From the Office
Looking at the Insides of ALCTS: Part 1—Our Budget
This is not so much as a “what makes us tick” article as it is, “here are some things you might not know about ALCTS but were dying to know if someone else asked.” Well, they did and here you are.
If you attended the Monday morning session at Annual in Chicago on “Creating our Future,” you will see here some of the information I mentioned when I answered some of the questions that people were asking. Not to be too boring or repetitious, I have thrown in some other tantalizing morsels.
Now for the really exciting part of my article: the ALCTS budget. (If this does not appeal to you, then you can skip to my December 2009 article on ALCTS’ life within ALA.)
The ALCTS budget is built beginning each December. I start the process, and then send it off to the ALCTS Budget and Finance Committee who discuss it at Midwinter and present it to the Board. This is only a preliminary budget since we are not working on a lot of current information. The final previous year’s budget is the basis, but I take the spring to look at trends, particularly in vulnerable areas such as dues, LRTS subscriptions, and registration fees. In the late spring, I revise the budget if needed and we repeat the process for approval. In the meantime, I have met with the ALA senior management and BARC (ALA’s Budget Analysis and Review Committee) pointing out strong areas and weak areas. The final budget goes into effect on September 1, which is the start of ALA’s fiscal year. The process itself takes seven months to complete, so we are barely finished with one year when we are planning for the next. The ALCTS budget stands separate from the ALA budget in that we must produce enough revenue to cover our costs. We get no direct monetary support from ALA. However, we do not have a separate bank account, do not employ our own accounting staff, and do not have to file our own tax statements, among other things. Being part of ALA does have its advantages (see December article for more on this).
If you have ever wondered where the money comes from and where it goes, here are some examples of revenue and expenditures. Our budgets are typically about $550,000. The 2010 is slightly less due to some adjustments I made in revenue projections, but it is close. For revenue sources we have few options, since we do not do a national conference or institute. The bulk of our revenues come from dues, which is about 47 percent. This is high for most associations but not for divisions. ALA’s dues are roughly 18 percent of revenue, but they have ALA publishing, conference, and grants as other streams of income that we lack. Outside of dues, the next source is registrations at about 25 percent. This covers web courses, webinars, symposia, and preconferences. Publications account for 21 percent, which includes LRTS, advertising, royalties, and our monographs. Last are donations and sponsorships, which run about 7 percent in any given year. More in a minute.
The expense side roughly reflects the revenue side in terms of percentages, so I will not go into detail about that. Just so you know, it takes about $220,000 to run ALCTS office and therefore the association operationally. The bulk is personnel expenses at about 45 percent of the total budget or more than 90 percent of what we spend for the office. In case you did not know, ALCTS has a full-time staff of three: Julie Reese, Christine Taylor, and me. We do not buy many supplies, recycle a lot of stuff, and generally are pretty efficient, maybe even frugal (I was going to say cheap, but…). Just so you know, in case you did not, ALCTS pays overhead to ALA on registration fees, subscriptions, and book sales. This year it will total about $38,000. The current overhead rate we pay is 24 percent on registration fees (except for web courses, which is 12 percent), and 12 percent on publication sales and subscriptions. We pay no overhead on dues. Thought I would also mention that some of the things that we pay for ourselves that may not be that apparent: bank service fees (the charge that is assessed when you use your credit card to pay for goods and services); warehouse and distribution fees for our books; leasing fees for the computers we use; photocopy charges for anything we copy or print in-house; webinar, forms and email programs; returns and bad debt; and a variety of charges for pulling mailing lists.
Now that you are all on the edge of your seats with anticipation of what is next, here it is. Thought I would bust some myths first: “ LRTS makes gobs of money for ALCTS.” In fact LRTS has lost money over the last several years. This is due to a combination of rising costs and falling subscriptions. With the introduction of an E- LRTS, I am hoping that we can generate some more subscription interest particularly internationally. “Donations and sponsorships cover a lot of expenses.” As you can see from above, only 7 percent of our budget comes from donations and of that, 60 percent goes directly to the production and monetary distribution of the awards. “Everything we do makes money”. I wish, but about half or more of our work is funded by the revenue sources I mentioned above. Some of what we expend is mandated by ALA, such as the Fall Executive Committee meeting in October. We also have expenses for Midwinter, Annual, the Executive Committee, and member services and support which have no direct source of funding. This means that those areas in which we do generate revenue support those that do not over the course of the year. In addition, we have a few areas in which we do have revenue but that revenue is not sufficient to cover all the costs as in LRTS and the awards. It is also noteworthy to mention that ALCTS does not receive any revenue from the general registration fees charged for either the ALA Midwinter Meeting or Annual Conference.
Everyone involved in creating and monitoring the budget take great care in assuring that we have enough funds to do the work we need to do from year to year. And in the end, ALCTS needs to come out with a positive net balance so we are not drawing down our very modest reserve fund.