2021-2022 Financial Condition of the Association
I am pleased to report that we continue to enjoy a stable financial picture. The source of our stability lies in the membership growth we have worked hard to maintain during the Pandemic and continue to grow today. We are off to a great start with increased membership numbers this year versus the last few years. Since most of our revenue comes from the dues we collect from our members, we have been able to keep revenue fairly stable as a result of signing new members up at the normal dues rate. And, as in previous years, we have coupled that with prudent checks and balances to ensure that expenditures are in line with the budget approved by the Board, making necessary adjustments as appropriate.
TSTA has three dedicated Funds created by the Board to help maintain our financial stability. These are the Cash Management Reserve Fund (CMR), the Capital Improvement and Technology Fund (CIT) and the Building Maintenance and Real Estate Investment Fund (BMRE).
Board Policy calls for making an annual transfer to the CMR of between 1% and 3% of dues revenue, as determined in the budget, with the Board able to vote to make no transfer if necessary. The goal established by the Board is to build the amount in the CMR to 16% of dues revenue (about one and one-half months of operating expenses), and then maintain that amount. The CMR Fund reached a total of $1,510,674 at the end of 2021 or 16% of membership dues. This amount exceeded the 16% of dues revenue required to maintain the fund at the end of 2022, so no transfers were made to the fund in 2022.
At the end of the year, the CIT Fund stood at $895,531. The Board Policy for this Fund calls for transferring to the Fund each year an amount equal to the depreciation expense for capital purchases made from the Fund; thus, the Fund will vary from year to year as we make capital expenditures (or not).
The amounts in these two funds allow us to continue to avoid any borrowing for cash flow purposes during the two or three months each year when we receive little or no dues revenue. Of course, the Permanent Fund continues to provide a stable foundation with its balance of $1,636,483. This base will increase by the returned interest of $3,562.
The BMRE was established by the Board in April of 2017. The fund was created to set aside funds for future building maintenance and real estate purchases. An initial contribution of $500,000 was made to the fund in 2018, with additional funding annually at 1% of membership dues. Funding in 2022 was $88,654. The balance of the BMRE, with additional market increases and earnings to date, has a balance at $1,059,624.
The staff pension plan continues to be the biggest financial concern for TSTA, due to more stringent funding requirements brought on by the Pension Reform act passed by Congress a couple of years ago. The pension plan continues to report a pension asset versus a pension liability. However, the more stringent rules imposed by Congress continue to put pressure on all defined benefit plans and the current increases in interest rates and declines in the stock market may prove challenging. TSTA continues to pre-fund the plan to help maintain the status of the plan.
Here is a summary of audited revenue and expenses for the last two years. The shift in Affiliate and Other Receipts from 2020 – 21 to 2021 – 22 is caused by Covid funding received from the Federal Government in 2020 – 21. Depreciation expense in 2020-21 and 2021-22 was $326,957 and $328,060, respectively. Net Income prior to depreciation was $1,913,182 in 2020-21 year and $536,987 in the 2021-22 year with the decrease from the prior year due to no receipt of Federal Covid funds in 2021 – 22:
| 2021 – 22 | 2020 – 21 | ||
| REVENUE | |||
| Membership dues | $8,883,670 | $9,459,888 | |
| NEA program support | 1,440,810 | 1,663,252 | |
| NEA projects | 583,201 | 512,608 | |
| Rental income | 22,917 | 25,000 | |
| Affiliate and other receipts | 314,472 | 1,082,950 | |
| Member benefit programs | 33,074 | 53,185 | |
| Other income | 1,224 | 1,040 | |
| Conference registration | 6,073 | 30 | |
| Investment income | (174,395) | 224,280 | |
| TOTAL REVENUES | $11,111,046 | $13,022,233 | |
| EXPENSES | |||
| Public Affairs | 969,027 | 1,067,483 | |
| Affiliate and Leadership Development | 1,896,656 | 1,971,340 | |
| Legal services and Member Advocacy | 1,577,984 | 1,748,394 | |
| NEA Projects | 502,519 | 520,759 | |
| Total program expenses | 4,946,186 | 5,307,976 | |
| Supporting services | |||
| Management and General | 3,000,777 | 3,039,206 | |
| Member Development | |||
| Public Affairs | 335,871 | 369,996 | |
| Executive and Governance | 137,366 | 139,181 | |
| Affiliate and Leadership Development | 2,481,917 | 2,579,649 | |
| Total supporting services | 5,955,931 | 6,128,032 | |
| TOTAL EXPENSES | 10,902,117 | 11,436,008 | |
| INCREASE (DECREASE) IN NET ASSETS | 208,929 | 1,586,225 |
2022-23: Good news at the mid-point
We are off to the best start we have had in recent years. To date we have recruited over 5,000 new members. While the financial markets have seen some volatility, our investment advisors have continued to provide advice on our portfolio mix while maintaining the asset balance for the invested funds per Bylaws and TSTA Policies. TSTA investments remain poised to have the asset balance needed to weather that volatility. Overall, we project a significant membership increase for 2002-23 which will begin to stabilize our budget after the two difficult years of the pandemic.