Report from SSA Treasurer
SSA members have been waiting for five months, every since the apparent embezzlement and financial irregularities at the Hobbs office first surfaced, to find out just how bad the financial situation for our organization was. I am happy to report that there is good news. After reconstruction of the SSA financial records - which had been left in shambles by SSA's former chief financial officer - it appears that the damage was not as bad as first thought.
One of the most fortunate things to have happened to SSA since the crisis broke and Alan Gleason was fired was to find our current Accounting Manager, Judy Blalack. Since coming on board in October 2006, Judy has worked heroic hours to piece the financial puzzle together. She has been tireless in tracking down missing documents, correcting erroneous financial entries, and in bringing our books and records back to some semblance of accuracy. Just prior to the February convention and board meeting, Judy was able to complete the SSA income statement for 2006 and the balance sheet as of December 31, 2006.
While Judy's figures are subject to audit, the preliminary numbers are good. The un-audited financial statements show that in 2006 SSA achieved a consolidated net profit of $165,785 (which includes gains realized in 2006 on our endowment investment account, held by the SSA Foundation) and a net profit of $49,000 on SSA's operations (consisting of business revenues and associated expenses from member dues, contributions, merchandise sales, magazine advertising revenue and the annual convention). SSA is a financially viable organization.
There are many unique aspects of the 2006 financial statements, some relating to the need to make adjustments from prior years in which the books were inaccurate, some relating to expenses realized in 2006 that should not recur in future years (such as legal and accounting fees necessitated by dealing with Mr. Gleason). After allowing for all of these items, I anticipate that SSA should be able to realize a small profit from operations in 2007 and future years. Based on my predictions and recommendations, the SSA Board of Directors approved a budget at the February Board meeting in Memphis that calls for a net operating profit of $57,000 in 2007.
This is very good news indeed. What it means is that SSA should not have to raise dues in the immediate future. We will not have to reduce services to the membership in order to stay alive. We will not have to reduce the number of issues of Soaring Magazine published each year. We will not have to lay off additional staff at the headquarters in Hobbs. We now have time to catch our breath and, with the input of the Future Restructuring Task Force, make decisions on how best to structure our organization to move forward into the future.
Some of you - recalling the financial reports of the past few years - may wonder how it is possible that an organization that has appeared to be struggling financially for the past several years could now predict a net profit for 2007? There are several reasons:
First, we now know that the accuracy of the financial records and statements for the past several years can no longer be accepted. It appears that - either through incompetence or design - SSA's financial situation may have been made to appear worse than it really was.
Second, SSA's staff has been cut to the bone. By reducing staff and salary costs from over $402,000 in 2005 to $320,000 in 2006 and a projected $273,000 in 2007, we obviously were able to positively impact our bottom line
Third, SSA's leadership and remaining staff has stepped up to the plate to fill the gap left by these missing executives and staffers. Current SSA Executive Committee members are now carrying much of the responsibilities previously held by departed Executive Director Dennis Wright. Additionally, the remaining staff members in Hobbs are all working harder to make up the difference.
Fourth, but by no means least important, SSA members have stepped forward to support their organization with financial donations through the Eagle Fund campaign, which supports SSA's basic operations. Eagle Fund donations in 2005 totaled about $47,000. By contrast, donations in 2006 totaled over $78,000, and welcome donations continue in 2007. Clearly, the financial support of SSA members has been crucial to allowing SSA to move forward without cuts in member services.
We are by no means out of the financial woods yet. The biggest immediate uncertainty facing SSA comes from the IRS. While we have paid in full the principal amount we owe the IRS for payroll taxes that were not paid on time, it is possible that the IRS will yet require payment of significant interest and penalties in spite of SSA's petition for remission of these additional amounts. If SSA is required to pay these amounts in full it will be a significant blow to the organization. Thus, we need to be cautious at this point in making plans for the future, and leadership will keep the membership informed regarding this critical issue, whenever there is news to report.
In summary: SSA faces an uncertain immediate financial future as a result of the pending interest and penalties that may yet be imposed by the IRS. We also need to pay back over the next few years the $260,000 loan made by the SSA Foundation to SSA so that we could pay the taxes owed to the IRS and State of New Mexico. However, if the penalty and interest issue with the IRS can be resolved satisfactorily, the financial future of our organization looks good. Our operations are profitable, at least so long as staffing levels can be kept at current levels and the membership continues to support SSA with their financial contributions and most importantly, continued membership renewals. With some luck, we should soon be over the hump and ready to decide how SSA can best lead our sport into the 21st Century.
SSA Director at Large and Treasurer