The Society for the
Psychological
Study of Social Issues

    





Secretary-Treasurer’s Report: Fall 2010

By Margaret Bull Kovera

I have recently finished my first year as Secretary-Treasurer of SPSSI and want to take this opportunity to report on the financial health of the organization as well as some of the actions that SPSSI Council has taken over the past year to ensure the continued well being of the organization.  It will come as no surprise that SPSSI, like all of us, has been affected by the economic downturn.  Although SPSSI remains financially sound, we are seeing the effects of these turbulent economic times on our revenue streams.  This decrease in revenue has forced SPSSI Council to make some tough budget decisions over the past year while remaining mindful of our mission and that our research and policy activities become even more relevant to health of our communities during this time of economic strife.  Let me describe the challenges that we have been facing and the actions that Council has taken to meet those challenges. 

  • SPSSI ended FY09 with a surplus of about $37,000, with revenue at $805,187 and expenses at $755,170.
  • Early in 2010, we received news from Wiley—the publisher of our journals—that they had been overly optimistic in their original predictions for the 2010 royalties from our journals in part because they had not anticipated the industry-wide drop in journal renewal rates.  Their new royalty estimate was $90,000 less than their previous prediction.  Given that the approved 2010 budget had predicted only a $28,000 surplus for the year, Susan Dudley and I revisited the 2010 budget, looking for places we could cut expenses to balance the budget.  A revised budget was taken to Council for approval at its Midwinter meeting. Most of the savings were achieved by cutting the budgets of some programs to more accurately reflect their historical expenditures. Council also voted to suspend SPSSI contributions to support the activities of other organizations until our income once again exceeds our own expenses.  Finally, Council discussed cost-savings that could be achieved by availing ourselves of professional services that APA offers to its Division free of charge.  To start, Council voted to terminate its retainer with private legal counsel, using APA’s legal services when such services are needed.  This move does not prevent us from hiring independent counsel in the future if it is needed but represented a significant cost-savings that allowed us to balance the 2010 budget. 
  • Prior to the Summer Council meeting, we received further bad news from Wiley, who was now predicting an additional loss of $90,000 in journal revenue for 2011.  So in preparing a proposed 2011 budget for Council approval, we were faced with making additional cuts to an already tight budget.  Susan Dudley and I again approached this task with the intent of achieving savings through streamlining operating expenses, avoiding cuts that would affect programs whenever possible.  We are currently exploring, with Council’s blessing, moving our accounting services over to the service provided to divisions by APA.  APA provides free accounting services to all divisions through an independent accounting firm.  This one change would result in a savings of over $20,000/year for SPSSI. Assuming this change in our provider of accounting services is workable, the approved budget for 2011 has a deficit of $16,950.  Council authorized the withdrawal of these funds from our Money Market accounts if this deficit is realized and also authorized similar draws on our investments for the next couple of years while the economic climate remains troubled.  If at that time, it does not appear that our revenue stream from our publications is recovering, Council will revisit this decision to draw on our investment account to balance our operating budget. 
  • SPSSI underwent a full audit for FY 2008. In our audit, the accountants discovered a significant deficiency and a material weakness in our accounting practices.

o        We receive payments via a Paypal account.  The accountants noted that we must reconcile the on-line payment history for our Paypal account with our bank statements, which had not been done (a significant deficiency).  They recommend that this reconciliation be performed monthly.  Susan Dudley has reconciled all of the 2009 Paypal and bank statements and is now performing this reconciliation on a monthly basis. 

o        The auditors also noted that Susan Dudley was responsible for both the accounting functions of the Society and had access to cash assets (a material weakness in our accounting practices as it increases our risk of exposure to fiscal mismanagement).  In response, Susan has trained Anila to take over the accounts payable functions in QuickBooks so that she no longer has responsibility for both tasks. 

The accountants also identified two additional areas for improvement.

o   They asked that we begin to track donated services (e.g., time donated by unpaid volunteers like officers, committee chairs, etc.) by individual rather than making gross estimates of donated time at the end of the year. Susan Dudley is now asking each person volunteering time to SPSSI to make an estimate about the amount of time that has been donated each year. 

o   Because we are now tracking membership on a 12-month rolling basis, we are required to defer the income from dues until the month in which it is earned.  Susan Dudley has now put into place procedures for deferring the dues income. This will result in a total deferral of $30,626 collected in 2009 to 2010 income.

We recently received the auditors’ review (a process that is less detailed than a full audit) of our FY2009 books and no further problems were identified.  I would like to express my appreciation to Dr. Susan Dudley, our Executive Director, for the excellent job she has done in implementing new procedures that allow us to put the auditors’ previous concerns to rest.

  • After market losses in Fiscal Year 2008, SPSSI’s investment portfolio rebounded a bit in 2009.

o   For Fiscal Year 2009, the SPSSI investment account showed a net increase (i.e., the percentage increase after payment of fees) of +10.98%.  This rate of return is lower than what was seen for the S&P500 for 2009, which was 26.47%, in part because of our socially responsible investment practices.  However, if we look over the three-year period that ended 1/1/2010, the investment account had a net increase of 0.06%, compared to the S&P500, which had a loss of 15.48%.

o   At the end of August 2010 our investment account had a total market value of $1,821,329. Currently, SPSSI’s investment portfolio is divided as follows: $132,060 in Money Market Accounts (7%), $877,264 in Equity (48%), $751,672 in Fixed Income Accounts (41%), and $54,613 in other assets (3%).  In addition, we maintain $821,072 in a Cash Account.  The Audit and Finance Committee recently reviewed this distribution and voted to make no changes at this time.

o   Our investment team, Dennis Paul and Pamela Roseneau have severed their relationship with UBS. They moved to Hightower on June 1. After consultation with the SPSSI Executive Committee and the Audit & Finance Committee, we retained them as our managers and move our assets to Charles Schwab Financial where Dennis and Pamela will continue to manage them. Their current outlook on the future of the market is that we should continue to invest more heavily in equities than in bonds.  The Audit and Finance Committee has reviewed their investment strategy and remains confident in that strategy and the team’s ability to manage our money in this volatile market. 

Please do not hesitate to contact me about how our organization is working to meet your needs as a member.  I can be reached at: mkovera@jjay.cuny.edu

 


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Research that produces nothing but books will not suffice.
                                                                                                                    - Kurt Lewin