1 American Library Association Member Financial Orientation American Library Association Member Financial Orientation (Financial Fundamentals) Thursday

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American Library AssociationAmerican Library Association

Member Financial OrientationMember Financial Orientation

(Financial Fundamentals)

Thursday – October 6, 2011

Clara Bohrer – BARC Chair

James Neal – Treasurer

Gregory Calloway – AED Finance

Orientation ManualOrientation Manual- Agenda -- Agenda -

Role and Responsibilities

Agenda Development ALA Budget Strategic Financial Plan Financial Concepts Financial Reports

Operating Agreement - Policy 6.4.1 Indirect Cost Study Long-Term Investment

Fund ALA Finance Workshop ALA-APA Housekeeping

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I. BARC Role and ResponsibilityI. BARC Role and Responsibility

Committee Charge Review proposed ALA budget Review financial performance Make and report budget recommendations Reporting to Executive Board & Council Role as a liaison Relationship with Finance & Audit, Executive

Board, Council and Staff Decision-Making Process ALA Membership Chart Organizational Chart – see attached Budget Planning Calendar

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Budget Analysis and Review Committee(BARC Charge)

The Budget Analysis and Review Committee (BARC) is charged to review the proposed budget, as forwarded by the ALA Executive Board, in the context of the ALA strategic plan, annual priorities and budget assumptions. To review the financial performance of the Association and the budget impact of potential actions of the ALA Council. To make budget recommendations to the ALA Executive Board and to report to Council regarding budget analysis and the process.

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ALA Decision-Making ProcessALA Decision-Making Process

COUNCIL

100 – Councilors at Large

11 - Divisional Councilors

53 - Chapter Councilors

12 - Executive Board Members

18 – Round Table Councilors

ENDOWMENT TRUSTEES

3 - Elected by The Executive Board Treasurer –Ex-Officio

FINANCE & AUDIT COMMITTEE

Treasurer - Chair

3 - Executive Board MembersAppointed by the President

BARC Chair

PLANNING & BUDGET ASSEMBLY

10 - Councilors Elected by Council 5 Chapters; 5 At-Large

13 - Divisional Representatives

37 - Committee Chairs - ALA Committees

Chairs Appointed by President

28 - Round table Representatives

EXECUTIVE BOARD

4 - Elected by Membership

8 - Elected by Council

1 - Staff - Executive Director

DIVISION BOARDS OF DIRECTORS

Elected by Division Members

BUDGET ANALYSIS & REVIEW COMMITTEE

(BARC)

6 - Members At-Large

2 - Executive Board

Members*

1 - Treasurer *Appointed by the President

EXECUTIVE COMMITTEE

President

President - Elect

Immediate Past President

Treasurer

Executive Director

ALA MEMBERSHIP ORGANIZATION

C H A P T E R S A F F IL IA T E DO R G A N IZ A T IO NS

A L A S T A FF

E X E C U T IV E D IR E C T O R B o a rd S ub com m itte es

E X E C U T IV EB O A R D

C O U N C ILC O M M IT T E E S

R O U N D T A B L E S R E P R E S E N T A T IV E S TOO T H E R O R G A N IZ A T IO N S

A L A A D V IS O R Y A NDS T A N D IN G C O M M IT T E E S

JO IN T C O M M IT T E E S W IT HO T H E R O R G A N IZ A T IO N S

D IV IS IO NS

C O U N C IL

M E M B E R S H IP

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A LA Organizational C hartFY 2011 - 2012

Divis ions Conference Services

ALA O ffices Roudtables

ITTS Aw ards Programs

O ffice of Accreditation O LOS

O ffice of Inte llectual Freedom HRD R

M a ry G h ik asS e n io r A E D M e m be r P rog ra m s & S erv ic es

K im O ls e n-C la rkD ire c to r

D e ve lo pe m en t O ff ice

C yn th ia V ivianD ire c to r

H u m an R e so u rc es

J o An n e K em pfIn te rim D ire c to r

G o vern a nc e O ffice

F in an ce

B u dg e t

A c c ou n ts R e ce iva b le A c c ou n ts P aya b le

P a yro ll C o lle c tio ns

A c co u n ting

O p era tion s & S ta ff S u pp o rt

G re g Ca llo w ayA E D F in an ce & A c c o un ting

O ff ic e o f T ec h n o lo g y P o licy

G o vern m e n t R e la t io ns

E m ily S he k e to ffA E D W a sh in g to n O ffice

C u s tom e r S e rv ice

In te rn a tion a l R e la t io ns

P IO

L ib ra ry

O R S

P u b lic P ro g ra m s

C h a p te r R e la tio ns

C ath leen Bo u rd onA E D C om m u n ic a tio ns

A L A E d it io ns

B o o k list

A L A Te c h S o u rce

P ro du c ts & P ro m otio ns

P ro du c tion S erv ices

A m e rica n L ib ra ries

D o n C h ath amA E D P ub lish ing

K eith M ic h a el F ie lsE x e cu tiv e D ire c to rG o vern a nc e O ffice

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ANNUAL BUDGETARY PLANNING CALENDAR

October - Fall Board Mtg. The Executive Board reviews the strategic plan as presented by the Executive Director/Senior Management and further defines the strategic focus resulting in the broad programmatic objectives. The Executive Board and BARC review and approve the Division’s final Budgetary Ceiling for the current year.

