It’s that time of the year again. In this issue (on page 38), we present the union’s financial reports for the most recent calendar year. If you read the report carefully, you’ll find a mixed bag, with some good news and some challenging news.

On the challenging front, you’ll notice that Local 802 showed a loss of approximately $157,000 in 2011. There are a few explanations for this.

The first is that 2011 saw a number of high-cost items that are not recurrent in any predictable way. We experienced high legal counsel expenses as negotiations with the New York Philharmonic, the Metropolitan Opera, the New York City Opera and Radio City Music Hall all occurred last year. As many of you know, these negotiations were long and difficult and required extraordinary time commitments by legal counsel. The good news for our budget is that this doesn’t happen every year.

A second reason for the union’s loss has to do with Local 802’s 90th birthday party, which was also our gala fundraiser for the Emergency Relief Fund. This was our first attempt at such an event, and we ended up supporting it with money from the union’s general fund (which is permissible under our bylaws). Thanks to those expenditures, the ERF – which was on the verge of collapse – is on healthier footing than it has been in years.

Thirdly, we have had significantly higher computer costs than in prior years. We replaced ten outmoded computers and are in the process of upgrading the elderly phone system and increasing our internet speed. Those are one-time costs, but we do have a significant recurring cost, which is the maintenance of our computer system that coordinates all of the data entries throughout the building. That is done off-site through a company called KMR.

A final challenge was that the union received less income in work dues in 2011 than in 2010. The widely perceived decline in work for musicians is only part of the story.

In September and October, Local 802 changed its method of tracking work dues in an attempt to bring greater accuracy to the system. The transition to the new process meant that there were delays in reporting dues during the changeover. Since many employers and members are already slow to remit dues, that inherent delay was compounded.

The new dues-tracking system will provide greater accuracy and will enable us to invoice employers and members who are delinquent in dues payments in a more timely and accurate manner. It will also enable the controller to gauge more exactly the extent to which the perceived decline in overall work is real.

Now to the good news. Our investments – which are handled by Morgan Stanley – are doing well as the stock market has gone up. We have significant cash on hand and are very liquid.

In summary, the apparently mixed message of the financial report poses specific challenges.

On the work dues side, it means that Local 802 needs to continue to enforce existing agreements while also attempting to organize more engagements under contract.

As a business entity, we need to keep a close eye on all costs. While unusual expenses are unavoidable since they are driven by unusual events, the recurrent costs need to be contained as well as possible. I do believe that with our new internal accounting procedures and careful budgeting, we will be successful in meeting those challenges.