Member Update (MU03-10)

*To:*	Members & Affiliates
*From:*	National Office
*Date:*	June 6, 2003
*Subject:*	REPORT TO THE MEMBERSHIP 2004 PRELIMINARY BUDGETS
*Reference:*	MU 03-10
*Attachments:*	Preliminary FY 2004 General Fund Budget (.pdf, 7KB) Preliminary FY 2004 Technical Action Fund Budget (.pdf, 12KB) Technical Action Fund (TAF) Overview & Status Report (.pdf, 44KB)

Change in Fiscal Year Yields Positive Results
This past year saw some significant changes in AMSA’s financial management – all of them providing positive results. AMSA’s Board of Directors acted in October to change the Association’s fiscal year from the calendar year to the Federal fiscal year. The Board anticipates that this change will ultimately enable the Association to avoid future cash flow problems, build its reserves and streamline its budget process.

AMSA’s Audited Financial Statements for the for the nine month period of January 1, 2002 through September 30, 2002 were finalized earlier this year. The Association’s Statement of Activities, reflected a surplus of Revenues over Expenses of $677,000. While the preponderance of the surplus was directly related to the one-time impact of the change in AMSA’s fiscal year, the financial performance was indeed favorable. Clearly, the strategy to align the organization’s fiscal reporting periods with the typical dues cycle, has eliminated a previously understated picture of AMSA’s audited financial position. Now the audit displays year-end net assets at $676,000 as opposed to virtually no net assets at the end of calendar year 2002. That represents approximately 25% of budgeted expenses for FY03 – meeting the target identified by the Board in its Policies & Procedures. It also demonstrates strong financial health and prudent financial reserves upon which AMSA can continue its forward momentum.

Preliminary Budget Adopted
Under AMSA’s new budget cycle, the Association’s Board of Directors adopts a preliminary budget in May, distributes the budgets to the membership for comment in June, and votes on a final budget in July. AMSA’s Board of Directors is pleased to provide the Association’s membership with this report addressing both fiscal and organizational initiatives for the 2004 fiscal year.

On May 19, 2003, AMSA’s Board adopted preliminary budgets for Fiscal Year 2004. These budgets are now – via this Member Update – presented to AMSA’s membership for review and comment. The preliminary FY 2004 General Fund Budget is presented in Attachment A and the FY 2004 preliminary Technical Action Fund Budget is provided under Attachment B.

In addition to providing for improved management and service to members, AMSA’s FY 2004 General Fund Budget anticipates a 3 percent dues increase for public agency Members and Public Affiliates. Additional detail on the proposed budgets is provided in this Member Update.

Board Strives to Ensure Quality Service/Cost Controls
AMSA’s Board of Directors continues its focus on the challenge of evaluating membership needs, setting priorities and reassessing the resources necessary to meet the Association’s goals. In FY 2004 the Board has identified several critical initiatives that will require a modest increase in revenue for AMSA’s General Fund. For this reason, the FY 2004 preliminary budget provides for a 3 percent increase in public Member Agency and Public Affiliate dues. The funds generated through these increases would support a comprehensive Strategic Planning Initiative; the completion of a two-year initiative to acquire, install, convert relevant data, and implement a new association Data Management System; the commissioning of an Engineering Study of the Association’s office building; and, the Realignment of the Accounting System & Financial Reporting Processes. A copy of AMSA’s current dues schedule is located at: http://www.amsa-cleanwater.org/membership/duessheet.cfm.

The General Fund budget supported at this level, accompanied by AMSA robust Technical Action Fund, will position the organization for future growth, ensure its effectiveness and improve its efficiency. The new initiatives are further described in the paragraphs which follow.

The Association’s Strategic Plan last underwent comprehensive review and amendment in July of 1998 – and it has been three years (March, 2000) since AMSA last conducted a comprehensive assessment of member needs and satisfaction. Needless to say, the AMSA community has seen many challenges and changes in the time period from the late ‘90’s to date. Experience has demonstrated that each time member needs are assessed, and/or the Strategic Plan is revisited, we glean invaluable information and are able to create a refined, targeted operational strategy for the Association.

It is for these reasons that the FY 2004 General Fund budget provides funding for an eight month, multi-faceted strategic planning and staff development effort – with the overall goal of creating a strategic direction for AMSA that provides a focused operational strategy for the short-term and a longer-term vision positioning the organization for future success. Included in this effort are 1) an Assessment of Member Needs and Satisfaction via a quantitative web-based survey and qualitative telephone interviews; 2) a facilitated Strategic Planning Session; 3) a Strategic Program Analysis to assess current programs, services, and activities; 4) a session to Create Strategies and Discuss Outcomes; and 5) a Plan Implementation and Action Planning Session.

