Martin Garnar posted this to the IFRT Connect page a couple of days ago. I thought you all should be aware of what ALA is dealing with right now.
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Hi all,
Here are my notes from today's Council meeting on the ALA financial siutation. We will have another special Council meeting later this fall to talk about the Forward Together recommendations. In the meantime, please let me know if you have any questions about today's proceedings.
ALA Council Virtual Meeting: September 2020
This meeting was focused on ALA's financial situation. Starting with the combined BARC & Treasurer's Report, Budget Analysis and Review Committee Chair Peter Hepburn began with an overview of the current financial situation. The total projected revenue is $10 million less than budgeted ($39.6 million vs. $49.9 million) and total projected expenses are $50.6 million compared to budget of $53.8 million. This is largely due to the cancellation of the Annual Conference. For the $11 million deficit gap, the plan to fill that gap is as follows:
- Paycheck Protection Program Funding - $4,200,000 (confirmed, not estimated)
- Draws from short-term investments - $2,800,000
- Draws from line of credit - $1,500,000
- Successful PLA Conference (held February 2020) - $600,000 in excess of budget
- Contributed revenue - $500,000 in excess of budget
- Furniture and Equipment/Depreciation - $1,400,000
We also expect to realize a few million dollars from our claim for conference cancellation insurance, which would change these numbers and reduce the need to take funds from some of the sources listed (presumably the line of credit and short-term investments). There were questions about the reliability about our confidence in the budget projections when we don't have the latest financial statements, but both Peter and the ALA treasurer (Maggie Farrell) expressed their continued confidence in the information, pointing out that it was more accurate than what is normally presented at Annual due to the later timing in the fiscal year. There were concerns expressed about the current firm to which we have outsourced our accounting (to the tune of $20K a month), as the financial statements are now 6 months overdue, which was blamed on the work slowdown from COVID. There was also a question about the development office since the director position is vacant. ALA President Tracie Hall is serving as the acting development director given her background in foundations.
Treasurer Farrell then presented the proposed budget for FY 21, which would total $43 million. The projected revenue is a conservative forecast compared to pre-COVID fiscal years. The proposed budget will include a planned deficit of $522K, but they plan to use $1.2 million from the Paycheck Protection Program (PPP) and $150K from the Economic Injury Disaster Loan, which would create a net revenue of $827K to be set aside as reserves for the future. Though the PPP funds are technically a loan, there is a loan forgiveness program built into the legislation and we are confident that we will qualify for full forgiveness of the PPP loan. There are other strategies to address the FY 21 gap that include a potential endowment loan and furloughs (the furloughs can be reduced as the year unfolds if the budget situation improves. Though Council does not approve the budget, we do approve the annual estimates of income, which includes current assets plus the annual estimates of revenue, for a total maximum spend of $71 million, though Maggie assured us that we would never actually reach that budgetary ceiling. There were questions about whether the revenue forecast assumed virtual conferences as opposed to in-person conferences. The current estimates of income do assume that Annual will be in person. While Midwinter 2021 will be virtual, no decision has been made about the other conferences, so those revenue estimates may change depending on what happens with Annual. We'll have a better sense of the finances by Midwinter, when we should see revised estimates of income if the revenue projections have changed based on those decisions about conferences. Council voted to approve the annual estimates of income (132 yes, 10 no, 6 abstained).
ALA Executive Director Tracie Hall presented a new Five-Year Pivot Strategy as a replacement for the previous five-year plan, which was deemed to be irrelevant due to the societal and economic changes since its adoption. Tracie gave some context for the pivot concept, noting that a change in strategy doesn't mean a change in values. She noted that we have just 15% of our potential market share if we look at the number of people in the library profession. The details of what the strategy would be are in the linked document, but in broad strokes, it's about diversifying our revenue streams and increasing membership.
Tracie transitioned to her report (not posted online, but will be made available later), mentioning that a few key searches for open positions (including the directors of the Office for Diversity, Literacy, and Outreach Services and ACRL) will be posted soon and highlighting efforts around closing the digital divide and promoting voter registration efforts.
Respectfully submitted,
Martin Garnar
IFRT Councilor
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Nann Hilyard
Librarian*Quiltmaker*Volunteer
Winthrop Harbor, Illinois
https://withstringsattached.blogspot.com------------------------------