Proposed 2013-2014 Combined Budget
Gavin Setzen, MD AAO-HNS/F Secretary-Treasurer Budgeting for FY14 presented a new challenge as staff leadership worked with the members of the Finance and Investment Subcommittee (FISC) to develop a proposed combined AAO-HNS/F budget for the next fiscal year, July1, 2013, through June 30, 2014 (FY14). Budget guidance for FY14 began with the prioritization of strategic issues that were identified during the Boards of Directors strategic planning sessions in December 2012 and the legal requirement for a balanced budget. Several new endeavors were included as priorities for the strategic plan and the proposed FY14 budget included these new activities. While the strategic plan addressed the trends that are shaping the future of medicine, for example: increasing continuing education needs; increasing sub-specialization; increasing the needs for research, quality and evidence-based medicine; the budget also took into account critical on-going programs (such as our annual meeting) and the increasing need for cost-effectiveness. In early spring, the FISC reviewed financial results for the first six months of the FY13 budget year and we were pleased to see that AAO-HNS/F was projecting a favorable budget year. The 2012 annual meeting netted positive results and staff continues to identify cost savings. This was all done under the leadership of David R. Nielsen, MD. The budget planning process involved each of the business units of AAO-HNS/F submitting their budget to the financial team, which works with them to assure the revenue and expenses are in line with the mission and priorities of AAO-HNS/F. The financial team is composed of Brenda Hargett, CPA, chief operating and financial officer (COO); Lynn Frischkorn, director of budgeting and special projects; and Carrie Hanlon, CPA, senior director of financial operations. The financial team presented the proposed budget to the FISC for an initial review in early March and then a final proposed budget in late March. Once reviewed and approved by FISC, the proposed FY14 budget was presented to the Executive Committees (EC) of the Boards of Directors (BOD) recommending their endorsement for approval by the BOD. The EC endorsed the FY14 proposed budget during their April meeting. In May, the BOD reviewed and conditionally approved the FY14 budget that is presented here for our membership. Highlights of the FY14 Budget The budget has been prepared on a cash basis. This basis is important to reflect the ability for an organization to meet its true financial obligations, regardless of whether the cash outlay is a true “expense” or merely balance sheet accounting. The FY14 budget prioritizes the direction of the Board and is based on conservative estimates of both revenues and expenses. The budget for FY14 is presented at $19.56 million, slightly lower than the FY13 budget of $19.75 million. Nearly 70 percent of FY14 revenue, $13.82 million, is budgeted to come from two major areas: membership dues and annual meeting revenue. Membership dues are remaining flat, but the Annual Meeting revenue is budgeted to slightly decrease. Another major area of revenue that is budgeted lower is product and program sales, a result of fewer subscriptions to the Home Study course. Royalties also continue to be a significant source of revenue. As presented overall revenues are down as compared to FY13; this will be a challenge as we prepare budgets in the future. In order to balance the budget with an expected decrease in revenue, the operating expenses had to be thoroughly reviewed, streamlined, and affirmed as they relate to the strategic plan. The expenses for the AAO-HNS/F are separated into two areas. The first area includes direct operating costs relating to each business unit; these are costs directly related to carrying out the priorities of the strategic plan and other on-going mission-related programs. The second area, allocated costs, relates to staffing and benefits, as well as operating costs incurred for the good of the whole organization, such as occupancy and building-related expenses, and organizational-wide HR, financial, and IT cost. While the allocated costs have increased due to inflation, contractual commitments, and salary adjustments, the direct operating expenses have been streamlined and tightened as much as possible to present a balanced budget. The complete budget is available to any Academy member who requests it in writing. Email requests to Brenda S. Hargett, CPA, CAE, COO, to bulletin@entnet.org. AAO-HNS/F Combined Budgets Approved Budget Proposed Budget FY13 FY14 Revenue: Dues/Membership $6,500,000 $6,500,000 Royalties 2,135,700 2,120,000 Corporate & Individual Support 835,000 800,000 Meetings 7,404,000 7,318,900 Products & Program Sales 1,520,000 1,424,150 Miscellaneous 185,600 170,200 Dividend and Interest 543,800 271,000 Funds Released from Restrictions 625,900 958,750 Total Revenue 19,750,000 19,563,000 Direct Operating Expenses: Office $514,100 $393,950 Occupancy (DC office rent) 200,000 200,500 Travel & Entertainment 691,100 667,400 Meetings 2,490,350 2,416,450 Printing & Production 1,023,200 873,850 Connectivity & software 363,500 362,600 Consultants & Professional Fees 2,899,500 2,949,750 Grants 657,400 625,000 Total Direct Operating Expenses $8,839,150 $8,489,500 Allocated Costs: Salaries & Benefits 7,988,000 7,954,100 Occupancy 1,653,000 1,652,000 Support 1,269,850 1,467,400 Total Allocated Costs $10,910,850 $11,073,500 Total Expenses $19,750,000 $19,563,000
Gavin Setzen, MD
AAO-HNS/F Secretary-Treasurer
Budgeting for FY14 presented a new challenge as staff leadership worked with the members of the Finance and Investment Subcommittee (FISC) to develop a proposed combined AAO-HNS/F budget for the next fiscal year, July1, 2013, through June 30, 2014 (FY14). Budget guidance for FY14 began with the prioritization of strategic issues that were identified during the Boards of Directors strategic planning sessions in December 2012 and the legal requirement for a balanced budget.
