September 01, 2004

 
HOD COVERAGE

 Treasurer's confidence in 2004 tempered by concern for 2005 - September 1, 2004

 posted August 15, 2004
 
Dr. James F. Peddie 
World congress a variable that could affect AVMA finances

The AVMA's treasurer projects a favorable outcome in achieving the Association's budgeted goal for excess income over expenses for the 2004 fiscal year, Jan. 1, 2004 to Dec. 31, 2004.

In his report to the House of Delegates on July 23, Dr. James F. Peddie said that, as long as several revenue streams stay on track and operating expenses are in line with the budget-based projections, he foresees the Association meeting its budgeted goal of $1,543,560 in income over expenses.

Treasurer Peddie reported that, as of June 30, the AVMA has received 89 percent of the $23,058,760 in projected income and expended 49 percent of the budgeted expenses of $21,515,200.

One uncertainty tainted his otherwise positive projections—the potential for a financial hit in 2005.

"I as the treasurer am very concerned about next year's convention in 2005 where we host the World Veterinary Congress in Minneapolis," Dr. Peddie confided.

"My concern comes from the instability in the world at this time and the difficulty which this imposes on our international visitors and their travel."

The AVMA and World Veterinary Association have no control over this variable, which, he said, could have a major impact on the AVMA's 2005 finances. He raised the issue to illustrate the type of situation the Executive Board faces when reviewing and approving each new budget.

The ongoing, rapid expansion of the AVMA Annual Convention also incurs a risk—that if a convention were not well-attended, the Association would not recover its investment, Dr. Peddie said.

Continuing his remarks about managing finances, Dr. Peddie said that during the past year, the AVMA has restructured its mutual fund investments by selling the shares in the two companies that had marginal performance and reinvesting the proceeds into the American Funds group. The AVMA's best performer, this group enjoys Morningstar ratings of 4 to 5, with 5 being the highest rating possible.

For its long-term investments, AVMA officials have met and corresponded with several association management firms working on developing a personalized investment management program. The Executive Board will have the final decision on how the AVMA manages its financial reserves, Dr. Peddie noted.

Lastly, Dr. Peddie, who is serving his final term as treasurer, reported on changes in the AVMA's real estate holdings. He projected an aerial photo of AVMA headquarters in Schaumburg, Ill., on the screen, stating that the Association receives approximately $550,000 in rental income per year and has no outstanding debt on this property. Construction of a new front entrance to the building, which included refurbishing the lobby, took seven months and came in under budget.

The planned construction of a convention center and hotel close to the AVMA building was green-lighted by the Schaumburg City Council in June and will affect the future value of the AVMA property.

The purchase June 9 of property in Washington, D.C., to house the AVMA Governmental Relations Division office culminated a several-year search, Dr. Peddie said. The turn-of-the-century property is 8,000 square feet and is located off Dupont Circle in the Embassy area. The negotiated purchase price was $2,525,000, and the Executive Board authorized an additional $500,000 to upgrade and refurbish the building. The AVMA will lease 25 percent to 35 percent of the space in this building to offset operating expenses.