REPORT

of the

NSS SECRETARY/TREASURER

For the Board meting
August,3 & 7, 1998

OVERVIEW:

Since the last Board of Governors meeting we’ve:

ENCLOSURES: (separately provided)

FY 97-98 Operating Fund Balance Sheet

FY 97-98 Operating Fund Revenues and Expenses

FY 97-98 Restricted Fund Balance Sheet

FY 97-98 Restricted Fund Income and Expenses

FY 97-98 Combined Corporate Summary Balance Sheet

National Speleological Foundation Annual Financial Statement for NSS Trust Funds

Analysis of Excess in NSS Life Member Fund Beyond That Required For Dues of NSS Life Members

Approval of NSS Contracts and Agreements

DETAILS:

FY97/98 Fiscal Report:

In the past it’s taken several months to close the NSS books at the end of a fiscal year as we waited for the NSF report and paid requests for reimbursement from the various NSS committees. But now that we’ve integrated our books and moved most of the accounting to the NSS office we must close the books on April 30th so we can process the daily office transactions for the new fiscal year. We asked the NSF to report the balance in our Trust Funds on a calendar quarter basis (3/31, 6/31, etc) rather than at the end of their fiscal year quarters (1/31, 4/30, etc) so we could obtain a report of our NSF Trust Fund balances in time to include it in our financial reports. All the committee chairmen were asked to submit their final expenses against the expiring fiscal year budget by early April ‘98. All deposits and checks written starting on 1 May ’98 were allocated to the new fiscal year. The cost to print the May ’98 NSS News issue was shifted into the FY 98/99 budget and the cost to print the May 99 issue was shifted into FY99/00 so we could avoid late bills. Getting the preliminary FY 97/98 financial report out on May 8th, one week after the end of our fiscal year, was a major accomplishment. Dave Irving spent a week at the NSS office to get it done. Since then he has made a few minor revisions and attached notes. The final reports are provided as enclosures (1) through (5).

Financial Statement for NSS Trust Funds:

Enclosure (6) provides the National Speleological Foundation’s report on the NSS Trust Funds as of the end of their FY97/98 fiscal year (April 30, 1998). In summary:

NSS Trust Fund Balance (4/30/98)

Life Membership $1,085,534
Stone Research $115,907
Awards $7,356
NSS Headquarters $127,649
Cave Preserve $47,358
Vandal Deterrence $10,748
International Support $46,274
NSS News Photo Endowment $39,108
Stephenson $10,531
Sara Corrie $36,598
NSS Holding $74,288
Endowment $23,742
NSS Support $19,380

TOTAL: $1,644,473

Enclosure (7) provides an analysis of the excess in NSS Life Member Fund beyond that required for membership dues of NSS life members. It was prepared by Larry Southham (NSF Treasurer). Dave Irving (NSS Chief Accountant) and I both endorse it. Based upon this analysis it would not be unreasonable to withdraw some funds from the NSS Life Member Fund for other purposes. Since further withdrawals should not be counted upon in the future, we suggest that any withdrawal be applied to other long-term funds or capital projects. In particular Dave and I recommend we use some of the excess in the NSS Life Membership Fund to establish a "NSS Publication Trust Fund" to provide funds for the publication of NSS books. Otherwise we will not have the cash to implement the approved NSS Capital budget without a loan from an external organization. Leaving some of the remaining excess in the Life Member Fund would preserve flexibility for needs that develop in the future.

Cash on Hand:

While our total assets are significant most of this is encumbered in our NSF Trust Funds and NSS Bookstore inventory. The cost of publishing On Rope II and Cave Minerals of the World in FY97/98 drove the balance in our checking accounts below what we need for our normal operations. Early in CY98 we borrowed $22K from our NSS Building, Convention, and Equipment Restricted Funds to provide operating cash (since their restrictions are self-imposed) and delayed large discretionary costs such as printing the 1997 Speleo Digest and 1998 Members Manual.

With our Cash on Hand so low Camille Duke and Dave Irving have been closely managing the timing of our deposits and check-writing transactions. Since January ’98 the balance in our main checking accounts (after adjusting for the temporary loan from the restricted fund and for NSS News and Journal bills that were left unpaid the end of April because we wanted to record them in FY98/99) was :

January 31 $ 9,417.03
February 28 $35,338.93
March 31 $58,907.81
April 30 $16,322.81
May 31 $15,680.80

Compared to the $16,000 we retain as Cash on Hand for normal operations. We were very low at the end of January, but for most of February, March, and April, we had no problems with cash. But by late April we were back to scraping the bottom of the barrel, and have continued that way. In May we received $32,490 from the NSF to pay the dues of NSS life members and were surprised when we received $10K in June that represented accumulated royalties from part interest in a West Virginia oil well that had been donated to us. Most of this has already been allocated to cover the 1998 Members Manual, 1991 & 1994 Speleo Digest, which should be published over the next three months.

