Treasurer’s Report for FY2010
Treasurer’s Report for FY2010
In my report this year I would like to give you an understanding of our financial timeline over the past few years. I’ll review the year just past, 2010, then go on to discuss some of the measures we have already taken, and those we are anticipating.[slide 1]
This chart shows the expenses and revenue trend since 2007. In the early years the differences between expenses and revenues were planned, as we made investments in the Alignment project, our Association Management System software, and the centennial conference in Washington DC. What we didn’t anticipate was the downturn in the economy just as we were finishing these investments that drew down our reserves. This resulted in an unplanned deficit in 2009 of $431,000.
We took steps to set a new budget that would balance expenses and revenues. We have absorbed some painful cuts during this time.[slide 2]
This chart shows the headcount at headquarters from where it was at the time of the centennial celebration to where it is today. Through layoffs and attrition the staff has been reduced by over a third. We also cut many areas to reduce expenses. We offered no scholarships in 2010, nor did we make any research awards. We reduced the number of free webinars through Click U. We ceased some of our interassociation activities and reduced travel. The staff did not receive any salary increases for the second year, and were asked to pay a larger share of their benefits. We also deferred some building maintenance that will need to be done.
Was all this enough to balance the budget in 2010? Unfortunately, no. Although the final audit for 2010 is still in progress, I can report that our cash-based budget will have an approximate $300,000 deficit.
Why did this happen despite the assertive tactics in holding down expenses? It occurred largely because of what happened on the revenue side.[slide 3]
This chart is an approximation of where our revenue comes from every year. You can see that membership dues make up a quarter of revenue, while the annual conference provides half the total annual revenue. Both of these areas were lower than budgeted in 2010. Membership is down about 9% from the previous year, and although it is now holding steady over the past few months, it is less than we projected. In the past few years our dues revenue has dropped dramatically from a combination of decreased membership and the greatly-reduced dues rates we began offering. Last year we adjusted our renewal mechanism so that members would be renewed at a full rate, but they could ask for a reduced rate. This has improved our revenues somewhat without removing any options for members; they simply have to confirm that they still require a reduced rate.
However, as you can see the driving force is the conference. We need a good conference ? we need a profitable conference, to have a good year financially. Although we had an educational and enlightening conference in New Orleans last year, it was lightly attended and our revenues did not meet expectations. Had we hit our projected registration revenues for the conference, we would have enjoyed a cash-based budget surplus. This would still not account for depreciation costs that we have to factor into our budget for such things as computers, furniture, and building maintenance costs, but it would have been a small victory in our efforts to turn the corner on our economy.
As it stands, we continue to strive for a balanced budget. Last year the Board of Directors prioritized all budgeted activities and provided the CEO with fresh criteria to develop her Goals and Objectives for 2011. Consequently, our budget for 2011 is 10% lower than the budget for 2010, which itself was 20% lower than the budget for 2009.
To help us achieve a balanced budget we have also incorporated some new revenue generation ideas. We are taking steps to increase advertising, earn more on Click U, and look for different services that you need which will help us raise money. In addition, there are a couple of items that I wish to highlight today, as they are ways in which the members of SLA can help keep the association running.
Later this year you will receive messages about the beginning of an SLA Loyalty club. This club will reward consistency of support for SLA. We would like to acknowledge SLA members who show their devotion every year, through thick and thin. A member joins the club with a donation, and maintains membership by donating every year, in any amount above a certain minimum. Building a core of loyal members who can be relied upon to donate each year will allow us to develop a reliable line of revenue while rewarding those members who continue to show their unflagging support of our association.
The other area I wish to mention is that of legacy planning. SLA has always benefited from bequests from members’ estates, but it is not an area that we have emphasized lately. Other associations and organizations have benefitted greatly from legacy funding, and we believe that many of our members would be happy to remember SLA in their estate planning if only given the necessary information and encouragement. While this is not an area we can count on for our regular budgeting, it will allow us to rebuild our depleted reserve fund so that the association can continue to make investments in its future.
During the Leadership Summit this January I gave a presentation that covered some of the same charts I’ve shown today, and also stressed that the time has come for units, the backbone of our association, to think differently about how to support services to our members. Consequently, we developed a selection of sponsorship opportunities and asked the units to consider underwriting some activities. Although we only provided these opportunities to the units last month, I am pleased to announce that some units, after careful consideration, have responded generously.[Slide 4]
The Legal division agreed to exclusive sponsorship of staff support at headquarters, so that we can offer some amenities and awards to the staff who have worked tirelessly in a rapidly downsized environment. Legal and the Pharmaceutical Division offered to co-sponsor the Membership Survey, which we would like to perform every five years to gather vital information about our members, and which was doubtful this year due to funding pressures. Business & Finance Division has agreed to exclusively sponsor the audit this year, and Engineering Division has taken an exclusive sponsorship of our building systems at our headquarters in Alexandria. The Science-Technology and Information Technology divisions have pledged to support our information technology. The Military Libraries Division and the Government Information Division have offered support for our ongoing leadership management and development activities.
Other units have expressed interest in providing support in other areas to help SLA get through a difficult economic time, and we will gratefully acknowledge these agreements in person, in print and online when they occur.
The Board of Directors is greatly concerned about the fiscal health of the association and is continuing to take steps to stabilize our finances. Earlier this week the Board developed a strategic vision to address our current situation and lay the groundwork for aligning our services to meet the members’ needs, within the budgetary framework that we will face in the next three years.
Shrinking budgets present difficult choices for those in positions of responsibility, as you are all well aware from your own experience in your organizations. As you saw in the line diagram in the first chart, we anticipate a cumulative reduction in revenues from 2008 to 2011 of 30%, and must make the necessary adjustments to reset our services and our finances.
One step that the Board took this week is one that was not taken lightly. Although we have suffered a 30% reduction in revenues recently, we have continued to pass the same allotments per member to the units. This has continued despite the fact that the sliding scale member rates have caused our dues revenue to drop dramatically, faster than our membership headcount has dropped. In effect, the percentage of dues revenue going to the units has been increasing. In 2006 the units received a 20% increase in their allotments, and have continued to receive the same fixed amount per member since then.
Earlier this year the Finance Committee recommended, and this week the Board of Directors approved, some adjustments to how the unit allotments are calculated. For 2012 only, the allotted amounts per member will be rolled back to the level they were in 2005 before the 20% increase. Then, in 2013, a new method of calculating allotments will be implemented; units will receive an amount for each of their members that is proportional to that member’s rate. We will all share in equal proportion the amount of dues revenue that we receive.
Which leads me to my final slide.[slide 5]
Since I’m the treasurer, this is what ‘future ready’ means to me. Financial stability has been elusive, but it is achievable.
My friends, we are all one SLA. If we make a broad commitment to help each other, and work together to overcome our present difficulties, we will be ready for that bright future that awaits our profession.