NEC Finance Committee Report 29 APRIL 2011
Agenda • FY 11 Budget Execution • FY11 Restored Appropriated Budget Financial Plan/Impact of CRA • FY12 Corporate Financial Plan • Cadet Uniforms • Vanguard Training Center Funds • CD Funds • Investments Update • ACMX Maintenance Fund Balances • Wing Use of ACH/EFT Payment
Agenda • Partial Payment of Membership Dues • Overpayment of Membership Dues • Unit Internet Reimbursement • Document Scanning Requirement • Training/Orientation Flight Budgets • Travel Vouchers/Meals and Entertainment • Unit Visits Update • Risk Matrix Update
FY11 APPROPRIATED BUDGET
FY11 Appropriated Executionas of 4 Apr11 BudgetExpended% O&M 27,048,000 12,052,157 45 DDR 425,000 122,532 29 Aircraft (3-yr funds) 2,424,000* 707,867 95 Vehicle (3-yr funds) 902,000* -0- 0 *Full funding has not been received yet. Program Income 1,344,087 697,104 53
FY11 CORPORATE BUDGET
FY11 Corporate Budget As of 4 Apr 11 FY10FY11 Budget 2,510,333 2,438,755* Income (YTD) 1,206,881 1,103,665 48% 46% Expenditures (YTD) 921,043 837,162 37% 35% *While membership revenue has increased, the projected revenue for conferences & special events and ad sales was projected lower which explains the net decrease in overall revenue between the years. Straight Line 50% Historical 49%Expenditures Historical 40% Revenue
FY11 Corporate Unfunded Initiatives As of 4 Apr 11 Diversity Committee (New Initiative)+ 30,000 Cadet Med. Exp. Coverage(New Initiative)+ 44,700 Total Unfunded Initiatives + 74,700 TOTAL CORPORATE UNFUNDED $128,522 (Corporate Unfunded List provided in Finance Cmte Folders)
FY12 CORPORATE FINANCIAL PLAN
HistoricalPerspectiveInitial Financial Plans FY10FY11FY12 (Actual $$) (Projected $$) (Projected $$) Income 2,431,950 2,421,755* 2,445,426 *While membership has increased, projected revenue for conferences & special events and CAP Magazine ad sales was lower which explains the net decrease from FY10 - FY11 Membership Income Projections (Figures are based on data available on 1 March of full paying membership) Total membership is 61,119. FY10FY11FY12 Senior Mbrs 32,459 32,202 32,370 Cadet Mbrs 22,89125,160 24,450 55,350 57,362 56,820
FY12 FINANCIAL PLANComparative FY12 – Expenses $2,445,426
Financial Plan Initial Requests Initial Projected Funding: 2,445,426 Initial Requests/Input: 2,689,217 Financial Plan Shortfall 243,791
NEW INITIATIVES &/ORSIGNIFICANT CHANGES REVENUE: Reduction of Picture ID Card - 8,500 EXPENSES: New Initiatives: Diversity Committee Travel 30,000 Safety Officer College 4,500 Cadet Medical Expense Coverage 50,000 Total New Initiatives 84,500
NEW INITIATIVES &SIGNIFICANT CHANGES EXPENSES: Significant Changes - INCREASES: (>4K from Pr Yr) Allocation Salary & Benefits +35,000 Credit Card Expense +27,000 Cash Reserves + 7,595 Prof. Svcs – AMS System (25% of increase) + 7,250 Electronic Media + 5,000 Mbrshp Card Production + 20,000 A.C.E. Pgrm Supplies + 14,500
NEW INITIATIVES &SIGNIFICANT CHANGES CONT. EXPENSES: Significant Changes – DECREASES: (4K/40% or more from Pr Yr) Prof. Legal Services - 5,000 Interest Expenses - 4,500 FY 12 FINANCIAL PLAN SHORTFALL $243,791
Financial Plan AdjustmentsMade At FMB GENERAL ACROSS THE BOARD REDUCTIONS NEC Travel funded at FY11 levels - 18,955 Region CC Tvl funded at FY11 levels -11,034 NCSA & Prof. Development -31,800 funded at FY11 levels New FY11 Unfunded Initiatives - 80,000 remain as unfunded for FY12 Total Savings from Adjustments 141,789
Financial Plan AdjustmentsMade At FMB ADDITIONAL REDUCTIONS EX Dept (Leases & Telephone) - 3,302 FM Dept (Travel & Cash Reserves) - 32,500 PA Dept - 46,800 (AMS, Travel, Exhibits & Promo, Magazine & Mbrship cards) AE Dept (Travel) - 10,000 Ops Dept (NESA & CISM) - 6,400 LG Dept (Oshkosh Tng Ctr) - 3,000 FINANCIAL PLAN BALANCED
FY12 Corporate Financial Plan Proposal The Finance Committee recommends the NEC endorse the FY12 Corporate Financial Plan as presented and forward to the Board of Governors for approval.
