The Minutes of the April 26, 2003 A&F Committee Minutes are attached in MS Word format. For those who require or prefer plain text the minutes follow. 73, Jay, K0QB ================ Minutes of the Administration and Finance Committee of the American Radio Relay League Kansas City, MO April 26, 2003 Pursuant to due notice, the Administration and Finance Committee of the American Radio Relay League, Inc., met at 8:30 AM, Saturday, April 26, 2003, at Kansas City Airport Marriott Hotel, Kansas City, MO. Present were the following committee members and staff: Directors Jay Bellows, K0QB, Chairman; Walt Stinson, W0CP; Art Goddard, W6XD; Frank Fallon, N2FF; Dick Isely, W9GIG; Joel Harrison, W5ZN, First Vice President; Jim McCobb, W1LLU, Treasurer; Vice Director Jim Fenstermaker, K9JF, Committee Secretary; Dave Sumner, K1ZZ, CEO; Mary Hobart, K1MMH, CDO; Barry Shelley, N1VXY, CFO; and Mark Wilson, K1RO, COO. Chairman Bellows welcomed the attendees to the meeting. The agenda was reviewed and approved by committee members. 1. First Quarter Financial Update Mr. Shelley discussed the first quarter financial summary. The fiscal indicators are on track with financial projections. There are no emerging trends that cause any concerns so far this year. Overall expenditures a bit under budget YTD. One area that bears watching is voluntary contributions, in particular the Defense of Frequencies fund and WRC-03 follow up in progress now. We are also keeping an eye on the Education & Technology fund, which is running behind projections. There is enough to fund the program for 2003, but in 2004 we may not be able to fund equipment for many additional schools. Advertising revenue is a bit lower than planned but staff is working on different marketing efforts with advertisers and April revenue should bring us back on track. May QST included a special 8-page Dayton ad section, and the Repeater Directory and DXCC Yearbook ad revenue was higher than expected. Specialty publishing (QEX, NCJ) is trending down. Mr. Sumner discussed the rollout of the new book Experimental Methods in RF Design. This has been a product that performed much better than forecast, thanks in part to a well-coordinated advance promotional campaign. Mr. Sumner also noted that WRC-03 expenses may run slightly over budget because of exchange rate issues and the retainer of Bob Jones, VE7RWJ, as a consultant. At mid-year, we will reforecast the budget for the remainder of the year. 2. Investment Portfolio Review Mr. McCobb discussed the investment portfolio. He is not optimistic about the future direction of the investment markets. The portfolio indicates market vs. book value is different by $884,000 (7.6%). YTD cash-out is approximately $500,000 including $350,000 for pensions $150,000 for general operating cash. He expects another draw of $300,000 later this year for operations. This is not a favorable trend. We need to watch changes in cash (cash flow) to better assess the financial health of the League in the long term. There was some discussion about how Life Membership dues are invested and the cost of servicing the Life Members. The plan normally anticipates using $500,000 per year from investment income for that purpose. Mr. Stinson discussed the tradeoff between the portfolios corpus and the amount of money that is taken from interest and dividends earnings. He believes thresholds should be placed on the overall operation of the organization and these need discussion during the strategic planning sessions in a quantifiable manner that is proactive rather than reactive. Mr. McCobb recommended a review of trends analysis for drawing down investments, noting that long-term it is not healthy for the League to continue to draw down reserves. The Board and Management should set a specific target floor amount. Mr. Stinson noted his continuing optimism but he also feels the short-term trends are not positive. Mr. Shelley noted that while the market has given us hits, we have lived within the 3-year plan regarding the updates to the computer system, startup of the development program and other long-term investments. Mr. McCobb recommended that the A&F direct management to produce a baseline set of financial projections for the three year period beginning January 1, 2004 for use by the Strategic Planning Committee (SPC). Motion : Management is hereby directed to prepare a set of financial projections and related assumptions for the three year period beginning January 1, 2004 for use by the Strategic Planning Committee. Such projections should be presented to the SPC by September 1, 2003. The motion passed unanimously. 3. Development Update Ms. Hobart described the first quarter as challenging. The overall mood of the nation has had an impact on giving. This has been reflected in contributions to the Defense of Frequencies and Education & Technology Funds. Given the continuing scenario, there is movement beginning to happen but it will take time. Relationships we are building will allow this to happen. The donors reception in Dayton is a good way to build on these relationships, and we expect attendance to be higher than last year. We continue to learn what types of requests are most effective and revise our efforts accordingly. The grants from the Corporation for National and Community Service and UTC Corp. for emergency communications training are on target. In addition to providing needed training to our volunteers, these grants give us visibility and credibility. Development and Sales/Marketing meet monthly to coordinate efforts with regard to membership renewals and Diamond Club solicitations. The current strategy is to incorporate a Diamond Club solicitation with renewal notices of likely prospects, rather than mail them separately. Six people now qualify for Maxim Society (lifetime donations of $10,000 or more), and there are 27 commitments to Legacy Circle (estate commitments). In the planned giving area, we are working with Robert Sharp Co. to develop a newsletter for prospects. There is a database of 175 prospects who have expressed interest or told us of a commitment, and information was sent to an additional 4500 members born between 1936 and 1950. The Committee reviewed further work on a proposal for the structure of an ARRL Endowment. The proposal calls for six broad funds (Spectrum