Since 2014, the IAFC budget process has started earlier and earlier each year, with 2017’s budget process being no different. The process started in June of 2016 with the goals and budgetary objectives being set for each of the different sections. One of the goals was for the sections to submit their budgets after Fire-Rescue International. 

As the budget was prepared, four major principles were taken into account and used to guide the end results:

• Conservative – The budget respects the current economic environment with prudent revenue assumptions.
• Realistic – The budget is supported by careful analysis and has a plan of operation behind it.
• Comprehensive – It captured all financial activity of the association, which mirrors what the audited financial statements will be at the end of the year.
• Balanced – Total revenues equal the total expenses and no usage of the net assets (section-approved exception) were used to balance the budget. Careful attention is being placed on cash-flow requirements

The 2017 budget for IAFC was presented as a balanced budget, with a number of proposed changes in place to set a financial direction for being able to continue to increase the net assets over the next several years.

The IAFC will continue to produce conferences and provide education to the members of the fire service. Government relations will remain a core purpose of the organization. This budget will continue to fund our recruitment efforts and allow us to do pilot programs for membership as appropriate.

At the end of 2016, our membership trend has continued to see an upward movement with membership numbers reaching back to where they were when the economy began to shift, with 2017’s goal being 10,000 paid members – we have almost 12,000 members, but many are life members. An emphasis has been placed on retention, with our average rate over the last six-years of 84% as compared to 79% in 2009.

The proposal included total revenue of $19,631,757 with expenses balanced, minus the net reduction in Section Assets. It was approved for VCOS’s request to spend net assets for updating its presentation booth and to produce a Yellow Ribbon Paper on the continued issue of suicide in the fire service.

All healthy and thriving organizations embrace some elements of risk in their financial planning, and the IAFC is no different. With so many potential unknowns coming our way in 2017, such as the always-possible government shutdown, a brand-new administration, relations with external partners and the ins and outs of our economy, the IAFC is prepared to handle these known unknowns, but any one of them or a combination of them would have major impacts on our cash position and the budget plan.

Personnel levels were proposed to remain the same in all departments, except for those positions that may be required for grants or contracts that start later in the budget year. Over the course of the year, positions are added or eliminated based on the requirements of grants and contracts. All position vacancies are looked at as opportunities to adjust and reassign duties to accomplish priorities that have the most impact on the IAFC. Any added positions are usually funded through the grant or contract and don’t have a negative effect to the budget.

The salary pool is funded to match the association profession in the area in order to remain competitive and retain the best employees. Contributions to retirement are proposed to be 4%, with the employee match remaining the same at 3%. The IAFC will absorb the entire increase in the cost for employee’s healthcare, which is a very modest 10% increase over 2016. However, if the bids come back greater than 10%, the issue will be brought back to the board of directors to discuss the options.

Travel and Meetings

Travel costs continue to be a big cost on the IAFC budget, although compared to 2016’s budget, a projected small increase in travel (1.39%) is expected. Funds remain in the budget for travel to key meetings and to interact with IAFC divisions, sections and conferences. Paid speaker travel, however, has been decreased as a means to ensure that our conferences yield higher returns for all.

Funds are in the budget to pay for travel to conneXions programs for approximately 30 fire departments over the coming year. A significant amount of travel occurs as a result of requirements of grants and contracts. The amount of travel varies, and fortunately, grants and contracts pays for 100% of the cost associated with those projects.

Our international footprint continues to diminish this year, with no funding being allocated for our two international programs, CTIF and Global Fire Service Leadership Alliance meetings.

Sections and Divisions

Over the years, the IAFC Sections assets have continued to grow, and it’s anticipated that this will continue. This year, the IAFC treasurer has continued to work with each section treasurer to ensure that all section budgets are balanced and don’t use net assets for normal operations.

The Division Secretary meeting at IAFC headquarters is funded for hotel and meals. A meeting is required by IAFC bylaws, and there has been discussion of having the Division Secretaries meeting coincide with the spring IAFC board meeting.

Fire-Rescue International

FRI continues to evolve and change. San Antonio (2016) was very successful, with full-access, COLS and the educational registrations at very high levels.

The experience for this year’s conference will continue to provide top-quality education and networking opportunities. This year’s conference is in Charlotte, North Carolina (July 26-29), and with a new city, expectations are very high.

Based on feedback from San Antonio, one general session will continue, but a change in the main presentation of a panel discussion will be made.