If dues revenue and bookstore sales remain good and we establish the proposed "NSS Publications Trust Fund" to cover the cost of publishing the items in our approved Capital Budget, we should not need the $25K loan authorized by the Board of Governors and should be able to repay the $22K we borrowed from our NSS restricted funds by the end of CY98.

Establishing the NSS Office as the Single Point for Receiving NSS Bills:

Before March '96 the NSS Treasurer paid all bills except NSS office expenses. Then Dave Irving and I divided the job so that he served as NSS Chief Accountant and paid all bills except the NSS office expenses paid by Camille Mueller (NSS Operations Manager). Since then we've been incrementally moving accounting and bill paying responsibility to the NSS office to make us less dependent upon volunteers. In March '97 the office assumed responsibility for all of NSS committees except for NSS publications. Then starting in May ’98 we asked that all NSS purchase orders, bills and requests for reimbursement be sent to the NSS office for payment. The only exceptions are those paid by the NSS convention and NCRC treasurers. Given the current cash on hand and its distribution between our bank accounts, I've asked Camille to fax the infrequent bills over $3K (printing bills for JCKS issues, Members Manual & NSS books, NSS insurance, quarterly transfers to the NSF, etc ) to Dave for payment since he has signature authority over our Money Market account which we use to obtain a greater rate of return than we receive from our checking accounts (5% interest instead of 2%). Camille will notify the appropriate officer, committee chairman, Dave and me whenever she receives a bill for more than $3K and before we pay it. When Dave expects to be out of touch for an extended period he will transfer sufficient funds to the checking account controlled by Camille to cover any anticipated large bills. For example Dave will make sure that Camille has plenty of cash to cover August bills while he is in Wyoming for 10-12 days. All of the officers have agreed to allow Camille and Dave to pay bills within their department budget that appear to be non-controversial without consulting them. Dave Irving and I will continue to work with Camille to establish policies under which she may sign NSS checks under my authority as NSS Treasurer.

As we update the signature cards for all NSS accounts to reflect Fred Wefer’s election as President, we will consolidate the checking accounts we use for normal operation under Camille. Eliminating separate accounts for office income and expenses will improve our cash flow and reduce our need for Cash on Hand. Dave will retain check writing authority over our Money Market account and our Visa/MasterCard account. Normally our V/MC account receives $8-10K a month that is usually transferred to the office accounts for payment of bills. During this period of tight cash flow, Dave has been short-circuiting that extra transfer by paying bills straight out of the V/MC account. The last Journal bill was paid that way. On rare occasions the V/MC transactions are very large, for example $14,000 on the first day of the 1996 NSS convention. For the last two years one of Dave’s tasks at Convention has been to take our V/MC checkbook and work with the Convention Treasurer to reimburse them for the $10,000-15,000 they take in during Convention week. Dave will handle the large batch of V/MC receipts associated with the NCRC national rescue seminar in a similar fashion.

Consolidating Accounting Operations at the NSS Office:

Several years ago we purchased NSSTrak software to manage our membership records and LedgerMaster software to do our accounting in an integrated office software environment. We have been using NSSTrak for some time but have yet to implement LedgerMaster. Last fall Camille reported the NSSTrak and LedgerMaster data bases were too big in aggregate for our NSS office computer environment and this spring Tom Rea and Phil Winkler resolved the problem by installing new Pentium II computers in the office with plenty of memory, and new server software. Last week Camille finished entering all the starting balances for FY98/99 into LedgerMaster and she plans to start entering the fiscal transactions for May and June next week. Phil Winkler reports that since Camille has been processing bookstore orders through LedgerMaster for some time, it should just be a matter of some housekeeping and general journal entries to bring things current. But I suspect this will not happen quickly for Camille’s time will soon be diverted to concentrate on convention bookstore sales. In the mean time, we continue to maintain our accounting in our current DacEasy system and plan to do so until we are comfortable with LedgerMaster.

We continue to consolidate all NSS accounting into a single cost center at the NSS Office so our professional staff can use LedgerMaster to maintain our ledger as part of an integrated office software environment. Dave reports all of the fiscal transactions he performs to Camille and she consolidates everything into LedgerMaster. The exact details of how we will capture future NSS convention and NCRC fiscal transactions remain to be worked out, and there may be more than one solution. But for now they remain as separate cost centers with little visibility on their day-to-day transactions.

Our adoption of Ledgermaster and the shift to recording all of the corporate NSS fiscal transactions at the NSS office is just one more step towards improving our visibility into NSS finances. But we still have a way to go. I anticipate we'll have to resolve little problems over the next several months as we use LedgerMaster for the first time, adopt new procedures within the S-T department, and Dave & I establish remote access. Then we'll shift our concentration to more fully integrating NSS conventions and the NCRC into our financial system.

