September 22, 1994
TO: BOARD OF GOVERNORS NO. 95-94
RE: FY 1995 Budget
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The principal factors influencing the environment in which the FY
1995 budget has been formulated are:
! the Institute will realize a surplus from FY 1994
operations of approximately $2.36 million, raising
total reserves to $10.6 million or 36.8% of the proposed
FY 1995 expense budget;
! the high rate of dues revenue growth in recent years may
not continue -- and indeed may already have slowed; open-
end assets have remained level since January 1994,
leaving open-end dues revenue for FY 1995 up by a
relatively modest (compared to FY 1994) $2.1 million; our
recent success in attracting new member groups means
ironically that there are now fewer prospects to recruit;
and more consolidations are likely, which reduces dues
revenue;
! the unexpected challenges that have arisen this year
(e.g. personal investing, derivatives, and greater
critical media scrutiny) and the subsequent demands
placed on the Institute's energy and resources are
probably typical of what we can expect in the future as
a consequence of the industry's size and prominence; and
! member, media, governmental and public demands on the
Institute for more and more information and services
continue to intensify.
As a consequence of these factors, the proposed budget is designed
to limit expenditure expansion as much as possible and to support
the Institute's core activities. The planned expense increase for
FY 1995 is limited to $1.71 million, a 6.3% increase over the
current year. The budget changes are intended to support the
principal legislative and regulatory mission of the Institute, to
add capacity in the sensitive media relations area, to provide a
new directors' education program and to enhance the FUNDS® system.
The planned budget increases include a necessary $400,000 increase
in the lobbying proxy tax, $250,000 for regional legislative
counsel, $200,000 for research to support effective disclosure
policy, an investment of $337,000 in upgrading the FUNDS® system,
$100,000 for director education expenses, three new full-time
positions (a junior securities attorney, a media relations person,
and a training specialist), a part-time attorney to assist with
directors' education, and full year funding for the recently hired
Senior Vice President - Management and accompanying secretary
positions. Several publications will be discontinued or
reconfigured to save money and administrative expenses will be held
close to current levels.
FY 1994 Results
The table below summarizes the results for FY 1994 compared to FY
1994 budget (see also Attachment 1):
FY 1994
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