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The illiterates of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.
– Alvin Toffler
THE
BULLETIN
Volume 76 | Issue 4
July 2008

From the President: A little confused

Rich Steele

In the past five years or so, I have developed a condition that could be described as “budget cognition dysfunction.” It is a rare form of dementia whereby I have absolutely no idea what year it is. I have pinpointed the source of the condition. Let me describe how this happens.

During the first semester of the academic year, we begin our budget planning cycle for the following fiscal year. So, in late 2008, while in fiscal year 2009, we will plan the budget for fiscal year 2010 based on actual results from fiscal years 2007 and 2008 and also show projections for fiscal years 2011 and 2012. Sound familiar? I believe it is warranted to blame the budget for this problem.

Of course, this planning goes on for months and by the time the calendar actually rolls over to 2009, I am fully exhibiting the signs of my cognitive dysfunction. This is evident anytime I need to date something. I feel an overwhelming sense of discomfort when writing the year. I ask anyone around, “What year is it?” They look at me dubiously as they sense my disbelief in their answer. It gets even better if someone asks me a question about “last year,” and I have to ask, “What year would that have been?” I am obviously a little confused.

My personal problems aside, it is certainly a worthy effort to ponder the past, assess the present, and plan for the future, especially with financial matters. Indeed, this is one of the primary tasks for the ACUI Board of Trustees.

Under the leadership of Adam Burden of The Ohio State University, the Finance Committee is charged to ensure that the organization is in good fiscal health. The committee meets monthly with the full membership of the board to review financial statements, approve budget amendments, assist with the preparation of the annual budget, assess financial opportunities, and establish financial policy.

At Georgia Tech, our business manager gets his workouts by hauling around a shopping basket full of overstuffed budget binders to meetings around campus. This ritual ensures that he has any tidbit of spending or revenue history at his fingertips as we plan for the future.

Conversely for the board, Dave Teske, ACUI director of finance and administration, provides a robust spreadsheet that can produce just about any historical information with a swift click of the mouse. There is no shuffling through reams of paper or frantic clicking of calculator keys. Just a single computer screen or one printed page (albeit tabloid size) to see four years past, the current year, and five years forward. This is a software tool that truly helps the board make better financial decisions.

Reviewing line-item expenditures is not really what the board is about; ACUI Executive Director Marsha Herman-Betzen relies on the board to establish strategic direction for financial matters. In 2003, the board updated a policy regarding the ACUI contingency reserve fund. God forbid that the annual conference is ever cancelled due to weather or labor strike, but we must be prepared for the worst. The balance of the contingency reserve fund has grown to more than $240,000 in just a few years, and we are well on our way to reaching the goal: 50 percent of the annual operating expenses (a goal of approximately $1 million).

As a new professional, I learned several interesting facts about money. I never knew that the color of money was important or that each color had a unique set of rules about how it could be spent. I had never thought about the importance of what bucket the money is placed and why it might be important to move some money from one bucket to another. I had always operated in what I learned was called the “big pot” theory.

You may be pleased to hear that your contributions to the ACUI Education and Research Fund are indeed located in a bucket separate from regional funds, which are separate still from general operating funds. ACUI has three buckets. But knowing that there is power in numbers, the board established an investment policy in 2007 to take the “big pot” of available cash and put it to work. The earnings from these investments are then reallocated to the three buckets.

Of course, the “big pot” is made up of several different colors of money, which each have special handling requirements. Some money gets spent quickly; other funds such as endowments are restricted and have the sole purpose of earning interest to be used to fund scholarships. So, the investment portfolio was spread into short-term and longer-term options with a conservative approach and minimal risk.

Two other financial concepts the board practices are: drilling down and disaggregating. ACUI finances are managed through six cost centers, and each of these operates like a small business. So, when more detail is needed for a certain revenue or expense data point, we can drill down into the details for each of the six cost centers. In doing so, we essentially divide a total into its collective parts, disaggregating the totals. These cost centers allow the Central Office to move revenue and expenses into the proper buckets to clearly show which activities are contributing to the bottom line.

In recent years, the Association has put considerable efforts into reviewing and, when necessary, improving our financial policies and procedures. Two separate task forces have addressed these issues in an effort to create consistent practices for all areas of the Association and to ensure the financial operations are being conducted in the membership’s best interests.

Probably the most exciting financial discussion for the board is when we consider potential new revenue streams. It was almost a decade ago when the concept of ACUI Procure was developed. That original idea has morphed into what is now a successful corporate partnership program, run by Martha Blood, which contributes significantly to the revenue of the Association. Other ideas have been considered; some were implemented, some not, and some are still in consideration. But board and staff scrutiny ensures that only the most promising ideas go forth, and only if they will indeed enhance our mission or our association.

I do get a little confused with calendar years around budget time, but I can assure you that your Board of Trustees and Central Office staff work to eliminate all confusion when it comes to the stewardship of the funds you invest in ACUI.