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2006-2007 ALA EBD #3.0
2006 ALA Annual Conference

Budget Analysis and Review Committee Report to ALA Executive Board
June 28, 2006

It is my pleasure to report on the Budget Analysis and Review Committee (BARC) meeting of June 23–27, 2006 in New Orleans.

The following topics were discussed:

• BARC Orientation of new members and liaison relationship
• FY 2006 April Update
• Final FY 2007 Total ALA Budget
• Planning & Budget Assembly
• BARC Division Leaders Follow-up
• BARC/F & A Joint Meeting
• CHOICE Office Space
• Indirect Cost
• Council Action: Graduated Dues Study and other Alternatives
• Dues Increase Implications

BARC Orientation of new members and liaison relationship

BARC welcomes two new members—Audra Caplan and Tyrone Cannon—as appointed by the Executive Board with the expansion of BARC per Council direction at the 2006 Midwinter Meeting. BARC also welcomes incoming Executive Board member, Mario Gonzalez and Member at-large, J. Linda Williams at the conclusion of this Conference. An orientation package for BARC members is in development and new members will be informally paired with returning BARC members to assist in their orientation. Executive Board member Jim Rettig and member-at-large Raymond Santiago will be completing their BARC terms on the committee at the conclusion of this meeting. BARC's liaison function provides: a conduit for financial information and guidance, an expansion of familiarity the overall finances of the entire association, additional communication between BARC and the unit, division, roundtable or office. To that end, liaisons were proposed to balance existing member interest, and diversify experience.

FY 2006 Budget Update—as of April

Total ALA (all combined funds) revenue of $28,952,160 is $1,112,645 more than budget. The General Fund revenue of $15,212,131 is $400,111, 3% less than budget due to lower Publishing sales, primarily related to the timing of book sales and membership dues. General Fund revenue is projected to be $575,000 less than budget for the year. Division revenues are 9%, $927,108 more than budget and Grants and Awards are $546,746 more than budget year-to-date. Long-Term Investment interest and dividends exceed budget by $60,442, reaching $447,722. Total ALA expenses of $27,825,925 are 4%, $1,278,536 less than budget. The General Fund expenses of $16,255,216 are $1,166,194, 7% less than budget. General Fund expenses are projected to be$675,000 less than budget for the year. Divisions are $459,377 less than budget. Grants and Awards are $546,746 more than budget. The General Fund should end the year with net revenues of at least $100,000. The net revenue is a result of prepaying the CIPA/CDA loans both principle and interest.

FY 2007 Budget Updates and Approval of FY 2007 Budgetary Ceilings

Keith Michael Fiels and Greg Calloway provided a summary of budget changes made since the Spring BARC meeting. The following motions were approved:

BARC recommends to the Executive Board approval of the Preliminary FY 2007 General Fund Budgetary Ceiling of $29,635,840.

BARC recommends to the Executive Board approval of the Preliminary FY 2007 Divisions Budgetary Ceiling of $20,400,473.

BARC recommends to the Executive Board approval of the Preliminary FY 2007 Round Tables Budgetary Ceiling of $851,187.

BARC recommends to the Executive Board approval of the Preliminary FY 2007 Grants and Awards (Restricted Fund) Budgetary Ceiling of $3,031,367.

BARC recommends to the Executive Board approval of the Preliminary FY 2007 Long Term Investment Fund (Endowment Fund) Budgetary Ceiling of $735,119 including $94,217 capital gain to be allocated for funding the ALA Spectrum Initiative and a transfer of $281,446 interest and dividends from the Endowment Fund to the General Fund in accordance with Policy 8.5.1.

BARC recommends to the Executive Board a $1,610,879 transfer from the General Fund to offset the Plant Fund net operating expenses.

BARC recommends to the Executive Board approval of the Preliminary FY 2007 General Fund Small Division allocation of $130,066.

BARC recommends to the Executive Board approval of the Preliminary FY 2007 total ALA Capital Budget of $1,704,600.