Midwinter Meeting The Executive Board - Treasurer - presents the broad programmatic objectives to Council for approval. BARC monitors the current budget. President-Elect proposes presidential program budget.

January ALA staff prepares the Annual budget based on the broad programmatic objectives.

April - May The Executive Board receives from staff - Senior Management - the preliminary budget, which is reviewed and then forwarded to BARC for a detailed analysis.

May - June Staff – unit managers and senior management - updates the budget.

Annual Conference Executive Board approves the budget. Council approves the budgetary ceiling. Division Boards approve their budgets.

September - October ALA management reviews the strategic focus of the Association.

August - September Staff begins preparing next year’s budget and three - year financial plan.

March - April Budget meetings for ALA and the Divisions are held.

II. BARC Agenda DevelopmentII. BARC Agenda Development

Meeting Agenda Samples

- Fall

- Midwinter

- Spring

- Annual Council Referrals to BARC Processing BARC Action Items

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Council Referrals to BARC

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Past Council Referrals: Dues Impact Study

Income Based Dues Study (Graduated Dues Study)

Resolution on the Gathering of Diversity Statistics

Report for Improving the Effectiveness of ALA Council

Report of the Chapter Relations Task Force

Young Professionals Task Force

III. ALA BudgetIII. ALA Budget

Financial Planning Calendar Process Fund Interrelationship Budget Guidelines Handling New Items and Requests Spring Meeting - 2012

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FINANCIAL PLANNING CALENDAR – FY12FINANCIAL PLANNING CALENDAR – FY12

The Executive Board reviews the strategic plan as presented by the Executive Director/Senior Management and further defines the strategic focus resulting in the broad programmatic objectives. The Executive Board and BARC review and approve the Division’s final Budgetary Ceiling for the current year – Chicago.

January - 2012 ALA staff prepares the Annual budget based on the broad programmatic objectives.

October 20th F&A/Division Leadership Meeting: Meet new Division Presidents - Chicago

Monthly Endowment Trustees Conference Calls – Every Third Wednesday @ 2:00 EST

Fall Board Meeting

October 21st – 23rd

October 6th – 7th BARC meeting: Finalize FY12 budget - Chicago

Midwinter Meeting (January 20th – 24h)

The Executive Board - Treasurer - presents the broad programmatic objectives to Council for approval. Participation i.e. reports in ALA Finances 101 and PBA. BARC monitors the current budget. President-Elect proposes presidential program budget – Dallas.

December – 1st or 2nd Week

Year end financial review with staff. Meet with auditor to discuss the progress of the audit. Prepare Council mailing on year end results. Begin preparations for Midwinter reports to Council, PBA, ALA Finances Best Practices and Treasurer’s Forum (if necessary). Prepare for ALA annual report.

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FINANCIAL PLANNING CALENDAR – FY12FINANCIAL PLANNING CALENDAR – FY12

April - May The Executive Board receives the preliminary budget from staff (Senior Management), which is reviewed and then forwarded to BARC with recommendations – Chicago.

May - June Staff updates the budget.

Annual Conference (June 21st – June 27th)

Executive Board approves the budget. Council approves the budgetary ceiling. Division Boards approve their budgets – Anaheim, CA.

September/November Staff begins preparing next year’s (FY14) budget and three - year financial plan.

February - April Budget hearings for ALA and the Divisions are held at ALA headquarters with staff.

April/May BARC Meeting: BARC reviews and analyzes the preliminary budget and forwards with recommendations to the Finance & Audit committee - Chicago

June Treasurer, along with staff, prepares for reports to Council (FY13 budget) and PBA – if necessary

August/October Final FY13 budget finalized, primarily the divisions.

Midwinter Meeting Midwinter Meeting Financial ResponsibilitiesFinancial Responsibilities

ALA-APA BARC/F&A Meeting via Conference Call Prior to MW F&A/BARC Meeting Friday January 20th 12:00 – 1:30 ALA Finances Best Practices Friday January 20th @ 2:30 – 3:30 PM Finance & Audit Saturday January 21st @ 9:00 – 11:00 AM BARC Meeting Saturday January 21st @ 12:00 – 1:30 PM Endowment Trustees Report Sunday January 22nd @ 9:00 AM PBA Sunday January 22nd @ 1:00 – 2:30 PM BARC/Division Leaders Sunday January 22nd@ 2:30 – 3:30 PM Finance & Audit Monday January 23rd @ 7:30 – 9:30 AM Treasurer’s Forum Monday January 23rd @ 5:00 PM ??????? Treasurer’s Report to Council Tuesday January 24th @ 8:00 – 12:30 PM Executive Board Meeting Tuesday January 24th @ 1:30 – 4:30 PM

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Annual Conference Annual Conference Financial ResponsibilitiesFinancial Responsibilities

ALA-APA BARC/F&A Meeting via Conference Call Prior to AC BARC Meeting Friday June 22nd @ 12:00 – 3:30 PM Finance & Audit Saturday June 23rd @ 11:00 – 1:30 AM BARC Report to Council Saturday June 23rd @ 3:30 – 5:00 PM Endowment Trustees Report Saturday June 23rd @ 3:30 –

5:00PM PBA Sunday June 24th @ 1:00 – 2:30 PM BARC/Division Leaders Sunday June 24th @ 2:30 – 3:30 PM Treasurer Reports to Council Tuesday June 26th @ 9:00 AM F&A/BARC Reports to Executive Board Tuesday June 26th @ 1:30 – 4:30 PM

