For the eight months ended August 31, 2012, PRSA’s net financial results are tracking better than 2011, better than the 2012 budget for the same period and are poised to meet or exceed our annual goal of returning 1% of annual operating expenses back to the reserves.
PRSA’s operations run on a seasonal cycle that creates various points of surpluses and deficits throughout the fiscal year. Membership renewals are high in January; professional development and Sections programming are strong in the spring, Anvils awards and Leadership Rally take place in June; and the International Conference takes place in the fourth quarter. However, PRSA incurs certain fixed expenses evenly throughout the year. Depending upon the timing and revenue-generating nature of each program, a net surplus or deficit will be reflected. Although the seasonality of the programs has been changing over time, we prepare and budget for it. The eight months ending August 31 typically results in a seasonal deficit and we budgeted for this deficit in 2012. Activity picks up again in the fall and we anticipate that the deficit will be reversed by the end of October.
In addition to budgeting for seasonal revenue fluctuations, we have been able to control variable expenses in direct proportion to changes in budgeted revenue. For example, registration revenue for the various Professional Interest Sections conferences is lower than comparable registration revenue for 2011. This is due lower attendance than previous years. With strict expense management protocols in place, we were able to respond to this lower revenue by reducing budgeted expenses which ultimately yielded a better-than-budget net result.
Since the International Conference will take place in October, the registration revenue will not be fully recognized until the Conference takes place. However, expenses are being incurred now in order to produce the Conference. Expenses are budgeted to run high in August / September while the revenue is deferred. The net effect creates a deficit in the months leading up to October when all Conference revenue is recognized.
All in all, PRSA takes great care to maintain fiscal control and responds appropriately to economic trends and unexpected change in circumstances. Budgeting, although not exact, is a science that we track and adjust as reasonably necessary. At the end of August 2012, PRSA is exceeding its net budget goals as well as the net results for the same period in 2011 and we expect to give a minimum 1% of our annual operating expense to reserves in order to help ensure our fiscal viability for years to come.
I encourage all PRSA members to review our interim financial statements as of August 31, 2012 and to contact me with any questions or concerns that you may have.