BARC recommends to the Executive Board approval of a 3.0% compensation adjustment to base salary and a .50% individual incentive with a total fiscal year impact of $458,000 in FY 2007.

BARC recommends to the Executive Board approval of the Preliminary FY 2007 Total ALA Budgetary Ceiling as follows:

General Fund	$29,635,840
Division Fund	20,400,473
Round Tables	851,187
Grants & Awards	3,031,367
Long Term Investment	735,119
TOTAL	$54,653,986

BARC recommends to the Executive Board approval of the transfers from Division operating fund balances to Long Term Investments of $250,000; ACRL $100,000, CHOICE $50,000, AASL $50,000, and RUSA $50,000.

BARC recommends to the Executive Board approval of a transfer of $25,000 for LIRT from Round Table operating fund balances to Long Term Investments.

After BARC reviewed the requests from divisions for 3 FTEs in FY 2007, they decided to defer further discussion until their fall meeting, after consideration of Annual Conference revenue and general ALA finances.

BARC reviewed the FY 2007 preliminary budgets for Divisions and Roundtables, noting conference and other activities that impact cash flow. There are a number of divisions celebrating anniversaries in 2007. All units are seeking ways to increase revenue and membership. Annual and Midwinter Conference costs continue to rise and a registration fee increase is proposed in 2007. The Washington Office move has focused some infrastructure needs in terms of connectivity and an improved network. Publishing is initiating new ideas to enhance their marketing efforts. The Development Office is working towards streamlining fundraising and donor acknowledgement activities, and working collaboratively with all units to coordinate donor/grant seeking efforts.

Planning and Budget Assembly

On Sunday, June 25, more than 40 members of the Planning and Budget Assembly were in attendance. The program featured the Treasurer's Financial Update, a Publishing update from Director of Publishing Don Chatham, impact of the Dues Increase and Presidential priorities from President-elect Leslie Burger. PBA participation has varied from time to time. Each year, however, the member leaders do change. Although attendance was quite healthy this year, review of the meeting by BARC and Executive Board member included the following recommendations to enhance outcomes:

Agenda development:

• Enhance agenda development process in coordination with the PBA body and Executive Board
• Keep agenda short and simple and insure an interactive and meaningful small-group. Develop realistic outcomes for the meeting: what do we want to achieve?
• Develop the agenda at or before the Spring BARC meeting, working closely with the President-Elect
• Mail and electronically transit the PBA invitation letter and agenda to all participants three weeks before the meeting date

Meeting implementation:

• Review the charge and goals of the PBA and its relationship to the budget process
• BARC and Board members should perform reporting out functions to ensure optimal time for all voices to be recorded and should seek to sit near their liaison units.
• Information will be shared on the Treasurer's webpage.

BARC/Division Leadership Joint Meeting

This year, the BARC/Division Leadership Joint Meeting generated discussion on how to best support President-elect Leslie Burger's Emerging Leaders Institute. Keith Michael Fiels will assist Ms. Burger in implementing this process and creating avenues for communication. Treasurer Teri Switzer provided an introduction to the annual calculation of the Indirect Cost.

Indirect Cost Study

The FY 2005 Indirect Cost Study, required by the ALA Operating Agreement, resulted in a rate of 21.5%, 1.4% lower than the 21.8% of the FY 2004 Study. Keith Brown compiled a two-page summary to explain indirect costs, its calculation and functions. The Indirect Cost Study summary was introduced as a handout at the BARC/Division Joint meeting following the Planning and Budget Assembly. Participants had some key suggestions: clarification regarding indirect costs associated with Grants and Awards, virtual participation, and the ALA subsidy/contribution toward indirect costs and a sample of indirect costs using an actual model on an attached sheet. There was some discussion of cost benefit analysis as well. Keith Michael Fiels suggested changing item 5 from “comprehensive financial model” to “basic model,” and to use more direct rather than financial or accounting terminology. The Fact Sheet was very well received and after revisions are complete, it will be redistributed to all Division Directors and lead members and PBA participants as well as linked on the Treasurer's Website. It will also be included in the ALA Finances 101 workshop.

