Transcript American Library Association Member Financial Orientation (Financial Fundamentals) Clara Bohrer – BARC Chair James Neal – Treasurer Gregory Calloway – AED Finance Thursday – October 6,

American Library Association
Member Financial Orientation
(Financial Fundamentals)
Clara Bohrer – BARC Chair
James Neal – Treasurer
Gregory Calloway – AED Finance
Thursday – October 6, 2011 1
Orientation Manual
- 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
2
I. 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
3
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.
4
ALA Decision-Making Process
EXECUTIVE
COMMITTEE
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
EXECUTIVE BOARD
4 - Elected by Membership
8 - Elected by Council
1 - Staff - Executive Director
President
President - Elect
Immediate Past President
Treasurer
Executive Director
FINANCE & AUDIT
COMMITTEE
Treasurer - Chair
3 - Executive Board Members
Appointed 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
BUDGET ANALYSIS & REVIEW
COMMITTEE
(BARC)
6 - Members At-Large
2 - Executive Board
Members*
1 - Treasurer
DIVISION BOARDS OF
DIRECTORS
Elected by Division Members
*Appointed by the President
5
ALA MEMBERSHIP ORGANIZATION
MEMBERSHIP
CHAPTERS
AFFILIATED
ORGANIZATIONS
COUNCIL
EXECUTIVE
BOARD
EXECUTIVE DIRECTOR
Board Subcommittees
ALA STAFF
COUNCIL
COMMITTEES
ROUND TABLES
REPRESENTATIVES TO
OTHER ORGANIZATIONS
ALA ADVISORY AND
STANDING COMMITTEES
JOINT COMMITTEES WITH
OTHER ORGANIZATIONS
DIVISIONS
6
ALA Organizational Chart
FY 2011 - 2012
Keith Michael Fiels
Executive Director
Governance Office
Mary Ghikas
Kim Olsen-Clark
Senior AED Member Programs & Services
Director
Developement Office
Divisions
Conference Services
ALA Offices
Roudtables
ITTS
Awards Programs
Office of Accreditation
OLOS
Office of Intellectual Freedom
HRDR
Cynthia Vivian
JoAnne Kempf
Director
Human Resources
Interim Director
Governance Office
Greg Calloway
Emily Sheketoff
Cathleen Bourdon
Don Chatham
AED Finance & Accounting
AED Washington Office
AED Communications
AED Publishing
Finance
Office of Technology Policy
Customer Service
ALA Editions
Budget
Government Relations
International Relations
Booklist
PIO
ALA TechSource
Library
Products & Promotions
ORS
Production Services
Public Programs
American Libraries
Accounting
Accounts Receivable
Accounts Payable
Payroll
Collections
Operations & Staff Support
Chapter Relations
7
ANNUAL BUDGETARY PLANNING CALENDAR
September - October
ALA management reviews the strategic focus of the Association.
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.
March - April
Budget meetings for ALA and the Divisions are held.
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.
August - September
Staff begins preparing next year’s budget and three - year financial plan.
8
II. BARC Agenda Development

Meeting Agenda Samples
- Fall
- Midwinter
- Spring
- Annual
 Council Referrals to BARC
 Processing BARC Action Items
9
Council Referrals to BARC
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
10
III. ALA Budget