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TIMELINE OF BUDGET PROCESS

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Inter-Fund Relationship Inter-Fund Relationship (Sample)(Sample)

Plant Grants & General Fund Divisions Roundtables Fund Awards LTI

REVENUES 26,699,956$ 13,939,616$ 363,775$ -$ 3,436,271$ 551,212$

Revenue TransfersInterest/Dividends 77,727$ -$ -$ -$ -$ 82,661$ Life Member Dues 49,000$ 19,950$ -$ -$ -$ (68,950)$ Cont. Member Dues (4,200)$ 4,200$ -$ -$ -$ -$

Total Revenues 26,822,483$ 13,963,766$ 363,775$ -$ 3,436,271$ 564,923$

EXPENSES 26,904,751$ 13,771,925$ 330,218$ 1,883,691$ 3,034,995$ 626,245$

Small Div Suppt 87,603$ (87,603)$ -$ -$ -$ -$ Plant Fund Transfer 1,725,093$ 158,598$ -$ (1,883,691)$ -$ -$ Overhead (1,473,637)$ 1,473,637$ -$ -$ -$ -$ Overhead (20,051)$ -$ 20,051$ -$ -$ -$ Overhead (401,276)$ -$ -$ -$ 401,276$ -$

Total Expenses 26,822,483$ 15,316,557$ 350,269$ -$ 3,436,271$ 626,245$

Net Revenue -$ (1,352,791)$ 13,506$ -$ -$ (61,322)$

Expense Transfers

IV. Strategic Financial PlanIV. Strategic Financial Plan

Association Needs and Priorities Financial Impact

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V. Financial ConceptsV. Financial Concepts

Glossary of Terms Fund Accounting

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Glossary of Working TermsGlossary of Working Terms

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501 C3 (ALA) – a tax law provision granting exemption from the federal income tax to non-profit organizations. exemptions apply to corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals.

501 C6 (APA) – a tax law provision granting exemption from the federal income tax to non-profit organization that promotes a line of trade or business. This exemption is reserved for business leagues, chambers of commerce, real estate boards or boards of trade etc. The APA is exclusively devoted to a number of functions which cannot be undertaken to a "substantial" extent by the American Library Association, which is organized as a nonprofit educational association under section 501(c)3 of the U.S. Internal Revenue Code. These functions are (1) the certification of individuals in specializations beyond the initial professional degree and (2) the direct support of comparable worth and pay equity initiatives and other activities (e.g. legislative lobbying) designed to improve salaries of librarians and other library workers. As a 501(c)6 professional association, the ALA-APA is able to serve as a vigorous advocate for America's librarians and other library workers and will be able to offer certifications which will help promote individual status and the quality of library service.

Accrual Accounting - An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The general idea is that economic events are recognized by matching revenues to expenses (the matching principle) at the time in which the transaction occurs rather than when payment is made (or received).


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Assets – An item of economic value owned by an individual or organization, that can be converted to cash.

Budgetary Ceiling – Except for projects supported by grants to the Association, annual estimates of income shall be based upon the unexpended balance remaining from the previous year plus anticipated revenues for the next budget year. In no case may expenditures be budgeted in excess of the estimates of income arrived at in this manner except for projects supported by grants to the Association. The annual estimates of income and budget objectives for each year are to be submitted to Council for approval.

Capital Appreciation – an increase in the market value of an asset (marketable securities) over its original cost.

Capital Budget - A detailed plan to secure or finance long-term outlays, for fixed assets such as facilities, furniture, equipment, software and hardware.

Credit* – Entry on the right side of a DOUBLE-ENTRY BOOKKEEPING system that represents the reduction of an ASSET or expense or the addition to a LIABILITY or REVENUE. (See DEBIT.)

Debit* - Entry on the left side of a DOUBLE-ENTRY BOOKKEEPING system that represents the addition of an ASSET or expense or the reduction to a LIABILITY or REVENUE. (See CREDIT.)

*See accounting formula


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Deferred Revenue – Income received but not earned until all events have occurred. Deferred income is reflected as a LIABILITY.

Depreciation – Expense allowance made for wear and tear on an ASSET over its estimated useful life.

Expenses - In accounting, an expense represents an event in which an asset is used up or a liability is incurred.

Grants & Awards – Funds from government and non-government agencies made available to support specific programs, services and initiatives.

Liabilities – a financial obligation, debt, claim, or potential loss – what an organization owes.

Long-Term Investment – The active management of a pool of securities, which includes equities, fixed income (bonds) and REIT’S, for the purpose of growing the corpus, assets, and investment resources so as to support current and future Association needs, including scholarships, awards and unique programs that build a strong future for the American Library Association and America’s libraries.

Market Value – The value that an asset (marketable securities) can receive, as determined by open bidding between buyers and sellers in a regulated market place ie NYSE

Net Asset Balance – The accumulated revenues minus expenses for ongoing operations.


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Operating Budget – Is an annual budget of an activity which includes revenues, expenses, programs etc.

Operating Cash – The revenue generated from on-going operations from the primary revenue generating units to conduct daily operations.

Overhead Recovered – Reimbursable costs to the General fund (Administration Central) for providing administration and infrastructure support from certain revenues generated within the Association.