BARC/F & A Joint Meeting

At this meeting the group discussed CHOICE Office Space, the Indirect Cost Summary, and the Dues Increase Implications.

CHOICE Office Space

While the preliminary study of the Acheson House did not result in a successful transaction, ACRL Executive Director, Mary Ellen Davis, and Editor & Publisher of CHOICE, Irving Rockwood, shared another property with BARC. A discussion centered on alternatives to purchasing property outright: jointly purchasing a large property with another like organization or other agency or purchasing the property and leasing the additional space to another group. ACRL/CHOICE requested that BARC consider a feasibility study of office space for CHOICE with a specific piece of property in mind. If the property was not deemed suitable, CHOICE requested permission to entertain another feasibility study of other properties upon availability. ACRL would report to BARC on their progress at Midwinter 2007. The CHOICE lease expires in December 2007.

BARC and the F&A Committee recommend the undertaking of a detailed feasibility study by ACRL/CHOICE of the property located at 77-83 Crescent Street in Middletown, Connecticut to determine its suitability as office space for CHOICE, and, in the event this property proves unsuitable, feasibility studies on additional properties that ACRL/CHOICE might subsequently identify as potentially suitable for purchase prior to the December 2007 expiration of CHOICE's current lease in the Riverview Center property.

Dues Increase Implications

Keith M. Fiels reviewed the financial and planning impacts of the passage of the dues increase. Initial projections predict a small drop in membership with a steady increase over time. The expanding membership, by percentage, might slow. The Department of Labor projects a 13% increase in the growth of Library Technicians through 2012, with a growth in the Librarian classification at the smaller rate of 4.9%. In addition, library staff is expected to extend their work life beyond what has been traditionally considered retirement age, upon the current economy and other factors.

Council Action

Graduated Dues Study and Other Alternatives

At Council II, BARC prepared CD #33.2 to provide an update on the referral of CD#38, A Resolution for a Graduated Dues Study Structure, to BARC. The Chair informed Council that while more information and time was needed for a comprehensive and complete study to reflect Council's intent, the Director of the Office for Research and Statistics was initiating a study of existing salary from surveys. The report generated significant discussion about the considerations of the study and was accepted by Council. The Chair invited continued Council participation and invited suggestions for participation on a task force to be established by BARC and Membership Committee. Membership Committee Chair Marcia Boosinger provided a detailed list of the parameters for the study suggested by her committee, along with some key members who were interested in participating on the task force. The BARC Chair will provide some key notes to share with Council in the spirit of increasing communication, and will solicit names to consider in this task force formation from the Council electronic list, the Division Presidents and Round Tables electronic lists, no later than July 6. The names will be considered by the Membership and BARC Chairs with input from the respective committee members and ALA staff. The task force will be charged with creating the scope of the feasibility study and will work with ALA staff to create and implement an RFP for a consultant to analyze the data and return with some cost and study scenarios. The RFP is anticipated by Midwinter. The cost analysis and recommendations will be transmitted to the Membership Committee and BARC in time for review and reporting at the June 2007 Annual Conference.

Outgoing Members

The Chair would like to recognize the fine work of Executive Board member James Rettig and Member at-large Raymond Santiago as their BARC terms expire. Both Jim and Raymond have been strong advocates for transparency, increased communication, and reason—a tradition BARC will continue.

Recognition

BARC would like to acknowledge the exemplary work of Greg Calloway, Keith Brown, Sandy Lee, Elaine Klimek and the finance and accounting staff as well as Keith Michael Fiels, Mary Ghikas, and the late Gerald Hodges. On behalf of BARC, it continues to be a pleasure to work towards the continued financial health of the American Library Association.

Respectfully submitted:

Francis Buckley
Tyrone Cannon
Audra Caplan
Rodney Hersberger
Marilyn Hinshaw
James Rettig
Raymond Santiago
Teri Switzer, Treasurer
Patricia (Patty) Wong, Chair

2005-06 BARC #2.1
Revised: 05/22/06