Funding is provided to continue with the Presidential Celebration luncheon to end the conference on Saturday.

IAFC Programs and Participation

The vast majority of programs offered by the IAFC is produced with funding from external sources, primarily grants and contracts from both private companies and the federal government. It’s anticipated that the vast majority of funding for these programs will continue through 2017, as they’re multi-year agreements with revenue and expenses spread over the duration of the grants.

Technology – As with your own organizations, this area continues to be enhanced as it changes daily. Cost savings are realized in some areas of the programs, but additional costs are also seen.

The IAFC continues to purchase more WiFi services for conferences as our members require it. Capabilities have continued to increase in the areas of GIS and website storage space.

The board also approved a new database system in which all of our multiple, individual, piecemealed databases will be merged. This will allow all data to interact and will provide less chance for discrepancies and for data that’s changed in one place to be changed throughout, providing a more relationship-based system.

Investment in ESCI – ESCI is a separate for-profit company in which the IAFC owns approximately 57.5% share presently. The ESCI board of directors approved a budget in November that will result in a revenue increase, along with continued growth in the value of the enterprise.

The IAFC investment in ESCI continues to produce dividends. ESCI is profitable, and money earned has remained at ESCI for operating capital. In essence, ESCI covers all cash flows without short-term loans to cover expenses.

ESCI continues to better market itself and its relationship with the IAFC through many partnerships. As a separate entity and board of directors, no part of the ESCI budget is in the IAFC budget review process.

The following information gives more details on the projected performance of the various parts of the IAFC budget.

Financial Summary

The IAFC FY 2017 budget proposal aims to accomplish two objectives: keep the bottom line balanced and grow the board-designated operating reserve fund with $300,000 from operating surplus.

The primary purpose of this operating reserve fund is to help ensure the long-term financial stability of the association and position it to respond to varying economic conditions and changes affecting the association’s financial position and the ability of the organization to continuously carry out its mission.

The consolidated IAFC budget is being submitted at essentially a breakeven, with no use of gains from the unrestricted investment account. With this proposed budget, unrestricted net assets would increase by $300,000.

The table below is a snapshot of the FY 2017 proposed budget.

It’s anticipated that at the end of 2016, the IAFC will have approximately $4,243,449 in net assets, detailed in the funds listed above, and a proposed net-assets balance of $4,515,753 by the end of the fiscal year.

In 2013, the board of directors set the goal of increasing its liquid net assets to 50% of the operating budget. With the passage of the 2017 budget of $19.6 MM, the liquid assets will only make up for 45.9% towards the goal of 50%.

Total Consolidated IAFC Revenue

Below is a detailed look the total Consolidated IAFC budget.

IAFC’s revenue is the core operation of IAFC. It includes membership, conferences, leadership, government and corporate grants—basically the bulk of the association’s operations.

The association is continually updating the diversification of revenue each year. In years past, the greatest revenue share came from conferences, which at the time constantly hovered at approximately 60-65% each year. A conscious decision was made to reduce this percentage and seek revenue from other sources; if FRI couldn’t happen due to a natural disaster or other event that caused the cancellation, the IAFC was banking on that revenue. That percentage has moved to a more balanced revenue approach at 19% of total revenue. Our membership dues only consist of 10% of the revenue total.

Consolidated Expenses

IAFC’s core expenses to run the association include personnel costs, conferences, travel, grants, facilities and equipment; basically, the costs are to provide services to the membership, generate revenue and administer the association.

Compare this to most fire departments: your personnel costs account for the bulk of your expenses and can run upwards to 85-90% of the total. The IAFC has been able to keep this expense within a manageable level at 38% while retaining and recruiting true professionals.

While our professional fees, the expense for all grant and contract workers, account for an additional 17% of the total miscellaneous expenses, equipment IT, facilities and operating reserves represent another 13%.

The 2017 budget was approved by the board of directors in December. It is realistic with a healthy amount of risk, is balanced and continues to give the IAFC the financial resources to serve its members while at the same time, adding to our net assets.

It’s easy to go back to doing all the old things that the IAFC use to do years ago that may not have been member-driven, but to do so risks returning to dire financial challenges. By adhering to the principals that the IAFC board has adopted, we continue to serve our members while remaining committed to having the resources to carry us into the future.

If you'd like further financial information on the IAFC’s financial status, please contact me.