Despite slight loss, we are a stable union

Financial Vice-President's Report

Volume 114, No. 5May, 2014

Tom Olcott


Trombonist Tom Olcott is the Recording Vice President of Local 802 and the supervisor of the union's concert department.

Trombonist Tom Olcott is the Recording Vice President of Local 802 and the supervisor of the union’s concert department.

On page 40 of the printed issue of Allegro is the audited financial report for the period Jan. 1, 2013 to Dec. 31, 2013. As usual, these reports simply show a snapshot of our finances. In reality, our finances are changing constantly. That said, if you look at the Statement of Financial Position, you’ll notice a mixture of increases and decreases in asset categories. On the statement of activities (page 41 of the printed issue), the net dues income revenue category shows that work dues are marginally up and membership dues are marginally down, netting a slight rise when compared to dues revenues in 2012. Our transfers to the AFM show a similar up and down pattern. The bottom line is that our dues income dropped just 0.75 percent, which is very close to break even. Our controller Cathy Camiolo describes our investments in some detail in her column. However, there is an important aspect of Local 802’s investment policy that does not appear in the consolidated statements and which all members should be aware of. Local 802 employs Morgan Stanley to advise us on investments. Without explicit direction from a client, Morgan Stanley would, of course, maximize returns to the best of its ability. Over time, Local 802 has informed Morgan Stanley what our acceptable risk assessment is. Those risks, especially as related to the Strike Fund, are dictated by the Local 802 bylaws, and prohibit the local from placing any of those assets at serious risk. The Strike Fund is also covered by FDIC insurance. All other investments are diversified in a way that minimizes risk as much as possible. Our investment policy calls for a mix of 70 percent bonds and 30 percent stocks, with a re-balancing required when the balance deviates by more than 10 percent. Our mix over the past year has been 65 percent bonds and 35 percent stocks in order to take advantage of the current bull market in stocks and to be wary of a slightly less advantageous bond market. In fact, that mix has yielded an excellent return. Local 802 reaffirmed that balance of investments with Morgan Stanley at the March 25, 2014 Executive Board meeting.

Thankfully, this audit reflects those positive changes to our bottom line, and shows Local 802 to be in a stable economic state. Considering the overall national economy, stability continues to be a form of success.

We all live in a professional music world that, to many members, seems to be declining. Considering last year’s numbers, I would advise members to keep the faith – Local 802 is in good shape. And if we are in good shape, we will always be able to provide dedicated service to our members. That is always our pledge. Best to all.