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  #1  
Old 07-10-2014, 05:09 PM
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Default SoA Transparency - Election Issue #1

It was pointed out to me that if members had some detailed financial information about the SoA, to whom members pay dues, they would be in a better position to evaluate and might, therefore, take a greater interest in the management of the organization and the impact that may have on their profession.

The SoA files public Form 990 documents with the IRS as a non-profit, i.e., an organization exempt from income tax.

Go here to download a pdf with financial data culled from the SoA's filed 2011 and 2012 Form 990s (the most recent available).

You will see that the SoA derives only about 26% of its revenue from member dues. The rest comes, principally, from Exam Fees. You will also note that total salaries (including benefits) are well in excess of dues received. So, the SoA depends (as it always has) on the E&E system to generate revenues necessary to support its operations (including, of course, education and accreditation).

That is a probable contributor to the SoA seeking new sources of E&E revenue - e.g., from the new General Insurance Track, initially intended to tap a new foreign source (primarily Asian) of dues and exam fee paying members or candidates. This may shed some light on why that could be considered to be a good business decision (assuming, of course, it succeeds and actually generates new revenue and members in excess of its costs).

This also explains, in part, my objection to ceding E&E activities which generate revenue to the SoA to universities. The biggest objection, however, that I had to that was ceding effective control of elements of basic actuarial education in our accreditation process to universities.

It is important to look at staff salaries to determine whether or not we as members are getting our dollar's worth. Since a good part of the SoA staff deals with education and continuing education (seminars, meetings, etc.), providing services to members and candidates, and they do a very good job of that, I see no problem there. Looking at details of the top 12 paid shows that actuaries on staff are paid on a par with actuaries working for private employers and, indeed, to attract quality actuarial staff we must do that.

The top three staff (Exec. Dir., CFO, and General Counsel) in 2012 earned in total (including benefits) just over $1,000,000. The Executive Director earned $381,334 base salary, $425,497 with benefits. To put that into perspective, he was hired in 2007 at a base salary of $250,000. Over the five years 2007 to 2012 he received an average of 8.8% annual increases. The $250,000 was reasonable, perhaps, for a 24,000 member professional organization in 2007 but, you may ask were the 8.8% annual increases reasonable?

Well, you can't blame the Executive Director. He took what he was given. I have highlighted an important passage from the description of how salary levels are determined in the SoA taken from the Form 990 in the text below.

Quote:
A compensation study is performed every other year to complete a market comparison study for all positions of the organization. Additionally, market data is gathered each year to determine the annual compensation adjustment for all employees. The Presidential officers and the Secretary/Treasurer, with input from the Board, are responsible for determining compensation and benefits for the Executive Director after reviewing comparable data from several independent sources. Additionally, the Presidential officers and the Secretary/Treasurer review management's recommendation for annual compensation adjustments for officers and key employees. Discussion and process are contemporaneously documented in the minutes.
The highlighted part indicates that it is the SoA Leadership Team which recommends salary increases for the Executive Director with "input from the Board". Yes, they do get input but it is a rubber stamp type of input since by the time the recommendation gets to the Board the real decisions have already been made and the Board is expected to "trust" leadership. I have been through that process a number of times.

The Leadership Team consists of the four presidential officers, the Secretary/Treasurer (appointed by the Leadership Team) and the Executive Director - compensated by the Leadership Team. Then, the next two highly pad staff positions report directly to the Executive Director.

Who, exactly, has the motivation to look out for membership interests?

Are you getting a picture as to why transparency is so darn important. Do you see why SoA leadership may not want me as part of the "team". Do you see why it is so important for you members to be concerned about this and to have the ability to select your own leaders?

This starts the discussion.

But, before we talk, can you please go to the directvote election site and vote in the Petition Process? I will have a lot more to say as a candidate.
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Last edited by tbakos; 07-10-2014 at 05:36 PM.. Reason: add period
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  #2  
Old 07-10-2014, 05:14 PM
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It's interesting to me that a big part of the SoA's revenue comes from exam fees, which come from non-members. As someone paying those fees (ok, my company pays them), I would think that I should at least be able to see how the fees are being used.
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  #3  
Old 07-10-2014, 05:20 PM
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Quote:
Originally Posted by BruteForce View Post
It's interesting to me that a big part of the SoA's revenue comes from exam fees, which come from non-members. As someone paying those fees (ok, my company pays them), I would think that I should at least be able to see how the fees are being used.
You are a "future" member we all hope. The exam fees are used, primarily to support the E&E structure as is a tremendous amount of volunteer time by FSAs/ASAs participating in the process.

