Chair Report for the Finance Committee, DA Knapp

Tags: the Association, Winter Supplement, American Journal of Pharmaceutical Education, Association, Curricular Resources, Finance Committee, the Board of Directors, Richard A. Ohvall, approved budget, AACP headquarters building, H. John Baldwin, financial statements, North Pine Street, Chair Report, James E. Wynn, Leslie Z. Benet, David A. Knapp, Graduate Education, Research, AACP, institutional dues, Finance Committee1 David A. Knapp School of Pharmacy, Bylaws and Policy Development Committee, financial reserve, financial information, Board of Directors, Shearson Lehman Brothers, Smith Barney Shearson, financial reserves, Curricular Resources Clearinghouse, depreciation, University of Maryland, capital expenditure, Oppenheimer Fund, annual leave
Content: Chair Report for the Finance Committee1 DAVID A. Knapp School of Pharmacy, University of Maryland, 20 North Pine Street, Baltimore MD 21201-1180
According to the AACP Bylaws, the Finance Committee is charged with advising the Executive Director in preparing the annual budget of the Association for review and approval by the Board of Directors. RESULTS OF OPERATIONS FOR 1992/93 The audited financial statements document excess budgeted revenues of $38,595. Non-budgeted expenses included: · $52,489 (depreciation of AACP headquarters building, land, real estate improvements and debt service); · $117,237 (a single accrual of the pathophysiology course/ Curricular Resources Clearinghouse); and · $22,674 (accrued vacation and sick pay). It should be noted that the Association's capital expenditures are made by special approval of the Board of Directors from reserves; AACP is a non-profit organization and depreciation and other accruals are not budgeted as an annual operating expense. In accordance with Association policy, the complete audited financial statements have been published in the American Journal of Pharmaceutical Education. Additionally, graphic presentations of the Association's finances were published in the AACP NEWS, and summary information was distributed to the house of delegates. 1 Committee Members: H. John Baldwin (Wyoming), Leslie Z. Benet (California-San Francisco), David A. Knapp, Chair (Maryland), Richard A. Ohvall (Oregon State), and James E. Wynn (MUSC)
STATUS OF THE 1993/94 BUDGET The Committee reviewed the financial data for the first 11 months of the 1993/94 fiscal year and projections by the Executive Director for the balance of the year. It should be noted that the budget presented to the House of Delegates in July, 1993 was modified to reflect the indexing of regular institutional dues (adding $34,200 to revenues). This review resulted in an estimated year-end surplus of $146,081 (not including depreciation of $55,500 on building, furniture, and fixtures; accrued annual leave will be calculated during the annual audit in September); the approved budget projected a surplus of $570 (not including depreciation and accrued annual leave). The Executive Director reported to the Committee that senior staff received no salary increases in 1993/94; the remaining staff equally shared an increase of $10,000. The Director of Graduate Education, Research and Scholarship was retained on 30 percent time beginning January 1 while a full-time replacement was being recruited; a full-time administrative assistant was hired bringing the total number of staff lines to 14 individuals. Merit raises totaling $8,500 were provided to several non-senior staff at year end based on availability of funds. Institutional dues for 1992/93 and 1993/94 have been paid in full. The Board of Directors-approved purchase of a condominium by the Association for purposes of housing its student clerks and scholars in residence was consummated as a cash transaction. The property will become part of the Association's financial reserves. Recurring expenses will include monthly "condo fees" and depreciation of furnishings
American Journal of Pharmaceutical Education Vol. 58, Winter Supplement 1994
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Committee Activities Association Investments. The Committee reviewed the performance of the Association's financial consultant/broker, Smith Barney Shearson (SBP)(formerly Shearson Lehman Brothers). careful examination of SBP's due diligence review of the Oppenheimer Fund and NWQ Investments reveals no changes are required in the Association's managers or financial reserve policies. A decision was made by the Board of Directors, however, to transfer $100,000 from the Oppenheimer account to a new international manager, Johnstone. Develop Increased Member Understanding of the Association's Finances. The Finance Committee continued to seek ways to better inform the members about the Association's finances. Along with the distribution of enhanced financial information (described above) late this year, the Association will report longitudinal information in several key revenue and expense categories, and will work with the Auditors to bring reporting in line with the graphic presentations of the Association's finances. The Committee welcomes member input and suggestions to improve this reporting process. Miscellaneous Activities. The Finance Committee reviewed, and endorsed, the following matters: · Councils, Academic Sections and special interest Groups financing--a recommendation was made to the Bylaws and Policy Development Committee to review and possibly update the Bylaws in these areas; and · a staff proposal for maintenance (painting and recarpeting) of Association headquarters. PROPOSED 1994/95 BUDGET The members of the Committee reviewed the proposed budget (attached) for 1994/95 submitted by the Executive Director. The proposed budget includes projections for all revenue items and estimates for all expenditure items. A single capital expenditure is anticipated during 1994/95: a replacement photocopier at approximately $18,000. The proposed budget accounts for this expenditure under depreciation. Additionally, according to the Association's agreement with the First Virginia Bank, the mortgage on the headquarters building may be called in full within the next 12-18 months. The practice of 10, 15, 20, and 25 year call intervals is typical with commercial lenders. Depending on the financial markets at the time, the Association may be required to seek a new mortgage and/or