Financial Planning Calendar
Process
Fund Interrelationship
Budget Guidelines
Handling New Items and Requests
Spring Meeting - 2012
11
FINANCIAL PLANNING CALENDAR – FY12
Monthly
Endowment Trustees Conference Calls – Every Third Wednesday @ 2:00 EST
October 6th – 7th
BARC meeting: Finalize FY12 budget - Chicago
October 20th
F&A/Division Leadership Meeting: Meet new Division Presidents - Chicago
Fall Board Meeting
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.
October 21st – 23rd
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.
Midwinter Meeting
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.
(January 20th – 24h)
January - 2012
ALA staff prepares the Annual budget based on the broad programmatic objectives.
12
FINANCIAL PLANNING CALENDAR – FY12
February - April
Budget hearings for ALA and the Divisions are held at ALA headquarters with
staff.
April - May
The Executive Board receives the preliminary budget from staff (Senior Management),
which is reviewed and then forwarded to BARC with recommendations – Chicago.
April/May
BARC Meeting: BARC reviews and analyzes the preliminary budget and forwards
with recommendations to the Finance & Audit committee - Chicago
May - June
Staff updates the budget.
June
Annual Conference
(June 21st – June 27th)
Treasurer, along with staff, prepares for reports to Council (FY13 budget) and PBA
– if necessary
Executive Board approves the budget. Council approves the budgetary ceiling. Division
Boards approve their budgets – Anaheim, CA.
August/October
Final FY13 budget finalized, primarily the divisions.
September/November
Staff begins preparing next year’s (FY14) budget and three - year financial plan.
13
Midwinter Meeting
Financial 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
14
Annual Conference
Financial 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
15
TIMELINE OF BUDGET PROCESS
16
Inter-Fund Relationship
(Sample)
General Fund
Divisions
Roundtables
REVENUES
$ 26,699,956 $ 13,939,616 $
Revenue Transfers
Interest/Dividends
Life Member Dues
Cont. Member Dues
$
$
$
77,727 $
49,000 $
(4,200) $
$
19,950 $
4,200 $
Total Revenues $ 26,822,483 $ 13,963,766 $
EXPENSES
$ 26,904,751 $ 13,771,925 $
Expense Transfers
Small Div Suppt
Plant Fund Transfer
Overhead
Overhead
Overhead
$
$
$
$
$
87,603
1,725,093
(1,473,637)
(20,051)
(401,276)
$
$
$
$
$
(87,603)
158,598
1,473,637
-
$
$
$
$
$
Total Expenses $ 26,822,483 $ 15,316,557 $
Net Revenue $
-
Plant
Fund
$ (1,352,791) $
Grants &
Awards
LTI
363,775 $
-
$
3,436,271 $
551,212
-
$
$
$
-
$
$
$
-
82,661
(68,950)
-
363,775 $
-
$
3,436,271 $
564,923
330,218 $ 1,883,691 $
3,034,995 $
626,245
20,051
-
$
$
$ (1,883,691) $
$
$
$
$
$
$
401,276
$
$
$
$
$
$
$
$
350,269 $
-
$
3,436,271 $
13,506 $
-
$
-
$
626,245
(61,322)
17
IV. Strategic Financial Plan

Association Needs and Priorities
 Financial Impact
18
V. Financial Concepts

Glossary of Terms
 Fund Accounting
19
Glossary of Working Terms
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).
20
Glossary of Working Terms
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
21
Glossary of Working Terms
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.
22
Glossary of Working Terms
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.
23
Glossary of Working Terms
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.
24
Fundamental Accounting Formula
ASSETS = LIABILITIES + STOCKHOLDERS (MEMBER) EQUITY
Assets
DR CR
+
DR = Debit
CR = Credit
-
= Liabilities + Net Assets + Revenues - Expenses
DR CR
DR CR
DR CR
DR CR
+
-
-
+
-
+
+
25
ALA FUND STRUCTURE
TOTAL ALA Budget
OPERATING FUND
PLANT FUND
General Fund
Headquarters
Building
Washington &
Choice Offices
Operating
Divisions
Round Tables
Technology
Furniture &
Equipment
Capital Budget
GRANTS &
AWARDS
Exchange Trans (G)
Exchange Trans (NG)
Restricted (NG)
Technology
Reserve Fund
Furn/Equip & Building
LONG TERM
INVESTMENTS
Unrestricted
Temporarily
Restricted
Permanently
Restricted
Huron Plaza
Property
26
VI. Financial Reports

Monthly Performance Reports
 APA
 Statement of Financial Position
(Balance Sheet)