Plant Fund – Consists of capital assets and general operations for buildings, capital equipment, construction in progress and improvements in and infrastructure or land. This includes:

- ALA Headquarters

- Washington Office

- Capital Budget

Realized (gain/loss) – an investment transaction, that recognizes the gain or loss in value of a security when it is sold.

Unrealized (gain/loss) – The prevailing value of an unsold investment, as determined by the market and compared to its original cost, that results in a gain or loss in the value.


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Revenues - The amount of money that an organization receives from its activities in a given period, mostly from sales of products and/or services to customers. *Note: conflicts abound as to when revenue should be recognized. The Financial Accounting Standards Board’s (FASB) Statement of Financial Accounting Concept 5 states that revenues should be recognized when they are “realized or realizable” and “earned”. Revenues are “realized or realizable” when products are exchanged for assets (such as cash) or claims to assets (such as promises to pay). Revenues are “earned” when the entity has performed all duties necessary to the purchaser.

Statement of Operations – Same as the income statement, which illustrates the profitability ie revenue less expenses, over a given period of time – monthly, quarterly, annually etc.

Statement of Positions – Same as the balance sheet, which gives a snapshot holdings ie assets, liabilities and member equity, on a specific date.

Subscription Equivalent – dollar amount transferred from the general administration to Publishing in order offset the net expense of publishing and distributing American Libraries.

Variance – The difference between the actual revenue/expense and the budgeted revenue/expense.

Yield - The annual rate of return - interest/dividends/appreciation - on an investment, expressed as a percentage.

Fundamental Accounting Formula

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= + + -

DR CR DR CR DR CR DR CR DR CR

+ - + - - + - + + -

STOCKHOLDERS (MEMBER) EQUITY= +

Net Assets Revenues ExpensesAssets Liabilities

ASSETS LIABILITIES

DR = DebitCR = Credit

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ALA FUND STRUCTUREALA FUND STRUCTURE

OPERATING FUND PLANT FUND GRANTS & AWARDS

LONG TERM INVESTMENTS

General Fund

Divisions

Round Tables

Headquarters Building

Washington & Choice Offices

Operating

Furniture & Equipment

Exchange Trans (NG)

Restricted (NG)

Unrestricted

Temporarily Restricted

Permanently Restricted

Huron Plaza Property

TOTAL ALA Budget

Capital Budget

Exchange Trans (G)

Technology Furn/Equip & Building

Technology Reserve Fund

VI. Financial ReportsVI. Financial Reports

Monthly Performance Reports APA Statement of Financial Position (Balance Sheet)

Statement of Operations and Changes in Net Assets (Income Statement)

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Statement of Financial Position

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Assets 20XX 20XX

Current assets:Cash and cash equivalents 1,916,803$ 2,277,254$ Short-term investments 15,661,798 15,279,452 Accounts receivable, less allowances for doubtful accounts

and returns (2006 – $347,552; 2005 – $330,305) 3,498,195 3,586,610 Inventories, less reserves (2006 – $454,751; 2005 – $384,827) 1,248,792 1,225,818 Grants receivable 859,910 3,328,343 Prepaid expenses and other receivables 849,190 749,301

Total current assets 24,034,688 26,446,778 Property and equipment, less accumulated depreciation 13,845,862 13,665,626 Long-term investments 28,810,543 26,966,775 Total assets 66,691,093$ 67,079,179$

Liabilities and net assets

Current liabilities:Accounts payable 3,075,434$ 3,592,893$ Accrued liabilities 1,678,358 1,322,454 Deferred revenue:

Publication subscriptions 2,426,307 2,597,401 Membership dues 4,060,975 4,134,665 Conference fees 2,721,384 4,146,065

Current Portion of long-term debt 294,925 119,244 Grants and awards 2,309,109 4,531,517

Total current liabilities 16,566,492 20,444,239 Capital Lease Obligation 35,395 59,160 Long-term debt 4,396,525 4,700,665 Accrued postretirement benefits 16,029,217 15,917,490 Total liabilities 37,027,629 41,121,554

Net assets:Unrestricted:

Nondesignated 23,762,211 20,061,368 Board-designated reserve – 1,037,633

23,762,211 21,099,001 Temporarily restricted 5,386,553 4,913,249 Permanently restricted 514,700 514,700

Total net assets 29,663,464 26,526,950 Total liabilities and net assets 66,691,093$ 67,648,504$

August 31

Statement of Operations & Changes in Net Assets

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Operating revenues and gains: 20XX

Membership dues $ 8,820,157 Sale of books and materials 5,536,135 Subscriptions 4,656,326 Advertising 4,876,520 Meetings and conferences 12,674,350 Products and promotions 1,459,906 Grants 8,547,760 Contributions 1,510,754 Dividends and interest income:

Short-term investments 917,247 Long-term investments 856,132

Other 2,633,778 Total operating revenues and gains 52,489,065 Net assets released from restrictions:

Satisfaction of program restrictions – Total operating revenues, gains, and other support 52,489,065

Expenses

Payroll 21,162,124 Outside services 7,295,343 Travel 2,529,826 Meetings and conferences 6,821,535 Publications 4,760,810 Operating 7,639,195 Postretirement benefits 1,725,247 Total expenses 51,934,080 Operating revenues, gains, and other support (less than)

in excess of operating expenses 554,985 Nonoperating:

Other post -retirement changes 1,268,841 Net realized and change in unrealized gains (losses):

Short-term investments 315,084 Long-term investments 1,084,271 Change in investment in related party (86,667)

Change in net assets 3,136,514 Net assets at beginning of year 26,526,950 Net assets at end of year $ 29,663,464

VII. Operating AgreementVII. Operating Agreement (Policy 6.4.1)

Relationship between the General Fund and the Divisions

Services provided at no chargeServices provided as a direct chargeNon-overhead assessed revenuesPractices

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Operating Agreement Relationship

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Operating Agreement Highlights

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• Created over a two year period in the late 1980’s. Adopted in 1989 with a five year phase in period.

