The total assets in the General Fund at December 31, 2003 are $53.6 million compared to $50.3 million at December 31, 2002. The figures will change in a final audit as we have continued to receive invoices for 2003.
The bank balance at December 31, 2003 was $7.9 million as compared to $2.7 million at December 31, 2002. I feel it is safe to now conclude that the cash crisis we have been experiencing for the past two years is now behind us and cash flow has returned to normal levels.
We achieved these and many other financial improvements with the help of our Regional Directors, National Directors, staff and locals. It helps when everyone is keeping their eye on the ball when it comes to finances.
The dramatic improvement in our cash flow position will allow us to better address CUPEs unfunded liability, which covers commitments for staff severance and vacation pay. The improved situation will also allow us to take advantage of opportunities to purchase, rather than rent, office space, as we now have the means to put up the necessary down payments.
The preliminary financial results for the General Fund are extremely encouraging. The operating surplus for the year ended December 31, 2003 was approximately $5.7 million, compared to a budgeted surplus of $30,673. Total revenue was over budget by $1.4 million and expenditures were under budget by $4.3 million.
A large part of that money is not sitting in the bank, idle. We have reserves for items we know we will have to pay.
For example, Convention delegates told us not to pay dues to the Canadian Labour Congress (CLC) until we have a resolution to our problems in B.C., satisfactory to our National Executive Board. So far, this amounts to $1.7 million.
Another example is the money we are setting aside every year to pay for National Convention. This will protect us from being hit with millions of dollars in expenses in one year.
The news is good, however.
We have a surplus of $5.4 million, something that is unheard of in CUPE. We achieved this surplus largely through good management and careful budgeting. Unlike many employers, we did not cut services to the bone or lay off staff. In fact, we did not reduce services at all.
Many things contributed to the surplus.
The largest factor in creating the surplus was staff salaries and benefits, where total costs came in approximately $1.5 million (or about 2.3 per cent) under budget. This was due to a number of factors, including some delays in filling positions, and to conservative budgeting in the pension and benefit areas.
We have reduced expenses in many areas. One example is Operational Travel, where after many years of overspending, we spent half a million less than we had budgeted. That half a million shows up in the surplus. The savings were largely accomplished by our National Office Departments, which were almost 20 per cent below budget in this area. Savings in operational travel will continue to be a high priority for my office and we will continue to do everything possible to see that costs continue to be controlled.
The programs of the various National Departments are under budget by $221,000 with some national programs being over budget and others being well under. Finance and Administration programs are under budget by $244,000 largely due to the delays in implementing the new accounting software. Union Development also finished the year $129,000 under budget.
We also had an increase in income of almost $1.4 million. About half of the increase came from dues. The other half came from the recovery of some legal costs in Ontario and the K to 12 court decision in B.C.
The three Ontario cases included our Hydro challenge where the courts decided that the government had no mandate to sell off one of the provinces largest assets. Another case was the proxy pay equity appeal where we won a huge settlement for workers who were being denied pay equity. The third challenge where we were awarded costs was the Ontario judges case in the health care sector, where we stopped the Conservative government from appointing judges to arbitrate collective agreements.
Another factor contributing to our increasing income is bank interest. We have a long history of paying interest; finally, we are receiving some interest on our bank accounts. We received about $200,000 in interest last year.
While all these areas were good news, there were several areas of the budget where significant overspending occurred. These included Legal and Arbitration expenditures (approved by the National Executive Board), Professional Fees, and Vacation Relief. The Legal and Arbitration expenses budget provides local unions with financial help for significant legal matters.
The overspending in Professional Fees and Vacation Relief were monitored and reviewed during the course of the fiscal year, and we recognized that these budgets needed to be increased in 2004. The budget increases approved by the Board for 2004 are still at levels lower than the actual 2003 spending, so these areas will have to be closely and effectively monitored this year.
National Defence Fund
We have $7 million in Total Assets in the Defence Fund, which is relatively unchanged from December 31, 2002. The cash balance has increased from $5.2 million at December 31, 2002 to $5.4 million by the end of the year.
The National Executive Board approved the spending of $1,041,682 on cost-shared campaigns in the period, $1,086,878 was spent on National Strategic Priorities, $1,344,616 was spent on Major Organizing, $700,762 on Political Action, and finally $988,180 was allocated for special funding for the fight-back campaign against the Gordon Campbell government in B.C.
The Fund Balance at December 31, 2002 of $3.6 million was transferred to the Strike Fund at the beginning of 2003. The Statement of Income and Expenses for 2003 shows a surplus for the period of $483,255.
National Strike Fund
We have been through some really tough times with our Strike Fund, but it appears that the crisis is over.
We had two years of entrenched strikes that were long, big, and bitter. While strikes and lockouts are still occurring, the level of strike activity has significantly diminished. Only time will tell if the level will remain low. We may be in the eye of a storm.
I am happy to report that our Strike Fund now has a cash balance of almost $12 million. We went from zero dollars to $12 million in one year. That is quite an accomplishment.
On December 31, 2003, we had $20.8 million in revenue against $14 million in expenses, for a surplus of $6.7 million. This is in stark contrast to the situation 12 months earlier, when we had a deficit of $1.2 million.
The turnaround in our Strike Fund would not have been achievable without the commitment of Convention delegates to continue the solidarity levy. Because of that decision, our Strike Fund has a chance to grow.
Legal Defence Fund
CUPE locals across the country have been contributing to CUPEs Legal Defence Fund. We now have a balance of over $15,000 in the Fund.
Since CUPE National created the Fund in 2002 and contributed $5,000 to get it going, 34 locals and district councils have sent contributions, ranging from $20 to $2,000.
The Fund was created to help CUPE activists pay legal expenses when they have been charged with a criminal offense due to participating in demonstrations or other political activities that adhere to CUPE policy and principles. Members may receive up to $1,000 at a time to help them pay for legal assistance.