AACRAO Financials Leadership Conference December 6, 2014

Budget Development Process Planning for FY 2015/2016 operating budget is underway. The draft budget is developed as follows: The review process: Executive Director Reilly meets with department heads and accountants. Proposed budget is drafted with FY 2013/2014 preliminary results and FY 2014/2015 budget projections. Detailed review with Vice President of Finance.

Budget Development Process Department heads have been asked to identify areas for expanded member services and growth potential for AACRAO. Budget for FY 2016 should remain similar to that of FY 2015 (current) Proposed budget presented to AACRAO Board for approval. Budget approved by membership at the Business Meeting in Baltimore. Working budget is monitored by the ED and the Board.

FY 2013/2014 Pre-audit Totals FY 2013/14 REVENUE: DUES (All dues areas) $2,570,062 25.95% NON-DUES $7,332,874 TOTAL REVENUE $9,902,936 TOTAL EXPENSES $9,548,534 EXCESS REVENUE $ 354,402

Dues and Non-dues Revenue Comparison FY 06/07 – FY 12/13 Actual and FY 13/14 Pre-audit – FY 14/15 Budgeted

Operating Revenue & Expenses FY 03/04 – FY 12/13 Actual & FY 13/14 Pre-audit – FY 14/15 Budgeted

Long-term Investments FY 2014 (as of Sept.30) Fund Use Allocation Value Infrastructure Set Allocation $1,000,000 Strategic Endowment Balance of Fund $6,634,758 Total Fund Value 100% $8,634,758

Bylaws Article II: Membership and Fees; Section 1: Voting Membership; c. Dues c. Dues: The Board of Directors through a Board Resolution, may approve a membership dues increase of no greater rate than the previous twelve‐month period’s Consumer Price Index, rounded to the nearest dollar. The Board of Directors, through a Board Resolution, may recommend a membership dues increase that exceeds the previous twelve‐month period’s Consumer Price Index, with notice thirty (30) days in advance of voting, for approval by the membership at the annual meeting.

Dues Last increase for 2014-15 membership year Board approved during November 2012 meeting to increase for 2013-14 and two consecutive years after (2014-15 and 2015-16) Dues were not increased from 2008-09 through 2012-13. Membership Dues Year Revenue % change 2014-2015 $2,477,852 (budgeted) 2013-2014 $2,455,572 (+1.1%) 2012-2013 $2,427,839 (+2.8%) 2011-2012 $2,363,561 (+1.7%) 2010-2011 $2,324,609 (0%) 2009-2010 $2,325,357 (-3.7%)

Current Dues 2014-2015: Increase from $206 to $209 (1.6%) 2015-2016: Estimated increase from $209 to $213 (2% max, pending CPI release)

Dues Discussion FY 2017 and into the Future AACRAO 2014-15 Budget With and Without AACRAO IES and Consulting    Revenue Expenses Net Revenue AACRAO 2014-15 Budget 10,913,078 10,497,927 415,151 AACRAO Consulting 2014-15 Budget 2,100,000 1,717,338 382,662 AACRAO IES 2014-15 Budget 1,880,238 1,432,836 447,402 AACRAO 2014-15 Budget without IES and AC 6,932,840 7,347,753 -414,913

Dues Discussion FY 2017 and into the Future Evaluation of current budget Lines of service cover over $415,000 of budget expenses that are directly related to membership services Philosophically, should other services cover membership services shortfalls? What if service lines fall short of expected budgeted revenue? What if service lines fail or are no longer valid? How can we grow endowment if service lines are covering membership general operation costs? How would we repay the strategic initiatives or infrastructure investment funds without revenues from service lines?

Dues Discussion FY 2017 and into the Future How to make up the disparity: Increase dues progressively over the CPI rate for several years to make up disparity Requires full vote of membership Provide enhanced member services using cost effective measures Increase dues in one large increase Not budgetarily favorable for most institutions Other options? Open discussion from the floor

Dues Discussion FY 2017 and into the Future Make up the cost by increasing the membership dues by a total of $34 from FY 2015-2016 forward (FY 2013-14 = 11,855 members) FY 2014-2015 CPI (1.6%) = $3 => $209 ($2,477,852) FY 2015-2016 CPI or 2% = $4 => $213 ($2,525,115) FY 2016-2017 CPI + $? = $10 => $223 ($2,643,665) FY 2017-2018 CPI + $? = $10 => $233 ($2,762,215) FY 2018-2019 CPI + $? = $10 => $243 ($2,880,765) Continue regular CPI increases for FY 2020-2021 forward

Comments or Questions? Stan DeMerritt Wayland Baptist University 806-291-3416 Email: demerritt@wbu.edu