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TAB Finance Committee Meeting 20 January 2000
Members Present:
Michael Masten, Chair Members Absent:
Robert Dent Guests Present:
James Aylor Staff Present:
Robert Bailey
Chairman, Dr. Michael Masten, called the first meeting of the TAB Finance Committee to order at 8:00 am. 1). Chairman's Remarks Dr. Michael Masten thanked everyone for attending the first TAB Finance Committee meeting of 2000. Dr. Masten summarized the impact of IEEE Policy and Procedure 11.10.C. As a result, investment income would not be distributed to IEEE units, including Societies/Councils, but will be placed into a holding account. Note: Subsequently, at the February 2000 Board Series, a motion was passed to distribute investment returns to the units for 1999. (Tab#1) 2).Review and Adoption of Agenda The agenda was adopted as amended. 3).1999 Preliminary Year End Results A). Mr. Mark Vasquez-Jorge, Manager Products - Conference Proceedings, highlighted the upward trend in Book Broker revenue since 1997, primarily due to IEL revenue. There has also been a 14% reduction in direct costs including acquisition and shipping expenses. The 2000 budgeted net is less than the 1999 projection due to additional expense to help launch IEEE Xplore. (Tab#2) B). Ms. Barbara Lange, Senior Product Manager - Electronic Products, reported a significant decline in CD ROM sales but a dramatic increase in online sales. Subscribers are not canceling completely, but are shifting from CD-ROM to online. By managing expenses and expanding the IEL consortia all over the world, including Korea, Scandinavia, and Italy, the forecasted revenue for 1999 is expected to reach $10.7M, which is favorable to budget by $3.8M. (Tab#2) C). Ms. Laura Pohl, Manager Products - Periodicals, reviewed the projected 1999 ASPP revenue to be $17.2M, of which $16.4M is expected to be distributed to the Societies/Councils. This is $2.2M over the 1999 budgeted distribution. On line sales are not at predicted levels but may increase when IEEE Xplore is launched. Following the meeting, Ms. Pohl and members of the Marketing Department will contact subscribers who have not renewed and investigate the reason for the nonrenewal. (Tab#2) D). Ms. Sharon Nadler, Manager Finance & Administration - TAD, presented the 1999 Preliminary Year End results for TAB/TAD. Based upon the interpretation of Policies and Procedures section 11.10.C, long and short term investment income and investment gains have not been posted to the 1999 financials at this time. In addition, Ms. Nadler highlighted the 2000 TAB/TAD budget and identified the major variances from the 1999 budget. The variances are primarily due to an increase in the overhead rate and funding of a TAB Initiative that will be offset by an increase in Book Broker revenue, dues allotment and the recovery of fully loaded overhead costs within the General Activities and Information Processing Groups. (Tab#2) E). Mr. Gilbert, Director TAB Business Administration, reviewed the Society/Council Finances. Due to placement of investment income into a holding account, the 1999 Preliminary S/C Year End results vary greatly. The primary improvements to the 2000 S/C budgets consist of an increase in ASPP and Book Broker distributions, conference surpluses and improvements from the 3% exercise. (Tab#2) MOTION: Normal financial operations be continued (i.e. distribution of interest and dividends from investment fund) until the policy and procedures are reviewed, interpreted and all interpretations are approved by the Board of Directors. PASSED ACTION: Staff will prepare a list of the S/C's 1999 net income with and without the distribution of investment income and dividends. Completed A note will accompany the December 1999 S/C Financial Statements indicating the transfer of investment income and gains into the IEEE General Fund. (Tab#2) ACTION: Staff will calculate the IEEE overhead rate (i.e. space, salary, telephone, rent, etc) and compare to universities and/or industry. 4).Publication Proposal for IEEE Sensors Journal Dr. John Vig, President of the IEEE Sensors Council, presented the proposal for the IEEE Sensors Journal. Three financial scenarios were presented. They are as follows: Option 1: Participate in the ASPP program (i.e. waive three year exclusion) $75k grant from TAB Option 2: Participate in the ASPP program (i.e. waive three year exclusion) No grant from TAB Option 3: No participation in the ASPP program No grant from TAB Option 3 was eliminated as an alternative. Based on the recommendation of the Committee the grant was reclassified to a loan. Mr. Vig moved to increase the loan from $75k to $100k. (Tab#3) MOTION: The TAB Finance Committee recommends the IEEE Sensors Journal proposal, with a $100,000 loan, to TAB for approval. PASSED MOTION: Interest free loan of $100,000 to the Sensors