November 2015 Financial Summary

The 2016 preliminary budget showed a deficit of $438,235. A reduction in expense, dues increase per full time equivalent, dues increase for Active Life Members and transfer of monies from investment reserves were necessary to balance the budget.

The budget is built on a combination of both historical and actual data, which provides a basis on which to project costs in the future when a reasonable inflation factor is built in. As with previous budgets, some items have decreased while others have increased due to inflation. No cost of living adjustment (COLA) was budgeted for 2016.Thefinal budget projects an income of $2,898,156 and expenses of $3,121,351 3,049,910and used a $30 dues increase which left a deficit of $ 151,753 to be funded by reserves. A full time member’sdues has been set at $652.

Because not all membership categories are charged 100% of the annual dues, the number of full-time equivalent (FTE) members is calculated. The dues income portion of the budget is based on the number of FTEs. Also factored in are estimated number of members who will move from active to active life, retired to retired life and members moving form the final year of graduated dues to full active member dues. The total FTEs used to plan the 2015budget were 3,453 compared to 3,247 FTEs used to update the 2016 budget. The decrease of 206 FTEs resulted in a dues revenue decrease of $134,312 or 5.95% for 2016.

There are a number of factors which are affecting this budget that will have an impact over the next several years. The most significant changes are in PDAIS contributions and changes in membership numbers.

At PDAIS Obamacare has had a significant negative impact on the agency. The Healthcare policies were a major source of income for the agency and under the current rules we could no longer be our own group and needed to migrate to the community group rate. At the same time the banks have radically decreased the money they will pay us as an endorsed program. With both factors hitting at the same time the prospects of significant non-dues revenue is fading in the short term. The PDAIS Board has taken action to change this situation in the long term, but involves short term costs. PDAIS has acquired the Bell Insurance agency which is a very profitable agency. This acquisition has tightened the cash flow such that the traditional contributions to PDA will not be available for several years. When the Bell Agency is paid for, it will provide a substantial non-dues revenue to the PDA.

We as an association are aging. In 2009 14% of our membership was in the category of Active Life Member, (members over 65 who are still working). That number is at 23% for 2016 and is projected to be 30% by 2019. With this large of a percentage of our members paying only 50% of PDA dues (they already pay 75% of ADA dues) the long term financial viability of our organization is in question. In response to this situation the Council of Presidents and the Board of Trustees have voted to increase the dues for this age group to match the ADA (75%) which has been how we have historically handledhistorically thehandled the dues.