Report of the AACP Finance Committee, June 15, 2010

The Committee recommends the Board:

1. Adopt the 2011 Budget as presented and

2. Consider establishing an Endowment for faculty research funded with projected net revenues from fiscal years 2010 and 2011. This fund could be more actively promoted among individual members and schools for matching contributions with the application and grant issuance processes managed internally.

Summary of Key April 2010 Financial Results

• Assets have risen 6% since the beginning of the year on account of growth in investments and strong operating performance in key revenue / program areas.

• The receivable balance of $163,500 for 2007–2008 Crystal Apple Award Grant from Merck remains outstanding though; we are inching closer to collection now that we are working with a new contact within Merck's contract compliance division. Payables consist mainly of accrued leave ($182,000) and the Sanofi Aventis grant ($416,000).

• Operating revenue totals $10,700,000 and has already surpassed FY09 year end on account of stronger than expected individual membership dues, PharmCAS applications, royalties from PCAT and meetings revenues. There is an additional $458,000 of realized / unrealized gains from the investment portfolio reporting as income and $71,000 of Wal-Mart scholarship funds received in FY09 to be applied as income this year.

• Operating expenses total $6,900,000 (or 64% of revenue) in FY10 and are on par with last year $7,069,000 (or 70% of revenue) save for one final license payment due to Liaison International.

• Diligent budget management has resulted in $237,000 of reductions to administration costs this fiscal year. The reductions between 2009 and 2010 were concentrated in the following areas:

  • Conversion of print publications to electronic ($132,000)

  • Renegotiating merchant credit card fees ($40,000)

  • Supplies, postage and maintenance ($22,000)

  • Legal fees ($22,000)

  • Travel ($17,000)

  • Investment fees ($4,000)

  • Employee medical plan (held premiums constant from a proposed 17% increase through a change in plan design)

• Furthermore, no new staff positions were added this year while professional fees incurred were only 10% over the prior year actual.

Summary of Key FY2010 Forecasted Financial Results

• The 2010 Forecast calls for revenue of $11,071,000 and net revenue of $365,000 or 3.2% before investment gains.

• All major sources of revenue met or exceeded budget targets helping to drive net revenue significantly above the $31,000 budget goal at the start of the year (Table 1).

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Table 1.

Summary of the FY2011 Budget Review

• For 2011, revenue is budgeted to be $11,596,000 and expenses $11,243,000 resulting in net revenue of $353,000 or 3.0%

• Revenue Assumptions:

  • No change in dues rates; three new institutional members

  • PharmCAS applications level with prior year; $10 increase in each subsequent application beyond the first one

  • PCAT testing fee royalties down slightly from record levels in 2010

  • Annual Meeting registration exceeds prior year; lower corporate support

  • AFPE to fund 1/3 of NIP program at $100,000

• Expense Assumptions:

  • New Investigator Program ($150,000) – NEW

  • Additional issue of AJPE ($8,000) – NEW

  • PEAS operating costs ($116,000) – NEW

  • Global Alliance Website ($12,000) – NEW

  • Webinars / Technology enhancements ($40,000) – NEW

  • Staff costs rise 5.8% overall (including promotions and a 3.5% medical plan increase)