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SIOP Finances Q&A With President Wang and Financial Officer/Secretary Heggestad

The SIOP Executive Board met on April 30-May 1, 2022, for its triannual meeting. To provide transparent updates to the SIOP membership, the Executive Board will select one or more major activities post-meeting to report on via a SIOP Source article. For this edition, we explore the latest in SIOP finances with President Mo Wang and Financial Officer/Secretary Eric Heggestad.

President Mo Wang:
Thanks for joining me, Eric. It’s been wild few years economically/financially with the pandemic, labor shortages, inflation, and the like. Tell it to me straight. Is SIOP doing ok financially?

Financial Officer/Secretary Eric Heggestad:
Hey, Mo! It has been a crazy time, to say the least. I am happy to say, as so many of my predecessors in this role have reported, that “SIOP is solvent.” The last couple of years have presented us with some ups and downs, but all things considered, we are financially healthy and doing well!

That’s a relief for all of us who want to ensure the strength and persistence of the SIOP community! So, what are the key things that our members should know about SIOP’s finances?

There are a few key things to know.

First, SIOP has two “types” of money. Not unlike you might have a checking account and a savings account (or brokerage account), SIOP has operating funds and reserve funds. SIOP has policies about how much we are to (minimally) hold in reserve and how those funds need to be held (our investment strategy). Over the last many years, SIOP has been able to grow its reserve funds, to provide protection from financial challenges, the proverbial rainy day.

Well, as you know it has been raining pretty hard for the last couple of years now. Thankfully, we only had to draw on our reserves once over the last 2 years. Otherwise, we have been able to maintain SIOP’s wealth and even start using some of these funds for strategic investments that will return value to our members.

Second, we are heading into budget planning season as our new fiscal year begins July 1. In the best of years, budgeting is challenging. As you can imagine it has been even more challenging over the past few years. For both FY20-21 and FY21-22 the Executive Board passed a deficit budget. Thankfully, the combination of a robust 2021 virtual conference, cost savings measures, and strong performance in the stock market resulted in a more balanced ending to FY 20-21. There’s still a month left in this fiscal year, but with the high participation in the 2022 conference and a member community that comes out strong to renew their dues this month and next, we should end in a relatively good place for this fiscal year as well.

Third, it’s worth noting how important the SIOP Annual Conference is to our bottom line. Revenue from the conference not only covers conference expenses, it also underwrites many non-revenue generating committee activities and member services that SIOP provides. It is great that the Annual Conference can provide this kind of revenue, but we need to look at ways of reducing our financial dependence on the conference.

Wow, that’s a lot to think about.

Yes, and we’ve hardly even scratched the surface! Luckily, it’s my (volunteer) job to keep an eye on this, and to partner with a number of people who take their fiduciary duty to SIOP very seriously. I work closely with Finance and Operations Manager Jamie Keblesh, Executive Director Tracy Vanneman, and others in the AO to steward SIOP’s dollars. We also have trusted financial advisors to actively manage our investments, according to policies that have been written by the Executive Board to establish goals and guidelines for those advisors.

That’s comforting to know that our dues, registration fees, and other investments members and their employers make are being well cared for and put to good use!

So, you mentioned something about our reserves and making our money work for us. Can you share more about that?

Absolutely. SIOP has taken care over the years to invest in not only a solid rainy day fund but also in a way that gives ourselves occasional opportunities to access what we call “excess reserves,” which is money that is available, after accounting for a percentage of our annual budget needs, to be used for strategic initiatives and other special projects. Of course, the surprising economic and financial impacts of the pandemic shone a bright light on the need for us to consider more angles and contingencies with our reserves policy, and so we are pleased to have just passed a new version of that policy at the Executive Board meeting in Seattle. This new policy prioritizes accounting for our contractual obligations (which became highly relevant during the pandemic as in-person meetings were being cancelled) and a portion of our annual budget. It also provides for different categorizations of excess reserves, so that money that becomes available for strategic uses remains smartly invested to ensure the best outcomes for SIOP’s financial needs over the short and long terms.

Mo, being a “data person,” you will appreciate the idea that we built a simulation to look at the functioning of this policy across a variety of financial situations over a hypothetical 5-year period. We looked across variations in things like our annual budget, conference income, conference liabilities, annual expenses, stock market returns, and so on. The results suggested that this new policy would be viable and good for SIOP.

This is good news for SIOP that we have learned from the last few years of an economic rollercoaster and adapted accordingly. Well, Eric, is there anything else you think our members should know about SIOP’s finances?

A critical takeaway is that all SIOP decision makers—the board, committees, and staff—are mindful of how we earn and spend money, and we endeavor to return as much of it as possible in terms of member value and services. As a couple of examples, we have a large technology investment coming down the line over the next few years, funded by excess reserves. This should really up our digital game and provide much better data resources on the back end. We are also funding The DIP and perhaps some other strategic programs to come. SIOP finances are working hard for every member and everyone who wants to see the I-O profession succeed.

Thanks so much for sharing this financial news with me, and with our members, Eric. Now get back to crunching those numbers!

My pleasure, President Mo!

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