overcome. In a case of this sort and probably many have somewhat similar problems, that are peculiar to cemeteries, it seems better to continue to keep up the general appearance of the cemetery even though the expense has to be charged to new lots or overhead. There is another point that constantly comes up in connection with these old lots and that is this: the present proprietors of these lots are usually numbered in the great middle class; they have not received the immense profits that have accrued to the operators in foodstuffs, merchandise and manufacturing enterprises not the 200% to 300% increase in wages of many workers. In fact, times are pretty hard with them in many old communities and they have much difficulty to live and clothe themselves. Whether it is charity to accept $5.00 where $15.00 should be charged or good business to take $5.00 rather than nothing is for each one to decide for himself.

The increased costs of labor have a very varying effect upon the price of new lots, depending upon the amount of labor necessary to bring the reserves or newly purchased land into shape for lots. Those who have adopted the excellent accounting system, embodies in the paper read at Buffalo by the late A.W. Hobart (an able man whose kindly presence and big heart we all miss), will have little difficulty in setting down a base price per square feet. Unfortunately, some must dig out the cost of the land and estimate the carrying charges, look up the cost of drains and avenue construction and compute and estimate the grading charges to be applied to the net area available for burial lots. Few must include the cost of blasting and excavating rock, but all these things must be considered and figured into the new selling price.

How many know the percent of gross area of a forty-acre tract that will be available for sale? More care than some have exercised in the past is necessary in accurately compiling all the elements of cost because the amounts involved are much greater than formerly; because one must be sure to have his balance on the right side of the ledger and because that has generally characterized their operation and no charge of profiteering brought against them because of a superintendent’s easy-going guessing instead of knowing.

Perpetual Care is the specific performance by the cemetery of a contract made by and between it and the lot owner, the consideration being a sum of money paid to the cemetery by the lot owner with the proviso that the cemetery will use the income forever to care for the graves on the lot and such other care as may be stated in the contract. Some Perpetual Care contracts thus limit the liability of the cemetery to the amount of work the income will pay for and others guarantee to do the specific things enumerated. Though there is a very marked difference in the legal aspect of these two forms of Perpetual Care contracts, the practical difference in a going cemetery is not so marked, for this reason: If a cemetery does not continue to maintain the same general appearance of care as formerly, the confidence of the public will be weakened and when confidence and trust go, the decline of that cemetery starts.

The amount of Perpetual Care endowment any lot requires is determined by two factors, both variables. First - the cost of doing the work and second - the rate of interest that the fund will yield. The yield must be sufficient to include the expenses of administering the fund and the actual losses to which all large funds are subjected. Of the variation in the cost of doing the work every superintendent is aware. The difference in the interest rates on money is also apparent to the readers of newspapers, to say nothing of those who are carrying overdue mortgages. There appears to be no fixed relation between these two variables, because they are each subject to different influences. For instance, restricted immigration has been a very strong factor in the wages of common labor and its influence on money rates is rather remote. Furthermore, the income received from conservative investments and the wage paid labor is different in the different localities.

In 1893 a superintendent states in our proceedings that a fund established sixteen years earlier on a basis of a yield of 6% earned in 1892 five percent and was likely to earn less in the future. So the question of the proper amount necessary to take Perpetual Care is not a new one with this Association. There is no rational formula that can be employed. Just as an engineer in designing a structure uses the latest data he can secure on the strength of materials, not the empirical formula he used five, ten or twenty years ago for similar structure, so those entrusted with the designing of Perpetual Care funds should consider the stresses and strains which the present times have developed in the Perpetual Care structure.

One old conservative practice in some places was to figure a yield of 3% on these funds this at the time the return was from 3¾% to 4% from state and municipal bonds. What rate of yield or what conservative figure less than the real rate at which bonds may now be purchased shall now be figured. I hazard a guess that 4½% would be a fairly conservative figure on which to base the estimate for Perpetual Care. The present yield of liberty bonds is better than 5½% and the yield of municipal bonds twenty years ago was 4%.

Suppose it cost $3.00 a year to take Perpetual Care of a lot containing 150 square feet under pre-war conditions, and $100.00 was the amount required for the endowment of the lot. Let us assume that it cost $7.50 to do the same work today, then on a 4½% estimated yield, the endowment should be $166.67 or an increase of two-thirds in the endowment. Of course these figures probably do not agree with any particular cemetery but the principle seems a reasonable one to adopt. It may be said that the rate in twenty years will be back to the old figures and it is unsafe to figure 4½% on a perpetual investment. An answer to such statement is that when money rates drop to such figure the costs of doing the work will probably likewise drop.

But what about the lots now under perpetual care which cost perhaps two and a half times as much as the income from the endowment fund estimated at 3 percent? Certainly a going cemetery must fulfill its contracts; the grass must be cut and the settled graves raised. In the language of the day it is up against a tough proposition. To be sure in the conservative practice of estimating assumed, there is probably a return on the original $100.00 investment of $4.00 instead of $3.00, and if the bonds mature now fixed principal of $100.00 may be reinvested to yield $5.50 in absolutely safe obligations of the national government. But even under such conditions there is a deficit of $2.00 on each $100.00 of the endowment. In some cemeteries, probably a good many, more work is done on the perpetual care lots than is called for in the contract-for instance, the care of grass alone may be specified in the contract for perpetual care and one or more myrtle graves may be cared for. This care of myrtle graves may be a matter of annual charge or additional endowment.

But suppose there is no chance for any such relief, then revenue from operation must be sufficiently increased to take care of this deficit. To be sure when the lots are all sold and only a very small income is obtained from operations the income from the perpetual care fund is practically all the fund available to care for the cemetery; then there will be no means to raise revenue needed to make up a deficit if present conditions then obtain. In case of the continued duration of these conditions the only thing to do is to make a systematic addition to the endowment fund by devoting a sufficient amount from future lot sales to make the endowment fund such amount as will yield enough to fulfill the contracts at the time the last lot is sold. These accretions will naturally diminish the amount necessary to raise yearly from the operating income.

Here is what Timothy McCarthy said twenty-seven years ago at Minneapolis: "In conclusion, gentlemen, our Association must be true to this Gospel of Perpetual Care. We know how pleasant and easy it is to receive people's money, and how uncertain and difficult it is to carry out the obligations assumed, especially in our severe and eccentric climate, but we must keep faith with the people, and secure to our citizens at least a burial place, indicating not only respect for the dead, but which will also be a source of pride and consolation to the living."

From the publication:
AACS - Proceedings of the 34th Annual Convention held at Hamilton, Ontario, Canada
September 7, 8, 9 and 10, 1920

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Code: 
A1066