From the CEO
In recent years, one of APA's many strengths has been its solid financial footing. Our diverse income streams—from book and database sales, to advertising revenue, to income from our investment portfolio and rent from our two Washington, D.C., office buildings—built the association's net worth to more than $200 million as of this time last year.
But, as it did for both nonprofits and for-profits nationwide, that began to change with the economic crisis. With both our investment portfolio and revenues significantly down, we found ourselves in uncharted territory and have been forced to cut more than $16 million from this year's $116 million budget. The most dramatic—and traumatic – of those cuts was an elimination of 37 staff positions in July. These cuts were made after instituting a hiring freeze at the end of 2008. The reduction in force was one of the last things that I or anyone at APA wanted to do, and was implemented only after much careful consideration and discussion, and after making $15 million in other spending cuts.
Those cuts included the cancellation of this fall's consolidated governance meetings, as well as the Board of Directors' and Council of Representatives' discretionary funds. In addition, we reduced funding for numerous public education programs, the APA congressional fellowship program and the directorate leadership conferences. We have also been forced to take away staff merit raises and some staff benefits, including a two percent retirement contribution.
All of the aforementioned and other cuts have been painful to say the least. Nevertheless, because of them, we are able to project a balanced budget for 2009 and 2010, and have laid the foundation for future budgets to include an operating safety margin of 1 percent to 2 percent of the total budget—a margin that is recommended by our governing Association Rules. Importantly, the Council of Representatives voted in August to maintain the membership dues at the 2009 level for 2010—thus suspending the annual cost of living increase that would have otherwise been the case.
What do these cuts mean for APA's future, especially given the likelihood of lower revenues in the near term? It most certainly means a leaner APA, where our work is more focused on the activities that are critical for psychology, our members and the public, and that APA can uniquely accomplish.
In fact, this August, Council approved the first such plan for the organization since its founding in 1892 (see my next column for details). The strategic plan will enable us to evaluate what we do, why we do it and how we do it—both on a staff and governance level—to make sure our work is consistent with members' priorities, our core values and with the contemporary challenges facing psychology.
This financial crisis will also, I believe, enable us to have a closer partnership between staff and governance, one in which we all recognize we can't do everything, but where we will make sure we are doing the right things. Inside APA headquarters, I see us being more unified, collaborative and integrative, where our staff will have more flexibility to work across areas and make greater use of technology, such as the new Web site (December 2009 launch), to accomplish our goals.
The financial challenges of today may be unprecedented, but rest assured, APA is transforming this significant challenge into an opportunity. APA will continue to do great work in the service of our members and the public, using our still impressive staff and the reduced, but still considerable, financial resources we have. There is no doubt in my mind that we will not only survive these challenging times, but are positioned to thrive as an organization for years to come.