Money Matters
SMALL SAVINGS PAY OFF
By Keith Sessions, AMA Chief Financial Officer | keithksessions@hotmail.com
This year is starting off well for AMA as we recover from the pandemic and look forward to a return of normalcy. Our membership numbers are steadily increasing and expenses have been in line or lower than planned.
With the start of 2021, we saw another round of stimulus payments from the federal government. This included a second opportunity for funds from the Payroll Protection Program (PPP). This round required a much more stringent process to meet the needed qualifications than the first one. With the work of AMA’s comptroller, bank, and audit CPA firm, we were able to navigate the process and successfully qualify. The first round has been fully forgiven. Our expectation is that the second round will be too, but until then, it shows as a liability on our balance sheet.
With the end of the first quarter, audit season begins. Several years ago, we changed our audit to occur in the second quarter. By moving it away from the traditional tax season, we were able achieve a significant savings in the fees.
The economy is moving along through the reopening process. Unemployment numbers continue to decrease. As I wrote this in early May, there was a significant boost to job openings. On an analyst call earlier in the year, it was reported that money in savings accounts was at a very high level. Normally, when an economy goes through a troubling time, consumers will save money until their confidence is better. At that point, the money in savings is typically used on the purchase of goods that had been delayed.
In this case, consumer confidence returned a while ago. Goods purchases have been strong as well. The expectation is that this time, the surplus in savings accounts will be used for experiences such as travel, concerts, sporting events, etc. This will hopefully extend to our clubs that are able to host events later in the year. I look forward to going to several events this year.
The downside to an economy doing well is inflation. The way the federal government measures inflation (Consumer Price Index [CPI]) and what you and I feel is inflation, can be very different. CPI often overestimates or underestimates what a consumer is feeling.
Additionally, how CPI is measured has changed throughout the years. Without getting too deep into the numbers, the federal government is looking for the CPI to average above 2% (as they measure it). In March, this number was still below 2%, but April saw it above that mark. If you have been to the lumberyard, gas station, or grocery store, you know the prices have increased much more than 2%.
In our hobby, we see prices going up for most things because of the cost of raw materials. For example, balsa wood is used in the wind turbine industry for the manufacturing of the blades. This greater demand increases costs and leads to higher prices for your favorite ARF or kit. Add in the increased cost to ship goods because of the price of fuel, and you can see that margins are narrower than a couple of years ago.
The last AMA dues increase was voted on in 2016. It had been 13 years since the previous increase. Throughout the years, we have worked tirelessly to run the organization in as lean a manner as possible. This is regularly reviewed. No savings is too small.
As a modeler who has built hundreds of airplanes, I know that saving small amounts can add up to a large total. Still, inflation increases the cost of everything we use to run the AMA, including labor, utilities, fuel, insurance, etc. It is a growing concern. We have been successful at offsetting these costs by increased membership and funding through grants and donations from generous members.