FY11 & FY12 Unfunded Proposal The Finance Committee recommends the NEC review in full session the possible modification to the Cadet Accident insurance program and the unfunded nature of that program and make a determination of how to move forward on this issue.
Cadet Uniforms • Costs allocated to the Cooperative Agreement must be reasonable, allowable, and allocable • Cadet uniforms are allowable per the Statement of Work and expenses may be allocated to appropriated funds • Analysis of cadet uniforms in relation to retention brings into question the reasonableness of the cost
Cadet Uniforms • CAP has expended in excess of $2M on cadet uniforms since 2006 UniformsCost FY09 6,824 $409,723 FY10 6,767 $449,291 • Approximately 50% of cadets do not renew their membership after the first year
Cadet Uniforms • CAP should consider appointing a committee to review the cadet uniform policy • Further, CAP’s annual appropriation may be seriously reduced due to Congressional budget restraints • Potential savings would be used to maintain other program elements
Cadet Uniforms Proposal The Finance Committee recommends to the NEC that a special uniform committee be appointed to review the cadet uniform policy.
Vanguard Training Center Funds • Vanguard Funds balance is currently $101,914 • FY11 Vanguard commissions are estimated to be approximately $130k • FY10 expenditures: NESA $67,642 Hawk Mt $17,500 Oshkosh $ 9,678 Vehicle Wrap $ 2,666
Vanguard Training Center Funds • Hawk Mountain has requested funds to remodel the kitchen at the facility • Kitchen is inadequate to support to support the activities • Hawk Mountain manages an ongoing fund raising campaign to enhance the facility • All buildings have volunteer “sweat equity” contributions to defer costs
Vanguard Training Center Funds • HMRSrequires an electrical service upgrade to complete the building project • CAP members can not perform electrical upgrade • Hawk Mountain has raised over $14,500 in funding and supplies for this project in the past year
Vanguard Training Center Funds • Hawk Mountain is one of the only facilities owned by Civil Air Patrol • Vanguard Training Center funds would enhance the experience of cadets who attend Hawk Mountain
Vanguard Training Center FundsProposal The Finance Committee recommends Hawk Mountain receive Vanguard Region Training Center funds in the amount of $75,000 for the purpose of kitchen and dining facilities upgrade.
Restricted Remaining CD Funds • Under the Counter Drug program prior to FY05 CAP Wings were paid 15% of the mission cost • Several Wings have remaining accumulated “CD Admin Fees” • Funds are restricted to use within the CD program • Admin fee payments eliminated after FY04 NC $6,759 KY $3,128 WA $4,482
Restricted CD FundsProposal Finance Committee recommends to the NEC that the remaining CD balances, as reported, be drafted back by NHQ to be utilized as CD mission funding by those units who have accumulated the funds.
ACMX Balances Wings bought into CMX program which currently have tail number balances remaining, but limited resources to remit reimbursement: Arkansas $44,146 Hawaii $10,876 Washington $11,211 Total $66,233
AR Wing ACMX Balance Proposal • AR Wing will pay $100 monthly from dues rebates • Flying rate for corp missions will be increased by $5 per hour • AR Wing and NHQ will meet annually to review plan to determine if a modification to the plan is feasible
A/C Maintenance BalanceProposal • NCR will be refunded the amount paid for IA • Approve 50% write off of all amounts outstanding and/or currently being paid; all remaining balances would require a payment plan.
