ALA Council

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Questions Regarding ALA Finances February 2020

  • 1.  Questions Regarding ALA Finances February 2020

    Posted 22 days ago
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    Councilors,

    On behalf of the Executive Board, thank you for your questions and concerns regarding the current ALA financial status.  We are a strong association advocating for libraries and supporting library workers but we need to focus on our financial infrastructure that supports our mission to enhance learning and ensure access to information for all.  Your input is vital not only for addressing our current financial situation but also for developing the framework to sustain our work for the future. 

    Attached is a listing of questions that were submitted during and following the Midwinter Council meetings.  We are in the process of responding to the issues presented and will provide a summary later this spring. This set of questions will also assist the Executive Board and ALA staff for FY21 budgeting and forecasting future budgets.  Your input is helping members, staff, and ALA leadership to think about how we budget and communicate about our finances. 

    Thank you again for your insights and your service to ALA members.

     Wanda

     

    ALA Financial Questions from ALA Councilors and Leaders
    The following are questions that ALA Councilors posed to seek more understanding of financial
    issues facing the Association. The questions are arranged according to Council session

    ALA Midwinter Council II
    1. Councilors requested the following documents and data:
    a. 5 year Financial Plan – Past and Future summaries
    b. 5 year Financial Plan Assumptions
    c. 5 years of past financial reports
    d. Division balances
    e. F&A Audits
    2. What is our liquidity? What are our cash/short term assets?
    3. Strategic Investment Plan – details
    4. Overhead – what is the rate and how much do Divisions contribute?
    5. What is the Overhead Rate formula?
    6. Why place the bulk of the HQ sale in endowment? And why place $1 million in short
    term/cash? Concern regarding investment when there is a cash shortfall.
    7. What is the loan interest vs endowment payout?
    8. Divisions/RT - can they spend? Why did ALA take the money?
    9. Should we conduct an internal investigation?
    10. Why did IT overspend? What are we doing about it now?
    11. Please provide specific costs such as SCOE, Council, Council AV, other initiatives.
    12. What should divisions and units plan for FY21?
    13. What are the net assets of the Divisions?
    14. What are we going to do for the next five years? How do we get back on track? How do we
    build up the short term/cash?
    ALA Midwinter Council III
    1. We would like a written report on the finances
    2. What are the Division reserves?
    3. We would like planners to look ahead to specific costs we are asking for ALA to make good
    decisions on predicting costs
    4. It does not appear to be a plan for FY21
    5. Divisions asked to be fiscally responsible but have to fill "big ALA"
    6. What are the data points?
    7. What are the historical and data breakdowns?
    8. Help us to make decisions and we want to provide input.
    9. We need to impart value of membership--share as a way to inform and increase
    10. Is outsourcing the store feasible?
    11. Should we spend the HQ sale proceeds instead of investing?
    12. The HQ is prime real estate so was the price too low?
    13. We want monthly communication or better access to financial data.
    14. What are we not going to do? We don't want to bum out ALA staff
    15. Roundtable spending down reserves so is money gone or do we have a promissory note?
    16. We just want to know what to do
    17. What is the staff impact?
    18. "One checkbook"; Respect the direction of our donors.
    2
    19. IT budget -- SCOE looking at new ways to use technology. Can we see RFP's before they
    go out? Can IT appear before council?
    20. CORE balance/reserves so we have concerns as to what this means for our future. Staffing
    in CORE--can we still proceed or will there be layoffs?
    21. One big checkbook. Safeguard so it doesn't happen again in which ALA spends Division
    and Roundtable balances.
    22. Do we need audits or are audits available?
    23. We need to continue to be big and bold
    24. Distressed that "union costs" being used as an excuse for high conference AV costs
    25. Operating Agreement needs to be examined and we need to express new ways of stating
    "one checkbook."
    Submitted Questions following ALA Midwinter
    1. When the decision was made to invest $8 million over 3 years in infrastructure,
    development, and advocacy, where was the money to pay for this investment allocated
    from? Does ALA have a capital reserve fund (one is referenced in the ALA Financial Primer
    on the Treasurer's web page but not in the documents from ALA MW 2020)? Was the
    investment to be paid for by a withdrawal from the Endowment? Or was it to just be
    considered a planned deficit to the general fund that would decrease our liquid assets?
    Was a cash flow projection done to assess if our cash flow was sufficient to absorb this
    loss? EB 12-16, while detailing the specific investments needed does not address where the
    money to make the investments comes from.
    2. Has a cash flow projection been done to show how much ALA must borrow in this fiscal
    year, when it must take the loans, and when the loans will be paid back?
    3. What is the projected net savings from taking out loans rather than using Endowment assets
    for existing cash flow needs as well as planned deficit investment? Can we see a chart
    showing the assumptions used in making that projection?
    4. Does ALA have any written rules, guidelines, etc. related to Division and Roundtable
    balances/deficits? The Policy Manual says Divisions may have fund balances but doesn't
    reference any rules or that ALA may zero out fund balances.
    5. Were Division fund balances zeroed out or have the balances remained on the books
    (understanding that ALA does not currently have the cash to allow those fund balances to
    be spent)?
    6. May we have a detailed report on the technology overspend? Were these cost overruns
    approved by management and/or the executive board? Are these cost overruns associated
    with the technology infrastructure investment or were they separate technology projects?
    7. May we have a breakdown of the Endowment Fund which includes restricted vs.
    unrestricted funds and what the restrictions are?
    8. Are Indirect Costs the same as Overhead Contribution? If so why are they applied to
    Annual/Midwinter and Publishing? The Policy Manual covers Divisions but I can't find any
    reference to Annual and Midwinter being charged Indirect/Overhead. A.7.2.2 refers to
    charging for administrative services in Institutes and Workshops, etc. Is that intended to
    also include Annual and Midwinter?
    9. Are members who cancelled their memberships and/or not attending the conference and
    ask why? Why are they no longer attending the conferences?
    10. Is ALA actually meeting the needs of the "everyday" librarian?
    11. There's no point or purpose to having two conferences a year. That's a huge strain on time
    and resources, both for ALA and its members;
    12. What happened to the funds from selling off ALA's buildings in Chicago?
    3
    13. Need to utilize more and more open source software/utilities
    14. Create a Financial Task Force for the sole purpose of reigning in ALA's finances
    15. Immediately stop pulling funding from Divisions
    16. One question I was asked at MW from the divisions and round tables was whether their
    endowment monies are their own or if their endowment monies are all rolled into ALA's
    endowment and reported together.
    17. Is this a typical cash crunch that ALA is experiencing?
    18. What about the current confusion and unhappiness among members stems from not
    knowing information and what comes from a lack of transparency.
    19. There will be a time period for the new ED to settle into her role, but then what?
    20. Are planned giving monies going where they should be going?
    21. Is ALA using the LTI to pay for operating costs?
    22. Are we currently drawing on that line of credit to pay for operating/liquidity? And what does
    this cost or the financial impact?
    23. When someone makes a donation, does that go toward the donor fund/endowment or is
    ALA using it for operating purposes?

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    Wanda Brown
    Director of Library Services
    Winston-Salem State UniversityO'Kelly Library
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