I am writing this column after attending the AAPM Annual Meeting in Nashville, TN. I want to share in this column the financial report I gave at the Annual Business Meeting. Fiscally, AAPM continues to perform well and ended the year with a slight deficit.
The Association realized a deficit from operations of approximately $49,000 in 2017 (Figure 1). For the year 2017, AAPM had budgeted for a deficit of approximately ($1.2M), therefore this led to a favorable variance of $1.15M for 2017. The largest single driver contributing to this favorable variance came as the result of net under-spending and favorable revenue performance versus budget in Councils and Committees contributed $836,000 to the favorable variance. Overhead costs were lower than budget by approximately $139,000. Additionally, costs associated with the Annual Meeting held in Denver, CO were lower than budget creating a favorable variance of nearly $138,000. Despite the modest deficit from operations, AAPM was still in compliance with the Debt Service Coverage (DSC) ratio of 1.2 to 1 covenant requirement as a part of AAPM's building financing with TD Bank. For the year ending December 31, 2017 AAPM's DSC ratio was 1.79 to 1.
AAPM's balance sheet is strong as of the end of the year 2017, with total assets exceeding $25.6M. This represents an increase of approximately $1.8M over the prior year (2016). AAPM's investments performed very well in 2017; for the year we had unrealized gains of approximately $1.6M. At year-end reserve balances stood at nearly $14.1M (Figure 2).
The 2018 budget has an approved deficit of approximately $955,000. This budget was prepared utilizing statistical model, using historical budgets and operating results as a guide. As previously mentioned for 2017 the Association budgeted for a deficit of $1.2M based on the model and achieved a deficit of $49k and met the covenants — evidence that the model is working. The model assumes that AAPM will finish the year in compliance with the DSC covenant requirements of TD Bank. Currently, the Association is working on the budget for 2019. All councils and committees are invited to prepare their respective budgets and will submit them by the end of August. FINCOM will meet on October 17, 2018 to review and approve the 2019 budget.
I have also included for informational purposes a five-year trend of Operating Revenues and Expenses (Figure 3). In addition to operating activity, investment income and Education and Research Fund (net) activity is shown as well to provide total AAPM activity over the past five years. As shown in the attached data, the Association is in a very healthy financial status with operating reserves exceeding the annual budget.
I would like to thank Robert A. McKoy, AAPM Director of Finance, for his subject matter contribution to this report. Please feel free to reach out to me at firstname.lastname@example.org, @mmahesh1, or call me at 410-955-5115, if you have any questions concerning this report.
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