Several new endeavors were included as priorities for the strategic plan and the proposed FY14 budget included these new activities. While the strategic plan addressed the trends that are shaping the future of medicine, for example: increasing continuing education needs; increasing sub-specialization; increasing the needs for research, quality and evidence-based medicine; the budget also took into account critical on-going programs (such as our annual meeting) and the increasing need for cost-effectiveness.
In early spring, the FISC reviewed financial results for the first six months of the FY13 budget year and we were pleased to see that AAO-HNS/F was projecting a favorable budget year. The 2012 annual meeting netted positive results and staff continues to identify cost savings. This was all done under the leadership of David R. Nielsen, MD.
The budget planning process involved each of the business units of AAO-HNS/F submitting their budget to the financial team, which works with them to assure the revenue and expenses are in line with the mission and priorities of AAO-HNS/F. The financial team is composed of Brenda Hargett, CPA, chief operating and financial officer (COO); Lynn Frischkorn, director of budgeting and special projects; and Carrie Hanlon, CPA, senior director of financial operations.
The financial team presented the proposed budget to the FISC for an initial review in early March and then a final proposed budget in late March. Once reviewed and approved by FISC, the proposed FY14 budget was presented to the Executive Committees (EC) of the Boards of Directors (BOD) recommending their endorsement for approval by the BOD. The EC endorsed the FY14 proposed budget during their April meeting. In May, the BOD reviewed and conditionally approved the FY14 budget that is presented here for our membership.
Highlights of the FY14 Budget
The budget has been prepared on a cash basis. This basis is important to reflect the ability for an organization to meet its true financial obligations, regardless of whether the cash outlay is a true “expense” or merely balance sheet accounting. The FY14 budget prioritizes the direction of the Board and is based on conservative estimates of both revenues and expenses.
The budget for FY14 is presented at $19.56 million, slightly lower than the FY13 budget of $19.75 million.
Nearly 70 percent of FY14 revenue, $13.82 million, is budgeted to come from two major areas: membership dues and annual meeting revenue. Membership dues are remaining flat, but the Annual Meeting revenue is budgeted to slightly decrease. Another major area of revenue that is budgeted lower is product and program sales, a result of fewer subscriptions to the Home Study course. Royalties also continue to be a significant source of revenue. As presented overall revenues are down as compared to FY13; this will be a challenge as we prepare budgets in the future.
In order to balance the budget with an expected decrease in revenue, the operating expenses had to be thoroughly reviewed, streamlined, and affirmed as they relate to the strategic plan.
The expenses for the AAO-HNS/F are separated into two areas. The first area includes direct operating costs relating to each business unit; these are costs directly related to carrying out the priorities of the strategic plan and other on-going mission-related programs.
The second area, allocated costs, relates to staffing and benefits, as well as operating costs incurred for the good of the whole organization, such as occupancy and building-related expenses, and organizational-wide HR, financial, and IT cost. While the allocated costs have increased due to inflation, contractual commitments, and salary adjustments, the direct operating expenses have been streamlined and tightened as much as possible to present a balanced budget.
The complete budget is available to any Academy member who requests it in writing. Email requests to Brenda S. Hargett, CPA, CAE, COO, to bulletin@entnet.org.
AAO-HNS/F
Combined Budgets |
Approved Budget | Proposed Budget |
FY13 | FY14 | |
Revenue: | ||
Dues/Membership | $6,500,000 | $6,500,000 |
Royalties | 2,135,700 | 2,120,000 |
Corporate & Individual Support | 835,000 | 800,000 |
Meetings | 7,404,000 | 7,318,900 |
Products & Program Sales | 1,520,000 | 1,424,150 |
Miscellaneous | 185,600 | 170,200 |
Dividend and Interest | 543,800 | 271,000 |
Funds Released from Restrictions | 625,900 | 958,750 |
Total Revenue |
19,750,000 | 19,563,000 |
Direct Operating Expenses: | ||
Office | $514,100 | $393,950 |
Occupancy (DC office rent) | 200,000 | 200,500 |
Travel & Entertainment | 691,100 | 667,400 |
Meetings | 2,490,350 | 2,416,450 |
Printing & Production | 1,023,200 | 873,850 |
Connectivity & software | 363,500 | 362,600 |
Consultants & Professional Fees | 2,899,500 | 2,949,750 |
Grants | 657,400 | 625,000 |
Total Direct Operating Expenses | $8,839,150 | $8,489,500 |
Allocated Costs: | ||
Salaries & Benefits | 7,988,000 | 7,954,100 |
Occupancy | 1,653,000 | 1,652,000 |
Support | 1,269,850 | 1,467,400 |
Total Allocated Costs |
$10,910,850 | $11,073,500 |
Total Expenses |
$19,750,000 | $19,563,000 |