September 01, 2002

 

 Treasurer reports steps to offset uncertain economy - September 1, 2002

Posted on August 15, 2002

 

Dr. James F. Peddie
Dr. James F. Peddie

Reporting July 12 to the House of Delegates, the AVMA treasurer avowed that the financial health of the AVMA is excellent, adding that although there are several problem issues that could affect future finances, leadership has been dealing with these aggressively.

Dr. James F. Peddie reported that as of June 30, the AVMA had assets of $809,000 in cash and government funds, $521,000 in receivables, $234,000 in prepaid expenses, and $21.45 million in liquid investments. In addition, the Association had about $8 million in fixed assets, principally real estate and equipment.

"The numbers which I have just reported for this fiscal year, when compared to the numbers for the same period of the previous fiscal year, are very similar," Dr. Peddie said, "with the exception of the reserves, which have increased over last year."

The national economic downturn accounts for the problem issues, particularly a decline in nondues revenue. Nondues revenue sources typically contribute 38 percent to 40 percent of the AVMA's annual income. The primary sources are advertising income, sponsorship monies, and returns on investments. These areas are discretionary in nature or reflect a market-driven return, factors over which the Association has little or no control. "The [2002] dues increase of $25 helped offset the recession-caused shortfalls which have occurred in the nondues revenues," Dr. Peddie noted.

On the other hand, 2002 dues revenue and most of the principal expense areas are on target to meet the budget, he added.

As a result of concerns stemming from the economic uncertainty and projected shortfalls in nondues revenue, the Executive Board in June revisited the 2003 budget it had approved in April. The result, Dr. Peddie reported, was reductions in many areas of the budget, such as travel, officers' expenses, and printing costs, as well as identification of several new areas of potential income.

"The product of this labor-intensive effort was a 2003 budget which went from an excess of income over expenses of $225,000 or 1 percent of the total annual expenses," the treasurer said, "to a revised budget of $21,018,100 with an income-over-expense cushion of $703,550 or 3.2 percent."

To ensure that the Association is getting the best products and services at the most reasonable cost, the AVMA has been comparison shopping in areas that include auditing, telephone service, hotel accommodations, and travel agencies. Already, a decision was made to combine the Association's banking and financial business to achieve better terms. After reviewing four package offers, AVMA leaders entered into a relationship with American National Bank and Trust Company of Chicago, a subsidiary of Bank One.

Dr. Peddie mentioned that plans to purchase a building to house the AVMA Governmental Relations Division in Washington, D.C., are on hold, and a five-year lease extension has been negotiated. In Schaumburg, Ill., some expenses are anticipated to cover needed maintenance work on the headquarters building.

In the immediate future, AVMA leaders will focus on three fiduciary priorities—conforming to budgeted goals, reviewing the budgetary processes, and developing new income sources.