Board recommends bold plan for growth, strength
2013 budget proposal emphasizes strategic goals
The ADA Board of Trustees is paving the road to the future with a 2013 budget proposal that combines strategic thinking with a critical examination of the Association’s resources.
|Dr. Calnon: 2013 budget plan seeks financial stability, member value|
Following the June 10-12 Board meeting at Headquarters, ADA President William R. Calnon said the Board had developed a plan to ensure long-term success and stability.
“The recommended financial plan for 2013 represents the strategic thinking of a group of highly concerned leaders of our Association. These are suggestions that will help ensure a pattern of growth and strength for our Association both in the short and long term. The Board takes its responsibility to achieve the fourth goal of the ADA’s strategic plan very seriously. That goal calls for the ADA to be a financially stable Association.”
Financial stability means that the Board felt it was necessary to present the House of Delegates and all members a clear vision for the future, Dr. Calnon explained. “This plan acknowledges the responsibility for sound internal management of our annual operating plans, proper alignment of resources, both financial and human, and the need to constantly review the calculated value of programs and membership offerings. It also sets forth a course for our Association to maintain relevance to our members and vitality to the profession and the public.”
To accomplish this, the Board is proposing a member dues increase and the establishment of a capital fund to use for maintaining ADA property, effective Jan. 1.
Projected 2013 revenue is $118.6 million. Pretax operating expenses are projected at $120.2 million.
Specifics about the plan will be spelled out in Board Report 2 to the 2012 House of Delegates, which will meet in October in San Francisco to consider the 2013 budget proposal and dues action. When the Board meets July 29-31 in Chicago, it will finalize the report’s details.
Currently, the Association has 28 different rates of membership dues, so that the actual average dues collected per member is $313 rather than the $512 full, active dues amount set by the 2011 House of Delegates resolution. Membership dues rates are currently under review by the Council on Membership as well as the Board of Trustees.
The Board’s budget proposal is designed to align with the four major goals of the ADA Strategic Plan. ADA President-elect Robert A. Faiella noted that the Board put particular emphasis on goals one and four. In brief, the four goals are (1) to help dentists succeed in their careers, (2) to be the trusted oral health resource for the public, (3) to improve public health outcomes and (4) to ensure the ADA is a financially stable organization.
“It is critically important for us to align our appropriations with our strategic and operational initiatives. Our strategic plan drives our Association,” he said.
He pointed to significant changes in the process this year. “For the very first time, we set up universal assessment criteria to give us some basis to evaluate programs for return on investment, return on objective, alignment with the Strategic Plan and mandates from the House of Delegates,” Dr. Faiella said.
The leadership also utilized a highly regarded management tool used by the Pentagon, Decision Lens software. “It helps us make decisions so that all opinions are valued and weighted,” said Dr. Faiella. “In addition, we also received input from volunteers including council chairs and vice chairs on their programs.
ADA Treasurer Edward Leone Jr. said the Board responded to several resolutions from the 2011 House that set up expectations on the budget process and reporting.
“This is a very courageous Board of Trustees by my observation,” he continued, “and staff support and cooperation has been outstanding. They have set forth a series of universal assessment criteria by which business functions of our organization should be measured and established a new budget planning strategy that examines the member value of all programs and functions at the ADA. This is as close to a zero-based budget planning approach as I have experienced while treasurer of the ADA these past six years.”
In brief, the Board’s recommendations include:
- increasing reserves in an effort to reach the goal of 50 percent of annual budgeted expense set by the House, with a modest annual operating surplus in order to replenish reserves to achieve the 50 percent target;
- sunsetting low-valued member programs to strengthen member value and relevance by freeing up resources to invest in innovative higher value programs, products and services;
- decreasing operating expenses by carefully controlling employee costs, including adjusting the number of ADA staff to better match our current and projected revenues;
- adhering to newly approved spending guidelines to limit contingency fund spending and long-term reserve fund spending;
- increasing dues revenue through a $30 dues increase and recommending other appropriate measures;
- increasing nondues revenue through business development activities within the ADA’s risk tolerance that generate positive returns on investment and returns on objectives to add member value;
- Creating a Capital Improvement Fund through a $50 per year special assessment for the next two years to enable appropriate investments in the ADA properties.
“The focus on longer term planning is much overdue,” said Dr. Leone. “We need to avoid the habit of tapping reserve funds for both operational and capital expenses when reserves are flush. We must adopt a savings discipline which tells us to leave surplus funds in reserves during peak performance in the business cycle, understanding that the market value of assets invested in whatever form will not be as great during a tough business cycle such as we are experiencing during the present time.”
In the face of current economic conditions and with an eye to the future, Dr. Leone believes the Association is headed in the right direction. “The Board of Trustees has suggested some new policy directions which will get us where we really need to be. The direction we must take will be a burden to members economically in the short run but will pay dividends as operating budgets are developed in future years,” he concluded.
Dr. Calnon agreed that the process has changed for the better. “I am very proud of the budget process used this year. It was an enormous improvement in the calculation of the true cost of programs and it provided councils the chance to have more direct input into the ranking of various programs against selected criteria.”