Treasurer’s FY 2011 Annual Report
At the 2010 Midwinter Meeting in San Diego the Executive Board and Council affirmed the development of the FY 2011 budget within the context of the 2015 strategic plan and the previously expanded list of programmatic priorities. The ALA Programmatic Priorities were as follows:
- Equitable Access to Information and Library Services
- Education and Lifelong Learning
- Advocacy for Libraries and the Profession
- Intellectual Freedom
- Organizational Excellence
ALA is an Association that is as diverse in its interests, activities and membership as any in the world. Despite this diversity we work in a profession that is heavily reliant on the general health of the overall economy. History suggests that the health of the profession lags the general economy by eighteen months when coming out of a recession. So as the economy continues to struggle in its recovery from the “Great Recession,” the negative impact continues to be felt by the profession. In FY 2011 ALA entered the year with the understanding that pressures from the mounting federal budget deficit, state/local budget cuts and a slow growing to sputtering economy would negatively impact the interests and activities that are dear to librarians and the profession of librarianship. As a result, many of our members were faced with the difficult prospects of doing more with less or doing without all together.
FY 2011 was also a year in which there were constant and changing pressures on the Association to maximize the use of its resources. This was particularly true in the General Fund. Since 2007 the General Fund has seen a steady erosion of its revenue base. Even though there has been a lack of revenue growth in the General Fund budget, significant investment in the programmatic goals and infrastructure of the ALA operations continued. In this environment it required a careful evaluation of planned expenditures across the association in order to properly match up with expected revenues. This was accomplished within the context of the Associations’ number one goal of maintaining a high level of service to the membership.
In terms of expectations FY 2011 did not disappoint. Despite entering the year with a planned 3% reduction in the General Fund from a similar reduction in the previous year’s budget—like last year—management and staff were all on high alert for the need to make some mid-year budget adjustments if the economy continued to falter and our revenue expectations did not materialize. By the time the six month results were in and analyzed it was clear that adjustments would again be necessary. Against a General Fund budget of $26.8 million, management projected a revenue shortfall of $442,000 and an expense overage of $449,000 for a total shortfall of $891,000. This shortfall was addressed with expense reductions that included the following:
- Meetings & Conferences
- Building & Technology
- Governance and Communications
- Use of Reserves
Once again management and staff embraced the steps that were necessary to see the Association through a difficult situation as sacrifices were made across the entire Association. To the credit and hard work of management and staff, the plan for the mid-year adjustments was achieved. The General Fund ended the year with a loss of $437,067.
FY 2011 Financial Results
Financial Value Proposition
“To develop and deploy the financial resources that supports the strategic plan and delivery of programs that are responsive to member needs and the improvement of library service.”
As stated earlier, the FY 2011 budget represented the realization that we were still working with an economy that was to a great extent still struggling with the aftermath of the financial meltdown of 2008 and the resulting “Great Recession.” Additionally, that the economic realities facing libraries—particularly public, academic and school libraries—and the library profession were likely to be with us for the foreseeable future. Corporations and non-profit organizations alike have had to dramatically modify their spending due to significant reductions in tax revenue. Despite this scenario ALA was still well positioned to tell the story of how the Association, libraries and librarians continue to support the needs of our constituents and society at large. Our efforts in advocacy and advocacy support at the national, state and local levels continued to help reduce the severity of budget cuts on thousands of libraries. As the economy has struggled the need for our services continues to increase.
The financial plan was developed as an outcome of the recession and the 3% budget reduction in the General Fund implemented in FY 2010 was carried over into the FY 2011 budget. It included further reductions in staffing, repositioning current products, elimination of print publications for electronic and a general decrease in operating expenses. The revenue assumptions were conservative and depended significantly on new product development including, enhancement and the marketing of current intellectual property. Additionally, the FY 2011 budget included significant downward expense adjustments based on:
- Continued changes in current business models
- Better utilization of technology
- Increased operating efficiencies—departmentally and physical space
- Capitalizing on increasing CE opportunities
- Expanding ALA’s reach internationally
FY 2011 Programmatic Highlights
- ALTAFF launched its Trustee Academy
- ALA conferences in San Diego and New Orleans supported ALA programs by generating $889,803 in net revenue
- PLA conducted a successful “Virtual Spring” symposium
- Washington Office hosted a number of webinars on advanced advocacy training
- “Every Child Read to Read” launched by PLA and ALSC
- ALA’s “Virtual” conference concept continues to expand
- ACRL conducted a successful national conference
- Support for increased electronic participation by members in Annual conference and Midwinter meeting committee activities
- ALA Connect moved into phase2 and is fully functional
- ALTAFF launched its Authors for Libraries program
- YALSA conducted a successful YA Literature Symposium
FY 2011 Financial Factoid
- ALA’s net assets improved by $462,337 (1.6%) to $30.1 million.
- The revenue producing units Publishing and Meetings & Conferences contributed $1.7 million in combined net revenue.
- General Fund dues declined marginally by $70,073 (-1.2%) to $5.8 million.
- Operationally—Total ALA revenues declined by $5.9 million (-11.3%) to $46.6 million, while to total ALA expenses declined by $3.5 million (-6.9%) to $46.8 million.
- Long-term investments improved by $2.1 million (6.6%) to $33.3 million due to improved market performance related to the overweighting of fixed income securities.
- General Fund net asset balance declined by $437,067 (-23.4%) to $1.4 million.
American Library Association Consolidated Statement of Operations and Changes in Net Assets
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FY 2011 Operational Financial Results
As stated earlier, ALA operations continue to be negatively impacted by the sluggish economy, but management and staff have worked well to adjust the budget to mute the effects. For the year, Total Revenues declined by $5.9 million (-11.3%) to $46.6 million, primarily due to lower revenues from Grants & Awards ($3.2 million) and Meetings & Conferences ($2.7 million). A number of major grants and awards were sunset during the year, while Meetings & Conferences were impacted by having one less national division conference compared to FY 2010. Total Expenses for the year declined by $3.6 million (-6.9%) to $48.3 million with reductions across the board in all expense categories. These reductions were a direct response to management and staff’s effort to better match expenses to expected revenues after a mid-year review. On an operating basis the result was a net operating loss of ($160,377), which is down from $2.3 million in 2010.
In spite of the challenges during the year, ALA was able to improve its overall financial position. Total Assets during the year increased by $2.9 million (4.3%) to $69.5 million. The improvement in the results from the Associations’ Long-Term Investment activities ($2.5 million) accounted for most of the gain. Total Liabilities also increased during the year by $1.9 million (5.0%) to $39.4 million. Increased Deferred Revenue ($1.4 million) from planned future conferences accounted for the largest change. The result was an increase in the Associations’ Net Asset Balance of $469,335 (1.6%) to $30.1 million.
The following are a number of illustrations that detail the financial results for total ALA and its primary operating activities:
Total Preliminary Budget
The total ALA FY 2012 budgeted revenues, which includes the General Fund, Divisions, Round Tables, Plant Fund, Grants and Awards and the Long-Term Investments, are $50,266,072 as compared to the FY 2011 budget of $46,163,851. The year-to-year increase of $4,102,221 (8.9%) reflects having two national division conferences during the year compared to one in FY 2011, as well as additional grants during the year. The total ALA FY 2012 expenses are $50,252,558 as compared to the FY 2011 expenses of $47,225,658. The total ALA budget reflects revenues exceeding expenses by $13,514.
The following illustrations represent some of the detail with respect to the above mentioned budgeted revenues and expenses for FY 2012: