USFA Election 2008 Debate Question #8: USFA back payments

[Capt. Slo-mo]

The USFA is waaaaay behind in payments to referees, BC members, athletes and weapons programs...if one believes everything one hears.

What are the candidate's (Tracy/Kalle, Greg/Sharol) specific plans to catch up with these outstanding debts in the shortest possible timeframe?

I have an unsigned ballot burning a hole in the kitchen table.

[epeemike81]

This post (#174 from the "USFA Accepts Election" thread would appear to be relevant:

Originally Posted by Greg_D

I'm with you on this one, and have outstanding bills as do most active referees, armorers, and BC staff (not to mention athletes with performance grants, coaches and other cadre who travel internationally, etc., etc.).

DJ covered this earlier, but to reiterate... The simple answer is that we have a deficit hanging over us from the end of last season. We're using current income to pay old debts. As money comes in from NACs we use the cash to pay debts from 3+ months ago. Fortunately, and unlike last year, the NACs are actually improving the situation rather than digging us into a bigger hole.

It's going to take us a couple of years to get back to even. To do so we need to have budgets in 2008/2009 and 2009/2010 that anticipate a significant surplus. That will allow us to catch up with our old bills. (And yes, I'm essentially saying that if you help at a NAC for the next couple of years that it's going to take some time to get paid. Hopefully less time at each event, but some time.) By the 2010/2011 season I'd like to think we'll be current with our bills and will be able to pay people right after we get the reimbursement forms. Then in 2011/2012 we can move to a system in which people get paid as they walk out the door at the end of the tournament.

The above may be a little pessimistic, but, at the same time, I would prefer to give everyone realistic expectations about our situation. If we can do better than we will.

Greg

[jjefferies]

I've been told that a report from the audit committee to the Board? is due or has been made detailing how much of a deficit there actually is. Does anyone want to reveal the report's findings or shall we start a pool on how much it is?

[KD5MDK]

Well, a letter was released from the Audit committe several months ago as I recall. The Board doesn't meet again until July, so any reports submitted to it probably won't be available until the Board Agenda is released and oiuyt posts it here 5 minutes later.

[Capt. Slo-mo]

Originally Posted by epeemike81

This post (#174 from the "USFA Accepts Election" thread would appear to be relevant:

Originally Posted by Greg_D
The simple answer is that we have a deficit hanging over us from the end of last season. We're using current income to pay old debts. (snip) As money comes in from NACs we use the cash to pay debts from 3+ months ago. (snip)
It's going to take us a couple of years to get back to even. To do so we need to have budgets in 2008/2009 and 2009/2010 that anticipate a significant surplus. That will allow us to catch up with our old bills. (snip) By the 2010/2011 season I'd like to think we'll be current with our bills

Those of us with unpaid bills larger than the value of our cars would like to point out that there have been no less than 4 NACs since the last time some of us got a check from the USFA, so obviously the "trickle backwards" theory has some leaks in it. Sorry, Greg, but waiting until 2010 is not an option.

What are the candidates proposing to do to emulate the late night TV financial mavens like J.G Wentworth, and get us our "cash now?"

[KShan5[PrFC]]

Originally Posted by Capt. Slo-mo

Those of us with unpaid bills larger than the value of our cars would like to point out that there have been no less than 4 NACs since the last time some of us got a check from the USFA, so obviously the "trickle backwards" theory has some leaks in it. Sorry, Greg, but waiting until 2010 is not an option.

What are the candidates proposing to do to emulate the late night TV financial mavens like J.G Wentworth, and get us our "cash now?"

I think the problem with this analysis of the NC Plan is that it only addresses the paying of refs/fencers etc. However, the NC Plan addresses that as a means to help ct the deficit. It's easy to say "we wanna get paid." I mean I just got paid for Atlanta like 3 weeks ago, and it is definitely a thought in the back of my head if I decide to referee. However, it is thus far the best answer I've seen as to how to get the USFA out of debt. Obviously it's a mutli-part system, but not paying refs/fencers/BC members immediately due to past mistakes is part of a well reasoned solution.

[Greg_D]

Originally Posted by Capt. Slo-mo

What are the candidate's (Tracy/Kalle, Greg/Sharol) specific plans to catch up with these outstanding debts in the shortest possible timeframe?

I'm actually going to frame this a little differently. We need to catch up with these outstanding debts in the shortest RESPONSIBLE timeframe.

First some history…

The 2007/2008 budget that was approved at the 2007 Summer Nationals has a planned fiscal deficit of around $111K. At that time, the BOD didn’t know the extent of the problems for the 2006/2007 season or that there would be huge, unanticipated losses. These were fully revealed only in February at the BOD meeting. The Board of Directors essentially decided at that meeting to not take drastic action to cut our expenditures. It's an Olympic year and many of our expenditures are laid out in already published documents (such as the Athlete's Handbook and the Schedule of events). So, for the most part we're staying the course for the rest of this year.

After JO’s the new Audit and Budget & Finance committees immediately scheduled time with the USFA’s auditors to begin the process of understanding what happened and the current financial picture. In those conversations the auditors indicated that things were much improved from the end of the previous fiscal year and the committees sent out a communication to that effect. The committees requested that the national office send monthly reports on the finances, including a balance sheet and income statements. Since then the committees have requested and received additional information to monitor our financial health (or lack thereof). As time has moved on from February it has become clear that, from an improved position, we have essentially moved back to the place that we started the year. The USFA has very little cash on hand and quite substantial accounts that require payments to vendors, athletes, coaches, and volunteers of all sorts.

Essentially the USFA is taking monies received today (for Summer Nationals for example) and paying expenses that were accrued months ago (say an athlete’s performance grant earned at a World Cup victory or a referee/armorer/bout committee person who worked JO’s). The expenses that we accrue now will have to wait months until they are paid. Obviously, this is causing a lot of people to be justifiably upset.

Again, changing course substantially this year is very difficult and is likely to have very detrimental impact to our athlete’s chances at this Olympics. Thus the EC and the BOD have not moved to cut expenditures radically (which would really involve cutting budgets for the travel of our elite athletes and those who support them).

That leads us to next year and, ultimately, to the next administration. It's important to note that the budget for the 2008/2009 season will be set by the BOD at Summer Nationals, before the new officers begin to serve their terms (which start at the end of the Summer Olympics in August). If we take the hole from last year and the planned deficit from this year we may need to make up around $1.25 million to be back to break-even. So, as a member of the Budget & Finance committee*, I'm going to work closely with the office to establish a budget for 2008/2009. My goal, as a member of that committee, is that the budget presented should have the USFA running a fiscal surplus that will close about 1/2 of the current fiscal deficit. The other 1/2 of the fiscal deficit could then be closed in the 2009/2010 season, putting us onto sound financial footing for the next two years and the future (assuming that the new ED, EC, and Budget committee have those same goals).

Obviously we can do this either by cutting costs or by raising revenues.

The USFFC proposals seem to indicate that we can get there by cutting costs and through operational efficiencies. I disagree. I do believe that the office can do a number of things that will help us to be a much more efficient organization. However, I don't think that air fares are going to go down next year. The schedule for the 2008/2009 NAC season is already set. In addition, changing the way we hire and pay for officials involves organizational changes that are unlikely to happen immediately, and that will require the approval of the BOD, something that can't happen until at least September. I don't believe that we can save enough money on postage and printing to make a sufficient dent in the deficit. I don't believe that it would be wise to cut the numbers of office staff when we already have huge customer service issues.

So, we have to make hard choices on how to combine raising revenues and cutting costs.

Let's start with costs. Our costs essentially break down to elite athlete programs, membership services, and running national events. I believe it is appropriate in the first year of a new Olympic cycle to reduce spending on elite athlete programs. It's important to note that some of the revenue sources (USOC and US Fencing Foundation) are restricted to only these programs, and, in fact, to specific line items within them. At least in theory we could cut back to only spending those restricted amounts. I do NOT, however, think this is in the best interests of the USFA and our long term development. (I want to also point out that if we close 1/2 of the deficit in each of the next two years, by the third year – the year before the Olympics – we’ll be able to expand spending just as we need to qualify teams to London and will then be able to continue that funding throughout the Olympic year at a higher level.) I believe that, in consultation with the national office, we might be able to get some savings from membership services. I also believe that moving away from having committees and volunteers do as much work and giving direct budgetary responsibility to people in the office will help to cut down on cost overruns – see this link for details: http://usfanominees.com/proposals/national-office/. Again, I don't think we can get all of the savings necessary to responsibly close the deficit. As I mentioned earlier, the tournaments themselves are largely set. With travel costs increasing (have you tried to buy a plane ticket recently????), I'm not sure that we can project significant savings without harming the quality of the tournaments.

So... it's likely that we'll need to raise revenues. This could involve some combination of increasing membership dues (above the $10 that is already scheduled), increasing tournament fees, increasing fundraising and donations, or finding completely untapped resources that I haven't thought of yet. I should point out that I, personally, believe that projecting any significant increase in fundraising and donations without already having a specific plan and/or some promises in place of where those sources are going to be derived would be extremely irresponsible (we’ve actually done this in the past and it doesn’t work…).

The Budget & Finance committee will work with the national office to prepare a series of budgets (probably 4 or so) and the different sets of choices that go with each one. Since the budget phase of the BOD meetings generally precedes the decision phase, any changes to significant policy would be presented in the BOD agenda. These would need to be moved to urgent and approved in order to go into effect for next season.

Now to directly answer the question… (You did after all want specific plans of how to get there.) If the plan above is actually followed, we’ll be able to pay some of those back bills to members of the association as we receive membership dues in August/September and throughout the first half of the 2008/2009 season. Those of us who help at Summer Nationals this year and at tournaments during the season as well as those who earn performance grants (under a new formula) will probably see delays of 1-3 months for payment as receipts (mostly tournament revenue) cover those bills. At the beginning of the 2010/2011 season membership dues should be able to fully catch up with old bills. From there we can use tournament receipts to pay people relatively promptly, probably with a month delay or so, for their work. Grants and fundraising that should hopefully begin to flow from a new development director should help to promptly pay athletes and coaches. By the 2011/2012 season we should be in a position to determine how to spend monies from a more efficient organization. If our revenues have successfully been greater than expenses by around $600K per year for two years we can then make choices about how to expand our services and invest that money in the growth and future of the organization and our athletes.

I should mention that one of the priorities, even while going through our current financial difficulties, is to implement a technology plan that will assist us in ultimately becoming much more efficient and able to serve the membership. Some of the budget choices presented to the BOD should include faster and slower versions of that technology plan based on the anticipated project costs and various revenue/expense projections. Other specific, targeted projects that fit in with the strategic plan of the new team of officers will also need to be considered in light of what we can afford and when we can afford it.

Again, as I said in the post that epeemike quoted earlier in this thread, if we can do better (by, say getting some unexpected donations – hint, hint, hint to those of you who can) then we should be able to compress this timeline. However, I don’t believe that it would be responsible to indicate anything other than the above as a reasonable time frame to put us on sound financial footing.

Greg

[Greg_D]

*Just in case anyone asks… Jerry, Brad, and I should all get credit for the work of this year’s Budget & Finance committee. It wouldn’t exist if I hadn’t proposed it, if the three of us hadn’t shepherded it through the first hearing and second hearing process, and gotten a positive vote from the BOD. I am one of the members of the committee, elected from the current BOD. If I am elected Treasurer I'll be the head of it.

Greg

[Greg_D]

One of the things that needs to be examined is whether or not we should continue to use the current auditors. They have served the USFA for a number of years. The current and past problems (specifically the lack of controls at the office) might indicate that they are not providing the level of scrutiny we require, possibly as a result of a very close working relationship with the National Office. At the very least, we should put the contract for audit services out to bid.

We've already discussed this amongst the Nominated officer team and will do so immediately after taking office.

Greg

[epeemike81]

Thanks for the response, Greg. I eagerly await a response from Sharol.

-m

[Capt. Slo-mo]

I hope you're not holding your breath.

Greg: Thanks!

[gorgie101]

Wow! Greg, thanks for an excellent post! Keep up the good work.

[epeemike81]

Originally Posted by Capt. Slo-mo

I hope you're not holding your breath.

Greg: Thanks!

I know she hasn't posted yet, but given that financial solvency is the single most important issue currently facing the USFA, I don't think it's unreasonable to expect that the Hurley candidate for treasurer might choose now to break her silence (at least with a statement through T). What are Ms. Postotnik's plans for the financial recovery of the organization?

-m

[griffindm]

Greg,

Thanks for all the information. It is good to know what shape we are actually in, and what plans seem available to put us back on track.

A disturbing trend comes out of the proposed fixes to our financial situation, in light of other proposed areas that the candidates of both platforms seem to agree upon. The first is the conflict between the need to continue the current form of "volunteer" financing by deferring the reimbursements for referees for longer than expected periods. What does this say to the up and coming cadre of tomorrow's referees? This is less an issue for locally obtained refs, but when you add in airfares and lodging, and pushing reimbursement out beyond 60 days, I doubt this will have a warming effect on bringing in new refs.

The second concern relates to the expected proposal to increase membership fees, at the same time as at least the USFFC slate has pushed the idea of trying to broaden the USFA membership base. While I suspect that getting parents to sign up for a second membership just to vote and to attend informational seminars may be harder than it sounds, I do fear that the increase in membership will have a chilling effect on our ability to bring recreational fencers into the fold as dues-paying rank-and-file competitors. We are already substantially more expensive than other sports (USTA, USGA, etc).

Many of the ideas you have floated seem well conceived, and give me at least the feeling that the USFA will rebound and create the environment to prevent a recurrance of our current situation.

That said, I would like to explore the idea of giving by the membership as an alternative to increasing membership fees. This could be in either a straight up charitable contribution to the sport, or via plea for increasing the number of life memberships. Anyone with a multi-year experience with fencing knows that it inspires passion among its participants. Many are successful professionals that already contribute to charities regularly. Has anyone on the NC slate seriously discussed either of these ideas as useful supplements to making up the difference without a substantial jump in membership fees?

[breaks out his checkbook]

Thanks,

Dave G.

[KD5MDK]

I think this is the applicable part about relying on increased donations:

Again, as I said in the post that epeemike quoted earlier in this thread, if we can do better (by, say getting some unexpected donations – hint, hint, hint to those of you who can) then we should be able to compress this timeline. However, I don’t believe that it would be responsible to indicate anything other than the above as a reasonable time frame to put us on sound financial footing.

I think that prudent planning that does not rely on optimistic assumptions is the best way to proceed, and that donations should be viewed as a way to speed up the process rather than a solution in themselves.

[tchwojko]

Originally Posted by KD5MDK

I think this is the applicable part about relying on increased donations:


I think that prudent planning that does not rely on optimistic assumptions is the best way to proceed, and that donations should be viewed as a way to speed up the process rather than a solution in themselves.

Originally Posted by Greg_D

If we take the hole from last year and the planned deficit from this year we may need to make up around $1.25 million to be back to break-even.

At $1.25 million, it's a structural issue. One time donations will help, but we have to teach the organization how to fish. (Bonds also came to mind as a way to get cash now from those who have the means to support the sport, but I have no idea if that's even in the realm of possibility.)

I'm curious if that $1.25 million went to any specific subset of the fencing population. (Not to point blame, but to understand what most needs to be changed.)

[KD5MDK]

A majority of it went to High Performance, from what I remember at the Feb Board Meeting.