Statement of Operations and Changes in
Net Assets (Income Statement)
27
Statement of Financial Position
Augus t 31
As s e ts
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, less allowances for doubtful accounts
and returns (2006 – $347,552; 2005 – $330,305)
Inventories, less reserves (2006 – $454,751; 2005 – $384,827)
Grants receivable
Prepaid expenses and other receivables
Total current assets
Property and equipment, less accumulated depreciation
Long-term investments
Total assets
Liabilitie s and ne t as s e ts
Current liabilities:
Accounts payable
Accrued liabilities
Deferred revenue:
Publication subscriptions
Membership dues
Conference fees
Current Portion of long-term debt
Grants and awards
Total current liabilities
Capital Lease Obligation
Long-term debt
Accrued postretirement benefits
Total liabilities
20XX
$
$
$
Net assets:
Unrestricted:
Nondesignated
Board-designated reserve
Temporarily restricted
Permanently restricted
Total net assets
Total liabilities and net assets
$
1,916,803
15,661,798
3,498,195
1,248,792
859,910
849,190
24,034,688
13,845,862
28,810,543
66,691,093
3,075,434
1,678,358
20XX
$
$
$
2,277,254
15,279,452
3,586,610
1,225,818
3,328,343
749,301
26,446,778
13,665,626
26,966,775
67,079,179
3,592,893
1,322,454
2,426,307
4,060,975
2,721,384
294,925
2,309,109
16,566,492
35,395
4,396,525
16,029,217
37,027,629
2,597,401
4,134,665
4,146,065
119,244
4,531,517
20,444,239
59,160
4,700,665
15,917,490
41,121,554
23,762,211
–
23,762,211
5,386,553
514,700
29,663,464
66,691,093
20,061,368
1,037,633
21,099,001
4,913,249
514,700
26,526,950
67,648,504
$
28
Statement of Operations &
Changes in Net Assets
Operating revenues and gains:
Membership dues
Sale of books and materials
Subscriptions
Advertising
Meetings and conferences
Products and promotions
Grants
Contributions
Dividends and interest income:
Short-term investments
Long-term investments
Other
Total operating revenues and gains
Net assets released from restrictions:
Satisfaction of program restrictions
Total operating revenues, gains, and other support
Expe ns e s
Payroll
Outside services
Travel
Meetings and conferences
Publications
Operating
Postretirement benefits
Total expenses
Operating revenues, gains, and other support (less than)
in excess of operating expenses
Nonoperating:
Other post -retirement changes
Net realized and change in unrealized gains (losses):
Short-term investments
Long-term investments
Change in investment in related party
Change in net assets
Net assets at beginning of year
Net assets at end of year
$
20XX
8,820,157
5,536,135
4,656,326
4,876,520
12,674,350
1,459,906
8,547,760
1,510,754
917,247
856,132
2,633,778
52,489,065
–
52,489,065
21,162,124
7,295,343
2,529,826
6,821,535
4,760,810
7,639,195
1,725,247
51,934,080
554,985
1,268,841
$
315,084
1,084,271
(86,667)
3,136,514
26,526,950
29,663,464
29
VII. Operating Agreement
(Policy 6.4.1)

Relationship between the General
Fund and the Divisions
 Services provided at no charge
 Services provided as a direct charge
 Non-overhead assessed revenues
 Practices
30
Operating Agreement
Relationship
31
Operating Agreement Highlights
• 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.
• Defines the financial responsibility between ALA and the
Divisions.
• 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.”
32
Operating Agreement Highlights
continued
• 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.
- ALA will provide general administrative, financial, membership,
publishing services to the Divisions.
33
Operating Agreement Services
Funded by the General Fund at
No Direct Charge to Divisions
• 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
34
Operating Agreement
Determined 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
35
Overhead Calculations
• 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.
36
Operating Agreement Highlights
continued
• Management Practices
- Interpretations of the Operating Agreement that guide the
application of the Agreement. Provides for flexibility when
new initiatives are proposed or services developed.
• Small Division Support
- 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.
38
VIII. Indirect Costs and Study
Indirect Cost Fact Sheet – see attached
 Indirect Cost Rate Formula
 Indirect Cost Allocation Methods
 2010 Indirect Costs
 Division Indirect Costs
 Indirect Cost Study Formula Results
 Indirect Cost History
 Recent Application Changes

