The ASCCC Budget and Fiscal Reporting

April
2017
Julie Adams, Executive Director
John Freitas, Treasurer

Among the numerous responsibilities of the ASCCC Executive Committee is its fiduciary duty to set the annual budget and monitor the budget performance. The question about how the ASCCC annual budget is developed, adopted, and monitored is both a common and important one.  This article will provide an overview of the Academic Senate funding sources, the fiscal duties of the Executive Committee, the operational responsibilities of the executive director and ASCCC staff, and how the annual funding priorities are set and implemented. 

At the first ASCCC plenary session in the spring of 1969, the delegates voted to seek incorporation as a nonprofit organization, with articles of incorporation in California filed with the Secretary of State in 1970 and 501(c)(6) status as a nonprofit professional organization granted by the Internal Revenue Service in 1974.  Incorporation of the ASCCC resulted in the Executive Committee becoming the board of directors, with fiduciary duties that include oversight of the fiscal health of the ASCCC.  Thus, the role of the Executive Committee in setting and monitoring the budget stems directly from its legal responsibilities to execute its fiduciary duties as a board of directors.  In turn, the Executive Committee delegates to its executive director the role of managing the ASCCC budget in accordance with the requirements of the ASCCC Accounting Policies (http://www.asccc.org/sites/default/files/AccountingPoliciesApprovedOctober2_2015.pdf)  and Accounting Procedures (http://www.asccc.org/sites/default/files/Accounting%20ProceduresFeb_3_2017.pdf), each of which is approved by the Executive Committee. Therefore, while the Executive Committee approves the annual budget, the executive director is responsible for implementation and management of the approved budget. This practice is the professional standard for nonprofit organizations. 

Budget Development

The ASCCC budget is a function of projected income and expenses, based on both past and anticipated trends.  Income falls into three broad categories:  grant revenue, program revenue, and membership fees.  Grant revenue, which includes the governor’s grant to the ASCCC, comprises the largest share of revenue for the ASCCC.  Program revenue is the anticipated revenue from registration fees for attending ASCCC events, such as plenary sessions and the Curriculum Institute, and should offset the cost to the ASCCC for offering the events.  Membership fees are the dues paid by the member senates’ colleges[1].  Senate dues are based on the total Full Time Equivalent Faculty of the college for the previous fall. Expenses are more varied and include salaries, wages, and benefits for ASCCC staff, reimbursement to the colleges for reassigned time for Executive Committee members and C-ID coordinators, event costs, publication costs for ASCCC papers and Rostrum issues, and ASCCC operational costs such as rent and utilities.

Each April, the executive director prepares the first draft budget for consideration by the Budget and Finance Committee.   Using the strategic plan (http://asccc.org/asccc-strategic-plan) as the framework for developing the draft budget, the executive director uses the following factors to develop the draft budget:

  • Review of past budget performance, including income and expenditures.
  • Expectations set by the Executive Committee during the prior year.
  • Trends across the state such as those related to conferences, meetings, hotel venues, and professional development activities.
  • Conversations with Chancellor’s Office staff and other groups.
  • Attendance at Chancellor’s Office meetings, advisory groups, and task forces.
  • Any other information that assists in creating a comprehensive draft budget.

The draft budget is then submitted to the ASCCC Budget and Finance Committee members for review. 

Chaired by the ASCCC Treasurer, the Budget and Finance Operational Committee is comprised of the four ASCCC Elected Officers – president, vice-president, treasurer, and secretary – and the executive director.  The purpose[2] of the Budget and Finance Committee is to recommend to the Executive Committee the annual budget and fiscal policy and procedure changes, review budget performance and recommend revisions as necessary, and select the auditor. The committee reviews all of the details of the draft budget, along with the details of prior-year expenditures, and brings its recommendation for a tentative budget to the Executive Committee for approval at its final meeting of the academic year, usually in late May or early June. 

The Executive Committee receives the recommendations of the Budget and Finance Operational Committee, including a higher-level budget comparison to prior the year and recommendations for the strategic plan goals and activities.  At this point, the Executive Committee may provide guidance to the Budget and Finance Operational Committee to further develop the budget and approve a tentative budget so that the work of the ASCCC can occur over the summer months.  The Budget and Finance Operational Committee will meet again in July or early August to finalize the budget and present a revised budget to the Executive Committee for consideration for approval at its first meeting of the fall, usually in August.  Once the final budget is approved, the executive director is responsible for ensuring implementation of the budget and strategic planning goals. 

