[Lnc-business] March End-of-Month Financial Reports

[Joe Bishop-Henchman]

A quibble. What led to the last budget crisis was approved aggregate 
spending exceeded the aggregate revenue. The "fronting" of funds 
*masked* that problem, and delayed its resolution, but was not the cause 
of it.

No organization perfectly matches revenue coming in with expenses going 
out. All organizations have peaks and valleys that don't match up during 
the year, but ideally should match up in the aggregate for the entire 
budget period. Some organizations balance to cover cash needs during 
that period; others build up a healthy reserve balance to cover any 
troughs that then gets paid back.

Once we have a reserve, we can insist on all sorts of sub-accounts that 
accurately credit and debit their own revenues and expenses as well as 
overhead, on a quarterly or monthly basis or whatever we like. The cash 
reserve tides over any troughs relative to the aggregate. To establish 
that requirement now, when we don't have a reserve, would be to cripple 
some programs at the expense of others for no total budgetary savings.

JBH

------------
Joe Bishop-Henchman
LNC Member (At-Large)
joe.bishop-henchman at lp.org
www.facebook.com/groups/189510455174837

On 2019-05-01 15:46, Richard Longstreth via Lnc-business wrote:
> Robert et al,
> 
> I do not support fronting of any funds for any reason. That is what led 
> to
> our last budget heartache and we must learn to only pay for and pursue
> projects we can afford. I think it important that things that are 
> earmarked
> are only used where they are earmarked and not assume that other 
> funding
> will come along to fill the holes. I also believe in not borrowing from
> Peter to pay Paul as a principle. As such matters come to a vote, that 
> is
> how I intend to cast my ballots.
> 
> Richard
> 
> On Wed, May 1, 2019 at 9:03 AM Robert S. Kraus via Lnc-business <
> lnc-business at hq.lp.org> wrote:
> 
>> All,
>> 
>> Please note, at this time staff has already set aside $20k towards the
>> convention in one of our reserve accounts. We are of course hoping we 
>> do
>> not have to use these funds for operational or ballot access expenses
>> (at the discretion of the chair, exec director & treasurer) & that we
>> can continue to put away money into this account. As a reminder, the
>> past several cycles we have "fronted" ballot access with these funds &
>> then use the funds raised at the convention to pay for the convention
>> itself.
>> 
>> Staff will be keeping the treasurer posted on how much we are able to
>> save towards the convention & we are sure he will keep you up to date 
>> as
>> well.
>> 
>> Thank you!
>> 
>> Robert S. Kraus - Operations Director
>> Operations at LP.org
>> Libertarian National Committee, Inc.
>> 1444 Duke Street
>> Alexandria, VA 22314
>> Ph: 202.333.0008 x 231
>> 
>> On 5/1/2019 2:20 AM, Alicia Mattson via Lnc-business wrote:
>> > P.S.  Because the LNC postponed the COC proposal to treat conventions as
>> > "special events" and require preservation of that cash, through March we
>> > have so far raided:
>> >
>> > $13,500 of Deferred Convention Revenues - $3,099 of Prepaid Convention
>> > Expenses = $10,401
>> >
>> > of cash from the 2020 convention event.  As I already mentioned, that
>> > number is going to dramatically increase in the April financials because
>> we
>> > have started selling packages, but we're not setting those funds aside.
>> By
>> > the time of our July meeting in Austin, it could easily be $100,000 of
>> 2020
>> > convention funds that will have been borrowed from but not repaid to the
>> > convention event.
>> >
>> > -Alicia
>> >
>> >
>> > On Wed, May 1, 2019 at 12:10 AM Alicia Mattson <alicia.mattson at lp.org>
>> > wrote:
>> >
>> >> Deferred Convention Revenues are included in the total cash, so not
>> >> backing them out means that we're treating that cash as if there will
>> be no
>> >> convention expenses, so we're free to just go ahead and use that money
>> now
>> >> free and clear.