Defense, Education, Research & Technology, Historical Preservation, W1AW and General Fund). With the consent of the donors, the broad funds will incorporate the existing smaller funds. The consolidation will assist ARRL in better promoting the development program and give future donors a way to more easily select an endowment that closely matches their interests. The board can determine the use of unrestricted contributions based on management recommendation. There was some discussion of the names of the funds, and in particular the thought that the Spectrum Defense fund should better describe antenna defense and other advocacy issues. Directors Isely, Fallon, and Bellows will discuss this prior to the July meeting. Mr. Stinson asked about the relationship between development and the foundation. Discussions regarding integration are now in order. The A&F and Foundation Board should discuss and give a report to the ARRL Board in a future meeting. Mr. Sumner discussed the power line carrier (PLC) systems FCC Adopted NOI and the issue of spectrum defense. It appears to be a more friendly environment to power line communication. This has potential to be a major problem. Frequencies affected are 2 to 80 MHz. Ed Hare anticipates travel to a PLC test site for review and measurement of the potential interference issue. Results of field tests and further FCC activity on the PLC issue may provide a fund raising opportunity for spectrum defense in the coming months. 4. Employee Insurance Benefit Proposals Significant changes are proposed for health and dental plans. An RFP was requested from seven companies and three replied. Current benefit levels and contribution strategies are generous in relationship to other firms. With the same benefit levels, the current carrier medical premiums would increase approximately 19%. The proposal includes a movement to a more standard program for medical plans. It will provide a core plan to employees and give them additional benefit choices. Any difference in premium for coverage beyond the core plan would be borne by the employee. Also included is a stratification of the employees share of premium payments based on employee base earnings. This proposal brings the ARRL medical cost and contribution methodology in line with similar size companies in CT. Mr. Shelley noted a goal of ARRL contributing 75% of the premium and the employee contributing 25%. In addition to changes to the medical plan, changing providers can reduce dental costs. Based on these changes to the benefit plan, the cost that the League will absorb changes from a 19.3% to a 5% increase. Mr. Shelley was asked to review the costs for a Flexible Spending Plan to allow for employees to be eligible for pre-tax savings on medical and other payments. The following motions were adopted: Moved that the A&F committee recommend to the Board that ARRL determine the community benchmark for employee benefit cost as a percentage of salary. Moved by Mr. Harrison, Seconded by Mr. Isely. Passed unanimously. Moved that the A&F committee recommend that the ARRL Board establish a policy moving the percentage share of employee medical and dental benefit costs toward the community benchmark over the next two years. Moved by Mr. Harrison, Seconded by Mr. Isely. Passed unanimously. Moved that the A&F committee recommend adoption of the health care benefit proposal of the insurance subcommittee and instruct staff to execute the appropriate contract. Moved by Mr. Isely, Seconded by Mr. Harrison. Passed unanimously. 5. Pension Plan Investment Proposal and Discussion We continue to await information from Massachusetts Mutual 6. Computer Project Update Report The status report from Alan Cohen was distributed and discussed by Mr. Shelley. * Accounting - It is installed, running, and being used! * Enterprise Software System - The core system is installed and working. There is a punch list of items to fix. ISD staff is working to resolve the issues. $35-40k per year is budgeted for outside maintenance of these products. * E-Commerce Klein implemented the native Siebel e-commerce functions, but the resulting system is not satisfactory. They have proposed moving to an implementation using JAVA software and are discussing how best to meet requirements with staff. This will delay implementation of net commerce, and the newly estimated date for partial implementation is June 30 with the final piece in place on September 30. Implementing this change may result in some additional staff time and expense, but Klein has said that there will be no additional software cost for the change to JAVA. * Logbook of the World - There are three remaining items to be completed before a public beta test. A locator for various awards has been expanded and will be done by Jon Bloom. Expected completion date of May 12 to begin the general beta test period. * DXCC - The specifications had to be redone. Within the next few weeks, repaired code will be received. At that point, we will know if the project continues to be viable. If not, we may ask for our investment back. 7. Update of Personnel Matters No substantial progress toward resolution of a complaint. 8. Preliminary Report Employee Compensation Issues Process that is followed occurs on anniversary date along with the annual performance review except when promotion occurs, then the date changes. This year, there is not much of a pool of monies available. 9. Discussion Restructuring of Committee(s) At the March 15 meeting of the EC, there was discussion about the committee restructuring process. Tom Frenaye presented a straw man proposal to the EC, which is currently under discussion. Changes proposed include: Election committee expanded to Election and Ethics Committee; VRC and MSC merged into Programs and Services Committee; Marketing and Sales Committee created; Roles and Responsibilities of the Administration and Finance Committee were slightly modified. Additional discussion followed on this and other committees. 10. Agenda and Date of Next Meeting The meeting will be held in teleconference. Proposed dates will be set via e-mail by the committee. The proposed fall date will be set during the teleconference. Adjournment: The meeting adjourned at approximately 1730. Respectfully Submitted, Jim Fenstermaker K9JF Secretary, Administration and Finance Committee