Transcript American Library Association ALA Finances 101 Financial Handout Operating Agreement, Indirect Costs and Budget Guidelines.

American Library Association
ALA Finances 101
Financial Handout Operating Agreement,
Indirect Costs and Budget Guidelines
1
Operating Agreement

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
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History/Background – why is it needed?
Relationship between the General Fund
and the Divisions (Policy 6.4.1) – see
attached
Composite rate formula
Services provided at no charge
Services provided as a direct charge
Non-overhead assessed revenues
Overhead assessed revenues
2
Operating Agreement
Relationship
3
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/BARC Leadership
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.”
4
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.
5
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
6
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
7
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.
8
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.
10
INDIRECT COST RATE FORMULA
Conferences + Graphics + Publishing + American Libraries
=
Revenues
=
Indirect Costs
Rate
Conferences + Graphics + Publishing + American Libraries
11
VIII. Indirect Costs and Study
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

Fact sheet
Formula
Allocation methods
Process
Division results
Indirect cost rate history
Divisions – Ten things to know
and love
12
INDIRECT COST RATE FORMULA
Conferences + Graphics + Publishing + American Libraries
=
Revenues
=
Indirect Costs
Rate
Conferences + Graphics + Publishing + American Libraries
13
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
14
Four Step Process
(Flow Chart on Next Slide)
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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 – Excel Formula
detail sheet and Page 22
15
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 = $587,863
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
I/D + D = $587,863 + $111,507 =
$699,370
Composite indirect cost rate determined
22.6%
See excel worksheet
“formula detail”
16
HUMAN RESOURCES
SCHEDULE #4
Allocation based on full time equivalents per the FY 2005
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 $587,863 and indirect costs of $111,507.24.
$
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
699,370.24
# OF FTE'S
%
ALLOCATION
0
0.0%
$
0
0.0%
$
6
2.2%
$
15,561.73
6
2.2%
$
15,561.73
5
1.9%
$
12,968.11
12
4.5%
$
31,123.47
0
0.0%
$
3
1.1%
$
7,780.87
2
0.7%
$
5,187.24
3
1.1%
$
7,780.87
14
5.2%
$
36,310.71
19
7.0%
$
49,278.82
0
0.0%
$
3
1.1%
$
7,780.87
6
2.2%
$
15,561.73
7
2.6%
$
18,155.36
0
0.0%
$
41
15.0%
$
105,041.70
9
3.3%
$
23,342.60
2
0.7%
$
5,187.24
2
0.7%
$
5,187.24
23
8.5%
$
59,653.31
31
11.5%
$
80,402.29
7
2.6%
$
18,155.36
2
0.7%
$
5,187.24
9
3.2%
$
22,045.79
13
5.0%
$
34,624.86
11
4.1%
$
28,529.84
9
3.2%
$
22,564.51
1
0.4%
$
2,593.62
3
1.1%
$
7,780.87
3
1.1%
$
7,780.87
3
1.1%
$
7,780.87
2
0.9%
$
5,965.33
4
1.5%
$
10,374.49
6
2.2%
$
15,561.73
3
1.2%
$
8,558.95
0
0.0%
$
-
0
0.0%
$
-
0
0.0%
$
-
0
0.0%
$
-
270
100.0%
$
-
-
-
-
699,370.24
17
General Fund Support
to Divisions 2006
Unit
PLA
ACRL
CHOICE
AASL
ASCLA
ALCTS
LAMA
RUSA
ALTA
LITA
ALSC
YALSA
Total
Indirect Costs
$
$
$
$
$
$
$
$
$
$
$
$
963,371.59
874,480.13
469,474.98
592,219.57
101,919.45
243,248.05
211,013.61
206,821.44
84,600.52
223,141.39
398,897.09
249,766.75
$ 4,618,954.56
$
$
$
$
$
$
$
$
$
$
$
$
Overhead
Small Division
General Fund
Paid
Support
Support
690,862
121,683
311,875
348,604
1,792
33,972
15,796
16,038
164
37,641
82,364
14,658
$ 1,675,449
$
56,154
$
85,961
$
-
$
142,115
$
$
$
$
$
$
$
$
$
$
$
$
272,510
752,797
157,600
243,616
156,281
209,276
195,218
190,783
170,398
185,500
316,533
235,109
$
3,085,621
18
DIVISIONS INDIRECT COSTS 2006
Cost Type
2006
Operating Supplies
Telephone
Equip/Main
Human Resources
Building Operations
Reprographics
Distribution Center
ITTS
Library/ORS
Fiscal Services
Audit Fees
Publishing AED
Production Services
PIO
Membership Services
General Administration
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Total
$
29,581
70,920
12,258
698,566
1,528,546
15,115
210,203
1,973,067
686,988
1,519,744
108,328
45,317
(56,032)
817,158
1,948,753