• Defines the relationship between divisions and core (administrative) structure of ALA.

• Reviewed annually at the Division Leadership/BARC meeting.• Preamble:

- Statement of purpose and values outlines the unique structure of ALA ie “one association with indivisible assets and a single set of uniform procedures.”

- Home of 11 Divisions and other units, “The nature of the relationship among the ALA units is a dynamic one, demanding collaboration and a willingness to work together.”

• Defines the financial responsibility between ALA and the Divisions.


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• The agreement provides a cooperative framework in which questions of organizational relationship can be addressed and resolved.

• Guiding Principles

- Shared values of unity, diversity, authority (delegated to individual Divisions) autonomy and collaboration/cooperation.

- Divisions assume financial responsibility for staff and programs, including some indirect costs for Division activities and services provided by ALA.

continued

- ALA will provide general administrative, financial, membership, publishing services to the Divisions.

Operating Agreement Services Funded by the General Fund at No Direct Charge to Divisions

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• Publishing - Rights and Permissions, copyright services and other specialized services.

• Finance/Accounting - Preparation of monthly budget reports, management of annual budgeting cycle, planning/budgeting support, credit & collections and annual audit.• OIF, Washington Office/OITP/OGR, OLOS, HRDR, OR, Executive Office, Diversity Office, Governance and IRO

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Operating AgreementDetermined Overhead Charges

Overhead will not be assessed on revenues from:

• Division Dues

• Division Donations• Interest Income Earned by Divisions• ALA Royalties to Divisions• Travel Expense Reimbursement from Outside

Organizations• Separately-Ticketed Events at Conference (tours and

meal functions)• Advertising in Publications Provided to Division Members

as part of Membership

Overhead Calculations

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• Overhead is charged on non-dues revenue generating activities ie. registration fees, exhibit space, meal functions (except separately ticketed events, net sales of materials, subscriptions, advertising other than those provided as part of membership) small miscellaneous fees and royalties.

• Some assessments are at 100% of the ALA composite rate Registration fees, exhibit space and meal functions.

• Remainder are assessed at 50%--Net sales of Materials, Subscriptions Advertising Except in Publications provided as part of division Membership, Other Miscellaneous Fees.


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• Management Practicescontinued

- Interpretations of the Operating Agreement that guide the application of the Agreement. Provides for flexibility when new initiatives are proposed or services developed.

- Planners recognized that to support the diversity of needs and services within ALA and to membership and recognizing that Small Divisions do not have a sufficient membership base, the operating agreement provides for a supplement to support Small Divisions.

• Small Division Support

VIII. Indirect Costs and StudyVIII. Indirect Costs and Study

Indirect Cost Fact Sheet – see attachedIndirect Cost Rate FormulaIndirect Cost Allocation Methods2010 Indirect CostsDivision Indirect CostsIndirect Cost Study Formula ResultsIndirect Cost HistoryRecent Application Changes

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Indirect Cost Rate Formula(Per Operating Agreement)

Indirect Costs

Conferences + Graphics + Publishing + American Libraries

==Revenues

Conferences + Graphics + Publishing + American Libraries

Rate

Indirect Costs

Revenues

=Revenue Producing Units

Revenue Producing Units= Rate

or

Allocation MethodsAllocation Methods

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Sherri Vanyek

ITTS

# of phone lines, # of PC’s, # of phones, # of financial transactions

Cynthia Vivian

Human Resources Table of Positions ie # of Full Time Equivalent Employees

Cathleen Bourdon

Communications Membership Statistics

Al Campanio

Staff Support Assigned Square Footage inBuilding/Maintenance

Mark Gould

PIO Allocation of PIO Usage

Karen Muller

Library Allocation of Library Usage

Four Step ProcessFour Step Process(Flow Chart on Next Slide)

Allocate total ALA expenses across all units & activities

Update allocation methodologies & apply to indirect cost centers

Determine direct/indirect cost incurred by indirect cost centers (16) after methodology applied – See excel Human Resources example and excel “fully direct/indirect” sheets

Allocate indirect costs to indirect cost formula as required by Operating Agreement – See excel formula detail sheet

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Flow ChartFlow Chart

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Human Resources

Total direct expenses captured across all unitsHR = $726,788

Direct/Indirect costs for support units allocated to all units

Indirect cost allocated to support units based on methodologies

D + I/D = $605,859 + $120,929 =$726,788

Composite indirect cost rate determined25.5%

See excel worksheet“expense allocation”

See excel worksheet“fully allocated direct

indirect costs”

See excel worksheet“sample indirect costcenter” HR allocated

based on FTE’s

See excel worksheet“formula detail”