39
Indirect Cost Rate Formula
(Per Operating Agreement)
Conferences + Graphics + Publishing + American Libraries
=
Indirect Costs
=
Revenues
Rate
Conferences + Graphics + Publishing + American Libraries
or
Indirect Costs
Revenues
Revenue Producing Units
=
Revenue Producing Units
= Rate
40
Allocation Methods
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 in
Building/Maintenance
Mark Gould
PIO
Allocation of PIO Usage
Karen Muller
Library
Allocation of Library Usage
41
Four 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
42
Flow Chart
Human Resources
See excel worksheet
“sample indirect cost
center” HR allocated
based on FTE’s
Total direct expenses captured
across all units
HR = $726,788
See excel worksheet
“expense allocation”
Direct/Indirect costs for support
units allocated to all units
See excel worksheet
“fully allocated direct
indirect costs”
Indirect cost allocated to support
units based on methodologies
D + I/D = $605,859 + $120,929 =
$726,788
Composite indirect cost rate determined
25.5%
See excel worksheet
“formula detail”
43
HUMAN RESOURCES
SCHEDULE #4
Allocation based on full time equivalents per the FY 2010
T able of Positions. T he CHOICE and the Washington Offices
are weighted @ 1/2. T otal costs of $699,370.24 are based on
direct costs of $605,859 and indirect costs of $120,929
$
HQ Building
Executive Bd./Council
Executive Office
LARC/Library
Staff/Off. Supp. Svr.
ITTS
Human Resources
Distribution Center
Reprographics
Building Maintenance
Membership Services
Fiscal Services
General Administration
Member Prog/Serv AED
PIO
Production Services
Marketing
Offices & Committees
Conference Services
Products & Promotions
Publishing AED
ALA Editions
Booklists
American Libraries
ALA TechSource
PLA
ACRL
CHOICE
AASL
ASCLA
ALCTS
LAMA
RUSA
ALTA
LITA
ALSC
YALSA
Round Tables
Restricted Funds
Related Interest Grps.
Totals
726,788.41
# OF FTE'S
%
ALLOCATION
0
0.0%
$
0
0.0%
$
6
2.2%
$
16,171.82
6
2.2%
$
16,171.82
5
1.9%
$
13,476.51
12
4.5%
$
32,343.63
0
0.0%
$
3
1.1%
$
8,085.91
2
0.7%
$
5,390.61
3
1.1%
$
8,085.91
14
5.2%
$
37,734.24
19
7.0%
$
51,210.75
0
0.0%
$
3
1.1%
$
8,085.91
6
2.2%
$
16,171.82
7
2.6%
$
18,867.12
0
0.0%
$
41
15.0%
$
109,159.76
9
3.3%
$
24,257.73
2
0.7%
$
5,390.61
2
0.7%
$
5,390.61
23
8.5%
$
61,991.97
31
11.5%
$
83,554.39
7
2.6%
$
18,867.12
2
0.7%
$
5,390.61
9
3.2%
$
22,910.07
13
5.0%
$
35,982.29
11
4.1%
$
29,648.33
9
3.2%
$
23,449.13
1
0.4%
$
2,695.30
3
1.1%
$
8,085.91
3
1.1%
$
8,085.91
3
1.1%
$
8,085.91
2
0.9%
$
6,199.20
4
1.5%
$
10,781.21
6
2.2%
$
16,171.82
3
1.2%
$
8,894.50
0
0.0%
$
-
0
0.0%
$
-
0
0.0%
$
-
0
0.0%
$
-
270
100.0%
$
-
-
-
-
726,788.41
44
Indirect Costs 2010
%
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%
$
17,859,902
100.0%
$
19,623,238
100.0%
$
(1,763,336)
-9.0%
Total
45
Division Indirect Costs 2010
2010
% Total
2009
% Total
$ Change
% Change
Cost type
Operating Supplies
$
5,709.90
0.11%
$
6,011.92
0.11%
$
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
$
0.56%
$
30,054.08
0.54%
$
(1,761.12)
-5.9%
Publishing AED
$
0.00%
$
0.00%
$
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%
$5,089,326.82
100.00%
$
5,588,642.90
100.00%
$
(499,316.08)
-8.9%
Total
28,292.96
-
-
(302.02)
-
-5.0%
#DIV/0!
46
Divisions Indirect Costs 2010
%
2010
