Treasurer’s Report to Council - Membership Information Session - CD #13.0 2017 -18 Midwinter Meeting Treasurer’s Report to Council - Membership Information Session - FY 2017 year-end Financial Results to ALA Council, Executive Board, Membership and The Planning and Budget Assembly Saturday - February 11, 2018 Sunday – February 12, 2018 Denver, Co. Presented by: Susan Hildreth – ALA Treasurer

How Did We Do? - Total ALA - FY 2017, FY 2016 and FY 2015   2017 2016 2015 Revenues $ 48,808,627 $ 51,897,784 $ 51,679,590 Expenses $ 50,946,547 $ 51,365,949 $ 51,364,646 Net Operating Revenue(Expenses) $( 2,137,920) $ 531,835 $ 314,944 Total ALA revenues were $48.8 million compared to the budget of $50.1 million and $51.1 million in 2016 ($2.3 million reduction). Total ALA expenses were $51.0 million compared to the budget of $51.9 million and $51.4 million last year ($419,402 reduction). We had anticipated a net expense of $1.9 million. Increase in net expense is less that 1% of revenue Budget results are not favorable but much closer to projections than in previous years Revenues not keeping pace with expenses even though expenses overall are down Not a sustainable path Mention 3 year comparisons

Where Did Our Revenue Come From? ALA’s primary revenue sources continue to be: Publishing – 34% Meetings & Conferences – 24% Dues – 16% Grants – 13% (unpredictable) Major revenue sources are at best stable and in actuality most are declining. Best news is that donations are increasing! Where Did Our Revenue Come From?

General Fund Summary 2017 2016 2015 Revenues $ 27,669,658 $ 27,305,345   2017 2016 2015 Revenues $ 27,669,658 $ 27,305,345 $ 29,024,423 Expenses $ 29,002,985 $ 27,972,577 $ 28,745,049 Net Revenue $ (1,333,327) $ (667,232) $ 279,374 General fund does NOT include divisions and roundtables Revenues were higher than FY 2016 actuals but were $1.9 million less that was budgeted Expenses were about $500,000 less that the $29.5 million that was budgeted which helped to reduce the net expense General fund had a net operating loss of $1.3 million Note FY 2017 was a one-conference and was expected to result in a net loss

General Fund Revenues 2017 2016 2015 Dues $ 5,363,955 $ 5,592,444   2017 2016 2015 Dues $ 5,363,955 $ 5,592,444 $ 5,480,185 Publishing $ 11,491,870 $ 12,167,044 $ 12,978,793 Meetings & Conferences $ 7,960,980 $ 7,047,615 $ 7,783,575 Interest & Dividends $ 1,333,533 $ 1,168,625 $ 1,087,785 Contributions $ 213,089 $ 190,020 $ 238,228 Miscellaneous $ 1,306,303 $ 1,139,597 $ 1,455,857  Total $ 27,669,658 $ 27,305,345 $ 29,024,423 Membership dues down by 4% - higher retirement rates and lower organizational members Publishing continues to have challenges. Missed FY 17 budget projection by $1.4 million. Has new leadership; developed more realistic FY 18 projections Meetings and conferences - Combined net revenue for Midwinter and Annual exceeded budget by $22,00. Reconfiguring both conferences Grants & Awards – challenge to predict as can vary significantly from year to year

General Fund Expenses 2017 2016 2015 Payroll $ 15,172,577 $ 14,323,038   2017 2016 2015 Payroll $ 15,172,577 $ 14,323,038 $ 13,941,468 Outside Services $ 4,342,135 $ 4,312,669 $ 4,109,241 Travel $ 1,004,247 $ 1,073,904 $ 970,076 Meetings & Conferences $ 3,830,480 $ 3,896,371 $ 4,044,220 Publications $ 2,079,003 $ 2,261,921 $ 2,379,129 Operating & Overhead $ 2,324,084 $ 1,744,278 $ 2,406,458 Interunit Transfers $ 250,459 $ 360,396 $ 404,790 Total Expenses $ 29,002,985 $ 27,972,577 $ 28,255,382 Detailed look at General fund expenses Note again that expenses were $500,000 less than budgeted. Reduction of expenses to offset lower than anticipated revenue is not a sustainable funding approach and reduces capacity to provide services. Also expenses must be aligned with realistic revenue projections as well as identifying additional revenue sources

