I would like to start the New Year with pleasant news about AAPM's finances. AAPM's finances continue to be on solid ground, however, we always have to be watchful of our revenues (trending down) and expenses (trending higher) along with the trends in the fixed expenses of our Association. It has been a very active year as we started with the selection and purchase of both a Financial Management System (FMS) and Association Management System (AMS) and we are currently in the implementation stage with the goal of completely switching to new systems early this year.
The AAPM Finance Committee and Board of Directors met in Chicago in December and reviewed the Association's current financial position, as well as approving the budget for 2018. I am happy to report that 2017 was a successful financial year for our Association.
As of mid-December, I am pleased to report that AAPM will finish the year with a surplus from operations. While conservative reports provided to the Board in November indicated that we would complete the year with a modest surplus from operations, when factoring in a reduced spending pattern within the Councils and Committees through the end of the year and historical spending in the last two months of the year it is now estimated that, due to recent market gains, the Association will see a healthy surplus from operations as well as an increase in reserves.
The 2017 budget, as approved by the Board of Directors, was developed using a statistical model to project revenue and expenses based on historical spending trends. As of October 31, revenue and expenses are estimated at $9.58 million and $10.48 million respectively compared to approved budgeted revenue of $9.55 million and expenses of $10.75 million.
AAPM experienced better than anticipated revenues from Online Education and Summer School both contributing. On the expense side, Annual Meeting expenses came in nearly $300,000 below budget and overhead costs are pacing approximately $88,000 below budget. Offsetting a portion of these positive variances is a negative variance in Publications. There was a budgeting error of $110,760 for the fee paid to Wiley for the hardcopy journals sent to AAPM members. This contributed to the negative expense variance in Publications of nearly $145,000. These factors are contributing to expenses pacing well below budget for the year.
Currently, AAPM's investment portfolio saw substantial gains during 2017 recording - in excess of $1,200,000 of unrealized gains in the first ten months of the year. Even after transferring out $660,000 to operations for the acquisition of the new Association Management System (AMS) and Financial Management System (FMS), the reserve fund exceeds $13.8 million as of October 31, 2017.
I would once again like to thank the Council and Committee Chairs, along with their liaisons, who worked extremely hard in developing their budgets. As reported in one of my earlier columns, the entire Finance Committee reviewed the 2018 budget with the Council Chairs while keeping the goals and objectives of AAPM's strategic plan in the forefront.
The 2018 budget summary is included with this report. Revenue projections total $9.45 million and expenses total $10.40 million, with a budgeted deficit of $954,787. The statistical model predicted a deficit of $946,490 which is based upon AAPM complying with the financial covenants established by TD Bank, the mortgage holder for the new HQ building. Given our normal underspending patterns, the Finance Committee felt that the approved deficit would allow for AAPM to operate and still meet the bank covenants and operate at or near break-even from operations.
Included below you will find a graphical presentation of the 2018 budgeted revenues and expenses by category (including which programs are included in the various categories).
In closing, I would like to thank Robert McKoy and the entire AAPM finance staff for all of the help during this past year, and in making the budgeting process and the job of Treasurer manageable. Please feel free to reach out to me by email, Twitter, or call me at 410-955-5115, if you have any questions concerning this report.
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