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SCHEDULE #4

726,788.41$

# OF FTE'S % ALLOCATION

HQ Building 0 0.0% -$

Executive Bd./Council 0 0.0% -$

Executive Office 6 2.2% 16,171.82$

LARC/Library 6 2.2% 16,171.82$

Staff/Off. Supp. Svr. 5 1.9% 13,476.51$

ITTS 12 4.5% 32,343.63$

Human Resources 0 0.0% -$

Distribution Center 3 1.1% 8,085.91$

Reprographics 2 0.7% 5,390.61$

Building Maintenance 3 1.1% 8,085.91$

Membership Services 14 5.2% 37,734.24$

Fiscal Services 19 7.0% 51,210.75$

General Administration 0 0.0% -$

Member Prog/Serv AED 3 1.1% 8,085.91$

PIO 6 2.2% 16,171.82$

Production Services 7 2.6% 18,867.12$

Marketing 0 0.0% -$

Offices & Committees 41 15.0% 109,159.76$

Conference Services 9 3.3% 24,257.73$

Products & Promotions 2 0.7% 5,390.61$

Publishing AED 2 0.7% 5,390.61$

ALA Editions 23 8.5% 61,991.97$

Booklists 31 11.5% 83,554.39$

American Libraries 7 2.6% 18,867.12$

ALA TechSource 2 0.7% 5,390.61$

PLA 9 3.2% 22,910.07$

ACRL 13 5.0% 35,982.29$

CHOICE 11 4.1% 29,648.33$

AASL 9 3.2% 23,449.13$

ASCLA 1 0.4% 2,695.30$

ALCTS 3 1.1% 8,085.91$

LAMA 3 1.1% 8,085.91$

RUSA 3 1.1% 8,085.91$

ALTA 2 0.9% 6,199.20$

LITA 4 1.5% 10,781.21$

ALSC 6 2.2% 16,171.82$

YALSA 3 1.2% 8,894.50$

Round Tables 0 0.0% -$

Restricted Funds 0 0.0% -$

Related Interest Grps. 0 0.0% -$

0 0.0% -$

Totals 270 100.0% 726,788.41$

HUMAN RESOURCES

Allocation based on full time equivalents per the FY 2010 Table of Positions. The CHOICE and the Washington Offices are weighted @ 1/2. Total costs of $699,370.24 are based on direct costs of $605,859 and indirect costs of $120,929

Indirect Costs 2010

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% % %

Cost Type 2010 Total 2009 Total $ Change Change

Operating Supplies $ 20,690 0.1% $ 24,220 0.1% $ (3,530) -14.6%

Telephone $ 35,704 0.2% $ 31,023 0.2% $ 4,681 15.1%

Equip/Main $ 36,220 0.2% $ 41,916 0.2% $ (5,696) -13.6%

Human Resources $ 726,788 4.1% $ 679,201 3.5% $ 47,588 7.0%

Building Operations $ 1,757,534 9.8% $ 1,726,401 8.8% $ 31,133 1.8%

Reprographics $ 23,301 0.1% $ 42,502 0.2% $ (19,201) -45.2%

Distribution Center $ 231,245 1.3% $ 240,593 1.2% $ (9,348) -3.9%

ITTS $ 2,365,031 13.2% $ 2,456,008 12.5% $ (90,977) -3.7%

HQ Library/ORS $ 739,853 4.1% $ 736,523 3.8% $ 3,329 0.5%

Fiscal Services $ 1,775,239 9.9% $ 1,788,534 9.1% $ (13,295) -0.7%

Audit Fees $ 91,347 0.5% $ 116,559 0.6% $ (25,212) -21.6%

Publishing AED $ 82,823 0.5% $ 51,261 0.3% $ 31,563 61.6%

Production Services $ (54,416) -0.3% $ 112,109 0.6% $ (166,525) -148.5%

PIO $ 749,638 4.2% $ 729,688 3.7% $ 19,951 2.7%

Membership Services $ 1,751,399 9.8% $ 1,825,187 9.3% $ (73,788) -4.0%

General Administration $ 7,527,504 42.1% $ 9,021,513 46.0% $ (1,494,009) -16.6%

Total $ 17,859,902 100.0% $ 19,623,238 100.0% $ (1,763,336) -9.0%

Division Indirect Costs 2010

46

2010 % Total 2009 % Total $ Change % Change

Cost type

Operating Supplies $ 5,709.90 0.11% $ 6,011.92 0.11% $ (302.02) -5.0%

Telephone $ 7,429.09 0.15% $ 6,356.39 0.11% $ 1,072.70 16.9%

Equip/Main $ 7,536.46 0.15% $ 8,588.29 0.15% $ (1,051.83) -12.2%

Human Resources $ 203,884.54 4.01% $ 181,112.26 3.24% $ 22,772.28 12.6%

Building Operations $ 217,368.97 4.27% $ 206,151.76 3.69% $ 11,217.20 5.4%

Reprographics $ 5,627.83 0.11% $ 12,878.64 0.23% $ (7,250.80) -56.3%

Distribution Center $ 46,796.44 0.92% $ 54,556.57 0.98% $ (7,760.13) -14.2%

ITTS $ 553,971.20 10.88% $ 461,431.87 8.26% $ 92,539.33 20.1%

HQ Library $ 129,998.21 2.55% $ 128,817.92 2.30% $ 1,180.29 0.9%

Fiscal Services $ 686,779.59 13.49% $ 675,885.04 12.09% $ 10,894.55 1.6%

Bank & Audit Fees $ 28,292.96 0.56% $ 30,054.08 0.54% $ (1,761.12) -5.9%

Publishing AED $ - 0.00% $ - 0.00% $ - #DIV/0!

