The purpose of this report is to inform APSA’s membership about the association’s financial health for the 2015–2016 fiscal year. This report provides an overview and assessment of APSA’s assets and current financial operations. (More detailed financial information is also contained in the APSA audit report, which is available upon request from the APSA office.)
The association’s financial condition remains healthy, providing a resource base sufficient to continue current operations, while expanding the association’s activities in new directions as needed. Since APSA’s last annual report, and as seen in table 1, our assets increased in value from $35.2 million on September 30, 2015 to $37.6 million on September 30, 2016. During the same period, liabilities decreased from $4.9 million to $4.6 million.
Table 1 Balance Sheet: September 30, 2016 (With Comparable Totals for 2012–2016)
For the recently ended fiscal year (October 1, 2015–September 30, 2016), operating revenue was $6.7 million (not including funds budgeted to be drawn from APSA’s endowments), with operating expenditures held below budget at $7.3 million. The association’s primary revenue sources (memberships, the Annual Meeting, and APSA journals and publications) are continuing to show growth with the exception of membership, which decreased about 4% in total revenue from the prior year.
The association has continued to implement the improved, more efficient financial practices. Thus, the association’s accounting is in line with best practices and APSA has diversified its investment strategies with an eye toward reducing risks associated with portfolio concentration.
In short, APSA continues to operate in a desirable financial environment, with steady income and growth-producing programs, minimal long-term liabilities, professional accounting practices, and a diversified investment portfolio. These steady growths were offset by the continued incremental decline in individual membership across the board with the exception of life members and associate members. Nonetheless, APSA is in a position to have an operating budget that meets anticipated income and expenses.
The remainder of this report will present more detailed analysis and information on each of these topics.
APSA INVESTMENTS AND NET ASSETS FOR FISCAL YEAR 2015–2016
The association’s overall financial position is stable, with assets of more than $37.6 million as well as a headquarters building, an adjacent property, and a carefully monitored operating budget (please refer to table 1 for the APSA Balance Sheet). Overall, APSA ended fiscal year 2016 with a balance sheet that reflected assets of $37.6 million and liabilities of $4.6 million, resulting in a net worth of $33 million. Of this net worth, $5 million is permanently restricted, just under $13.7 million is temporarily restricted, and more than $14.3 million is either unrestricted or board-designated.
APSA’s financial statements, which also include figures for operations, investments, endowed programs, and grant-funded activities, show an increase in total net assets at September 30, 2016 of $2.7 million for the fiscal year. The change in net assets for 2015–2016 was chiefly due to the increase of $2.7 million in fair market value (FMV) of APSA investments as well as an increase in total revenues of $257 thousand. As indicated in table 1, this performance compares to a decrease of $938 thousand in year 2015 and $3.8 million in year 2014, and a $3.4 million in year 2013.
Our investments, as seen in table 2, were valued at $33.1 million on September 30, 2016. These assets are defined by their fund: $15.2 million in the Congressional Fellowship endowment; $14.63 million in Centennial and Awards funds; and $2.8 million in general operating funds (all at market value as of September 30, 2016).
Table 2 Investment Portfolio Summary for Trust Pool and Endowed Funds Fiscal Year Ended September 30, 2016
APSA’s portfolios have historically outperformed the S&P 500. During the third quarter of 2016, asset class returns were broadly positive for the third quarter as global markets continued to rebound from the late June shock caused by the UK’s decision to leave the European Union. Investment returns benefitted from continued accommodative global central bank policies as well as a general improvement in economic data released during the quarter. Equities continued to outperform bonds as investors embraced risk-based assets as a result of historically low interest rates around the globe.
This resulted in the following returns:
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The CFP account had a return of 4.3% for the third quarter and a trailing 1 year return of 12.8%.
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The T&D account posted a return of 4.2% for the third quarter and also had a trailing 1 year return of 12.8%.
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The Working Capital account posted a gain of 0.26% for the quarter with a trailing 1 year return of 1.63%.