lender. Growth of financial reserves are in anticipation of this possibility. Given below is a summary of the major elements of the proposed 1994/95 budget as approved by the Finance Committee and recommended for adoption by the Board of Directors. Revenues. Budgeted revenues for 1994/95 are projected to total $3,018,025. Institutional dues are indexed at 2.5 percent based on the CPI-urban or an increase of $391/school to $16,047 ($29,355 overall increase in revenues). A significant reduction in grants/ contracts revenues (and expenditures) is tied to the completion of the Scope of Pharmacy Practice Project, and reduced revenues anticipated for the Research Participation Program and the Academic Management Symposium. Expenditures. Budgeted expenditures (not including depreciation or accrued annual leave) is estimated at $3,017,800 leaving an excess of revenues over expenses of $225. Staffing remains at 14 full-time positions (7 at the manager level or higher). 1994/95 budgeting for staff reflects a 1 percent increase in employer contributions to TIAA/CREF for eligible employees (total 11 percent). Expenditures include $100,000 for the Center for the Advancement of Pharmaceutical Education (CAPE), based on 1993/ 94 CAPE expenditures, planned activities for 1994/95, and an anticipated budget to be prepared by the Center's director. This report and its accompanying budget are being forwarded to the Board of Directors for its review and approval; the House of Delegates receives this report for its information. DISSEMINATION OF FINANCIAL INFORMATION It is the Committee's goal to provide complete and comprehensive financial information to the membership. In addition to this report and accompanying budget information, a graphic presentation of annual revenues and expenditures is published in a fall issue of the AACP NEWS. At the same time, a summary of revenues and expenditures, by department, is sent to the administrative and faculty delegates of the House. The audited financial statements are published in the Winter Supplement of the American Journal of Pharmaceutical Education, on an annual basis. The Committee desires to learn how best to keep the membership informed. Your observations and suggestions are welcome, and may be sent directly to the Chair of the Committee or the Executive Director. Am. J. Pharm. Educ., 58, 21S-24S(1994); received 8/12/94
APPENDIX A. BUDGET WORKSHEET Fiscal Year End 93/94 and Fiscal Year 94/95
Year to date as of 5/31/94 Actual
End of year as of 6/30/94 Estimate
Annual Budget 1993/94
Proposed Budget 1994/95
1. Revenue Dues--Individual 2. Revenue Dues--Institutional 3. Revenue Dues--Affiliate 4. Admission Tests 5. Registration Fees 6. Exhibitor Fees 7. Grants and Contracts 8. Publication Sales 9. Advertisement Sales 10. Interest and Dividend Income Gain or Loss on Securities 11. Curricular Resources Income
$ 139,842 1,173,288 89,975 44,100 241,603 16,650 1,386,564 47,328 43,300 28,059 35,347 9,266
$ 140,000 1,174,200 90,225 47,900 242,000 16,650 1,223,314 49,000 53,000 35,000 40,000 9,266
$ 132,000 1,174,200 91,250 42,500 242,500 16,000 1,343,500 49,000 51,000 38,000 0 28,500
$ 136,000 1,203,525 97,250 46,000 246,000 15,000 1,126,250 52,000 53,000 36,000 0 eliminate
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American Journal of Pharmaceutical Education Vol. 58, Winter Supplement 1994
12. Other Income 13. Total Revenue Expenses Salary group insurance Annuity Payroll Taxes 14. Total Salary & Benefits 15. Rent 16. Interest Expense--Building 17. Telephone 18. Building Operations 19. Reproduction 20. Printing 21. Supplies 22. Postage and Shipping 23. AACP Insurance 24. Travel 25. Meeting Expense 26. Honoraria 27. Awards 28. Grants 29. Professional Services 3U. Dues 31. Publications 32. Equipment & Furniture Repair 33. Section Meeting Expense 34. Curricular Resources Expense 35. Miscellaneous 36. Total Budgeted Expenses 37. Excess Budgeted Revenue (Expenses) Building Depreciation Furniture & Equipment Depreciation Accrued Employee Leave 38. Total Auditable Expenses Excess Auditable Revenue (Expenses)
Year to date as of 5/31/94 Actual 4,789 3,260,111 735,446 63,511 56,397 45,173 900,527 6,061 40,042 20,410 21,385 15,057 146,512 14,504 40,539 21,521 198,882 294,493 17,150 27,678 407,510 66,571 55,170 4,927 6,301 14,109 5,248 3,275 2,327,872 932,239 20,625 30,250 0 2,378,747 $881,364
End of year as of 6/30/94 Estimate 7,000 3,127,555 834,221 69,766 61,798 50,210 1,015,995 6,000 47,000 22,000 23,000 16,000 165,000 17,000 42,000 21,649 210,000 294,493 17,650 27,678 866,708 92,000 55,500 6,000 6,301 16,000 5,500 8,000 2,981,474 146,081 22,500 33,000 3,036,974 $90,581
Annual Budget 1993/94 7,000 3,214,950 822,080 71,000 61,800 54,000 1,008,880 18,500 48,000 22,000 25,000 16,000 200,000 19,000 43,000 22,000 210,000 391,500 16,000 31,500 925,000 88,000 51,500 8,000 6,000 30,000 28,500 6,000 3,214,380 570 20,000 35,500 0 3,269,880 ($54,930)
Proposed Budget 1994/95 7,000 3,018,025 868,300 80,000 90,000 56,000 1,094,300 10,000 48,000 22,000 25,000 16,000 200,000 9,000 43,000 24,000 220,000 347,000 20,000 28,500 692,000 102,000 56,000 8,000 6,000 30,000 Eliminate 7,000 3,017,800 225 23,000 34,500 0 3,075,300 ($57,275)
Backup for Proposed AACP Annual Budget 1994/95 Revenue
1. $ 136,000 Active, affiliate, associate and student individual
members.
