Welcome to the Online Version of
New Zealand Statistical Association Newsletter 64

Comments on our Financial Position

Many members will be aware that this year’s conference, ASC/NZSA 2006, ran at a substantial loss. I am writing here to reassure members that we are able to cover the estimated loss from current resources and that our Exec will be giving vigilant attention to our financial situation.

To describe our current (pre-conference) financial position, the NZSA has built up a current reserve of about $20,000, and, in the Campbell Fund, has a resource of about $60,000 that is managed in relation to Professor Campbell’s interests. Our annual turnover is about $20,000, which is the basis for calculating our target reserve.

There are three factors that put pressure on our accounts:
• the need to rebuild reserves to pre-conference levels;
• the need to increase reserves to a safe level, insofar as we are not permitted to borrow money (see Clause 13 of our Constitution);
• the need to buffer ourselves against fluctuations in the exchange rate.

The loss incurred through the conference for which NZSA is liable is likely to be about $NZ20,000. Attendance was 290 compared to a break-even level of 400. Of these, more than expected were students (46), for whom registration was discounted. Thus, there was a shortfall in income, rather than an excess in expenditure. In fact, measures were taken to curtail expenditure on certain items, preventing a greater loss, for which we are grateful to the organizing committee, David Scott, Harold Henderson, William Dunsmuir and Neville Bartlett. They delivered an international class conference through which we were able to ‘build statistical connections’.

It is also important to realise that the best (and in some cases, only) options were taken in choosing the venue and management arrangements within the constraints that were set. I still imagine that some members will be feeling a degree of negativity about the level of quality (or ‘indulgence’, as I have heard it expressed more than once) involved in the conference. If there is no other way to relieve your angst, send me an email - but read to the end of this article first!

I had always been under the impression that the Association operated on a break-even basis. The Friday before the conference I was made aware of the dreaded Clause 13 (“The Association shall not have the power to borrow money.”). Now a random walk with zero drift and a positive start will reach zero with probability one, while with positive drift there is a positive probability that it will not reach zero. Of course our ‘walk’ isn’t random, as we are able to intervene. But my suggestion is that, to avoid a reactive situation, we need to tune our finances towards making a small profit, and may need to set our target reserve at greater than one year’s transactions.

Our exposure to the exchange rate comes through the journal, for which we pay a capitation of $A27.50. In $NZ terms, this would cost us $1600 more with the drop in our currency from the beginning to the middle of this year, an extra $4 per member.

What to do?

This situation was discussed at the AGM, and there was a definite sense that we could take the loss in our stride, that there was no need to worry.

The AGM approved an increase in subscriptions for regular members from $60 to $75, as of April 2007, with rates for other membership classes mapping in the usual way. (Note that the SSAI core subs went from $A99 to $A140 at the same time.) It is likely that those whose subs are in arrears will be dropped from the list of members.

Our Exec has the responsibility to manage our accounts, control financial risks, plan budgets, and, hopefully, restore us to our previous position over 4-5 years. This is likely to be a process of many small gains to offset a single larger loss, not an unfamiliar scenario.

Future conferences are likely to be run on a more traditional basis (University venue, DIY management), not to exclude hotel venues, which we have used successfully in the past.

We have been pointed to measures taken by the Meteorological Society to avoid risk in an international situation. It is in the nature of being involved with bigger players (in our case SSAI and Blackwells) that the risks are greater.

Contributions from members are welcome – opinions, ideas, new initiatives, donations (they’re tax-deductible!) – email me at roger.littlejohn@agresearch.co.nz.

Roger Littlejohn