802’s Finances Declined Over the Last Year

Controller's Report

Volume CII, No. 10October, 2002

Jon Bogert

For the six months ended June 30, 2002, Local 802 incurred a loss of $53,376, compared with a gain of $186,724 reported for the comparable period of 2001. The audited financial statements for the period appear on page 20 of this issue of Allegro.

The year-to-year decline in profitability of $240,100 is the result of both a decrease in revenues of $154,942, or almost 6 percent, and an increase in costs of $85,158, or 3 percent.

On the revenue side, work dues declined by $158,000. Year-to-year reductions occurred in most areas of the business with the exception of concerts, for which year-to-year work dues were unchanged. Annual membership dues declined $67,000, reflecting a decrease in membership of almost 4 percent. Interest income declined in 2002 due to the use of funds in 2001 to liquidate the mortgage on the union’s headquarters building. Offsetting those declines was recognition of earnings from the Recording and Claims funds in 2002, totaling $50,000.

With respect to expenses, spending for the Live Music Campaign accounted for a substantial portion, 90 percent, of the year-to-year increase in total expenses. Departmental costs increased less than 2 percent; the increase includes the filling of organizing staff vacancies. There is, of course, no longer any mortgage interest expense.

The union’s net assets have declined $330,000, 7 percent, since June 30, 2001, reflecting the losses incurred during the second half of 2001 and the first half of 2002. Such losses are not sustainable over the long run. As stated in my report at last year-end, we can expect our ongoing costs to continue to increase, if only at today’s modest 2 percent inflation rate. Even though expenses will decline when the Live Music Campaign winds down, we cannot assume that such savings will be available to reduce losses, since other worthwhile projects may arise to take its place. To return to profitability, or even to approach break-even, revenue sources must be found, either from an improving New York business environment or from our members.