It is anticipated that these activities will provide the Association with 1) a deep understanding of the current and future environment in which the organization represents and serves; 2) a strategic direction for AMSA that provides a focused operational strategy for the short-term and a longer-term vision for future success; 3) a plan that can be used by AMSA leadership and staff to guide future programs, services, and initiatives that will lead the organization forward; and 4) an implementation strategy that assesses the current portfolio of products and services and creates an Action Plan to implement the Strategic Plan. Additionally, this process will provide us the information necessary to update AMSA’s Human Resources Strategic Plan based upon our strategy and outlook for the coming years.

AMSA’s Board of Directors feels strongly that this initiative will provide clarity and focus for both AMSA’s leadership and its National Office staff as we work together to enhance the Association’s prominence in these competitive times.

During FY 2002, with the Board’s concurrence, AMSA spent considerable time, effort and financial resources to assess its data management system. As a result, a plan of action was undertaken to identify AMSA’s specific requirements and assess the viable products on the market consistent with the Association’s business needs. Subsequently, the Association has solicited, received and is in the process of evaluating proposals and plans to select a vendor this summer. In FY 2004, plans call for installation of the system and the training of the National Office staff to achieve full implementation.

Next to its members and staff, AMSA’s most valuable asset is its National Office building. Clearly, the decision to purchase the building has created substantial value for the Association. However, as with value of human resources, the building’s value does not appear on the financial statement. During the past two or more years, the market value of office space in the District of Columbia has been increasing at record levels. As trustees over the assets of the Association, and consistent with the recent commitment to enhance AMSA’s financial planning and accounting capabilities, AMSA’s Board of Directors has requested that a financial replacement plan for major building components, repairs and maintenance be developed. Funds have been included in the FY 2004 budget to commission an engineering study of the building to ensure the continued integrity of AMSA’s National Office. That study, and the resulting replacement plan, will provide AMSA with the information it needs to ensure its Replacement Reserve Fund is sufficiently funded to cover the future replacement of systems and equipment when the end of their useful life is reached.

With last year’s addition of a Controller to the AMSA staff it became clear that the efficiency and effectiveness of AMSA’s current chart of accounts, fund-accounting processes and financial reports can be significantly improved through a realignment of the accounting system and financial reporting processes. Over the past several years most (non-governmental) nonprofit organizations (NPO’s) have moved away from the “fund accounting” concept as the primary basis for their accounting and financial reporting processes. They did so because fund accounting requires (in most NPO’s, including AMSA) an excessive number of “non-value added” processes such as inter-fund financial transactions and related entries to record them.

Today, associations are better equipped to effectively and efficiently capture a financial transaction once, record it on either the association’s data-management system or the accounting system, and be able to report it when it’s needed, where it’s needed, in the format it’s needed, (ideally) at the click of a mouse. The FY 2004 General Fund budget provides funds for the Association to implement a new accounting model that is aligned with AMSA’s core activities and consistent with best practices in the association sector. This improvement to AMSA’s financial management is anticipated to streamline AMSA’s annual audit and reduce associated costs.

‘TAF At Work’ Provides Significant Member Benefit
AMSA’s Technical Action Fund (TAF) continues to prove its value by bolstering AMSA’s ability to represent the interests of its members before Congress and federal agencies and in the courts. Established eight years ago to commemorate AMSA’s 25th anniversary, AMSA’s “stand alone” Technical Action Fund strengthens the Association’s capability to implement its short and long-term objectives. The TAF has provided dedicated funds to gather and analyze data, initiate litigation, and secure the services of consultants having expertise beyond that which the National Office can offer. These funds are dedicated to projects and activities that impact pending legislation and anticipated or proposed regulations and policy initiatives, as identified by the Association’s committees.

Since its establishment, AMSA’s Technical Action Fund has provided hundreds of thousands of dollars in support of legislative, regulatory, legal and management initiatives. Twenty percent of your annual AMSA dues are allocated to the Technical Action Fund. In FY 2003 that amounted to $510,000. This allocation has proved to be approximately equal to the needs that have been identified by AMSA’s committees and members. Most importantly, it has enabled AMSA to pursue a wide range of projects that are of critical importance in achieving our strategic goals and objectives. A complete summary of Association activities currently being supported by the Technical Action Fund is provided in this Member Update under Attachment C.

