Each fiscal year, the Board will use the following guidelines for determining annual expenditures from the SCA General Fund:
These Guidelines are not binding, and may be modified according to the needs and financial health of the organization
In order to responsibly use SCA funds for programs and activities that benefit the Membership, each year the Board should budget to expend a percentage of accumulated surplus in the General Fund. The guidelines below are suggested to encourage the Board to identify and spend a percentage of surplus funds as part of the annual budget process. The guidelines are not binding, and may be modified according to the needs and financial health of the organization.[1]
For the General Fund, surplus funds should be defined as those in excess of the minimal Operating Reserve, plus an AGM Reserve sufficient to cover the liability defined in the current hotel contract.
The Operating Reserve has been $12,000, as adopted by the Board based on 2002 recommendation by the Finance and Investment Committee. It is intended as a cash reserve sufficient to cover six months of expenses.
The recommended “AGM Reserve” should be sufficient to cover a worst case scenario: cancellation of the AGM. The AGM hotel contract is SCA’s largest financial commitment each year. For 2014, the cancellation cost is the cost of the room block we have committed to fill, plus the minimum catering cost projected: ( {160 rooms @ $148} + $5,000 catering = $28,680). Other recent AGM hotel contracts have had a slightly higher obligation, therefore a $35,000 AGM Reserve is recommended. (The Board may adjust this in light of current contract details, but it serves as a good base figure.)
Based on 2013-2014 figures, $47,000 is the target reserve ($12,000 Operating Reserve + $35,000 AGM Reserve), and General Funds in excess of this should be used for SCA programs and member benefits.
In preparation for each year’s budgeting, the surplus General Funds should be calculated based on balances as of the previous January 1st. The Board should budget to expend 10% to 15% of surplus funds in the coming fisal year, so that any programs funded will be sustainable for several years to come.
Example calculations based on 2014 budgeting figures are:
| General Fund as of Jan. 2013: | $160,000 |
|---|---|
| Operating Reserve: | - $12,000 |
| AGM Reserve: | - $35,000 |
| Surplus General Funds: | $113,000 |
10% of 113,000 = $11,300
15% of 113,000 = $16,950
Therefore the 2014 budget target should be roughly $11,000 to $17,000 “in the red”, with this sum directly underwriting programs or other member benefits.
Expenditures ideally should support activities emphasized in the most recent Strategic Planning Report, but may support other priorities identified by the Board. For example, based on the four recommendations of the 2013 Strategic Planning Report, the types of expenses that should gradually spend down surplus funds should result in
General Fund expenditure decisions should be made in light of available Restricted Funds each year as well. If the Education Fund is healthy and can support increased educational programming or scholarships, it should be used up to the maximum expenditure of principal permitted before the General Fund is applied to educational programs. Similarly, if the Speakers Fund is healthy or depleted, the General Fund may be spared or tapped to support speaker expenses as appropriate.
1: If an administrator or clerical assistant is hired, for example, the budget situation will change dramatically and the recommended calculations below will not be sufficient.
Revision history: 6/14 tep, 06/2018 llc