On August 9 and 10, 2010, the Accounting Advisory Committee met with Glenn Petty, Brad Short and Lisa Montgomery to review and assess the above funds and AHA's ability to support them. The following account balances as of June 30, 2009 were used:



Amounts above are in 000's of dollars

The obligations to the Prize Money Programs (Sweeps and Futurities) total $8,153k (including deferred billings which are only a liability if collected). From above, the cash available to cover these prize obligations is $8,638k. Allowing for a cash reserve of $500k to cover other expenses, it was viewed that there was enough cash to cover prize money program obligations. There are some minor pluses in this area, for example, Performance Futurities have not been relieved for program expenses for several years. This amounts to an estimated 38k at this time, but needs further analysis. Further once there is a signed note between AHA and the Sweepstakes Trust, there should be cash available to address the other Fund areas.

The problem is the other Funds. As we look at the Designated, Temporary and Permanently Restricted Funds, we have a total of 1,678k of needs. However, we considered those funds that were controllable by the Board and those that were controllable by resolution or agreement. That resulted in the Obligated column above with a total of 1281k.

The Designated Legal Fund with a balance of 397k was set up by the Board. We considered two things: the number of lawsuits over the last 15 years and that our insurance coverage has a 50k deduction. We felt that with the Permanently Restricted Legal Defense Fund of 124k we had coverage for two lawsuits which seems adequate at this time. We felt that the Designated portion could be either reduced by the Board and add back to it over several years or to place a low priority on funding it.

Without considering the Designated Legal Defense Fund, the obligations we need to address in a responsible manner is the above 1281k. Additionally, Life Memberships will self remedy as the policy per Board motion of March 2007 is to amortize new Life Memberships over an estimate of the life of the member. Therefore, the 1281k could be reduced to 749k as the deficit amount that needs to be addressed. As this deficit situation built up over a period of years, it will have to be addressed over a period of years. AHA has several issues, the need to build up a cash reserve to face the next few years where the Accounting Advisory Committee felt that membership and registrations would not recover soon and there is a normal need to build up cash reserves from the National Events to be able to maintain operations through the winter months before cash collections start to accelerate in June of the next fiscal year. We felt memberships would continue to decline and that registrations could decline to the 4,000 level.

Clearly, the results from the Nationals Events are critical to the full analysis of the situation.

The area that contributed the most to the Association's problem was the cash outlay for the IT project. Over the last four years the total outlay has been approximately 2.4 million.

Frank Galovic
AHA Treasurer