Delbert L. and Margaret J. Baker - Page 47

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          system, food service, environmental service, utilities, and                 
          insurance.  The adjustments for food service and environmental              
          expenses were based on formulas provided by the food service                
          contractor and the environmental service contractor.  The                   
          adjustment for utilities was based on a square-footage method and           
          the adjustment for insurance was based on a ratio- and square-              
          footage methodology.                                                        
               The committee ultimately concluded that the allocation                 
          percentages were 40.3 percent and 41.6 percent for the years 1997           
          and 1998, respectively.  The resident council reported to AFVW              
          residents a summary of the ad hoc committee’s findings.  The                
          resident council explained how the allocation percentage was to             
          be applied, provided the same census figures used in the Health             
          Facility Information report, and stated what the medical                    
          deduction was per resident.                                                 
               Mr. Baker testified that the calculations in the                       
          supplemental report he prepared were similar to the ad hoc                  
          committee’s calculations.  He testified that his calculations               
          assumed that the fee charged for a medical service approximated             
          the cost of Village West’s providing that service.  Mr. Baker did           
          not explain in detail the adjustments contained in his                      
          supplemental report, and we are unable to satisfactorily connect            
          his figures to the financial information contained in the record.           
          As a result, we find the supplemental report to not be helpful,             






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