Region, Section and Chapter Discussion Topic Region Treasurers November, 2011 New Brunswick, New Jersey Rob Anderson – MGA Treasurer Enrique Alvarez – MGA Treasurer Elect Larry Bolsch – MGA Director of Finance & Administration

Agenda Communication & Action Plan Region, Section and Chapter Reserves: Issue, Impact, Progress & Data Attachments and Questions Attachment Shows which units would have shared based on 3 year average and what amounts each would have absorbed Glossary 10/8/20152

Communication and Action Plan After Discussion, MGA Staff will draft a general communication for socialization with all Geo Unit’s Leadership in Q MGA will be notified in Q as to impact to MGA & impact to Regions, Sections & Chapters for the 2011 year Communication and timeline as to how and when the reserve sharing process will be completed in 2012 for the 2011 financial year Region Treasurer assistance will be requested 10/8/20153

Reserves Impact In 2008: MGA absorbed $2.3 million in Spending Rule & Pension Loss related to Regions, Sections & Chapters Reserve %’s, reducing MGA’s Reserve Balance to only $24k. In 2009: Region, Section and Chapter’s share of Pension Gain would have been $800k. This went to MGA as did the losses. In 2010: MGA absorbed $1.2 million loss related to Regions Sections and Chapters into the P&L of MGA There is concern that the XML Project could cause the spending rule allocations to deplete MGA reserves if we do not share the allocations. Currently all Gains and Losses bypass the Regions Sections and Chapters and are reflected only in MGA. Sharing would allow funds to be used by MGA on Projects & for Benefits that impact Members. 10/8/20154

Progress to Date Issue presented to MGA’s Managing Director, VP, Treasurer, Finance Committee, Operating Committee and Board A complete 3 year Review of Reserves Balances was made Motion approved – that Regions, Sections and Chapters should Share in Reserve Allocations using 3 year average formula noted STEP PROCESS: Cash Transfers for Region, Section & Chapter Share in 2012 for 2011 was agreed Reserve Sharing may allow for items such as: MGA to execute on short term and long term projects not currently in the operating budget Adding programs to units for the benefit of the member Providing additional funding in Sections Congress Years 10/8/20155

Reserve Data Points 2008: Total Pension Loss: $(20) million Total Investment Loss: $(72) million New INITS and Foundation $(5.5) million MGA and Geo Unit Share: $(3.9) million. Of which $(2.3) million is Geo Unit Share – all absorbed by MGA. 2009: Total Pension Gain: $4.5 million Total Investment Gain: $51 million New INITS and Foundation $(5.9) million Geo Units would have received back $800k from prior year losses 2010 Total Pension Loss: $(2.8) million Total Investment Gain: $25 million New INITS and Foundation $(9.0) million MGA and Geo Unit Share: $(1.3) million. Of which $(1.2) million is Geo Unit Share of Losses 10/8/20156

2010 L 50 Reserve Information Reserve data is available by Region, Section and Chapter (attached) 3 Year Averages and Reserve to Expense Rations Prepared (attached) Qualifying Regions, Sections & Chapters with impact (attached) 10/8/20157

Glossary of Terms OU – Operating Unit Reserve Ratio – Reserve Balance Divided by Expenses at Year End Spending Rule – Approved annual expenses incurred for New Initiatives and the IEEE Foundation Net Assets = Reserves: Income less Expenses in each year 10/8/20158