Reconciling Accounts:

As we fully implement the LedgerMaster accounting software at the NSS office Dave Irving's role has evolved. A year ago Dave was writing all of the checks to cover NSS committee expenses and doing all of our accounting. He entered Camille's reports of NSS office fiscal activity with those of the committee's to provide an overall accounting in DacEasy. This aspect of Dave's job is no longer necessary. In the future Dave will monitor Camille's LedgerMaster accounting instead of doing the accounting himself and he will work with her to resolve questions. In so doing, he will reconcile her accounting with the bank statements. In the past Gary Moss has been responsible for this function.

NSS Convention Accounting:

I’ve distributed Bill Stringfellow’s 1998 Convention Chart of Accounts to the 1999 and 2000 convention treasurers to adopt as their COA. String's COA is a DacEasy COA, not a Ledgermaster COA. It has the account items we need and the basic structure, but may not be exactly what we want to feed LedgerMaster. For example, DacEasy requires summarized account numbers and LedgerMaster doesn't need them.

The 1998 Convention staff recently distributed the registration software they developed in Delphi to Kathy Welling (Convention Software Committee) and Carol Tiderman (Convention Development Committee). I’ve yet to determine if this software can serve as a convention sub-ledger that would provide the output data we need to feed the NSS general ledger (LedgerMaster software) at the NSS office. I am told it should be easy to produce a data feed from the registration software into LedgerMaster, but as yet no one has agreed to do it. Thus at this point it is not obvious what the Idaho Convention will use for accounting software or if we will be able to fully integrate it with LedgerMaster.

NCRC Accounting:

Butch Feldhaus, Doug Medville, and I continue to discuss how to integrate NCRC and NSS finances. Once Butch selects someone to serve as NCRC Financial Officer, the process should accelerate.

Insurance:

In May ‘98 the better of the two NSS convention trailers was stolen along with the 1996

convention showers that were on it at the time. Someone apparently hooked their vehicle up to it and hauled it away. The NSS trailer was not insured since we did not expect to retain it and the tentative rate from the carrier ($.80 per $100 for contents plus liability coverage) was more than we were willing to pay. We continue to insure the NCRC trailer with their cache of rescue equipment at an annual cost of $300-400.

Ted Kayes worked with our liability insurance carrier to obtain an endorsement for the restoration camp on 9-15 Aug and 3-4 Oct ’98 at Mammoth Cave. This provides liability coverage for NSS members participating in the camps and covers the National Park Service if they are sued by anyone for damages caused by NSS members or even as a result of the restoration work.

In response to recent questions concerning bonding Society employees and members who have access to significant Society funds on a regular basis, we have bonds for all NSS officers, employees, convention treasurers, and the NCRC treasurer to insure against dishonesty, forgery, theft, disappearance and destruction.

NSS Contracts & Agreements:

During the summer EC meeting we discussed our process for approving various formal and informal NSS contracts and agreements with the intent of documenting it in Section 9 of the BOG Manual. The results of those discussions are provided by Enclosure (8).

Peter Gomez Fund:

I’ve contacted Harris Martin (Coordinator, NSS Underwater Cave Study Group) to determine how Janet Gomez would like us to administer the grant program based on the money donated to the NSS Dr. Peter Gomez Fund. Under consideration is a motion that would allow the Dr. Peter Gomez Fund to be used by the NSS Research Advisory Committee for grants to help members of the NSS, NSS/CDS, or NACD cover the expenses of travel to scientific conferences to present the results of their underwater cave research. A panel of cave divers with a scientific background would be responsible for determining what grants to award with members of the panel selected by the NSS RAC Chairman based upon nominations from NSS/CDS and the NACD. About $4000 has been donated in the name of Dr. Peter Gomez and the money is being held in a restricted account pending definition of the requirements to disburse the income from the fund.

Current S/T Department Members and Agents of the Treasurer:

Secretary-Treasurer - Paul Stevens
Chief Accounting Office - David Irving
NSS Operations Manger - Camille Duke
Insurance Committee - Ted Kayes (Chairman)
Personal Property Committee - Mike Gunderloy
NSS Budget Coordinator - Cheryl Jones
NSS Convention Bank Account Reconciler (except the 1998 Convention) - Bill Stringfellow
1998 NSS Convention Bank Account Reconciler - Scott Fee
1998 NSS Convention Treasurer - Bill Stringfellow
1999 NSS Convention Treasurer - Peggy Kesner
2000 NSS Convention Treasurer - Nick Schaer
NCRC Financial Officer - Vacant
MCNP Cooperative Agreement Treasurer - Karen Dennis
NSS News Ad Accounting - Bert Ashbrook

FUTURE ACTIVITIES:

Our priority between now and the fall 1998 BOG meeting will be to continue to keep up with the bills. Other tasks include:

Paul Stevens
NSS Secretary/Treasurer