Treasurer’s Report
Ted Wozniak
ted@tedwozniak.net
There have been some pleasing developments in ATA’s finances since my last report:
- The final figures are in from the Annual Conference in Miami.
- The working budget for the next fiscal year has been approved by the Board.
- A new conference pricing tool has been developed and is being tested on ATA’s 57th Annual Conference in San Francisco.
Financial Report
The equity deficit has been eliminated! Thanks to various cost-cutting and revenue-enhancing measures during the past several years, but most recently due in particular to a financially successful Annual Conference in Miami, the Association’s unrestricted net assets (equity) moved into positive territory for the first time since 2008, reaching $322,869 as of February 29, 2016 (previous year: negative $205,732).
Net Assets Increase: For the first seven months of FY2015/16, our change in net assets (net income) was $505,647, a 2,102% increase over $22,966 for the same period last year. This development was due in part to increases in revenue, with total revenue for the period reaching $2.347 million, up 6% from $2.211 million for the same period last year. Membership revenue was up + $21k (2%), certification revenue rose $26k (24%), and professional development gained $6.5k (84%).
However, the most significant change in revenue compared to the same period last year was the almost 11% increase in revenue from the Annual Conference, rising from about $87k to $920,483. (See below for additional information about budgeting for the Annual Conference.) Offsetting these revenue increases were year-on-year declines in Chronicle revenue (-$8k, or 22%).
Changes in other revenue sources were due to:
- Continuing education point renewal fees, which peak every third year.
- Changes in certification exam revenue.
- Reduced Chronicle revenue due to the change in the publication schedule (bimonthly as opposed to monthly) and the switch to the electronic format.
- A slight increase in publications and ATAware sales at the Miami conference versus Chicago.
Decline in Total Expenses: Lower expenses also contributed to the equity turnaround. Total program expenses fell from $1.738 million in the same period last year to $1.364 million (-22%) for the first seven months of FY2015/16. Aggressive cost negotiation for the Miami conference was responsible for part of the almost 31% drop in conference expenses, while its location in a right-to-work state meant that some costs (audiovisual and food and beverage in particular) were already below the Chicago levels even before lower costs were negotiated. Attendance below the number of attendees in Chicago also contributed to lower conference expenses, with total conference expenses of $633k for Miami versus $915k in Chicago.
Lower Chronicle Expenses: The Chronicle continues to show lower costs as expected from recent changes, dropping almost 31% year-on-year from $321k to $188k. The other program services (divisions, professional development, and publications) posted slight increases as expected, in particular from Headquarters expenses for division website support and increased webinar offerings for professional development.
Expenses for Support Services Unchanged: Total expenses for support services, which are the expenses that are not allocated to a specific program, remained almost unchanged at $454k, while individual items saw significant proportional increases, which were not material in absolute terms. Public relations and marketing posted an 115% increase as planned, rising almost $13K to just under $24k from last year’s $11k baseline. Volunteers and governance also posted a large percentage increase of 116%, from $7k to $15k, primarily because of dues increases for the Joint National Committee for Languages and the International Federation of Translators. General and administrative expenses dropped almost 16% to $197k, while salaries and benefits rose by just under 7% to $163k.
Cash Balance Up: Our Statement of Position (balance sheet) as of the end of the first seven months of FY 2015/16 also shows positive development. With respect to assets, our balance of cash and cash equivalents is up 61% year-on-year to $1.428 million. We have no outstanding accounts receivable, and prepaid expenses posted a decline of 20% to $42k. Our investment funds saw an 8.5% decline to $328k, while our property and equipment assets declined by 14% to $137k due to depreciation. Total assets improved by almost 33% to $1.944 million.
Liabilities Unchanged: Our current liabilities remained nearly unchanged, declining by 2% overall to $1,578k, consisting almost entirely of deferred revenue from unearned dues of $1.495 million. This is normal for this period as dues are paid at the beginning of the calendar year, so we owe our members 10 months of services. Our noncurrent liabilities, which consist entirely of deferred rent, declined by 28% to $43,000. Our net assets (equity deficit) increased by 257%, from negative $206k to positive $323k.
The elimination of the equity deficit is a very pleasing development. Please note, however, that it highlights the impact that the financial success (or failure) of the Annual Conference can have on the Association’s finances. The $286k net income from the Miami conference accounts for roughly 56% of our total net income before investments. Proper planning, including accurate cost estimates and deliberate pricing of the conference, is crucial to a financially successful Annual Conference.
Working Budget for FY2016/17 Approved
The Board of Directors approved the working budget for the next fiscal year at the Board meeting in Alexandria, Virginia, on May 1. The budget forecasts total revenues of $3.189 million, total expenses of $3.039 million, and a change in net assets (net income) of about $150,000 for the next fiscal year.
Individual items of note include a projected further decrease in Chronicle expenses of $64k, an increase in professional development revenue to roughly $22k due to increased webinar offerings and in-person seminars, and an increase in public relations/marketing expenses to about $60k, as requested by ATA’s Public Relations Committee.
Annual Conference Budgeting/Pricing Tool
To improve our ability to forecast the financial result of an Annual Conference, and to give the conference organizers and Headquarters better information on which to base the registration fee, ATA Director Evelyn Garland and John Milan, a member of ATA’s Finance and Audit Committee, spent several months developing a conference pricing tool. Kirk Lawson, our accounting and finance manager, and I then tweaked the tool a bit. It is now undergoing beta testing.
When budgeting for the Annual Conference and developing the new conference pricing tool, very conservative estimates are used. We use lower-than-expected attendance to forecast registration revenues and actual expected attendance to calculate expenses. Ideally, the actual net income from the conference will therefore always be higher than the forecast. But this conservative approach is necessary because we can never be quite sure about attendance and, more importantly, expenses are very difficult to estimate accurately in advance of the conference. Exhibitor and sponsorship revenues, which can comprise around 10–15% of total revenue, are also rather uncertain this far in advance. This is where the new conference pricing tool should help.
The tool uses both historical data (financial, geographical, and other) and the best available cost estimates (primarily for audiovisual and food and beverages, which together comprise 65–75% of total conference expenses) to estimate total revenues and costs for the upcoming conference under a range of attendance scenarios. This allows us to project the “per attendee break-even point,” which equates to the early registration fee necessary to avoid a loss. The Board of Directors believes that the conference should be at least cost neutral (i.e., it should not be subsidized by the dues of members who do not attend).
This tool will continue to be refined and improved as we gain more knowledge from future conferences and increase the accuracy of our forecasts.
Other Items
Certification Decoupling: With regard to the motion for “decoupling” the Certification Program from membership approved by the Board on April 19, 2015, and the financial conditions set therein, it is probable that Condition 1 (positive operating revenue for at least one year on June 30) and Condition 2 ($500,000 of contingency funds) may well be met this year. $200,000 was transferred to our money market account at the end of April, bringing the balance of that account to just over $400k. The remaining financial condition (cost-neutral pricing model) cannot even be worked on until the logistical condition precedent regarding delivery of the certification exam is met following whatever changes are made by the Certification Committee and the Board.
No Dues Increase: In accordance with the Dues Increase Policy adopted on April 18, 2015, the U.S. Consumer Price Index—All Urban Consumers (CPI-U), as reported for March 31, 2016 by the Department of Labor, was 237.920 (unadjusted), as compared to 235.859 on March 31, 2015. Adjusted for inflation, associate/active/corresponding dues of $190 for 2015 would therefore rise to $191.66. As such an increase would be less than $2.50, there will not be an automatic dues increase in 2017.