Overpayment of Member Dues • Member dues are frequently overpaid by small amounts • CAP has been refunding overpayments by issuing checks • Overpayments are generally less than $15 • Many refund checks issued are not cashed • Most organizations noted at the Personify user conference that they record overpayments as contributions due to cost (time, postage) of refunding
Member DuesProposal The Finance Committee recommends to the NEC that dues payments that exceed the proper dues amount by less than $15 be recorded as contributions and that members be notified of the policy.
NHQ-funded Internet Service for Units • NHQ provides access to dialup internet service via EarthLink • Where EarthLink access is not available reimbursement up to $15.95 toward the cost of internet service is offered. Total expenditure in FY11 was just over $38k • Dial-up service almost inadequate for eServices and WMIRS • Initially over 1,000 accounts - today fewer than 200 units (<15%) participate • Workload to process receipts and reimbursement payments for NHQ and wing administrator staffs is considerable and exceeds value of reimbursement • Requirement is not established in any Air Force, CAP or board-approved policy
Internet ServiceProposal The Finance Committee recommends to the NEC cancellation of the Internet service reimbursement program, effective 1 Oct 11 and application of funds to be directed to training or other programs.
Document Scanning • Ten Wings have implemented procedures to scan all documents into QuickBooks utilizing a utility called SmartVault • Wings which have implemented SmartVault vary in size • All Wings now have scanners • Scanning financial documents supports National Board proposal to adopt paperless processes • Allows auditors, WFA’s and Finance Committee to review documents
Document ScanningProposal The Finance Committee recommends to the NEC that all Wings implement SmartVault by 1 September 2011.
FY11 Missions / Exercises • Executed 100% of our budget for the last four years - never received funding this late before • Most wings now have plans in place to execute budgets • Must now fly 60+% of budget in the last 3rd of the year • By 1 August, Regions/Wings need to identify funding for training and orientation flights that will not be executed by 14 September
FY11 Missions / ExercisesProposal • The Finance Committee recommends that the NEC authorizes NHQ an early recovery of unobligated funds for FY-11in WMIRS on or after 1 August 2011.
Online Banking • Wings have begun to utilize online banking for bill payments • Online bill pay • EFT/ACH Payments • Process saves time and is more efficient • CAPR 173-1 lacks guidance to ensure internal controls are in place
Online Banking The outcome from the FM Summit will develop guidance to include in CAPR173-1 to provide for procedures and internal controls for online banking.
Investmentsof 31-March-2011 RestrictedUnrestricted Beginning Cost 188,131 4,897,175 (30-September-2010) Interest & Dividends 3,317 114,974 Additions -0- 100,653 Withdrawals (8,095) (55,095) Scholarships Realized G(L) from Sales (2,641)(261,429) Ending Cost 180,712 4,796,278 Market Value 182,1684,891,420 Gain (Loss) 1,456 95,142
InvestmentsAs of 31-March-2011 RestrictedUnrestricted Change in Market Value 0.77% 1.94% (Excludes Interest and Dividends) Interest & Dividends 1.76% 2.35% Total Return 2.54% 4.29% (Includes Interest and Dividends) Dow Jones Industrial Average: 14.18% S & P 500: 15.95%
Travel Vouchers/M&E Expenses • IRS requires documentation to support travel expense and meals and entertainment • WFA and auditor review has indicated most travel is not being fully documented • Lack of consolidated travel voucher is especially common if the individual holds a credit card • Entertainment expenses are also not being documented
Travel Vouchers/M&E Expenses • FM Summit will develop in language to include in CAPR173-1 to provide clarification of the documentation required to ensure compliance with IRS requirements.
Unit Visits • 80 Units visited since 1 June 2010 • Sample of units is too small to project trends • 19% of units visited had no reportable issues • ORMS Value of items reviewed: Aircraft 504,814 Vehicle 290,794 Supplies & Equipment 676,514 Communications 847,000 Total Value $2,319,122
ORMS Issues noted at Unit Visits(% of units visited) • Non-tagged items—41% • Items not located—25% • Not updating ORMS timely—18% • Items on site not in ORMS for unit—16% • Items assigned to individuals not present at audit—13% • Improperly tagged items—8% • Non-expendable purchases not in ORMS—6% • Incorrect Serial Number in ORMS—5% • No property number assigned in ORMS—5% • Personal storage at unit—1%