The E&E system does produce a net gain, however, which supports the overall organization. One might argue that the tremendous volunteer effort in support of E&E and the revenue it generates is an additional member contribution to the SoA finances.
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  #4  
Old 07-10-2014, 05:28 PM
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One can get copies of the 990s from here, btw:
http://www.charitynavigator.org/inde...2#.U773Z_ldX_M
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Old 07-10-2014, 05:54 PM
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For the lazy, here are four of the five 990s I was able to get (Give me a moment for the fifth.... it was too large to upload directly)
Attached Images
File Type: pdf 2009 990 SOA.pdf (983.9 KB, 186 views)
File Type: pdf 2010 990 SOA.pdf (1.04 MB, 161 views)
File Type: pdf 2011 990 SOA.pdf (1.09 MB, 117 views)
File Type: pdf 2012 990 SOA.pdf (1.14 MB, 236 views)
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Old 07-10-2014, 05:56 PM
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Here is a link to the 2008 990.

https://drive.google.com/file/d/0Bya...it?usp=sharing
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  #7  
Old 07-11-2014, 01:37 PM
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Default UPDATE - Form 990 SoA Financials

The file SoA Financial.pdf file which can be downloaded here has been updated to include data from 2008 - 1012 Form 990 filings by the SoA.

Adding 2008 data brought this back to the end of the Sarah Sanford era. Effectively, in 2008 the SoA paid two Executive Directors. Sanford received $320,000 in 2008. Note also that SoA Legal fees in 2008 were just over $1.2 million. Richard Veys was hired as the first full-time SoA General Counsel in June 2009.

During the 5 year period 2008 - 2012 Salaries have increased 31%, Exam Fee Revenue has increased 32%, and Member Dues have increased 14% (Membership increased about 19% from ~20,100 to ~24,000). Other revenue has remained fairly stable.

Office Expenses have stayed relatively level. Travel Costs have increased 52%.
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  #8  
Old 07-11-2014, 02:06 PM
Enough Exams Already Enough Exams Already is offline
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Quote:
Originally Posted by tbakos View Post
It was pointed out to me that if members had some detailed financial information about the SoA, to whom members pay dues, they would be in a better position to evaluate and might, therefore, take a greater interest in the management of the organization and the impact that may have on their profession.

The SoA files public Form 990 documents with the IRS as a non-profit, i.e., an organization exempt from income tax.

Go here to download a pdf with financial data culled from the SoA's filed 2011 and 2012 Form 990s (the most recent available).

You will see that the SoA derives only about 26% of its revenue from member dues. The rest comes, principally, from Exam Fees. You will also note that total salaries (including benefits) are well in excess of dues received. So, the SoA depends (as it always has) on the E&E system to generate revenues necessary to support its operations (including, of course, education and accreditation).

That is a probable contributor to the SoA seeking new sources of E&E revenue - e.g., from the new General Insurance Track, initially intended to tap a new foreign source (primarily Asian) of dues and exam fee paying members or candidates. This may shed some light on why that could be considered to be a good business decision (assuming, of course, it succeeds and actually generates new revenue and members in excess of its costs).

This also explains, in part, my objection to ceding E&E activities which generate revenue to the SoA to universities. The biggest objection, however, that I had to that was ceding effective control of elements of basic actuarial education in our accreditation process to universities.

It is important to look at staff salaries to determine whether or not we as members are getting our dollar's worth. Since a good part of the SoA staff deals with education and continuing education (seminars, meetings, etc.), providing services to members and candidates, and they do a very good job of that, I see no problem there. Looking at details of the top 12 paid shows that actuaries on staff are paid on a par with actuaries working for private employers and, indeed, to attract quality actuarial staff we must do that.