General Fund Net Revenue Sources – 2017 - and other support - Overhead Total   Revenues Support Interest & Earnings $ 1,333,533 $ 0 $ 1,333,533 Membership Dues - Net $ 5,363,955 $ 5,363,955 Publishing - Net $ 479,990 $ 2,909,300 $ 3389,290 Meetings & Conferences - Net $ 752,015 $ 2,482,732 $ 3,234,747 Other $ 612,489 $ 2,080,969* $ 2,693,458 $ 8,814,982 $ 7,473,001 $ 16,014,983 More information on General Fund Revenue Sources Publishing, meetings and conferences, divisions and roundtables contribute OH that funds critical activities of ALA units Note that $7.5 million in OH was contributed - $3M from publishing, $2.5M from conferences and $2M from divisions and roundtables OH rate in FY 17 was 26.4% and that will be continued in FY 18. Application of OH rate varies depending on the category of funds. *Overhead contribution from Divisions, Roundtables and Grants

Publishing Revenues & Expenses – 2017   Overhead Net Revenues Expenses Contribution Revenue ALA Editions $ 2,646,320 $ 3,240,649 $ 698,543 $ (594,329) Booklist $ 4,760,677 $ 3,792,156 $ 1,236,819 $ 968,521 Graphics $ 697,649 $ 767,301 $ 184,094 $ (69,652) Digital Resources $ 1,188,547 $ 1,143,957 $ 324,087 $ 44,590 American Libraries $ 934,513 $ 934,513 $ 247,038 $ - E-Learning $ 798,261 $ 743,817 $ 224,921 Publishing - AED $ (76,416) $ 0 Total $ 11,025,967 $ 10,545,977 $ 2,909,300 $ 272,714 ALA editions softness in market, internal operational challenges, planned titles not ready for publication Booklist –stable but seeing declines, move from print to online, booklist being creative in re-packaging products New leadership Mary MacKay working with empowered management since June 2017 strategically reduced budget projections and hopes to meet or beat those projections in FY 18

Meetings & Conferences Revenues and Expenses - 2017   Overhead Net Revenues Expenses Contribution* Revenue Annual Conference $ 6,660,599 $ 5,828,583 $ 1,758,398 $ 832,016 Midwinter Meeting $ 2,743,689 $ 2,823,690 $ 724,334 $ (80,001) Total $ 8,349,976 $ 8,304,105 $ 2,482,732 $ 752,015 *Overhead contributed to the General Fund It is always about location for conferences! Mid-winter in Atlanta was very close to its budget , including OH Annual in Chicago - which is one of the most profitable conference locations - was strong but we see it stabilizing and not producing as much as in the past. Reconfiguration of both midwinter and annual are critical to continued relevance and success of these events.

Division Revenues and Expenses– 2017 2017 was a spend down year in preparations for 2 division conferences in FY18, so net expense was anticipated Actual net expenses were very consistent with other 1 division conference years.

Roundtable Revenues and Expenses– 2017 Not huge amounts of money but doing very well Controlled expenses in all units.

Total ALA Assets, Liabilities & Net Assets – 2017   2017 2016 2015 Assets $ 72,513,440 $ 75,727,502 $ 77,572,339 Liabilities $ 32,622,113 $ 45,343,837 $ 46,034,318 Net Assets $ 39,891,327 $ 30,383,665 $ 31,538,021 Very complicated topic but we remain in a solid financial position. Our assets decreased but so did our liabilities which increased our net assets by $9.5 million Asset position was impacted by requirement for cash to cover operating needs which was offset by an increase in value of endowment. Note that total assets include the ALA endowment valued at about $46 million Liabilities were reduced due to reduction in Post-retirement liability which relates to separating retirees from current employees. All benefits were retained by our current and former employees but this action was significant as it reduced this liability by over $10 million

Preparing for FY19 and Beyond

Strategy to Address FY 19 and Beyond Leverage strong balance sheet to fund investments that will generate revenue and reduce operating expenses Endowment loan ALA line of credit Bank debt supported by value of buildings/other assets

Strategy to Address for FY 19 and Beyond Consider the best use of the ALA Headquarters Commission analysis of best use of building Consider how to provide most efficient and modern staff work environment Take advantage of all opportunities to streamline the organization and workflow New Business Development Committee revitalized

Thank you for your support