THE OPERATING BUDGET FOR 2015–2016
The operating budget for the most recent fiscal year appears in table 6. Our largest anticipated income sources for the year were membership dues and fees ($2.1 million), conferences and meetings revenue ($1.8 million), and journals and publications ($1.3 million). Our largest anticipated expenditure areas were the Congressional Fellowship Program ($1.2 million), journals ($1.08 million), and the Annual Meeting ($1.06 million).
The budget anticipated that roughly 26% of total revenue would be derived from individual memberships; 22% from the Annual Meeting; and 16% from journals, sales, and advertising revenue streams. On the expense side of the ledger, Annual Meeting costs accounted for 13% of all operating expenses in 2015–2016, Congressional Fellowship Program and other grant expenses were expected to account for 15%, while our three journals were expected to account for 14% of all operating expenses, followed by business office at 12% and governance and external relations at 9%. Building and equipment (including depreciation costs) stood at 8%, while general administration, education and professional development, and organized sections each accounted for just over 6%. Also, 4% or less of total expenses were costs related to committee programs, member services, the Teaching and Learning Conference, departmental programs and conferences, publications, employment services, the Centennial Center, and endowed awards.
Compared to the prior year, total revenue realized from individual membership dues during 2015–2016 declined slightly (4.25%). This is due to the new AMS system and the ability to automatically recognize membership dues based on a daily basis versus manually on a monthly basis. Total individual membership dues and numbers are 3% greater than at this time last year. APSA membership trends inform us that membership renewals and new member joins tend to increase leading up to and during the Annual Meeting and decrease after the Annual Meeting. As such, 2015 membership trends showed us that there was a larger span of individuals renewing or joining at a greater rate in the months of June through August, which may be attributed to the 2015 Annual Meeting deadlines. In 2016 the biggest renewal and join period was January and June, which may be attributed to differing Annual Meeting deadlines and then a significant increase due to the new professional member category (under $30,000 income) in September and October.
The cost to deliver services in all major programs increased from 2015–2016, with the exception of the Teaching and Learning Conference, journals, and general operating and building at rates of 8.8%, 1.5%, and 17.7% respectively. (Please see tables 3a–c, 4, and 5 for multiyear comparisons.)
Table 3a Operating Budget 1992–2016: A Multi-Year Perspective
(*) In FY 1992–1993, APSA moved to a new budgeting system, making the figures in that year not comparable with those of prior years.
(**) In FY 2008–2009, APSA changed Year end from June 30th to September 30th, therefore budget is for 15 months.
Table 3b Budgeted Draws/Fund Transfers: 2015–2016
Table 3c YTD Operating Net Profit
Table 4 Operating Revenue Trends, 2012–2016
1 Includes $26K 2012 Meeting Insurance Proceeds
Table 5 Operating Expenditure Trends 2012–2016
1 Includes net effect of 2012 Annual Meeting Cancellation
2 Includes additional cost related to 2012 Annual Meeting Cancellation of $100K
3 As of 2014–2015 Web Services has been moved to General Operating
Table 6 Operating Budget
OPERATIONS IN REVIEW: FISCAL YEAR 2015–2016
The recently concluded fiscal year was an active one. Most importantly, after the success of the 2015 Annual Meeting in San Francisco, California, this year’s 2016 Annual Meeting in Philadelphia, Pennsylvania, was able to surpass expectations. Compared to 2015, the number of paid registrants was very strong. Other initiatives in 2015–2016 included sustained efforts in the areas of public engagement, expanded department and international membership, the Teaching and Learning Conference, annual workshops in Africa and the Middle East, mentoring, and graduate education.
The association has 28 employees at its headquarters in Washington, DC, who support the association to serve the membership’s programming goals and to respond flexibly to new responsibilities and Council-directed projects.
APSA also held its thirteenth Teaching and Learning Conference in Portland, Oregon, in February 2016. This conference theme was “Rethinking the Way We Teach: High-Impact Methods in the Classroom.” The conference attracted a diverse group of political scientists from a wide variety of institutions and subfields. For 2017, the Annual Meeting will be held in San Francisco, California, and the Teaching and Learning Conference was held in Long Beach, California, in February 2017.