Total
%
2009
Total
$ Change
%
Indirect
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%
$
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%
100.0%
$5,588,642.89
100.0%
$ (499,316.07)
-8.9%
32.3%
Total $5,089,326.82
79,656.75
47
General Fund Investment
in Divisions 2010
Unit
Indirect Costs
Overhead
Small Division
General Fund
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
$
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
$
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
$
$
24,711
57,757
-
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
$ (499,316.07)
$
# $
(53,252)
# $
Difference
512,724
(1,065,292)
48
COMPOSITE RATE*
Publishing Deprtment
Fiscal Year 2010
Conferences
Indirect Cost
Revenue
=
Unit Rate
Re ve nue pe r $ Indire ct Cos t
$1,745,455
$8,200,811
Graphics
+
$313,604
$1,459,906
Publishing
+
$2,395,187
$8,349,876
Overall
Composite
Rate
American
Libraries
+
$377,185
$936,086
=
21.3%
21.5%
28.7%
40.3%
25.5%
$4.70
$4.66
$3.49
$2.48
$3.92
Publishing
American
Libraries
Fiscal Year 2009
Conferences
Indirect Cost
Revenue
=
Unit Rate
Re ve nue pe r $ Indire ct Cos t
$4,831,431
$18,946,679
$1,835,808
$8,414,639
Graphics
+
$374,051
$1,628,552
+
$2,460,371
$8,354,592
+
$360,011
$870,179
=
25.5%
Overall
Composite
Rate
=
$5,030,241
$19,267,962
21.8%
23.0%
29.4%
41.4%
26.1%
$4.58
$4.35
$3.40
$2.42
$3.83
=
26.1%
DIVISION COMPOSITE RATE**
Indirect Cost
Revenue
=
2009
$5,588,643
$13,729,911
=
2010
$5,089,327
$15,756,676
40.7%
$2.46
Re ve nue pe r $ Indire ct Cos t
=
32.3%
=
38.8%
$3.10
TOTAL ALA COMPOSITE RATE***
Indirect Cost
Revenue
Re ve nue pe r $ Indire ct Cos t
=
2009
$17,451,096
$41,064,625
=
2010
$16,513,583
$42,587,757
42.5%
$2.35
$2.58
NEH RATE
Previous Rate
=
24.4%
2009
Current Rate
2010
=
24.4%
*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 revenue
is defined as General Fund ($26,425,901), Divisions ($15,756,676), and Round Tables ($405,180).
49
Indirect Cost Summary
2006 - 2010
Total
Indirect
Costs
Division
Indirect
Costs
% of
Total
Total
Indirect
Costs Paid
Small
Division
Support
Net General
Fund
Support
FY10
$17,859,902
$5,089,927
28.5%
$1,948,680
$ 82,468
$3,223,115
FY09
19,623,000
5,589,000
28.5%
1,436,000
136,000
4,288,000
FY08
18,725,000
5,190,000
27.7%
1,777,000
141,000
3,554,000
FY07
18,123,000
5,258,000
29.0%
1,220,000
133,000
4,170,000
FY06
16,449,000
4,619,000
28.1%
1,676,000
142,000
3,086,000
50
Indirect Cost Rate History
Study
Rate
Budget Year Applied
2011
2010*
2009
2008
2007
2006
2005
2004
2003
2002
2001
TBD
25.5%
26.1%
24.0%
23.9%
22.6%
21.5%
21.8%
18.8%
20.3%
19.6%
2014
2012 & 2013
2011
2010
2009
2008
2007
2006
2005
2004
2003
*See next slide
51
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
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.
54
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
ALA OPERATING PROCEDURES FOR
TRANSFERS & 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.
56
X. ALA Finance Best Practices
Midwinter Meeting
 Budget Context; Mission and Legal Structure
 Financial Framework
 Role and Responsibilities
 Annual Budget Cycle and Process
 Annual Budget Guidelines
 Budget Development
 Implementation and Review
57
XI. ALA-APA
 Budget
 Business
Plan
 Operating Agreement
 Financial Statements
58