WEBVTT

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So, the finance committee report.
I would like to start first

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by acknowledging the members of the 2018,
2019 finance committee.

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And if you're here, would
you please stand?

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First is Gayle Bellamy,
from North Carolina.

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I don't think Gayle is here.

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John Etherington, from Oregon, Karen Lyon,
from Louisiana, Shan Montgomery

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from Mississippi, David Saucedo from
Texas, and Randy Smith from Kentucky.

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And we've had a wonderful committee that's
been working very hard

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throughout the year.

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And I'd also like to acknowledge NCSBN
Chief Financial Officer, Rob Clayborne.

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Are you in the room?

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Could you stand if you are?

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I can't see him.

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And also our Financial Director,
Gloria Melton, they are the real experts

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in the financial arena.

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And I want you all to know that the
finances of the organization are

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in very good hands.

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So, the Finance Committee Charges are
listed here.

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And we advise the board on the overall
direction and control of the finances

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of the organization.

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We review and recommend a budget to the
board every year.

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And we worked in July,
had our July meeting and completed the

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budget that will be presented to the Board
of Directors at their September meeting.

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We monitor the income, expenditures,
and program

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activities against projections.

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And we present quarterly financial
statements to the board.

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So, prior to every board meeting,
the Finance Committee goes over those

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reports and recommends that then they be
forwarded on to the Board of Directors.

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We oversee the financial reporting
process, the systems of internal

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accounting and financial controls,
and the performance,

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and independence of the auditors.

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So, it's the finance committee that
recommends to the board the appointment

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of the firms to serve as
independent auditors.

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And we have already conducted that work
this year, and we'll be making a

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recommendation to the Board of Directors
at their September meeting.

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As you all know, the finances of the
organization are audited every year.

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And they've always been unqualified
reports for as long as I have been on the

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board and probably, every year previously.

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So, we've always gotten
very good audit reports.

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The finance committee makes
recommendations to the board with respect

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to investment policy and assures that the
organization maintains

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adequate insurance coverage.

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So, the Board of Directors adopts a
policy, with input from the

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Finance Committee, on how our investments
will be made.

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We have investment consultants that meet
with the Finance Committee at every

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meeting that we have.

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And these consultants help us with setting
that policy for the investments.

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But they do not actually manage the money.

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We do have managers that do that.

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And that's kind of one of the internal
controls of the organization.

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So the desired impact for the Finance
Committee is that we'll have adequate

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financial resources to fund the tactical
plans necessary to execute the NCSBN's

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Strategic Initiatives over the long-term.

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And we have our operating reserve.

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And by policy, we are required to keep at
least 25% of the annual operating budget

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in the operating reserve.

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We have, however, opted to keep a lot more
in that operating reserve so that we don't

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touch that money.

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And then we have a capital reserve that we
also have money that's allocated

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for enhancement of program qualities and
introducing new programs, etc.

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So, we've really looked at advising the
board on, you know, keeping both the

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operating and capital reserves
at a high level.

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And we also have to make sure that we
allocate our finances according

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to our mission.

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And the Finance Committee
does that as well.

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This is the revenue stream for National
Council.

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You can see that a total of 70% of the
revenue comes from

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NCLEX for U.S. licensure.

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That's not a surprise to anyone.

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We receive 7% from nurses for licensure
verification fees, 4% from the

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learning extension sales,
and 5% from the NCLEX in Canada.

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While investment earnings are projected to
be equal to 12% of the total revenue

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for this year, ending on September 30th of
2019, that income source is always

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dependent upon changing conditions in the
financial markets and can vary

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significantly from year to year.

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And then the other income that combined,
just makes up 2% of NCSBN income includes

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such things as royalty from the Nurse Aide
and MACE exams, the NCLEX practice

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exam fees, meeting registrations,
associate member fees,

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and then our publication and sales.

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So that's the broad overview of our
revenue sources.

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And then how we spend our funds is
depicted in this graph.

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NCLEX is our largest revenue source.

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It's also our largest expenditure.

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Fifty-nine cents of every dollar that's
spent goes directly to support exams.

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And the exams department also receive
substantial reports from the other or

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substantial support from the other 41
cents, in terms of occupancy,

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administrative services, IT,
communications.

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Exams receive support from all of those
areas as well.

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So, combined expenditures on other program
activities to assist boards,

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including committees, meetings, research,
NLC legislative support,

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and online offerings,
comprise 19% of the total budget.

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And NURSYS including ORBS and e-Notify is
6% of our budget

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and our IT infrastructure equals 5%.

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So, combined total expenditures on
supporting service, which

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includes governance, communications,
finance, and HR equal about 9%.

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And our occupancy costs are at about 2% of
the total budget.

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So that is, you know,
a broad overview of how we spend our funds

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at National Council.

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Now, this next slide is talking about our
fund balance.

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And it's looking to the projected value of
our fund balance from the end of fiscal

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year 2019 through fiscal year 2022.

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And you can see that the fund balance
right now is at about $212.6 million.

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We expect that we're going to have to use
some of those funds over the

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next few years.

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So you can see the slight
decline in the...

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It looks pretty drastic on the graph.

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But we still will have a very healthy
investment balance, even with having

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to use some of these operating or the fund
balance to provide support

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for our projects.

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And actually, I think in fiscal year 2020,
will be the first time that I think

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National Council has had to use some of
these reserve funds to operate programs,

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but it's not a cause for alarm.

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As you can see, even through what has been
projected through fiscal year 2020,

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we're still at a very healthy fund balance
of over $190 million, so

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that the Finance Committee will monitor
that very closely and

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with revenues and expenses.

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We know that some of our projects that
we're having to fund now will not

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last forever, that they are time-limited,
so we'll watch that very closely and

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advise the board accordingly.

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So, in summary, then some of the
performance outcome measurement that the

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Finance Committee looks for is a strong
financial position that provides

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an internal source of funds and allow
for financial flexibility so that we can

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expand our services to the members,
of providing for financial stability

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by planning operating budgets that we can
support over the long-term,

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and preparing budgets that link financial
resource allocation to the

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strategic initiatives,
and mission of the organization,

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and investment policy,
and strategy in place

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that's produced the desired returns on
financial investments.

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Within the risk tolerance of NCSBN,
we received an unqualified audit opinion

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from the independent accountants.

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And there are policies in place that guide
good internal control practices.

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We've engaged auditors to conduct a fraud
risk assessment to ensure that all best

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practices for maintaining
control are in place.

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And from time to time,
there are different areas that will

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require some auditing and then the Finance
Committee will make a recommendation that

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the board does that.

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So, that is the financial
report for this year.

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I am just very pleased that I was able to
serve as your treasurer for the last two

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years and I'll be passing the torch to
some very qualified individuals.

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So, with that, if you have any questions,
I would entertain any of those at this

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point in time.

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Okay.

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Seeing none, thank you so much.