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Volume 49 Number 2
Message from SCRA Treasurer, Jim Emshoff
Early 2016 finds SCRA’s financial status to be healthy and strong. I will review our revenue, expenditures, and investment performance for 2015. Then I will describe some changes in our financial processes before providing a summary of our budget for 2016.
In 2015, we exceeded our expected revenue, primarily as a result of a profitable Biennial. While we have an expectation that the Biennial will provide us with some of our financial support, it has not always worked out that way. We are thankful to Andy Hostetler, Meg Bond and the rest of the team at UMass Lowell for both a stimulating and profitable conference.
We also had fewer total expenses in 2015 than we expected when we set the budget. Some of this was the result of under-spending in some categories, but most of it came as a result of not hiring the part-time Outreach Coordinator that had been authorized for part of 2015. That hiring process is underway now, and by the time you read this we may have filled this position. As a result of both the profitable conference and the underspending, we finished 2015 with revenues exceeding expenditures by $60,096.
One challenge for SCRA in 2015 was negotiation of a new contract for the publication of AJCP. Publication royalties have been our primary source of income for quite a few years, so the outcome of that negotiation was critical to our future financial well-being. In the time that has passed since our last contract negotiation with Springer, the business model for journals has been upended by the rise of electronic publishing and access, leading to fewer and less profitable print subscriptions. Nevertheless, a very able team led by Jack Tebes and Anne Bogat vetted offers from multiple publishers before signing what we consider a very good deal with Wiley. The reduction in our journal revenues could have been drastic, and we feel fortunate that these cuts are “only” $68,000. Making this reduction easier to bear is a one-time signing bonus of $100,000. This bonus will be added to our budget in five $20,000 increments over the years 2016-2020. Therefore, our net reduction for 2016 is $48,000. In addition, there is a possibility that our subscription numbers will be high enough to earn a $50,000 bonus, but we are not counting on that.
The Executive Committee (EC) met in January to set the 2016 budget. The reduction in revenue noted above has resulted in cuts to our grants programs as well as other areas of discretionary spending. If we are fortunate to receive the subscription bonus described above, these cuts will be fully restored by mid-year or so. The EC has also been engaged in a strategic planning process with the assistance of a committee external to the EC. We have acted on several budget requests associated with that plan, including the approval of funds for services that will increase the visibility of our website and an additional administrative assistant. Assuming we do not have any unanticipated expenses through 2016, our budget will be almost exactly balanced (anticipated revenue = anticipated expenses).
The detailed 2016 budget and a budget narrative are available to members who login on the SCRA website, under “Leadership”, “Budget and Finance”, within the “Who We Are” menu.
Our investments total in the neighborhood of $1.1 million. As might be expected, the past 15 months have not provided the returns we hope and plan for (we have a goal of 5% growth with a moderately conservative investment strategy which is managed by professionals). Our 2015 growth was 0.4%. Guided by our Investments and Finance Committees, we have adopted a policy of spending from this nest egg. Each budget will include a revenue allocation from the nest egg which will be the equivalent of the average of 5% of our total assets over the previous 12 quarters. Thus, if we meet our goal of 5% growth in our assets, our net assets will remain constant, while years in which our investment performance is higher or lower than 5% will result in growth or reductions in our assets, respectively.
The most significant change in our financial processes is the decision to engage APA to assist with a substantial part of our finance operations. This decision was made after an extensive consideration of the costs and benefits. The primary benefit of this arrangement is that our accounting will be handled in a professional manner and not subject to the variable capacities of our volunteer elected treasurers. While there was a time when our finances were sufficiently simple to be handled in this manner, they have grown more complex by the year (e.g., contracts with 9 vendors to provide various communication services, monthly payments to administrative staff, administration of several grants programs). APA will be responsible for making all payments, as well as for handling our accounting and tax preparation. All of these services are provided at no cost (with the exception of a minimal payment of $500 for preparing our taxes (well less than half of what we have paid to external accountants for this service). Using APA eliminates the need for paying an administrative assistant to the Treasurer to assist with bookkeeping as well.
Looking forward, we are expecting to strategize around the issue of additional revenue streams for SCRA, as our heavy reliance on AJCP for the vast majority of our revenue may not be a sustainable strategy. We are in good financial shape in 2016 and want to maximize our chances of sustaining that status in the future. If you have any questions about the budget or our finances, or if you have any interest in participating with our Finance or Investment Committees, please feel free to contact me at email@example.com.