October 1997

REPORT

of the

NSS SECRETARY/TREASURER

- Attachment E -

BACKGROUND: The July 1996 Secretary-Treasurer's report defined the overall vision for where we are going. The October 1996 S-T report located our funds and discussed our real property legal records. The February 1997 S-T report recommended a FY97/98 NSS budget and changes to our contract with the NSF under which they manage our Trust Funds. These changes were subsequently adopted by the Board. The June 1997 S-T report outlined changes in how we do business. Since then the NSS Office is depositing all NSS income and paying most NSS committee expenses with the approval of the appropriate NSS officer. Bills for NSS publications, insurance, and our election continue to be paid by Dave Irving.

OVERVIEW: Since the last Board of Governors meeting we've continued to migrate our accounting system from DacEasy to LedgerMaster with a new NSS chart of accounts which will integrate our accounting, membership, and bookstore financial systems. This report also addresses the current status of routine NSS financial activities.

INDIVIDUAL ACTIVITY:

Dave Irving has spent much of his time since convention in Minnesota away from home. While in Minnesota he worked with Camille to make sure she had enough money in her expense account to pay bills and he kept on top of our payroll. Don Conover forwarded the few number of bills that came to Dave's Ohio post office box while he was gone. Dave is now home again.

In August, Dave asked our CPA to request an extension from the IRS for submitting our FY96/97 federal tax return. He plans to provide our CPA his final FY96/97 fiscal report this month so our CPA will have the bulk of the data he needs to prepare our tax return. However, Dave does not have the NCRC data our CPA will need to file our tax return.

Dave will provide a FY97/98 first quarter fiscal report at the 11/8/97 BOG meeting. There is not enough time at the end of our first six months (10/31/97) to compile a six-month report.

In October, Dave plans to work with Camille to fully implement LedgerMaster at the NSS office. Then he will spend November reviewing membership, bookstore, and ad revenue trends over the first six months of our fiscal year so he can update our FY97/98 income projections and provide a range of FY98/99 income budgets based upon risk.

Cheryl Jones is responsible for preparing the FY97/98 NSS Operating and Capital Budgets for Board approval next spring based upon income projections provided by Dave Irving and expense projections provided by the other officers. She worked with the EC at our Fall meeting to define the process and schedule we'll use and led our discussion of the major issues we anticipate. Currently she is preparing a mockup of the budget structure and mapping the new Chart of Accounts to budget line items. On Tom's behalf she is working directly with Camille to develop the NSS office budget for next year. Starting in December she will facilitate the EC discussions that will ultimately result in the budget presented for Board approval.

Camille Duke continued to deposit all corporate NSS income and pay all office and most NSS committee expenses. She also distributed the master copy of our Chart of Accounts to various members who will need to use it in the future. In October she plans to get LedgerMaster completely online and then run it in parallel with our current DacEasy-based accounting system from November to the end of April 1998. At that point she should be able to "go solo" with LedgerMaster.

Bill Stringfellow has been working with the convention section of our new NSS Chart of Accounts (COA) and has a few changes he plans to distribute in the next week or so.

Marla Steele resigned her roles as NCRC Financial Officer and chairman of the NSS Personal Property Committee to be able to concentrate on her accounting profession. These vacancies will be announced in the NSS NEWS and replacements appointed. In the mean time, I am working directly with Butch Feldhaus to understand NCRC regional and national rescue seminar fiscal activities which continue to be conducted outside of our corporate books. Our goal is to integrate these activities into the NSS accounting system where appropriate.

Scott Fee continued to perform the accounting for NSS News advertising.

Debra Quamen is completing 1997 NSS convention finances. Bill Stringfellow, Peggy Kesner, and Nick Schaer have bank accounts and budgets in place for the 1998, 1999, and 2000 NSS conventions.

Scot Fee reconciling the 1998 NSS convention bank account. Bill Stringfellow reconciling the 1999 NSS convention bank account. Gary Moss is reconciling the NSS office bank accounts.

Ted Kayes continues to be responsible for our NSS insurance policies.