2. 1,203,525 75 schools @$16,047.
3.
97,250 41 affiliate institutions @$250; 29 corporate
members @$3,000.
4.
46,000 9,200 paid PCAT exams @$5.
5. 246,000 $190,500 Annual Meeting and Teachers Semi-
nar; $55,500 Interim Meetings.
6.
15,000 Actual contracts in hand.
7. 1,126,250 $460,000 GAPS; $140,000 NIP; $29,000 CIC; $47,500 Geriatrics; $176,500 Annual Meeting; $16,250 RPP; $6,000 Utah School; $150,000 AMS; $100,000 CAPE; $1,000 Secretary's Award; plus miscellaneous.
8.
52,000 Based on 1993/94 sales plus CRC sales.
9.
53,000 Based on NEWS and AJPE advertising.
10.
36,000 Based on size and return on current portfolio.
11.
ELIMINATED--Curricular Resources In-
come.
12.
7,000 Miscellaneous.
13. $3,018,025 Total Revenue
Expenses
14. $1,094,300 Salary line as recommended by the Finance Committee, approved by the Officers. Executive Director salary approved by the Officers. Line also includes payroll taxes ($56,000); group life, disability and health insurances ($80,000); annuity ($90,000); and educational assistance ($4,000).
15.
10,000 Off-site storage, parking & housing.
American Journal of Pharmaceutical Education Vol. 58, Winter Supplement 1994
23S
16.
48,000 Interest on loan @7.5 percent & $4,500 personal
property tax.
17
22,000 Telephone including PHARMLINE.
18.
25,000 Building operations and maintenance (utilities,
housekeeping, security, trash, etc.).
19.
16,000 Service and paper on three copiers.
20.
200,000 Printing at 1993/94 budget level.
21.
19,000 Supplies at 1993/94 budget level.
22.
43,000 Postage at 1993/94 level.
23.
24,000 Insurances at 1993/94 level plus anticipated rate
increases.
24.
220,000 Member and staff travel includes GAPS. Parke-
Davis, Secretary's Award and NIP peer review,
committees, focus groups and BOD meetings.
25.
347,000 $120,000 Interim Meetings: $203,600 T.S. &
AM + BOD; $3,000 FIP; $5,000 NDTC; $15,000
CAPE.
26.
20,000 Estimated honoraria for GAPS, NIP, Annual
Meeting, Teachers Seminar, Interim Meetings.
27.
28,500 Cash awards for Volwiler, Distinguished Edu-
cator and Lyman and Biotechnology Awards
plus plaques and certificates.
28.
692,000 Includes $400,000 GAPS; $135,000 NIP; $6,000
Utah School: $16,250 RPP/Merck and $47,500
Geriatrics. AMS; $20,000 SIR.
29.
102,000 Includes $25,000 AJPE Editorial Services; $7,000
Accountant; $9,000 Audit; $3,000 Temporaries;
$3,000 NEWS; $10,000 investment expense;
$5,000 consultants; $8,000 Annual Meeting;
$5,000 PHARMLINE and $4,000 miscellaneous
(payroll, registered agent) plus Coalition,
CAPE, and strategic planning.
30.
56,000 ACPE dues, FIP, ACE, Res. America, Coali-
tion, Other.
31.
8,000 Subscriptions.
32.
6,000 Service contracts and maintenance for office
equipment.
33.
30,000 Academic Section programming and operating
expenses.
34.
ELIMINATED--Curricular Resources Ex-
pense.
35.
7,000 Miscellaneous.
36. $3,017,800 Total Budgeted Expenses
37. 225
Excess Revenue (Expense)
23,000 a. Loan principal plus capitalized construction
and improvement costs.
34,500 b. Depreciation on office equipment. 38 $3,075,300 Total auditable expenses.
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American Journal of Pharmaceutical Education Vol. 58, Winter Supplement 1994

DA Knapp

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