Reporting to the Membership and the Public

Member senates are informed of the fiscal health of the ASCCC through reports provided to the delegates at each plenary session. Each fall, the delegates are presented with an audit report conducted by an independent auditor, which is not required for a nonprofit organization but is an effective practice.  The audit offers the delegates three different statements that provide a comparison of two years of prior year financial information. 

The first statement is a Consolidated Statement of Financial Position or, as accountants call it, a balance sheet, which is a historical document—a snapshot of a day in time—of the financial position of the ASCCC and includes both assets and liabilities.  Delegates can use this statement to gauge the growth and health of the organization and to compare the ASCCC’s performance with past performance.  Internally, the executive director uses this report to track and improve operations over time.  For example, in 2016 the ASCCC balance sheet showed a decrease in our financial position of $309,809 from the previous year.  This difference occurred because of fluctuations in grant funding from the State of California. If this situation continued, the ASCCC would have to cut back on services available to the field. However, a snapshot in time that was true for June 30, 2016 may not be true for July 2016, and thus such a decrease in services did not prove necessary.

The second statement distributed to the delegates is a Consolidated Statement of Activity, or the income statement. An income statement shows how much revenue an organization earned over a specific time period, usually for a year, and includes the costs and expenses associated with earning revenue. The literal bottom line of the statement includes the net earnings or losses and informs the delegates of how much the ASCCC earned or lost over the period. For example, this year’s income statement shows a projected loss of $171,863 this year.  Much of this loss can be attributed various factors, including the following:

  • Higher-than-anticipated costs for holding events, such as increased credit card fees and uncollected registration fees.
  • Additions to Executive Committee member assignments because of increased needs to remain engaged in ever-expanding system-level work, such as initiatives, Chancellor’s Office committees, task forces, and advisory groups that require faculty representation.
  • Reimbursement of C-ID expenses not occurring in a timely manner.
  • Chancellor’s Office withdrawal of support for the CTE Leadership Institute and the CTE Curriculum Academy.
  • Increased offerings of regional meetings that are held at no cost to attendees.

However, this statement is a projection based on the approved budget for expenditures.  Expenditures will be reduced as needed to ensure that the ASCCC ends the fiscal year with a balanced budget.

The final statement is the Statement of Cash Flow, which is exactly what its name implies – the cash flow of the organization. This statement shows how effectively and efficiently the ASCCC can use its cash to finance its operations and expansions. This document is particularly important because it informs the delegates of the current fiscal health of the ASCCC.  The term cash flow generally refers to the ASCCC’s ability to collect and maintain adequate amounts of cash to pay its upcoming bills. In other words, having good cash flow demonstrates that the organization can collect enough cash to pay for its operations and fund its debt service without making late payments.  Last year’s audit shows that the cash flow for the ASCCC decreased by $201,961.  This difference can be explained by the fact that the ASCCC had more accounts receivable—funds due from grants, dues, and events revenue—and more accounts payable.  This situation can problematic for the ASCCC because most of its income in any given fiscal year, which includes local senate dues and the governor’s grant, is not received until October of that fiscal year, which is three months after the beginning of the fiscal year on July 1.

As a nonprofit organization registered with the IRS, the ASCCC is required to submit annually a Form 990 tax form to the IRS.  Submission of the Form 990 (Return of Organization Exempt from Income Tax) is required of all tax-exempt organizations and must be made available publicly.  The ASCCC Form 990s are available through GuideStar (https://www.guidestar.org/Home.aspx).  GuideStar is a free information-sharing service about nonprofit organizations.  GuideStar does require users to create free password-protected accounts in order to use the service.  Once that is done, users can simply enter “Academic Senate for California Community Colleges” in the search box and click the appropriate search result.  Once the ASCCC profile is opened, the “Forms 990” button can be clicked to access the most recent 990s.  The Form 990 includes all the detailed financial information about the ASCCC for a given fiscal year, including detailed information about expenses.

Through its authority as the board of directors of a nonprofit corporation, the Executive Committee approves the annual budget recommended by the Budget and Finance Operational Committee, monitors its performance, and delegates to the executive director the responsibility for budget management. Through its budget development process, the ASCCC works to support the strategic plan[3] and ensure that resources are allocated in a way that optimizes its ability to represent and support the work of the faculty of the California community colleges in academic and professional matters.


[1] The ASCCC treats dues as an institutional commitment.  Therefore, the practice of the ASCCC is to bill the college, not the local senate, for member dues.

[3] The 2016 Strategic Plan Update is available at http://www.asccc.org/sites/default/files/strategic%20report2016%20%281%29.pdf.

 

The articles published in the Rostrum do not necessarily represent the adopted positions of the academic senate. For adopted positions and recommendations, please browse this website.