NORTH CAROLINA LIBRARY ASSOCIATION

FINANCE COMMITTEE REPORT

April 19, 2002

PROPOSED YEAR 2002 BUDGET

The Committee presents the attached budget for approval as the FY2002 budget. It is based on a closer look at the Association's FY2001 budget expenditures, paring down or elimination of some items, funding for initiatives approved at the January Board meeting, and projections of income and expenditures determined from budgetary trends of recent years. This budget document reflects a much smaller short fall than the various scenarios presented and discussed at the January Board meeting.

The Committee did have a request to provide money in the annual budget to support the funding of scholarships when scholarship endowment revenue failed to produce sufficient funds. The Committee was of the opinion that the scholarship endowments were created to make the scholarships self-supporting and that operating funds should not be used to compensate for fluctuating investment revenue.

The Committee has presented revenue and expenditures in broad categories. You will note some changes from the categories used in previous years. The following serves to clarify how figures were determined:

REVENUE:

CARRY OVER FROM PREVIOUS YEAR: In 2001, the Committee projected a deficit of $4,500, which was to be covered by conference profits or reserves. Due too higher than anticipated revenue from NCSL Projects, the deficit was actually $2,812. Since the $ 4,500 was placed in the budget line at the beginning of the cycle, the lower deficit resulted in a positive balance at year=s end. The Committee recommends that the projected deficit amount no longer be moved into the budget line at the beginning of the cycle, but rather the exact amount needed to balance the books be moved at the close of the year.

MEMBERSHIP DUES: The events which occurred in the Administrative Office during the last year have made it difficult to assess the revenue stream from membership dues. With 2001 dues revenue closing out at approximately 56% of that projected, and the continuing impact of the resignation of the NCASL Executive Board, the Committee elected to project only a 6% increase over the actual dollar amount of membership dues receipted in FY2001.

CONFERENCE PROFITS: The amount indicated represents 2 of the 2001 conference profits. The inclusion of conference profits as part of the revenue stream provides the Association with the ability to continue to support special programs and projects. However, in order to help balance the annual budget, rather than apply all of this toward Project Grants, a portion ($4000) of it will be applied to the overall operating budget, with $5000 be allocated to Project Grants.

INTEREST: Based on current interest rates, this figure appears to be within reasonable expectations.

NCL SUBSCRIPTIONS & ADS: With the planned changes in the format of NCL, this line represents approximately 50% of that in past years.

LEADERSHIP INSTITUTE: This figure is based on the budget presented by the Leadership Institute Committee. Should the Institute fail to generate sufficient revenue to cover expenses, NCLA will have to cover the difference. The 2001 Institute had a revenue shortfall of $8263.67.

NCSL (STATE LIBRARY) PROJECTS: On recommendation from the State Library, this figure is based on the average revenue generated during the past year for the administration of the NCSL.

SALES TAX REFUND: This is a one time revenue item, created by the recapture of sales tax from 1997-2001, and reflects only that amount actually received to-date. Since the State reserves the right to reduce the amounts requested based on the time lapsed between having paid the taxes and actually requesting their return, it is unclear what, if any, additional refunds will be received for this time period. Beginning with 2002, at the point of purchase, the sales tax is to be separated into an assets account and not deducted from the operating budget account, so it cannot be treated as an income item.

SUBTOTAL: This represents the total budgeted revenue from income generating sources.

RESERVES: This figure represents the amount needed from reserves in order to cover the Association's budgeted expenses. This figure will either increase or decrease based on actual revenue and expenses

TOTAL: This total balances revenue against expenditures.

EXPENDITURES

ADMINISTRATIVE ASSISTANT: Based on the Operations Committee recommendations, the position was advertized as a 25-hour week position at an hourly rate of $11.25 per hour plus 10% for benefits. This figure is based on that rate and those benefits with the position available and filled for 43 weeks in 2002.

ADMINISTRATIVE OFFICE: This figure represents a 21.63% increase over actual FY2001 expenses. The line includes monies for: internet, credit card, software lease, dues, bank fees, bonding, equipment (including hardware upgrade), liability insurance, marketing, postage and shipping (including a postage increase), printing, service contracts, office supplies, telephone, and administrative travel.

BOARD MEETINGS: This expenditure covers expenses related to NCLA Board meetings. The figure allocated is 29% higher than that expended for FY2001.

COMMITTEES: In FY2001, with only half of the Association=s committees expending against the allocation, committee expenditures exceed the budgeted amount by 37%. Two committees alone represented 51% of the expenditures. Without a change in budgeting to reflect an allocation by committee, as well as a firm cap on the maximum amount that can be expended, this could become a runaway expense.

LEADERSHIP INSTITUTE: This figure is based on the budget presented by the Leadership Institute Committee. Should the Institute fail to generate sufficient revenue to cover expenses, NCLA will have to cover the difference. The 2001 Institute had a revenue shortfall of $8263.67.

AFFILIATE DUES/TRAVEL: This figure covers association memberships as well as travel expenses to ALA and SELA for NCLA=s representatives to these associations.

NORTH CAROLINA LIBRARIES: This figure is based on the Board approved change from paper format, published 3 or 4 times a year, to electronic format with an annual paper compendium. The figure includes startup costs for web design, layouts, etc. It is expected that in future years, expenses for this publication would decrease.

PROJECT GRANTS: This is $5000 of the 2001 Conference profit=s amount allocated for FY2002. The purpose is to provide project grants to committees, sections, roundtables to help cover the expenses of programs during this non-conference year.

TARHEEL LIBRARIES: This is the figure requested to fund the resurrection of Tarheel Libraries, distributed as a quarterly in paper format.

TOTAL: The sum total of budgeted expenditures.

In an effort to address the area of concern mentioned in the Committee budget line, the Committee submits the following policy recommendation:

The Finance Committee recommends that, beginning with the FY2003 budget, all standing committees must submit operating budget requests to the Finance Committee. The Finance Committee will take these requests into consideration when building individual committee budgets as line items in the Association=s budget. The amounts indicated for each committee in the approved budget may not be exceeded by more than 5% without prior Finance Committee recommendation and Board approval.