Proposed fiscal year 2017 combined budget
The Executive Committees (ECs) were presented with the Finance and Investment Subcommittee (FISC) proposed budget for the next fiscal year, July 1, 2016-June 30, 2017 (FY17), and endorsed it for approval by the BODs. During their April meeting, the BODs reviewed and conditionally approved the FY17 budget that is presented here for our membership.
The Executive Committees (ECs) were presented with the Finance and Investment Subcommittee (FISC) proposed budget for the next fiscal year, July 1, 2016-June 30, 2017 (FY17), and endorsed it for approval by the BODs. During their April meeting, the BODs reviewed and conditionally approved the FY17 budget that is presented here for our membership.
Budgeting for FY17 represents the collaborative work of both the staff leadership and the Members of the FISC to develop a balanced combined AAO-HNS/F budget. The debt covenants of AAO-HNS/F require a balanced budget whereby total revenue is sufficient to meet all operating expenses plus the next year’s debt service principal payment. The proposed FY17 budget is structured to meet these compliance requirements, the strategic plan goals of the AAO-HNS/F, and continue to provide member services in the most effective and efficient way possible.
In early spring, the FISC reviewed financial results for the first six months of the FY16 budget year showing that a favorable variance, as compared to budget, is projected for the year.
FY17 budget highlights
The FY17 balanced budget is proposed at $19.15M and prioritizes the direction of the BODs. Development of RegentSM, the ENT clinical data registry, continues to be a strategic priority and significant area of budget resources. The BODs previously approved up to $3M of reserves for RegentSM start-up costs of which $2M was budgeted for use in FY16 and $553K is budgeted for use in FY17.
Starting in FY17, dividend and interest income will be credited directly to reserves. This change supports the AAO-HNS/F strategic goal of ensuring long-term sustainability by focusing our investment portfolio on long-term growth rather than generating cash flow for operations.
The decrease in the amount of reserves used for the registry, plus the change in accounting for dividend and interest income, accounts for the majority of the difference between the FY16 and FY17 revenue budgets. No change in membership dues is proposed. Annual Meeting revenue is budgeted to be consistent with the prior year budget and continue the change made in 2015 to provide Instruction Courses at no additional cost.
The expenses for the AAO-HNS/F are separated below into two areas.
Direct Operating Expenses include costs directly related to carrying out the priorities of the strategic plan and ongoing mission-related programs. Two areas with notable changes in resource use for FY17 are Meetings and Education. Costs to hold the 2016 Annual Meeting & OTO EXPOSM in San Diego will be significantly more than the costs of the prior year’s Dallas meeting. City selection is made years in advance and, in addition to cost, takes a number of factors into consideration. Also, education printing and production costs are budgeted to decrease as the Home Study Course moves to include an online format option.
The direct costs of RegentSM are funded by reserves and budgeted to be significantly less than the prior year. With the registry project now underway, we are able to better estimate actual costs to be incurred on an annual basis. Research grants awarded by AAO-HNS/F remain approximately equal to the prior year budget. However, a $130K grant previously funding data collection is not budgeted for FY17 as this need will be met through use of RegentSM.
Allocated Costs relate to staffing and benefits as well as the operating costs that are incurred for the good of the whole organization, such as occupancy and building-related expenses, and organizational-wide HR, Financial, and IT costs. In total, these costs are budgeted to be less than the prior year, due to elimination of certain staff positions and operational efficiencies incorporated over the past several years.
The complete budget is available to any Academy Member who requests it in writing. Email requests to Carrie Hanlon, CPA, Senior Director, Financial Operations to chanlon@entnet.org.
