2023-2024 Financial Condition of the Association
I’m happy to share that our financial situation remains strong and stable. Our stability is largely driven by ongoing membership growth, which continues to be a focus for us. We’ve had a solid start to the year, with membership numbers holding steady. Since most of our revenue comes from member dues, we’ve been able to maintain consistent income by bringing in new members at the standard dues rate. Additionally, as in past years, we’ve maintained careful oversight of our expenses, ensuring they stay within the budget approved by the Board.
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 requires an annual transfer of between 1% and 3% of dues revenue to the CMR, as outlined in the budget, with the Board having the flexibility to forgo the transfer if needed. The Board’s goal is to grow the CMR to 16% of dues revenue (roughly one and a half months of operating expenses) and maintain that level. As of the end of 2023, the CMR Fund totaled $1,510,674, or 17% of membership dues, and this balance remained steady through the end of 2024. Since the fund exceeded the 16% target, no transfers were made to the CMR in 2024
At the end of the year, the CIT Fund had a balance of $979,877. Board Policy for this fund stipulates that an amount equal to the depreciation expense for capital purchases made from the fund be transferred each year. As a result, the fund’s balance will fluctuate annually based on capital expenditures.
The balances in these two funds enable us to avoid borrowing for cash flow during the two to three months each year when dues revenue is minimal. Additionally, the Permanent Fund continues to provide a solid financial foundation, with a current balance of $2,416,360. The base fund saw a modest increase from the previous year, thanks to the returned interest of $3,969.
The BMRE Fund was established by the Board in April 2017 to reserve funds for future building maintenance and real estate acquisitions. An initial contribution of $500,000 was made in 2018, with additional annual funding set at 1% of membership dues. In 2024, the contribution was $87,893. Thanks to these contributions, along with market gains and earnings, the current balance of the BMRE Fund stands at $1,233,961.
The staff pension plan remains a key financial focus for TSTA, largely due to the stricter funding requirements introduced by the Pension Reform Act passed a couple of years ago. While the plan continues to report a pension asset rather than a liability, the new regulations have added pressure on all defined benefit plans. Additionally, the current rise in interest rates and recent market fluctuations could present some challenges. Nonetheless, TSTA is proactively pre-funding the plan to help ensure its continued stability.
A summary of audited revenue and expenses for the past two years is on the following page.
2024-25: Good news at the mid-point
We’re off to a strong start, with membership numbers holding steady and gains across several membership categories. We’ve successfully welcomed many new members, offsetting any losses, leading to a solid net gain. While the financial markets have experienced some volatility, our investment advisors continue to guide us on optimizing our portfolio, ensuring that we maintain the required asset balance in line with Bylaws and TSTA Policies. Our investments are well-positioned to keep values steady and strong.
Looking ahead, we’re optimistic about a significant increase in membership for 2024-25, which will contribute to further stabilizing the organization and boosting our budget.