Clearly, AMSA’s Technical Action Fund plays an increasingly prominent role in the Association’s ability to ‘get the job done’ for its members. The dollars we spend ensure more informed rulemaking decisions at EPA and have produced significant savings in management, operation, and capital costs for publicly owned treatment works (POTWs). The TAF at Work icon continues to serve as a constant reminder of the important work done by the Fund.

Infrastructure Funding Prominent on AMSA’s Agenda
Ensuring a continuing federal role in wastewater infrastructure funding continues to be one of numerous ways the Association is working hard to meet the needs of its members. In addition to AMSA’s leadership role within the Water Infrastructure Network, last year the Association undertook a new initiative dedicated to seeking a long-term, sustainable source of wastewater infrastructure funding.

The first official action of 2002-2003 AMSA President Paul Pinault, Executive Director of the Narragansett Bay Commission was to announce formation of a new task force – the AMSA Wastewater Infrastructure Funding Task Force. This new task force was to set its sights on the issue of wastewater infrastructure funding. The Task Force has worked diligently to identify a new source of federal revenue to fund wastewater infrastructure improvements – and to devise a strategy to win broad grassroots support. AMSA member agencies rallied around the idea and voluntarily pledged some $488,000 in support for fiscal year 2003.

To say that AMSA’s Wastewater Infrastructure Funding Task Force has had a busy year would be an understatement. In just twelve months time, the Task Force has conducted a strategic planning process designed to create a consensus around future funding goals; initiated an economic research project that will identify possible revenue sources to finance a wastewater trust fund; began the development of a white paper that will give a factual overview of utilities’ current competitive, best management practices, including a review of utility rate-setting and rate increases; produced this new publication – Why Not Water? Investing in the Nation’s Clean Water Future – that lays the groundwork for our future efforts; and, secured the services of Frank Luntz to conduct research and polling on the issue of clean water funding – with compelling results.

Clearly, AMSA’s efforts in the infrastructure funding arena, combined with those of the Water Infrastructure Network, are building momentum. What is essential is to sustain that momentum, which will require the active involvement of AMSA’s membership. Additional information on this important issue, and the work of the Task Force, chaired by AMSA Treasurer and Board Member William B. Schatz, General Counsel of the Northeast Ohio Regional Sewer District, can be found on AMSA’s web site – www.amsa-cleanwater.org. To join the Task Force, please contact Lee Garrigan at 202/833-4655 or by e-mail at lgarrigan@amsa-cleanwater.org.

Growth in AMSA’s Membership Continues
This past year we have continued to implement initiatives aimed at both retaining our existing membership and at attracting new members. With the help of member agencies nationwide, AMSA’s membership roster has increased to include 282 Member Agencies, 14 Public Affiliates, and 54 Private Affiliates. These 350 entities work together to increase our collective political clout with Congress and the U.S. Environmental Protection Agency, thus ensuring that our messages are heard by national policy makers.

In Summary . . .
As AMSA moves forward in its fourth decade of advocacy and service, initiatives throughout the year will support the objective of maintaining AMSA’s strategic position as the driving force in national clean water policy. We plan to continue to focus our efforts largely on the legislative, regulatory and legal arenas. Through leadership and member support, we will also continue to commit time and resources to address the challenging management issues faced by our membership – as well as provide support to POTWs specific to security initiatives.

This past year we have accomplished many things. Playing the most instrumental role in these accomplishments were AMSA’s leadership and members, whose firm decisions and substantial participation lent unquestioned credibility to AMSA’s positions and led to increased attention to its policy goals. Many thanks for your continuing participation and support.

Member Comment Invited
The Board of Directors encourages all members to review the FY 2004 Preliminary Budgets for both the General Fund and the Technical Action Fund. Please direct any comments you may have to Donnie R. Wheeler, AMSA’s Treasurer and Chair of the Association’s Budget & Audit Committee at 757/460-2261 or via e-mail at dwheeler@hrsd.com, AMSA’s Executive Director Ken Kirk at 202/833-4653 or via e-mail at kkirk@amsa-cleanwater.org, or the member(s) representing your region on AMSA’s Board of Directors (for contact information see AMSA’s Board Roster in the Member Pipeline at http://www.amsa-cleanwater.org).

The Board of Directors and committee leadership will meet in Boston, Massachusetts on July 16, 2003, and will adopt final FY 2004 budgets at that time. Please provide your comments and recommendations prior to Friday, June 27, 2003.

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