62 MARCH 2018 | THE FOREIGN SERVICE JOURNAL AFSA NEWS AFSA: 2017 Treasurer’s Report The American Foreign Service Association con- tinues to be in excellent financial health as we enter 2018. AFSA has a very strong financial reserve. The AFSA Governing Board, led by Ambassador Barbara Stephenson as president, worked rigorously to find effi- ciencies in operations during 2017. The board has approved a 2018 budget with prudent spending reductions. We will continue the effort to create more efficient operations in the year ahead, led by new Chief Operating Officer Russ Capps. Budget Operations With the strong support of our membership, we are able to sustain a professional staff of 31 and a planned $4.8 million operating budget for calendar year 2018. During 2017, AFSA shifted resources in order to strengthen our outreach efforts, building stronger capacities for communicat- ing the priority issues of the Foreign Service to both the public and our key con- stituencies, for working more closely with Congress and like-minded organizations, and for working with our retiree members. These work streams reflect the need for AFSA to speak out clearly and effectively on issues that endanger the Foreign Service and to build partnerships with those who understand and support the vital role our diplomats play in support of America’s interests around the globe. Over the past year, we have also taken steps to increase support for mem- bers who are dealing with labor and management issues. In order to ensure the long-term viability of AFSA’s venerable scholarship program, we reduced the draw and achieved significant efficiencies in administering the program. The efficiencies generated sufficient sav- ings to significantly expand AFSA’s merit scholarship program. Throughout 2017, we worked hard to maintain and strengthen our mem- bership base despite the reductions in numbers of entrants into the Foreign Service and increased num- bers of departures. Led by President and CEO Barbara Stephenson, we reached out regularly to those joining the State Department and other foreign affairs agen- cies to officers around the globe, and to those retiring or otherwise leaving the department. We ended 2017 with 16,464 members. Active- duty membership numbers represent approximately 77 percent of our potential membership from the foreign affairs agencies. In order to sustain the programs and services we offer to our members at this time of increased challenges for the Foreign Service, the board approved a 2.2 percent increase in AFSA member- ship dues, based on the official estimated 2017 cost of living increase. Fund Operations Operating Reserve: We maintain a reserve fund of approximately $3 million. This reserve is intended to protect AFSA from obliga- tions assumed in our oper- ating budget and regular activities, from any unantici- pated capital maintenance expenditures, and from other unexpected risks. This reserve represents some 64 percent of our operat- ing budget, which prepares us well for any turbulence or unanticipated needs ahead. As you can see in the accompanying chart, AFSA has grown and maintained a solid operating reserve over the past two decades, even while drawing on it occasionally to help meet important needs. AFSA is fortunate to have debt-free ownership of its headquar- ters, thanks to the prudent actions of the association’s past leadership. The Operating Reserve began 2017 with $2,944,237 invested and ended the year with $3,155,737. Scholarship Fund: This 501(c)(3) entity supports the children of Foreign Service members by helping to pay for college. The fund cur- rently holds around $9.5 mil- lion. As the chart illustrates, these funds have continued to grow in recent years. The money is restricted and can only be used for scholarships. A certain percentage of the total is withdrawn each year to be distributed as schol- arships to Foreign Service children. In 2017, 98 students applied for financial assis- tance grants, and 67 received them. 105 students applied for merit scholarship awards in 2017; 24 were granted. This year the board decided to reduce the annual withdrawal from the fund’s reserve from 5 percent to 4.5 percent on a five-year average value, which is in line with industry best practices. At the same time, by adopt- ing improved practices for managing the funds and programs, AFSA will save sig- nificant operational monies in the scholarship program and will be able to expand scholarship funding. The 2018 operating bud- get includes $220,500 for financial assistance scholar- ships. It will also increase the funding for merit awards to $129,000. This increase will provide funding for an addi- tional 17 merit awards and increase the amount of the awards granted by $1,000 each. The Scholarship Fund began 2017 with $8,195,260 invested and ended the year with $9,533,566.