>> >>
>> >> Side note:  For those to whom it isn't obvious, the total cash amount is
>> >> inflated by the amount of Deferred Convention Revenues, offset by the
>> >> portion of them which have already been spent on convention expenses, so
>> >> when calculating how much of that cash we can spend next month, we need
>> to
>> >> subtract (Deferred Convention Revenues - Prepaid Convention Expenses)
>> from
>> >> the Total Cash.
>> >>
>> >> Also side note:  As of the end of March, the 2020 convention cash is
>> only
>> >> inflating our total cash by about $10k, but as of the end of April, it's
>> >> going to be more like $80k.  If the reserve formula doesn't back that
>> out,
>> >> the LNC may think we're in a lot better shape than we are.
>> >>
>> >> Even under the existing definition of "reserve" in the policy manual, I
>> >> think it is warranted to back out the convention cash.
>> >>
>> >> If we look at the policy definition as only authorizing math involving
>> the
>> >> balance sheet line items that are named in the definition, then we
>> >> shouldn't adjust for the Other Accrued Expenses, either.  This report
>> does
>> >> use the Other Accrued Expenses in the formula, though.  The rationale
>> given
>> >> was that they "are essentially the same as accounts payable".  So it's
>> >> viewing the policy as a concept rather than a strict limitation on which
>> >> balance sheet items to use.
>> >>
>> >> I think the (Deferred Convention Revenues - Prepaid Convention Expenses)
>> >> factor is also essentially the same as the restricted funds which are
>> to be
>> >> subtracted under the policy.  The convention cash isn't technically
>> >> "restricted" under an accounting definition because you can only
>> restrict
>> >> equity accounts, and they're not equity until we have recognized them as
>> >> revenue, which doesn't happen until the convention happens.  But
>> >> conceptually, they're essentially the same as restricted funds.  They're
>> >> supposed to be saved and used to pay for the convention.  We haven't
>> even
>> >> earned them yet until the convention event.
>> >>
>> >> So under the "essentially the same" concept used to include Other
>> Accrued
>> >> Expenses in the formula, I think we should include the convention
>> elements
>> >> as well.
>> >>
>> >> I'd rather not rewrite the policy to name specific balance sheet lines
>> >> because then all it would take to throw the calculation off is a name
>> >> change in a balance sheet description.  I'd rather keep the policy
>> >> definition as a concept, and then include the items on the balance sheet
>> >> that are essentially the same as the concepts in the definition.
>> >>
>> >> -Alicia
>> >>
>> >>
>> >>
>> >>
>> >>
>> >> On Tue, Apr 30, 2019 at 4:35 PM Tim Hagan via Lnc-business <
>> >> lnc-business at hq.lp.org> wrote:
>> >>
>> >>> The March End-of-Month Financial Reports are attached.
>> >>>
>> >>> The Policy Manual, page 7, says:  "Reserve" is calculated as the total
>> >>> cash balance less the sum of all restricted funds and accounts payable
>> >>> at month end.
>> >>>
>> >>> The reserve formula in these reports was changed to match this Policy
>> >>> Manual definition. It no longer includes Prepaid Expenses nor Deferred
>> >>> Revenue. Including the Prepaid Convention Expenses and Deferred
>> >>> Convention Revenue in the formula should require a change to the Policy
>> >>> Manual. Other Accrued Expenses are essentially the same as accounts
>> >>> payable, so I included them in the formula. The reserve for March is
>> >>> calculate from numbers on pages 9 and 10 thusly:
>> >>>
>> >>> Reserve = Total Cash - (Temp. Restricted Balances + Accounts Payable +
>> >>> Other Accrued Expenses)
>> >>>
>> >>>       = 34168.75 - (13706.53 + 8471.70 + 13872.50)
>> >>>
>> >>>       = -1881.98
>> >>>
>> >>> I updated the reserve chart on the bottom of page 3 to show the reserve
>> >>> for the past two years using this formula.
>> >>>
>> >>> ---
>> >>> Tim Hagan
>> >>> Treasurer, Libertarian National Committee
>> >>
>>