System Dynamics Society
Report of the VP for Finance
(David F. Andersen)
Bergen, Norway, August 2000
Summary of Report. The time series trend attached to this report gives an overview of the recent financial picture of the Society. Since 1996, the overall balances for the Society have grown from around $125,000 in 1996 to approximately $230,000 in 2000. The annual contract with the University at Albany began around $30,000 and has grown to a proposed $111,000 for FY 2001, reflecting a growth in financial and other activities for the Society. The year 2000 has witnessed a sharp upturn in both income and expenditures for the Society. This trend represents primarily a change in accounting practices—this year for the first time, the activities associated with the annual research conference are being fully integrated into the Society's accounting system.
I am proposing that the Society sustain a deficit of approximately $26,000 for fiscal year 2001. This deficit will be invested in promoting the web presence of the Society. We can easily afford this investment and it will pay off in the long run. Details of these broad trends are organized around my discussion of several financial sheets attached to this report.
As can be seen below, I am proposing two resolutions to the policy council. The first of these requests is that the Society reexamine its dues split with Wiley. The second request is that the Policy Council approve the budget for 2001.
Audited Reports for 1999. The audited reports from our CPA, Hall, Vasil & Dowd, are attached. These reports show a number of slight discrepancies with the unaudited reports that I released at the March Policy Council meeting. These differences arise from technical issues relating to how we account for depreciation in Society-owned equipment and making end-of-the-year postings. I will work with Roberta Spencer on these technical reconciliations. The accountants and I agree that there are no substantial discrepancies.
Budget Comparison, Current Year Only. This report shows how we are doing at the mid-year against our budget for the year 2000. Please note that the year 2000 budget is somewhat different from what you may have in your records in that this revised budget now incorporates the budget for the Bergen conference (as worked out by Bob Eberlein and Paal Davidsen and approved by the Policy Council). I am very glad that we now have an integrate ability to plan and track for the impact of this and future conferences on the Society's aggregate financial picture.
Mid-Year Profit and Loss Comparison for First 6 Months (comparing 2000 to 1999). This report shows that overall we appear to be doing much better financially than we were at the same time last year. These reports should be read with caution, because the Society operates on a cash basis and the timing of payments can make things look temporarily better or worse. I think that we are not really as much improved this year as this report shows, but we are doing fine.
Mid-Year Profit and Loss—Organizational Total. This report shows how our overall "profit" (read "Net Income") is distributed across various cost centers. This year, we have broken out "Core Operations" to include the additional categories of "Web", and "Publication Support". The Web category will allow us to budget for and track investments in our web presence. The "Publication Support" category tracks subsidies that the Society is making to its publications associated with Wiley. As you know, Wiley retains $80 dollars of every member's annual dues and the Society has access to only $10 per member per year.
RESOLUTION #1: I MOVE THAT THE SOCIETY EXPLORE ITS DUES ARRANGEMENT WITH WILEY AND REEXAMINE THE RELATIVE "SPLIT" OF DUES BETWEEN WILEY AND THE SOCIETY IN LIGHT OF THE SOCIETY'S CONTINUING SUBSIDY OF PUBLICATION ACTIVITIES ASSOCIATED WITH WILEY.
System Dynamics Society Budget for 2001. This attachment contains the overall budget for next year. The major components of this budget have been reviewed and approved by the Society's administrative committee. The major features of this document are: (1) The budget incorporates for the first time financial activities associated with the annual conference. This accounting change reflects the major role that the Society's home office staff is now playing in the annual conference. (2) The budget for 2001 includes a $25,000 investment in developing the Society's Web Presence. This year for the first time, the Society ran the review of conference papers and the assembling of the CD using Web technology. While this operation worked out OK, I believe that the Society as a whole needs to gear up its Web operations more fully for the future. The Administrative Committee would oversee this investment and I expect that it would involve partnering or outsourcing for Web expertise. I do not expect that the Society will be making an additional hire to gain this expertise (the administrative committee has reviewed and approved this proposal). (3) The budget incorporates a request for $4,000 to reimburse staff for uncompensated overtime. Since January, Society staff has been working late evenings and weekends for a total of nearly 5 weeks equivalent of “overtime” effort. The University at Albany has no easy mechanism available for compensating this type of extra effort (the administrative committee has reviewed and approved this proposal). (4) Finally, the contract with the University at Albany is budgeted to increase by about 6%. Roberta Spencer will move from 90% to full time status with the Society. In 1999 the contract with the University at Albany had a surplus that "rolled forward" and I expect that a similar surplus will "roll forward" again. These adjustments are reflected in the budget and keep us from having to write formal contract amendments (the administrative committee has reviewed and approved this proposal).
System Dynamics Society Budget for 2001—By Cost Center. This breakout of the Society's budget by cost center shows where the projected surpluses will be generated and where the cross-subsidies will occur. For 2001, we expect that the Atlanta conference and home office sales activities will generate substantial surpluses. Core Operations, the Web, and Publications Support will all require cross-subsidization. Note that overall, I propose a deficit budget for 2001 of $26,112. This deficit is being used to forward-fund an investment in Web Presence Development.
RESOLUTION #2: I MOVE THAT POLICY COMMITTEE OF THE SYSTEM DYNAMICS SOCIETY APPROVE THE PROPOSED SOCIETY BUDGET FOR 2001
Attachments:
1. System Dynamics Society Budget Trends 1996-2001
3. Budget Comparison, Current Year Only
4. Profit and Loss Comparison for First 6 Months (comparing 2000 to 1999)
5. Profit and Loss – Organizational Total (First 6 Months)