In 2016, APSA provided support for the APSA Ralph Bunche Summer Institute (RBSI) at Duke University, at an increased level of 15 students as compared to 2015 enrollment of 12 students. This was due to the receipt of a new National Science Foundation (NSF) grant to Duke University for the RBSI. APSA contributed direct cost support for teaching assistants through a draw from the RBSI Support—Board Designated Funds.
In conjunction with the RBSI Working Group report, in 2015 the APSA Council created this board-designated RBSI Support Fund to provide funding for the 2016–2018 RBSI at Duke University, along with an RBSI Advisory Committee charged with overseeing the development of long-term programming options. A development strategy outlining a three-year, $750,000 fundraising goal for the Ralph Bunche Fund was submitted to APSA Council with the intention of a fund draw to begin in 2019 to support future efforts, and efforts to support the RBSI programs through institutional and individual philanthropy are continuing. With NSF funding in place for 2016–2018, updated recommendations for the RBSI Support Fund for the short term will be submitted by the RBSI Advisory Committee.
In terms of earned operating revenue and program expenses, the outcome for the year for both was higher than budget expectations. As table 3a demonstrates, APSA earned approximately $6.7 million in operating revenues and incurred operating expenses of $7.3 million, excluding budgeted draws/fund transfers (see table 3b).
Please note that in accordance with Generally Accepted Accounting Principles (GAAP), board approved draws/fund transfers on the following programs are not included in the reporting of actual revenue activities within the financials. These amounts are only included in the budget column for budgeting and council reporting.
When draws/fund transfers are taken, they are reflected as a reduction of the Congressional Fellowship Fund and Trust and Development Funds and an increase of APSA General Operating Fund on the balance sheet. Therefore, when budgeted draws/fund transfers are taken into consideration for operating activities and projects, Operating Net Profit (Loss) is reflected in table 3c.
As noted at in last year’s report, in anticipation of the current publishing agreement that expired in December 2016, APSA and Cambridge University Press began reviewing a new publishing agreement in October 2015. The final contract negotiation, with legal counsel review and publishing consultant guidance, was completed in August 2016 and shared with APSA Council. A new 10-year agreement, effective January 1, 2017 through December 2026, was signed September 2, 2016. Overall, the contract is worth about $17 million to APSA over the ten years.
In 2016, a new editorial team (based at the University of Mannheim and London School of Economics) took over the editorship of the American Political Science Review. It is the team’s intent to move from a strict issue-based journal to one that features “FirstView” articles published online, in advance of publication of an issue. The benefits to this include a shorter time from acceptance to publication, more materials available to researchers and members online, and less reliance on print copies. In addition, the team plans a new feature, “Letters,” that will encourage shorter articles. This contract was signed and enabled APSA to reduce overall cost by 5%.
For PS: Political Science & Politics, editors Paul Gronke, Reed College, and Phillip Ardoin, Appalachian State University, requested an extension of their term (2014–2016) as editors to August 2018. This was approved and their agreements for the extension were signed in August 2016. This contract was signed with no change in cost for APSA.
In May 2017, the editorship of Jeffrey C. Isaac for Perspectives on Politics ends after his more than 10 years as an editor (first as book review editor, then as editor in chief). A search committee, formed in 2015, placed a call for editors, interviewed applicants, and prepared a report for APSA Council in August 2016. Contract negotiations began in October 2016, with an announcement anticipated in early 2017.
Similarly, for the proposed open access journal, for which the council approved forming a search committee for an editor/ editorial team in August 2015, a search committee finalized and launched a call for proposal in December 2015 and promoted this through the spring, with an extension to June 15, 2016. A recommendation to the APSA Council is expected in early 2017.
The Organized Section on Political Science Education proposed to its members to transfer the sponsorship (editorship) of the Journal of Political Science Education, published and owned by Taylor & Francis, from the organized section to APSA and to offer a subscription to all members of APSA. The organized section approved this transfer in October 2015. In addition to searching for a new editorial team, APSA began negotiation with Taylor & Francis. The four-year contract will offer all APSA members an online subscription to the journal, including back issues. A limited number of print subscriptions will be available. The publishing agreement with Taylor & Francis was finalized in October 2016. The new editorial team, led by Victor Asal, University at Albany, began its four-year term in August 2016.
