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ALA Finances 101 (AKA BARC Financial Planning Seminar)
Round Table Discussion

2006 Midwinter Meeting
San Antonio, TX
Friday, January 20
Marriott Rivercenter, Salon A
1:30–4:30 p.m.

Review and Development of Budgets

1. Division and Round Table Boards are responsible for program prioritization, funding and analysis. The Budgetary Ceiling calculation is unique for Divisions and Round Tables—both can carryover and spend fund balances, which gives maximum flexibility.

2. The ALA Management Group (Executive Director, Associate Executive Directors, Development Office Director, Human Resources Director, ITTS Director and a Division representative) review and recommend all Division and Round Table budgets to BARC, along with all other ALA budgets.

3. BARC reviews financial trends and ensures compliance of budgets with ALA policy. Key indicators of financial trends include:

   • membership statistics,

   • major sources of revenue,

   • changes in net assets,

   • performance results of prior budgets,

   • new ventures, which may result in additional risk,

   • additions to staff, programs, or capital equipment, which need to be reviewed over a long run basis,

   • significant changes between years, and

   • reserves levels.

4. Transfers and creation of the Endowment.

5. Budget to actual variances of revenue and expenses should not vary more than +- 10%.

6. Year-to-year revenue increase should equal or exceed year-to-year expense increase.

(Excerpt from the Outline for Division Leadership Meeting, September 1989. Updated May 2004.)

Budget Planning Alerts

When reviewing budgets, members and staff should be alerted to any (or all!) of the following conditions which may indicate financial problems:

• Net asset balance falls below 25% of the annual operating expenses,

• indicating revenues are barely sufficient to cover expenses.

• Erosion of the net asset balance over time.

• Expenditures that exceed annual revenues except when due to a multi-year funding strategy for projects such as division national conferences.

• No increase in dues revenue.

• No net revenues from revenue generating projects such as publishing or conference.

• Year-to-year expense increase is greater than year-to-year revenue increase.

(Adapted from the report of the ASCLA Special Review Committee to the ALA Executive Board, 1987. Updated May 2004.)

Unit Budget Discussion Points

• How do units balance short term vs. long-term priorities of the Association?

• What is the new norm for expected financial growth?

• What is the mechanism your unit has used to add/delete activities?

• How do units finance increasing demand for more programs when revenues are not growing?

• What do units consider the priorities at the ALA level? How can units provide input in the process?

• Are reserves levels adequate?

• Are reserves levels adequate to make transfers to the Endowment?
  

Revenue Driven Budgets at a Glance

Recommended Budget Review Calendar

• Midwinter review and draft budget proposed by staff.

• Division Board approves draft budget with recommendations at the Midwinter Meeting.

• Annual Conference review preliminary budget with comments from BARC (if any) and changes from Midwinter.

• Approves preliminary budget with recommendations to develop the final budget at the Annual Conference.

• Annual Conference—ALA Executive Board approves final budgets.

• Fall Meeting—ALA Executive Board approves final budgets.

Division Budget Planning and Process: Fiscal Year