Production Services $ (53,476.54) -1.05% $ 109,167.28 1.95% $ (162,643.82) -149.0%

PIO $ 163,287.55 3.21% $ 197,015.69 3.53% $ (33,728.14) -17.1%

Membership Services $ 591,131.07 11.62% $ 627,106.93 11.22% $ (35,975.86) -5.7%

General Administration $2,494,989.55 49.02% $ 2,883,508.24 51.60% $ (388,518.69) -13.5%

Total $5,089,326.82 100.00% $ 5,588,642.90 100.00% $ (499,316.08) -8.9%

Divisions Indirect Costs 2010

47

% % % Indirect

2010 Total 2009 Total $ Change Change Rate

Unit

PLA $ 881,909.43 17.3% $ 737,658.43 13.2% $ 144,251.00 19.6% 21.2%

ACRL $ 933,059.50 18.3% $1,209,350.49 21.6% $ (276,290.99) -22.8% 42.4%

CHOICE $ 580,495.15 11.4% $ 648,180.47 11.6% $ (67,685.32) -10.4% 19.1%

AASL $ 676,715.68 13.3% $ 674,527.70 12.1% $ 2,187.98 0.3% 25.3%

ASCLA $ 109,749.53 2.2% $ 102,386.44 1.8% $ 7,363.09 7.2% 130.6%

ALCTS $ 236,330.62 4.6% $ 292,614.27 5.2% $ (56,283.65) -19.2% 43.4%

LLAMA $ 152,021.74 3.0% $ 223,619.22 4.0% $ (71,597.48) -32.0% 54.3%

RUSA $ 213,695.32 4.2% $ 271,495.48 4.9% $ (57,800.16) -21.3% 50.1%

ALTAFF $ 231,501.70 4.5% $ 151,844.95 2.7% $ 79,656.75 52.5% 60.7%

LITA $ 204,125.30 4.0% $ 260,981.23 4.7% $ (56,855.93) -21.8% 50.4%

ALSC $ 509,034.75 10.0% $ 620,012.67 11.1% $ (110,977.92) -17.9% 47.7%

YALSA $ 360,688.08 7.1% $ 395,971.54 7.1% $ (35,283.46) -8.9% 72.0%

Total $5,089,326.82 100.0% $5,588,642.89 100.0% $ (499,316.07) -8.9% 32.3%

General Fund Investment in Divisions 2010

48

Overhead Small Division General Fund

Unit Indirect Costs Paid Support Support

PLA $ 881,909.43 $ 724,712 $ 157,197

ACRL $ 933,059.50 $ 166,971 $ 766,089

CHOICE $ 580,495.15 $ 364,994 $ 215,501

AASL $ 676,715.68 $ 434,866 $ 241,850

ASCLA $ 109,749.53 $ 9,454 $ 24,711 $ 125,007

ALCTS $ 236,330.62 $ 44,889 $ 191,442

LAMA $ 152,021.74 $ 13,459 $ 135,563

RUSA $ 213,695.32 $ 19,349 $ 194,346

ALTA $ 231,501.70 $ 18,536 $ 57,757 $ 270,723

LITA $ 204,125.30 $ 34,057 $ 170,068

ALSC $ 509,034.75 $ 97,031 $ 412,004

YALSA $ 360,688.08 $ 17,362 $ - $ 343,326

2010 $ 5,089,326.82 $ 1,948,680 $ 82,468 $ 3,223,115

2009 $ 5,588,642.89 $ 1,435,956 $ 135,720 $ 4,288,407

Difference $ (499,316.07) $ 512,724 # $ (53,252) # $ (1,065,292)

49

American

Conferences Graphics Publishing Libraries

Indirect Cost $1,745,455 $313,604 $2,395,187 $377,185 $4,831,431Revenue $8,200,811 $1,459,906 $8,349,876 $936,086 $18,946,679

Unit Rate 21.3% 21.5% 28.7% 40.3% 25.5%

Revenue per $ Indirect Cost $4.70 $4.66 $3.49 $2.48 $3.92

American

Conferences Graphics Publishing Libraries

Indirect Cost $1,835,808 $374,051 $2,460,371 $360,011 $5,030,241Revenue $8,414,639 $1,628,552 $8,354,592 $870,179 $19,267,962

Unit Rate 21.8% 23.0% 29.4% 41.4% 26.1%

Revenue per $ Indirect Cost $4.58 $4.35 $3.40 $2.42 $3.83

2009 2010Indirect Cost $5,588,643 $5,089,327

Revenue $13,729,911 $15,756,676

Revenue per $ Indirect Cost $2.46 $3.10

2009 2010Indirect Cost $17,451,096 $16,513,583

Revenue $41,064,625 $42,587,757

Revenue per $ Indirect Cost $2.35 $2.58

Previous Rate = 24.4% Current Rate = 24.4%2009 2010

*Indirect Costs Conferences+Graphics+Publishing+Amer.Lib./Revenues Conferences+Graphics+Publishing+Amer.Lib.**Division Indirect Costs/Division Revenues***Total ALA Indirect costs (less Restricted Fund and affiliates)/Total ALA Operating Revenues. Total operating revenueis defined as General Fund ($26,425,901), Divisions ($15,756,676), and Round Tables ($405,180).

