Councilor W. H. Daly

On the surface the council meeting at Orlando was ho-hum. We selected Profs. Charles P. Casey, University of Wisconsin, Madison and Alvin L. Kwiram, University of Washington, Seattle as candidates for 2003 President-Elect. The election will be held this fall.

The Council approved a recommendation from the Committee on Committees (ConC) to continue the Committee on Science. The status of the Women Chemists Committee (WCC) was changed from "Other" Committee of the Council to a Joint Board-Council Committee by voice vote of the Council. WCC will now report to both Council and the Board. A petition to increase the size of Council committees was withdrawn to allow further deliberations.

Committee on Budget and Finances reported that Society finished fiscal year 2001 with a net deficit. The budget for fiscal 2002 is projected with revenues of $345 M and expenses of $347 M, resulting in a net deficit of $2 M. After this report, the full dues escalator was approved for 2003, raising the annual dues from $112 to $116, without any discussion from the floor. The good news is the deficit is a wake-up call. A task force charged with reviewing all the expenses of the Society has been appointed.

Those were the only action items brought before Council. The real action was behind the scenes in the Committee meetings and Caucuses prior to the Council Meeting. The main item for discussion was a petition to change Local Section and Division Support developed by a Presidential Taskforce on Local Section/Division Finances. The petition proposed to make the primary support of both local sections and divisions come from dues revenue by allotting 20% of the individual dues to a local section/division pool. The allotments to Local Sections would be distributed in accordance with procedures developed LSAC and approved by Council. In an exactly analogous fashion, the Division allotments would be distributed in accordance with procedures developed DAC and approved by Council. The distributions would be contingent upon receipt of the annual report prior to a forfeiture date as specified by either LSAC or DAC and would include a base allotment, an allotment tied to total membership and may include distributions based on other factors such as programming.

The most controversial portion of the petition was the method for dividing the funds. The petition proposed " These funds shall be divided between Local Sections and Divisions according to the fraction of total memberships using the second preceding year membership figures. Total memberships shall be defined as the sum of the number of members and National Affiliate of each Local Section and according to the number of members and National Affiliate of each Division. Total memberships shall not include Local Section Affiliates or Division Affiliates." Although new members are automatically assigned to local sections, membership in divisions is elected and voluntary. However, a Society member can be a member of several divisions and thus be counted more than once in the division membership pool. Effective recruitment by divisions could distort the membership distribution between local sections and divisions and influence the funds distribution.

The objective of the petition was to enhance funding to both Local Sections and Divisions based upon dues driven, membership based funding formula. After trying to sell the idea to various council committees and caucuses, at the Orlando Council meeting, almost all of the petitioners who signed the original petition signed a sheet withdrawing the petition. The petition, as submitted, would have never passed in Boston. Thus, it has been withdrawn and a new petition planned.

Frank Blum, Chair of DAC and a leader of the task force sponsoring the petition summarized the major issues to be addressed as follows:

Issue 1:

Councilors were not given enough time or information to digest before, or during, the Orlando meeting. By the Boston meeting, we must use every means within our disposal, including a web site, to inform the Local Section and Division councilors. Ask your Local Section councilor about it. If the members of the local sections express an interest, their councilors must take the time to become informed.

Issue 2 (and its variants):

a. The proposed formula put divisions and local sections in competition for a fixed pool of money (20 % of dues). Many felt this could lead to competition, not collaboration and cooperation.

b. The formula was cumbersome and complicated.

c. The formula could be manipulated by divisions through low dues to get the allocation monies (this is actually not a likely scenario, but is certainly perceived as a problem).

d. The support to local sections could drop below the current levels (based on the formula), violating one of the recommendations of the first task force–that increased support for divisions should not come at the expense of local sections.

Proposed Solution: Fix the percentage of dues allocated to divisions at 45% and local sections at 55% of the total (20% of dues). This was passed upon by the task force. It was not unanimous, but it may be passable by Council. It will be a large increase for Divisions and a smaller one for Local Sections. The percentage is based on recent membership numbers (143,000 Local Section memberships and 116,000 Division memberships). In principle, the relationship used to set the percentages is only related to memberships for the above year. After that, the membership numbers will change, but the percentage for funding will stay fixed until such time as it is changed again.

Based on these numbers, the split would be roughly $1,431,000 for Local Sections and $1,171,000 for Divisions. For comparison, the 2002 allocation for Local Sections was $1,317,000 and for Divisions was $378,000. The increase in total allocation would be $907,000.

Issue 3 (and related):

a. The amount of money is large (current estimate is an increase of about $900,000).

b. The Society is currently dipping into its reserves to fund current programs.

c. What are we going to cut to fund it?

Proposed Solution:

The amount of money is large. But the volunteer base is critical to the Society. Ultimately the Board of Directors and the Committee on Budget and Finance have the Society-wide view to prioritize the spending of the Society. The Society’s budget is on the order of $390 million or so. This increase is about 0.25% of its budget. Councilors need to identify support for the two main volunteer groups of the Society as a priority. Surely we can find 0.25% or so in lesser priorities. Also, the changes should they be approved would take place Jan. 1, 2004. The economic picture and the budget may look much different by then if our investment pool picks back up.

Issue 4:

Allocations support for meeting programming seems to have disappeared?

Proposed Solution:

The current approach to supporting meeting programming by direct allocation from the Society is under scrutiny by the IRS. In some cases this approach could put the nonprofit public corporation status of some divisions in jeopardy. We must use member derived funds to cover meeting expenses to avoid this problem. However, when the funds become available from an appropriate source, it is the intention of DAC to increase meeting allocations.

Issue 5:

a. Will the Society dues automatically go up to fund this initiative?

b. How much would dues have to go up to cover it?

Proposed Answer:

No, there is no provision for that to occur in the proposed changes. Dues would need to increase about $9 if it were to be paid for this way, but it would take an additional bylaws change to do this.

The proposed changes in Local Section and Division funding are probably the most significant issue to come before council in recent years. It will impact all of you, but it is most critical for division members. Last year five of the thirty three divisions (including POLY) operated in the red and nine of them are holding reserves equivalent to less than one year’s annual expenditures. Our current sources of income associated with programming are diminishing, while our obligation to program remains one of the primary responsibilities of the division. To meet our obligations, it is essential that the Divisions receive a stable source of funding at a level that enables them to program effectively. The task force believes that the concepts described above will provide that funding in a fair an equable manner.

We hope this extensive recitation of the dues petition details and the arguments anticipated during subsequent debates will enable you to conduct informed dialogs with colleagues, who are only members of local sections. Grassroots support will definitely enhance the possibility of enacting the proposed changes. We will keep you informed of any new developments associated with the petition. The next round will take place in Boston. Stay tuned.