C&EN: ACS COMMENT - TIME FOR FISCAL RESTRAINT

JUDITH L. BENHAM, VICE CHAIR, SOCIETY COMMITTEE ON BUDGET & FINANCE

The purpose of this comment is to offer our members a perspective on ACS finances, including some recent history, our current financial status, and an outlook on the near future. A basic understanding of ACS finances can help to direct our actions.


	*We view the current situation as an opportunity to step back and examine what we do, impose an order of priority on our operations, and seek to extract maximum value for every ACS dollar we spend.*

The Society Committee on Budget & Finance currently has 22 members and associate members and two former councilors who are consultants. We work closely with the board of directors and council in ensuring that the society's budgets are responsibly developed, allocated, and monitored. We review requests for funding new and unbudgeted items, and we recommend action on them. When appropriate, we review budgeted activities for cost-effectiveness. Bylaw III, Sec. 3,e(1)(a) describes our responsibilities in greater detail.

The mid- to late-1990s were heady times for the financial markets, as those building up their 401(k) and IRA accounts can attest. ACS benefited, too, as the worth of our investment portfolio swelled and its net contributions to the society's operations increased impressively. Our advertising and publications revenues advanced significantly as well.

Times were so prosperous that ACS could implement remarkable expansions in programs for members--especially in career services and enhanced programming for national and regional meetings. We reached out to other stakeholders (secondary educators, legislators, underrepresented minority chemistry and chemical engineering students, and others). We could (and did) approve almost every reasonable program funding request. At the end of 1999, we were a much larger and more influential scientific society than we were 10 years before.

However, while pursuing a full agenda of important initiatives, we became more and more accustomed to letting our business and investment income finance society activities. Since 1988, we have declared five dues-increase holidays because we had no pressing need for the funds. Currently, membership dues cover only 19% of member services. The remainder is funded by donations, ACS investment income, and contributions from our very successful Chemical Abstracts Service and publishing businesses. Meanwhile, expectations for more and better programs and services continue to increase.

Let it be noted that, currently, ACS is indeed financially sound. Governance and staff function capably. Our local sections and divisions, with their thousands of volunteer members, continue to work with energy and imagination. We can be proud of our successes. However, we are now in the third year of declining financial markets. Our investment income has slipped, as have our advertising revenues, and we are currently operating at a modest deficit budget of about $2 million this year. There is no need for anxiety here, but we must recognize that we are now living beyond our means. It is a time for fiscal restraint.

There is no intention to retrench member services. Instead, we view the current situation as an opportunity to step back and examine what we do, impose an order of priority on our operations, and seek to extract maximum value for every ACS dollar we spend. How is this being done? ACS senior management has challenged staff to find savings in their operations, and that is happening. In addition, the society has launched a Strategic Expense Management System (SEMS) to scrutinize every major program. SEMS will impose a systematic cost-benefit analysis on these initiatives to determine their value in advancing the ACS Strategic Plan and its 10 thrusts. The programs have been identified, metrics are being developed for each, and the assessment program will be launched by January 2003.

The Budget & Finance Committee has a key role as well. We have committed to evaluate each new program funding request for lasting value and to monitor those requests for effectiveness through the life of the appropriation. We shall challenge those submitting such requests to find ways to do things better and more cheaply, including engaging other sources of funding to share costs. We shall encourage leveraging of expenses and working through alliances. There is no reason that ACS should bear all the costs of an initiative involving outside partners.

Some of the upcoming proposals will be a challenge to fund. For 2003, they include $450,000 for education/diversity programs, $390,000 for the second year of the PROGRESS program, $80,000 to $100,000 as sustaining funds for the Technology Milestones program, and $30,000 for tribal colleges. If the initiative for increased funding for local sections and divisions is approved in its current form, it will cost an extra $900,000 starting in 2004. Moreover, as the society uncovers more essential needs to be addressed, additional funding requests can be expected. We shall be challenged, indeed!

To keep everyone informed with current financial information and perspective, Budget & Finance will initiate a website by October. Our new Subcommittee on Communications will supply timely Web content, and ACS Financial Operations will manage the website. We're all in this together!