6,840,216
%
Total
0.2%
0.4%
0.1%
4.2%
9.3%
0.1%
1.3%
12.0%
4.2%
9.2%
0.7%
0.3%
-0.3%
5.0%
11.8%
41.6%
2005
%
Total
%
$ Change Change
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
49,814
45,882
47,369
699,370
1,087,300
14,825
249,102
1,874,071
625,069
1,466,608
113,918
87,057
(25,598)
798,443
1,703,884
6,188,737
0.3%
0.3%
0.3%
4.7%
7.2%
0.1%
1.7%
12.5%
4.2%
9.8%
0.8%
0.6%
-0.2%
5.3%
11.3%
41.2%
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
16,448,729 100.0% $
15,025,851
100.0%
$
(20,233) -40.6%
25,038 54.6%
(35,111) -74.1%
(804) -0.1%
441,246 40.6%
290
2.0%
(38,900) -15.6%
98,996
5.3%
61,919
9.9%
53,136
3.6%
(5,590) -4.9%
(41,740) -47.9%
(30,434) 118.9%
18,715
2.3%
244,869 14.4%
651,479 10.5%
1,422,878
9.5%
19
DIVISIONS INDIRECT COSTS 2006
2006
%
Total
963,371.59
874,480.13
469,474.98
592,219.57
101,919.45
243,248.05
211,013.61
206,821.44
84,600.52
223,141.39
398,897.09
249,766.75
20.9%
18.9%
10.2%
12.8%
2.2%
5.3%
4.6%
4.5%
1.8%
4.8%
8.6%
5.4%
2005
%
Total
634,315.14
912,060.90
461,962.23
570,579.58
83,578.96
231,223.69
238,827.55
216,345.91
107,788.58
240,513.30
375,503.47
214,157.45
14.8%
21.3%
10.8%
13.3%
1.9%
5.4%
5.6%
5.0%
2.5%
5.6%
8.8%
5.0%
$
%
Change Change
Indirect Indirect
Costs
Rate
Revenue
329,056.45
(37,580.77)
7,512.75
21,639.99
18,340.49
12,024.36
(27,813.94)
(9,524.47)
(23,188.06)
(17,371.91)
23,393.62
35,609.30
51.9%
-4.1%
1.6%
3.8%
21.9%
5.2%
-11.6%
-4.4%
-21.5%
-7.2%
6.2%
16.6%
$
$
$
$
$
$
$
$
$
$
$
$
963,371.59
874,480.13
469,474.98
592,219.57
101,919.45
243,248.05
211,013.61
206,821.44
84,600.52
223,141.39
398,897.09
249,766.75
23.5%
43.5%
16.6%
26.7%
156.3%
49.3%
62.0%
47.9%
122.9%
43.7%
40.2%
67.0%
$ 332,097.80
7.7%
$14,421,445 $ 4,618,954.56
32.0%
Unit
PLA
ACRL
CHOICE
AASL
ASCLA
ALCTS
LAMA
RUSA
ALTA
LITA
ALSC
YALSA
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Total $4,618,954.56 100.0% $ 4,286,856.76 100.0%
$
$
$
$
$
$
$
$
$
$
$
$
4,095,274
2,011,553
2,823,271
2,216,846
65,222
493,514
340,613
431,447
68,850
510,402
991,881
372,572
$
$
$
$
$
$
$
$
$
$
$
$
20
INDIRECT COST SUMMARY
2002 - 2006
Total
Indirect
Costs
Division
Indirect
Costs
% of
Total
Total
Indirect
Costs Paid
Small
Division
Support
Net General
Fund
Support
FY06
$16,449,000
$4,619,000
28.1%
$1,676,000
$142,000
$3,086,000
FY05
15,026,000
4,287,000
28.5%
950,000
136,000
3,473,000
FY04
15,420,000
4,680,000
30.3%
1,359,000
240,000
3,566,000
FY03
14,094,000
4,447,000
31.8%
801,000
230,000
3,876,000
FY02
15,865,000
4,784,000
30.2%
1,169,000
230,000
3,845,000
20,000,000
15,000,000
10,000,000
5,000,000
0
T o tal Ind. C st.
D iv. Ind. C st.
F Y06
D iv. Ind.C st. P d.
F Y05
F Y04
F Y03
Gen. F und Sup.
F Y02
Small D iv. Suppo rt
21
COMPOSITE RATE*
Exhibit I
Publishing Deprtment
Fiscal Year 2006
Conferences
Indirect Cost
Revenue
=
Unit Rate
Re ve nue pe r $ Indire ct Cos t
$1,557,459
$8,106,316
Graphics
+
$400,910
$1,855,601
Publishing
+
$2,230,663
$9,016,038
Overall
Composite
Rate
American
Libraries
+
$355,501
$1,131,745
=
19.2%
21.6%
24.7%
31.4%
22.6%
$5.20
$4.63
$4.04
$3.18
$4.43
Publishing
American
Libraries
Fiscal Year 2005
Conferences
Indirect Cost
Revenue
=
Unit Rate
Re ve nue pe r $ Indire ct Cos t
$4,544,533
= 22.6%
$20,109,700
$1,556,381
$8,018,918
Graphics
+
$370,381
$1,949,416
+
$2,002,708
$8,923,740
+
$371,771
$1,136,039
Overall
Composite
Rate
=
$4,301,241
= 21.5%
$20,028,113
19.4%
19.0%
22.4%
32.7%
21.5%
$5.15
$5.26
$4.46
$3.06
$4.66
DIVISION COMPOSITE RATE**
Indirect Cost
Revenue
=
Re ve nue pe r $ Indire ct Cos t
2005
$4,286,857
$11,639,576
=
2006
$4,618,955
$14,421,445
36.8%
$2.72
=
32.0%
=
37.9%
Current Rate =
23.9%
$3.12
TOTAL ALA COMPOSITE RATE***
Indirect Cost
Revenue
=
Re ve nue pe r $ Indire ct Cos t
2005
$14,408,610
$38,556,819
=
2006
$15,712,832
$41,485,114
37.4%
$2.68
$2.64
NEH RATE
Previous Rate
=
23.1%
2005
*Indirect Cos ts for Conferences +Graphics +Publis hing+Am er.Lib./Revenues for Conferences +Graphics +Publis hing+Am er.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 ($26,713,644), Divisions ($14,421,445), Round Tables ($350,025) and Plant Fund ($0).
22
INDIRECT COST RATE HISTORY
Study
Rate
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
22.6%
21.5%
21.8%
18.8%
20.3%
19.6%
18.9%
18.5%
18.0%
16.5%
16.7%
Budget Year Applied
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
23