1. Division IV Director’s Report Peter Staecker July 2001

2. BoD meeting: Beijing Core Function History Dues Increase Challenge budget mandate Future Meetings of BoD/OUs

3. Core Function History Background: request by TAB to see history of core function growth. Dan Senese previews to BoD in Beijing. Summary:  Function categories and list  Financial History  Discussion

4. Sidebar: OAR Syntax: Overhead Allocation Recovery, AKA the Findlay model, = a revised New Financial Model. Purpose: Distribute income and expenses in fair & equitable manner Revenue streams to support Infrastructure expenses:  OU Reserve income, IP revenue, Conference registrations, Dues  Don’t forget cost-cutting Further recommendations:  Direct Core Function (Infrastructure) costs be paid by users  Indirect Core Function (Infrastructure) costs should be allocated Result: Costs will be visible to all OUs at time of budget preparation. Core function cost reduction will be a shared exercise.

5. Core Functions ($48M* total) Member services Controllers/Admin & Payroll Human resources Business admin & financial planning In-house investing & procurement Information technology Sales & marketing Customer services Financial services Corp activities, awards & facilities Executive Constituent communications SPC & research * ~ 20% of IEEE budget Direct Mostly Direct Indirect

6. Core Function Categories Direct ($11.8M) Shared services supporting all IEEE Direct charge (= pay-by-the-drink)  (Time sheets, headcount, equipment usage, sq ft, # of orders, etc)  Member services  Controllers/Admin & Payroll  Business admin & financial planning  Human resources  In-house investing & procurement

7. Core Function Categories Mostly Direct ($26.1M) Shared services supporting most of IEEE Direct charges as above; Indirect allocated by committees (OAR, IEEE FinCom, ExCom) Mixture? Stay tuned  Information technology  Customer services  Financial services  Sales & marketing

8. Core Function Categories Fully indirect ($10.1M) Shared service supporting all IEEE Indirect charges allocated by committees (OAR, IEEE FinCom, ExCom)  Corp activities, awards & facilities  Executive  Constituent communications  SPC & research

9. Core Function History Overall Core Function spending meaningful:  $26M (1996) -> $48M (2002B)  10.7% CAGR  IT largest ($17M) by factor of 3  Some high growth categories, but… Category level trend data not meaningful  Need for restated historical financials Need to link closely to OAR

10. Next steps Cost center definition consistent with requirements of overhead recovery process (Findlay committee) Provide restated multi-year history (number of years to be defined) Create budget standards that are IEEE Finance Committee approved Create new budget format that is easier to understand

11. BoD meeting: Beijing Core Function History Dues Increase Challenge budget mandate Future Meetings of BoD/OUs

12. Dues Increase Passed: Dues increase from $86 to $101  R1 Assessment of $2  R1-R6 USA Assessment of $4  Agreed in principle: annual dues increase Comments:  Bad timing (economics; double hit to members if S/C dues rise also)  Necessary to avoid additional $3M shortfall

13. BoD meeting: Beijing Core Function History Dues Increase Challenge budget mandate Future Meetings of BoD/OUs

14. Challenge Budget Mandate Motion: IEEE FinCom recommends that the BoD require that the IEEE OUs, including the Societies as tiered down by TAD meet the challenge budgets recommended by the IEEE ED. This recommendation was passed.

15. BoD meeting: Beijing Core Function History Dues Increase Challenge budget mandate Future Meetings of BoD/OUs

16. Meetings of the BoD Motion: ExCom recommends that future meetings of the BoD and OUs be held in locations close to Headquarters.  Against: Violates a “rule” stating that 1 meeting every other year must be held outside R1-6. Make the selection $ based rather than location based.  For: It will save money.  Motion failed (by 1 vote).