GENERAL TOPICS

Income From Dues:

The projected dues income in our FY97/98 Operating Budget was based on the assumption that our membership would not grow during the fiscal year. In fact we’ve observed no growth since 1/96 and very little growth since the fiscal year began 5/1/97.

Month Total Membership

1/96 11402
3/96 11173
6/96 11141
9/96 11213
12/96 11140
1/97 11219
2/97 11111
3/97 11169
4/97 11349
5/97 11387
6/97 11378
7/97 11389
8/97 11369
9/97 11400

Income From Sales:

Since May 1, 1997, we've had $60K in bookstore sales including $21K from the new On Rope, $7K from Cave Minerals, and $12K from non-publications. Not included in the $60K is $18K in accounts receivable. Camille predicts we'll make the $200K we budgeted for bookstore sales by the end of the fiscal year. Her estimate is based upon comparing our sales with where we where last year at this time then adjusting it to reflect her new initiatives. These include the data base of customers she's built over the past two years to target catalogs and mailings. Note that the $200K we expect in bookstore sales this year is a significant increase compared to bookstore sales in prior years. It's due to our introduction of the new On Rope and Cave Minerals. We may see substantially less sales next year and $15K to $30K less net bookstore income.

Cash Flow:

The total cost to publish the new On Rope was $58,252.83 for 10,044 copies. As the books are sold we will pay an additional $20,000 in royalties to the authors. We published it using our own capital; no loan was needed.

The bill for printing Cave Minerals has not yet come in. Dave Irving expects it in October and it should be in the range of $95K to $100K. In addition we have already invested over $25,000 in production advances for Cave Minerals.

We are currently reprinting Caving Basics for $5K and expect to print the last FY97/98 Journal for $15K in December and the 1996 Speleo Digest for $9K in January.

Dave Irving has told the NSF we may need a $15K short-term loan to supply the necessary cash for these publications and our normal expenses until an infusion of cash from our bookstore Christmas sales.

Change to FY97/98 Budget Accounting:

The income side of our FY97/98 budget includes a transfer of $5,000 from the NSF's Conservation Support Fund and $6,200 from the Save-the-Caves Fund. The budget footnotes on the expense side state that the $5,000 grant to Project Underground would be covered by a transfer from the NSF's Conservation Support Fund and that most of the Conservation Committee's expenses will be covered by the Save-the-Caves Fund. Since the budget was approved by the Board we've discovered the NSF's Conservation Support Fund should only be used to cover Conservation Committee expenses, not general conservation expenses such as those associated with Project Underground. Unless otherwise directed by the Board we will resolve this issue by recording our Project Underground expense as a transfer from the Save-the-Caves Fund and will cover Conservation Committee expenses through a transfer from the NSF's Conservation Support Fund.

NSF Trust Funds:

The net worth of some of our more significant NSF Trust Funds as of 8/31/97 is as follows. Larry Southham is preparing a complete report which will be available at the BOG meeting.

Life Membership Fund--$910,300
Headquarters Fund--$120,300
Holding Fund--$77,050
Cave Preserve Fund--$39,800
Endowment Fund--$15,912
Cave Vandalism Deterrence Reward Fund--$9,105

NPS Mammoth Cave Restoration Grant:

It appears the accounting and financial reporting requirements for the National Park Service grant to restore sections of Mammoth Cave are reasonable. If the Board agrees to accept the grant, these functions should be performed by an agent of the Treasurer within the committee managing the grant program.

FUTURE ACTIVITIES:

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

+ run both DacEasy and LedgerMaster accounting systems in parallel for a few months and compare the results. Begin to expand the use of the new LedgerMaster and COA system to our other cost centers (NCRC and NSS conventions).

+ revise our periodic NSS office financial reports to make them more useful.

+ continue to build a data base of NSS fixed assets, track their location over time, and account for their value in our fiscal reports.

+ codify our financial policies in the Board of Governors Manual so they can be visible, maintained, and updated over time.

Paul Stevens
NSS Secretary/Treasurer