=

+

COMPOSITE RATE*

NEH RATE

Overall

Composite

Rate

Overall

Composite

Rate

=

=

Fiscal Year 2010

Fiscal Year 2009

=

=

=

=

=

= 38.8%

Publishing Deprtment

32.3%= 40.7%

26.1%

DIVISION COMPOSITE RATE**

+ 25.5%

=

42.5%

TOTAL ALA COMPOSITE RATE***

=

+ +

+ +

50

Indirect Cost Summary Indirect Cost Summary 2006 - 20102006 - 2010

FY10

FY09

FY08

FY07

FY06

$17,859,902

19,623,000

18,725,000

18,123,000

16,449,000

$5,089,927

5,589,000

5,190,000

5,258,000

4,619,000

28.5%

28.5%

27.7%

29.0%

28.1%

$1,948,680

1,436,000

1,777,000

1,220,000

1,676,000

$ 82,468

136,000

141,000

133,000

142,000

$3,223,115

4,288,000

3,554,000

4,170,000

3,086,000

Total Indirect Costs

Division Indirect Costs

% of Total

Total Indirect

Costs Paid

Small Division Support

Net General Fund

Support

51

Indirect Cost Rate History

Study

Rate

Budget Year Applied

20112010*200920082007200620052004200320022001

TBD25.5%26.1%24.0%23.9%22.6%21.5%21.8%18.8%20.3%19.6%

20142012 & 2013

201120102009200820072006200520042003

*See next slide

Changes Resulting From FY10 Indirect Cost Study

Approved by the Executive Board at the FY11 Spring meeting based on recommendation by staff and Finance & Audit Committee.

The 2010 rate (25.5%) will be applied to the FY12 budget The 2010 rate (25.5%) will also be applied to the FY13 budget Beginning with 2011 study, all future rates, will be applied on a

lagging three-year basis as follows:

– the 2011 rate will apply to the FY14 budget– the 2012 rate will apply to the FY15 budget– the 2013 rate will apply to the FY16 budget

52

IX. Long-Term Investment Fund(AKA Endowment)

Policy 8.5.1 – see attached - Spending/Payout Scholarships and Awards Division Transfers Establishing an Endowment - Principal amount needed

53

Purpose of the Long-Term Investment (Endowment) Fund

54

The purpose of the American Library Association’s Long-Term Investment (Endowment) Fund is to protect and grow the corpus, assets, and investment resources so as to support current and future Association needs, including scholarships, awards and unique programs that build a strong future for the American Library Association and America’s libraries.

Spending/Payout Policy

The spending/payout rate will be a range of 3% - 5% of the trailing five-year quarterly rolling average of each funds net asset balance.

The annual spending/payout rate will be reviewed and recommended by the Endowment Trustees and the Finance & Audit Committee with final approval by the ALA Executive Board.

55

56

ALA OPERATING PROCEDURES FORTRANSFERS & WITHDRAWALS BETWEEN DIVISION FUND BALANCES & THE LONG TERM INVESTMENT FUND

I. TRANSFER PROCESS - From Division Fund Balances (Net Asset Balance) to the Long Term Investment Fund (Endowment Fund).

A. It is desirable that Divisions establish 4 – 6 months of reserves - (Net Asset Balances divided by average

monthly expenses), before any transfers are requested. B. Transfers from the Division(s) Fund Balance to the Long Term Investment fund must be a part of the Division(s)

approved annual budget. C. Transfers of $50,000 or more must be reviewed by BARC as part of the 3 year financial plan and requested 2

years prior to the execution. II. WITHDRAWAL PROCESS – From the Long Term Investment Fund A. Any withdrawal from the Division(s) Long Term Investment Fund, other than emergencies, must be part of the

Division(s) annual budgeting process. It is desirable that interest is withdrawn first and principal is withdrawn as a last resort.

1. Emergencies The ALA Executive Board shall authorize withdrawals from the Division(s) Long Term Investment Funds when the purposes

and programs of the Division would otherwise be seriously impaired. Any withdrawal will carry with it a specific repayment plan. The plan will include a schedule of repayments with the interest rate set at the time of withdrawal. The interest rate will be based off of ALA’s borrowing rate. Requests for withdrawal must be submitted to BARC for review and board approval.

2. Scholarships/Awards The ALA Executive Board shall authorize withdrawals from temporarily restricted and unrestricted Division Long Term

Investment funds designated for named scholarships and awards to the extent necessary to support the award or scholarship according to its stipulations and requirements. If the amount in the temporarily restricted and unrestricted funds are not adequate, the (principal) of the fund may be used, up to the limits of any permanent or donor restrictions. Requests for withdrawal must be part of the Division(s) annual budget process.

X. ALA Finance Best PracticesX. ALA Finance Best PracticesMidwinter Meeting Midwinter Meeting

57

Budget Context; Mission and Legal Structure

Financial Framework

Role and Responsibilities

Annual Budget Cycle and Process

Annual Budget Guidelines

Budget Development

Implementation and Review

XI. ALA-APAXI. ALA-APA

BudgetBusiness PlanOperating AgreementFinancial Statements

58

Documents

1 American Library Association Member Financial Orientation American Library Association Member Financial Orientation (Financial Fundamentals) Thursday