The top three staff (Exec. Dir., CFO, and General Counsel) in 2012 earned in total (including benefits) just over $1,000,000. The Executive Director earned $381,334 base salary, $425,497 with benefits. To put that into perspective, he was hired in 2007 at a base salary of $250,000. Over the five years 2007 to 2012 he received an average of 8.8% annual increases. The $250,000 was reasonable, perhaps, for a 24,000 member professional organization in 2007 but, you may ask were the 8.8% annual increases reasonable?

Well, you can't blame the Executive Director. He took what he was given. I have highlighted an important passage from the description of how salary levels are determined in the SoA taken from the Form 990 in the text below.



The highlighted part indicates that it is the SoA Leadership Team which recommends salary increases for the Executive Director with "input from the Board". Yes, they do get input but it is a rubber stamp type of input since by the time the recommendation gets to the Board the real decisions have already been made and the Board is expected to "trust" leadership. I have been through that process a number of times.

The Leadership Team consists of the four presidential officers, the Secretary/Treasurer (appointed by the Leadership Team) and the Executive Director - compensated by the Leadership Team. Then, the next two highly pad staff positions report directly to the Executive Director.

Who, exactly, has the motivation to look out for membership interests?

Are you getting a picture as to why transparency is so darn important. Do you see why SoA leadership may not want me as part of the "team". Do you see why it is so important for you members to be concerned about this and to have the ability to select your own leaders?

This starts the discussion.

But, before we talk, can you please go to the directvote election site and vote in the Petition Process? I will have a lot more to say as a candidate.
PROCTOR: Since we built the church there were pewter candlesticks upon the altar; Francis Nurse made them, y’know, and a sweeter hand never touched the metal. But Parris came, and for twenty week he preach nothin' but golden candlesticks until he had them. I labor the earth from dawn of day to blink of night, and I tell you true, when I look to heaven and see my money glaring at his elbows-it hurt my prayer, sir, it hurt my prayer. I think, sometimes, the man dreams cathedrals, not clapboard meetin' houses.
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  #9  
Old 07-11-2014, 02:20 PM
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Quote:
Originally Posted by tbakos View Post
The file SoA Financial.pdf file which can be downloaded here has been updated to include data from 2008 - 1012 Form 990 filings by the SoA.

Adding 2008 data brought this back to the end of the Sarah Sanford era. Effectively, in 2008 the SoA paid two Executive Directors. Sanford received $320,000 in 2008. Note also that SoA Legal fees in 2008 were just over $1.2 million. Richard Veys was hired as the first full-time SoA General Counsel in June 2009.

During the 5 year period 2008 - 2012 Salaries have increased 31%, Exam Fee Revenue has increased 32%, and Member Dues have increased 14% (Membership increased about 19% from ~20,100 to ~24,000). Other revenue has remained fairly stable.

Office Expenses have stayed relatively level. Travel Costs have increased 52%.
Huh - sounds like the SOA is the personal piggy bank of a few people.

How do I sign up to get on this gravy train?
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  #10  
Old 07-11-2014, 02:23 PM
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Quote:
Originally Posted by tbakos View Post
The file SoA Financial.pdf file which can be downloaded here has been updated to include data from 2008 - 1012 Form 990 filings by the SoA.

Adding 2008 data brought this back to the end of the Sarah Sanford era. Effectively, in 2008 the SoA paid two Executive Directors. Sanford received $320,000 in 2008. Note also that SoA Legal fees in 2008 were just over $1.2 million. Richard Veys was hired as the first full-time SoA General Counsel in June 2009.

During the 5 year period 2008 - 2012 Salaries have increased 31%, Exam Fee Revenue has increased 32%, and Member Dues have increased 14% (Membership increased about 19% from ~20,100 to ~24,000). Other revenue has remained fairly stable.

Office Expenses have stayed relatively level. Travel Costs have increased 52%.
Imagine some (not sure how much of course) of travel cost increase attributable to more exams correlating with more people needed at central grading. Presumably exec director accountable to and is required at some level of detail to justify operating expenses and staffing levels to Board of Directors. I really have no knowledge in that area. Can make analogy to prevelance of 3rd party payor as fueling a lot of high health care trend-as long as bulk of us get our dues and exam fees paid by employer, we don't make much noise or ask for much detail about why costs go up at level they have.
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