Robotics and Automation Society Financial Operations Overview

1. Robotics and Automation SocietyBusiness PlanReport

2. Outline • Background context • Business plan principles • Business process

3. Background Context

4. Current RAS Business Divisions • Four current business divisions • Publications • Conferences • Administration • Investments/Reserves

5. Annual Operating Surplus/ Loss Market Gain Reserves Surplus/Loss Reserves Conferences Surplus Book Broker Reserves Margin Minimum per TAB 50% Op Expense Current Financial Flow Income Expenses Publications Member Fees ASPP/IEL Non-member Fees Publications Administrative Travel, Awards Tech. Comm, IEEE Market Loss Approved Initiatives Surplus /Loss

6. Recent Financial History* * All numbers in thousands

7. IEEE TAB Rules • Reserves can only be budgeted for initiatives in accordance with TAB rules • Cannot be budgeted for operations • IEEE TAB must approve initiative requests • Operating Fund/Watch List rule • Negative operations in 2 consecutive years => Watch List • Reserves Watch List rule • Reserve/Expenses < 0.5 of operating budget in any 2 consecutive years => Watch List

8. Other IEEE Factors • New ASPP/IEL formula will cost RAS >$125k per year unless we can obtain more Xplore usage or more articles • Reduced Book Broker income expected • IEEE recommends non-member rates and has penalized rates below recommended • IEEE recommends that member rates cover variable publication costs • Highly variable IEEE Administration costs

9. Financial Controls • Direct controls • Member fees (only $110k out of $2.2 mil.)* • Non-member subscription rates ($170k) • Member subscription rate ($22k) • Page charge rate ($38k) • Advertising rates ($27K) • Conference budget approval & direction *Numbers are 2003 actuals

10. Financial Controls • Direct controls • Some expenses (travel, awards, distinguished lecturer, member activities, long range planning, technical activities) ($60k) • Page counts • Editorial reimbursed expenses ($105k)

11. Financial Controls • Indirect controls • ASPP/IEL ($400k) • Depends on number of Xplore hits and # articles • Book broker policy • Which conference proceedings are included • # articles • # subscriptions – subscription drive • Form of subscriptions – encourage change • Electronic subscriptions avoid expense • IEEE services used

12. IEEE Budget Process Soc. Bud. Req. IEEE TAB Budget Review & Approval } Op. Bud. ≤ Proj. inc. For year N Society Budgets   Initiative Requests April, N-1 Year N June, N-1

13. Current RAS Unbudgeted Expense Process • These expenses come from current operating budget, not reserves • Can be added by AdCom, but stay net positive • Unbudgeted expense request brought to the Financial Activities Board prior to AdCom • VP for Finance presents the financial impact on the budget to the AdCom • The AdCom votes on funding the program

14. Current Unbudgeted Expense Input Required • Program title • Name of the proposer (responsible for annual report) • Starting and ending dates • Amount requested • Funds administered by (committee, etc.) • Brief description • Expected benefit to Society

15. Recent Approved Initiatives & Unbudgeted Expenses • T-ASE startup $300k • Member Activities -- Virtual Communities $ 3k • RAS Chapter of the Year Award $ 1k/yr • RAS Technical Activities initiatives $ 10k • Long Range Planning Committee initiative $ 5k • IEEE Field Award $ 10k+/yr • Distinguished Service Awards $ 3k/yr • EdCom initiatives $ 12k • Distinguished Lecturers Program $ 9k/yr • Archiving pre-1988 publications $ 35k   • Note: Recurring expenses must transition to operating budget

16. Some Observations • Standard deviation of operating net was $208k • IEEE Tax part of operating budget since 2002 • Excluding effects of IEEE Tax or market variations, the operating surplus could be reduced without much danger of going on Watch List • The largest market reduction in reserves was $383k • TAB reserve requirement: $970k

17. Business Principles

18. Motion The business principles and processes listed below shall be adopted as the basis for RAS financial operations.

19. Business Plan Principles • There shall be a process to annually review business divisions and set operating and reserves goals • Non-member income should support member services • Operating budget surplus and initiatives shall be targeted to manage reserves • Consideration should be given to control member costs as well as to new initiatives

20. Business Plan Principles • Our reserves shall • Be maintained at or above the TAB specified minimum plus a safety term • Suggest TAB min + 50% worst market loss + initiative capacity • For example, ($1,940k/2) + ($383k/2) + $125k ≈ $1,300k • Be the basis for establishing new initiatives • Initiatives are a mechanism for using our reserves to benefit members

21. Business Plan Principles • While initiatives are encouraged when resources are available, strong proposals are expected. • Reserves should not be spent simply because the excess reserves are substantial • The initiative process shall consider • Member inputs • Income sources and budget impact • Formal independent review of initiative • Transition from initiative to ongoing expense or sunset

22. Business Plan Principles • Expenses (to members) of carrying out society business shall be reimbursed • Members should not normally be paid for society activities • Major business activities should be led by member volunteers but supported by professional services, either inside or outside the IEEE • As a volunteer-run Society, consideration should continually be given to business simplification

23. Business Process

24. Annual Business Process • FAB review of ongoing activities, in conjunction with boards where appropriate • Benefit/cost review of initiatives at end of period • Self study from initiative managers • Independent review • If appropriate, recommendation on continuation or termination

25. Annual Business Process • Divide new initiatives into two categories • Fixed duration • Secondary impact on budget, use reserve funds • Expected ongoing activity • Possible initial reserve funding • Assess long term operating budget impact • Minimum size unspecified, but est. $5,000 • Require detailed proposal for initiatives • All information required for unbudgeted expenses • If over $X, a process plan for implementation • Evaluation plan

26. Annual Business Process • Obtain LRPC input on desired annual initiative capacity • Board reviews, AdCom decisions; • Set ongoing expense budget • Set target reserve level • Target budget surplus goal to move toward desired reserve level, while avoiding Watch List problems.

27. Society Budget Process Committees generate initiative ideas & prelim proposals Review by VPs/Brds or LRPC Detailed proposals prepared  Member Inputs    Winter, N-1 Fall, N-2

28. Rates Conference Goals Initiative Decisions Reserve Goals Budget Decisions Business Process Initiative Activity Review Anticipated External Factors AdCom Review & Decisions Initiative Requests by VPs, LRPC FAB Financial Analysis Initiative Capacity Request: LRPC Prop. Bud. ExCom Review Financial Status Spring, N-1 ICRA, N-1

29. IEEE Budget Process Soc. Bud. Req. IEEE TAB Budget Review & Approval } Op. Bud. ≤ Proj. inc. For year N Society Budgets   Initiative Requests April, N-1 Year N June, N-1