Council is to be paid back within six years, following the first publication of the journal (May 2001). PASSED MOTION: As a guideline, TAB will entertain requests for start up funds for revenue producing initiatives from entities with inadequate reserves on a pay back basis. PASSED Subsequent to this meeting, an e-mail was sent regarding an amendment to this motion, so that these loans become grants in the event an entity was unable to repay the loan. Subsequent e-mail voting rejected the amendment. (Tab#3) 5). Society/Council Watch List Ms. Nadler reported that the Consumer Electronics Society was running a higher negative balance than budgeted. No action will be taken until the December 1999 actuals are posted. A revised schedule will be redistributed and reviewed at the next TAB Finance Committee meeting in May. (Tab#4) 6). S/C 2001 Budget Cycle Timetable Ms. Nadler also reviewed the 2001 S/C budget cycle, which was approved by TAB in November 1999. The TAD Finance Staff will take a more proactive role in the early stages of the budget process so the S/C budget cycle can be completed by September 1. This change has been developed to synchronize the S/C budget cycle with the Institute budget cycle. (Tab#5) 7). Publication Proposal for Transactions on Reliability of Electronic Material s and Devices Mr. Lucian Kasprzak, reported that the transaction would be in electronic format, except for ASPP. The publication would be free to all IEEE members and those affiliated with the Institute. Sponsorship is threefold: financials sponsors, Industrial sponsors, and advertising. The financial responsibility will be based upon membership. No advertising will be included in the CD-ROM or print versions. (Tab#6) MOTION: The TAB Finance Committee recommends this publication proposal to TAB for approval. PASSED 8). Broadcast Technology Page Count Modification for 1999 Dr. Masten reviewed the request from the Broadcast Technology Society. It was recommended that any S/C that wants to request a page count change must bring it to the TAB Finance Committee by October 1 of the year in question. TAB Finance will review/recommend to TAB and all requests will be approved/rejected at the last meeting of the year. By doing so, all issues can be resolved by year end. (Tab#7) Note: Please refer to the February 2000 TAB Minutes for results and motion passed on page count change requests. 9). TAB Strategic Initiatives Ms. Mary Ward-Callan, Managing Director Technical Activities, discussed the five initiatives that would be presented to TAB in February 2000. The initiatives that are eligible for review were highlighted and the TAB Finance Committee voted on whether the initiative should be funded or if more information was needed. The results were as follows:
The TAB Finance Committee recommended a set of guidelines be established to aid the Societies/Councils with their initiative budgeting/spending. This document will include definitions and procedures. TAB Finance Committee members created an adhoc committee to put together a draft. Members of this committee include Leah Jamieson, Edward Rezek, Lewis Terman, Clifford Lau, and Mary Ward-Callan. The proposal will be available for the April 1st S/C budget mailing. (Tab#8) 10). Update on Next Financial Model Dr. Masten gave a brief overview of the new financial model, which highlighted the main actions taken by the IEEE Board of Directors. In November 1999 the Board defeated the Bylaw Amendment to eliminate allotments and from that an AdHoc group will be formed to examine the alternate methods and overall allotment issue. The IEEE Finance Committee will examine, and propose modifications to the Policies and Procedures, including Section 11.10. (Tab#9) 11). New Business Mr. Jonathan Dahl, Staff Director Marketing & Sales, highlighted the need to develop a non member pricing strategy. IEEE prices are below the market average and many S/C's have not raised prices in years. According to Mr. Dahl, raising prices will not drive the number of subscribers down. TAB Finance Committee suggested Mr. Dahl's recommendations, including trend data pricing, pricing factors and consensus philosophy, be presented to the Products Committee. In addition, Mr. Dahl discussed the need to build a sales force. Currently, subscription agents receive a commission fee of 5%. By building our own internal sales force and reducing the services provided by outside agents, the commission can be reduced to 2%. The committee suggested that this issue also be brought to the Products Committee for further discussion. (Tab#10) IEEE Technical Activities is a major component of the IEEE, and includes all programs of the IEEE Societies and Technical Councils, as well as programs of the Technical Activities Board (TAB) and the Technical Activities Department (TAD). |
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