Executive Director’s Commentary
By Don Eversmann, F240000
In this month’s column I have chosen to write about an important decision that no one wanted to have to make “” a recommended dues increase. This month the Governing Board will be voting on whether to authorize a dues increase for the family membership of FMCA. I would like to shed a little light on the discussion.
When Family Motor Coach Association was founded back in 1963, the initial membership dues were set at $5 per year. The founding members tell stories about how some of the original members could not pay the $5 dues at the first meeting, because they needed the money to get home after their trip to Hinckley, Maine, to view the solar eclipse. As most of us realize, $5 went a lot further back then than it does now. In 1965 the dues were increased to $12 to meet the expenses of the rapidly growing association.
Dues were stepped up to $15 in 1967 and to $20 in 1974. On October 1, 1980, FMCA membership dues were increased from $20 to $25, and that rate has remained in effect for 23 years.
FMCA has been very blessed over the past 23 years. The association has grown steadily. At the close of 1980, FMCA had issued 38,753 memberships and had an active membership count of 19,529 families. As of September 1, 2003, the last membership number assigned was F334074, and our association had an active membership of 127,479 families.
What sets FMCA apart from other RV organizations is that early on, in 1963, the founders were composed of not only motorhoming families but also commercial representatives. Yes, from the start two distinct but related groups made up FMCA. FMCA currently has more than 2,200 commercial members.
Seven months after FMCA was born, the first magazine (not a newsletter) was published. The founders recognized early on the importance of the information that needed to be shared with the membership. The early magazines were printed quarterly. Then in 1971 Family Motor Coaching became a bimonthly publication, and in 1978 it became a monthly, as it remains today.
This important form of communication has been a major key to the success of the association. While the magazine provided the family membership with motorhome experience and instruction, it also provided a wonderful vehicle for the commercial membership and others to get the word out to families about the RV/motorhome products they had to sell. Over the years, Family Motor Coaching magazine has become what some would refer to as a “cash cow,” in 2002 producing $7.4 million in revenue. This is more than half of the association’s overall $14 million revenue.
To be sure, FMCA and the industry have experienced some lean years. In general, however, growth in the association and in magazine revenue generated what I would like to refer to as a spiral. As the association grew, so did the operating costs, but at the same time the amount of advertising being placed in Family Motor Coaching magazine increased. FMCA maintained and increased magazine advertising rates as the circulation increased and in accordance with publishing industry trends. The increases in advertising revenue helped to cover the costs of operating FMCA. And in some years, when the RV/motorhome industry was booming, FMCA was able to put away funds and invest them for future growth.
We are all aware of what has happened to the economy in the past couple of years. As hard times have overtaken quite a bit of the economy, the RV/motorhome industry has not escaped the downturn. Even though there was quite a bit of publicity surrounding the desire of many to change their travel habits as a result of the tragic events of September 11, 2001, the motorhome industry has not really recovered from the slump in what had been a booming market.
FMCA, while still recording financial surpluses at the end of each year, experienced a financial loss of $569,907 in 2002 due to a substantial decrease ($667,199) in the value of its investments. Back in 2000, we all were very pleased when the end-of-year reports indicated a surplus of $1,487,957. However, $758,579 of that was based upon a substantial increase in the value of the FMCA investments.
This brings me to our current situation. As the industry has been in a downturn or a standstill, the expenses of RV-related companies have continued to increase. They, in turn, have decided to reduce the size of their ads or cut back on the frequency of their advertising, thus shrinking FMCA’s revenue at a time when FMCA investments are no longer contributing positively to the bottom line of the association. FMCA experienced a 9.1 percent loss in advertising revenue from the year 2000 to 2002, while overall consumer magazine advertising revenue decreased by 11 percent during that same time, according to the Publishers Information Bureau.
FMCA has tried to hold down expenses within true revenues, and we have been quite successful until budgeting for 2004. Over the past couple of years following September 11, 2001, FMCA, and everyone else, has experienced unheard of increases in insurance costs. The year 2002 increase in insurance premiums for FMCA totaled $70,654, which represented an increase of 28 percent, and in 2003 we have experienced another 15 percent increase on top of that.
Another area where FMCA and other companies have experienced increased expenses is postage costs. As their expenses have increased, the U.S. Postal Service and other mailers have passed along rate increases to consumers and companies. FMCA has had to absorb the increases in postage expenses due to the rise in rates. FMCA’s postage costs increased by $99,612 in 2001, and then by another $56,056 in 2002. These are specific examples of large line items in the budget, but throughout the budget we have seen increases across the board just from doing business as usual. We are converting to and using state-of-the-art methods of communicating with the membership. However, to avoid disenfranchising many of our members, we must continue to use the U.S. Postal Service for the majority of our communications.
Over the past two years, the leaders of FMCA have been trimming the budget in an effort to avoid what we all were afraid was inevitable. Now, in order to balance the budget, they were faced with the decision to either start cutting benefits or to recommend a dues increase.
As I explained earlier, the cost of doing business has increased in many areas, and FMCA has not been able to increase income through investments or business enterprises. FMCA is a service organization, and one of the major expenditures of such organizations, and of FMCA, is the paid staff. Salaries have increased, as have the costs of employee benefits. As we all know, some employee benefits are mandatory, and some are optional. FMCA cannot offer its employees stock options, profit sharing, and other benefits that for-profit companies can; so, health benefits and 401(k) contributions are especially important in terms of attracting and retaining quality employees. The average years of service of your employees is 9.5 years.
Salary surveys are done both locally (Cincinnati) and nationally to determine salary ranges for FMCA employees. We collect data to ensure that we are not underpaying or overpaying someone. Every four years the Wage Review Board (composed of the president, senior vice president, and treasurer) reviews each employee to ensure that FMCA is paying an appropriate salary for each position.
In preparing the dues increase proposal for the Governing Board, the Finance Committee and the Membership/Member Services Committee studied the value of your FMCA membership, i.e. what you receive for the annual $25 dues. The amount was determined to be approximately $350. This does not include any discounts you might take advantage of through your affiliation with FMCA. Rather, these are true values that are provided to the membership in the form of the magazine and insurance benefits. FMCA offers many other valuable benefits; however, a member must use them in order for a value to be realized.
The cost to print and send Family Motor Coaching magazine (not counting the Membership Directory portion of the January issue, which is calculated separately) to each member is approximately $1.60 per month, or $19.20 per year. There are several benefits that FMCA provides that have a fixed cost per member. The cost of these benefits was $351,226 in 2000, and the estimated budget for these items for 2004 is $667,000, which is a 47 percent increase. These benefits include the January Membership Directory, the accidental death and dismemberment insurance, the deductible and co-insurance insurance reimbursement plan, and the MEDEX Plus emergency medical assistance program, the latter of which was added as a member benefit in 2001.
If the dues increase is approved by the Governing Board in November, there will be an opportunity for you, the members, to purchase advance years at the old multiple-year rates to delay the impact of this dues increase. The one-year renewal dues would immediately increase on January 1, 2004, to $35, and the new first-year member rate would increase to $45. However, from January 1 through March 31, 2004, members would be permitted to purchase advance years at the old discounted rate schedule of two years for $47.50, three years for $67.50, and five years for $100.
I am guessing that I have not answered all of the questions that you, as members, may have regarding the proposed dues increase of $10; however, I hope that I have provided answers to the majority of them. Please read the “President’s Message” and the “Executive Director’s Commentary” in the January 2004 issue of Family Motor Coaching to learn whether the dues increase has been approved and, if so, how you can take advantage of the discounted advance dues rates if you so desire.