As recommended by AVMA treasurer Dr. James F. Peddie, the House of Delegates handily approved a member dues increase July 19. The HOD approved the Bylaws amendment to increase the dues with no debate on the floor of the HOD.
The AVMA Reference Committee on Administration (Reference Committee 1), the Executive Board, and the House Advisory Committee had recommended approval of the measure.
Treasurer Peddie made his formal appeal to delegates for the increase in his address to the House on July 18, saying a "yes" vote for an increase is a vote for the AVMA's future. Without it, he anticipated a "paltry safety margin" of income over expenses.
Effective in January 2004, the increase will raise dues for active members from $225 to $250, for associate and affiliate members from $200 to $225, and for recent graduates, graduate students, postgraduate students, interns, and residents from $100 to $110.
Dr. Peddie began his July 18 address to the HOD with a report on the current financial status. As of June 30, the AVMA had assets of $1.9 million in cash, $340,000 in receivables, $288,000 in prepaid expenses, and $22.4 million in short-term investments. The Association also has $7.5 million to $8 million in fixed assets, principally real estate and equipment.
"The totals which I have just reported to you are comparable to those reported last year at this time," Dr. Peddie said, "with the exception of a possible slight reduction in the value of the real estate, due to a softening of that market."
The AVMA building in Schaumburg, Ill., is one of the major assets owned by the AVMA, and it is unencumbered. Construction of a new entrance is in progress, along with an upgrading and redecorating of the lobby area. The project should be completed by this fall, with the cost to be amortized.
Dr. Peddie explained that a reduction in certain primary nondues revenue areas was a major factor in his decision to move forward his dues increase timetable by a year.
Three of the AVMA's main areas of nondues revenue are interest income from investments, rental income, and advertising income. Over the past three years, the ratio of revenues generated in those areas to the total of all AVMA revenues decreased from 23 percent in 2000 to 21 percent in 2001 to 16 percent in 2002.
The area of largest loss occurred in interest income from AVMA's investments, which dropped from its high of $1.03 million in 2000 to $432,000 in 2002. For 2003, the AVMA budgeted for a slight increase to $460,000 in interest income.
The drop in rental income is secondary to a softening of the office space rental market in the northwest suburban Chicago area and a 15 percent vacancy rate in the AVMA building. Display and classified advertising revenue dropped a total of $279,000 between 2000 and 2002, although the downward trend in advertising may be stabilizing.
"In summary," Dr. Peddie told the HOD, "nondues income is down, due to no fault of ours; expenses have already been cut, and there is little, if any, room to cut further; and a historic unexpected source of cash flow, that being the budgeted but unfilled AVMA staff positions, is drying up as staff replacements are hired."
Adding those revenue shortfalls to the ever-increasing requests for assistance in areas that affect AVMA members is a formula for deficit spending—having to pull money from the reserve accounts to fund operating costs, Dr. Peddie cautioned.
In the 2004 budget, the projected amount of income over expenses—without the recommended dues increase—leaves a margin of only $73,560, not enough of a financial safety net for 2004, the treasurer said.
AVMA fiscal policy mandates that the fund balance must be maintained between 50 percent and 150 percent of the annual operating expenses. At the close of fiscal 2002, it was at 95 percent. "By thinking of this reserve as a ready source of cash for a rainy day, which it is," Dr. Peddie said, "we tend to forget one of its other major purposes, that being as a generator of a source of revenue, or in other terms, as an endowment."