Good Fiscal News for APA

As I have informed you in earlier columns, APA has faced some difficult economic challenges this past year and a half. APA's revenue comes primarily from three sources: membership dues, meetings, and publishing. In 2009, APA witnessed an approximate shortfall of $8 million in revenues, from roughly $60 million to $52 million.

Although we had budgeted for some reduction in revenues from 2008, we had not anticipated the precipitous decline that occurred during 2009. As early as March 2009, we had indicators that revenues were dropping and immediately began to take steps to reduce spending. Despite these efforts, by the end of the third quarter, the revenue shortfall pointed to an anticipated loss of $1 million for the year, and the Board of Trustees approved using reserves to cover it. There was little choice: there already had been considerable cuts in spending, and we needed to keep key operations functioning.

We have just posted the preliminary results of APA's financial status as of the end of 2009 (see our annual report at <www.psych.org/MainMenu/Newsroom/AnnualReports.aspx>). Even with the lowered revenues, the hard choices we made were effective—we finished the year with a surplus of $1.4 million.

What accounted for the striking turnaround? For one, the Institute on Psychiatric Services was more successful than in previous years. Second, a key annual expense we need to cover is the staff benefit program—and the potential amount is determined on the last day of the year. The cost of this program was offset by a very positive performance in the stock market, and our reserves earned more than expected because of the stock market performance. For another, there was a bit of an uptick in ad revenue and a decrease in paper costs for APA's major publications at year's end that were not expected. Last, our overall expenses were lower than anticipated.

Although it is a great relief to us that this was the case, the staff and the Board of Trustees have expended considerable effort to see whether we could have better anticipated the lower figure. There may be a temptation for people to jump in and say let us restore some of the items that we cut. Clearly we cannot do that without going into the red since our revenues are still way down in terms of advertising. Just take a look at the lack of pharmaceutical ads in this issue of Psychiatric News. APA's budgeted and actual expenses for 2010 need to be managed carefully. We will have a better sense of where we stand after the 2010 annual meeting in New Orleans. I urge all of you to attend the meeting—it has many truly superb sessions covering a wide range of scientific and clinical topics.