I am pleased to report that we continue to enjoy a stable financial picture. Since most of our revenue comes from the dues we collect from our members, the source of our stability lies in the membership growth we have worked hard to maintain for the past eight years. While we have experienced a decline in overall membership with the end of organizing dues, we have kept revenue stable as a result of signing new members up at the normal dues rate. 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 $1,466,835 at the end of 2020 or 15.9% of membership dues.
At the end of the year, the CIT Fund stood at $781,329. 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.
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. Additional funding of $276,553 was made in 2020 as TSTA finalized the renovation of its new building putting the fund balance at $876,553.
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 recovery of the stock market has reduced the gap between our pension obligation to current and prior staff and the value of the assets in the pension plan; but the more stringent rules imposed by Congress continue to put pressure on all defined benefit plans.
Here is a brief summary of revenue and expenses for the last two years. TSTA purchased and remodeled a new building. This created a much larger asset to depreciate than the original 1950’s building that was valued at its original purchase price. The result of this from a financial statement basis is a much higher non-cash depreciation expense. Depreciation expense in 2018-19 and 2019-20 was $404,640 and $382,981, respectively. Net Income prior to depreciation was $242,277 in 2018-19 year and $1,190,892 in the 2019-20 year:
|NEA program support||1,698,603||1,608,888|
|Affiliate and other receipts||582,965||313,338|
|Member benefit programs||54,090||63,890|
|Affiliate and Leadership Development||1,935,645||2,048,189|
|Legal services and Member Advocacy||1,926,519||1,882,378|
|Total program expenses||5,113,148||5,342,587|
|Management and General||3,012,497||3,179,731|
|Executive and Governance||154,146||158,483|
|Affiliate and Leadership Development||2,532,934||2,680,209|
|Total supporting services||6,049,562||6,407,167|
|INCREASE (DECREASE) IN NET ASSETS||807,911||($162,362)|
2020-21: Good news at the mid-point
The Covid-19 Pandemic has impacted everything this year including TSTA operations. TSTA shifted to working from home in March of 2020. We are still in that mode of operations and maintained all of operations from a remote workspace while maintaining a safe work environment. TSTA experienced it first significant dues increase since 2009, which has helped TSTA continue providing service to its members throughout the pandemic. We have recruited over 2,500 members using primarily virtual recruiting techniques this year. Overall, our membership levels have been consistent during the pandemic, and we anticipate those increasing as we become able to return to school campuses.
In the American Rescue Plan under President Biden, TSTA continues to qualify for additional stimulus credits that will result in additional support in the last half of our fiscal year. These credits will provide additional funds to help cover expenses as we anticipate being able to return to schools when the pandemic wanes and when it is safe to do so.
While life membership generally drops a little every year (1973-74 was the last year for enrolling as a life member), our TSTA-R membership is holding steady and student membership is stable.