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Working hard to overcome an array of financial challenges that plague many businesses and not-for-profit organizations, the AOA ended 2009 with a healthy $1.3 million operating surplus – after entering the year with a sizable deficit, AOA Secretary-Treasurer Ronald L. Hopping, O.D., MPH, reported during his presentation to the AOA House of Delegates at Optometry’s Meeting®.

“This surplus, after the $6 million deficit in 2008, proves that 2009 was an exceptional year of recovery for the organization,” Dr. Hopping told the House of Delegates.

Dr. Hopping credited a concerted cost-containment initiative by the AOA Board and executive staff that reduced association spending. Additionally the AOA has benefited from an upsurge in income from investments.

However, Dr. Hopping warned that many of these cost-containment measures cannot be maintained in the future if the AOA is going to be successful in addressing health care reform and providing new benefits for members.

Overall, the AOA and its affiliated charitable foundation, Optometry Cares, posted a consolidated surplus of $810,000, with the association’s $1.3 million operating surplus partially offset by a deficit in foundation operations of $524,000.

“Although the foundation did end the year with a deficit, it should be noted that both the AOA and the foundation originally budgeted losses for 2009,” Dr. Hopping said. “Both were also able to perform better than originally budgeted.”

A new five-year business plan developed by the AOA during the past year addresses association expenses as well as sets the stage for long-term revenue growth in the future, Dr. Hopping said.

A key development in 2009 was the successful elimination of the association’s multimillion-dollar responsibilities for a defined-benefit employee retirement plan, he noted.

The AOA offered employees a defined-benefit retirement plan beginning in 1969 under which the association has been required to provide sufficient financial underwriting each year to ensure the plan provided a predetermined benefit for each enrollee at retirement.

Market fluctuations and other factors have made such defined-benefit plans increasingly expensive to maintain and could have put the future financial health of the association at risk, Dr. Hopping noted.

Over the past year, the AOA dissolved the defined benefit program with a final $3.6 million expenditure to provide AOA staff enrollees their choice of either a lump-sum cash settlement or fully paid enrollment in a similar plan, administered by John Hancock Insurance, “without any loss of the defined benefit for our staff,” Dr. Hopping noted.

Some factors impacting the association’s financial wellbeing are beyond the control of AOA officers and board members, Dr. Hopping acknowledged. Contributing to the association’s 2008 deficit was that year’s record stock market downturn, which substantially reduced the association’s invested fund balances and interest income.

However, a critical factor in the association’s improved financial performance, a major organizational restructuring, has been the product of considerable planning by association leaders, he assured the House of Delegates.

Designed to better coordinate association activities around core member benefits and activities, the restructuring reduced costs and improved efficiency last year through the reorganizing of a number of programs and staff positions, Dr. Hopping said.

But importantly, Dr. Hopping emphasized, the restructuring reflects a new association business plan intended to help ensure the association’s fiscal stability in the future.

Newly created AOA departments such as the AOA Clinical and Practice Advancement Group and AOA Third Party Center will offer innovative new products and services that will help enhance membership benefits and growth as well as provide new revenue streams, Dr. Hopping said.

The 2010 AOA operating budget is a “break-even budget” reflecting some increased spending related to health care reform advocacy needs as well as the development of these new member benefit programs.

This will include the addition of some specialized staff positions. Dr. Hopping pointed out that some development costs are necessary to ensure enhanced non-dues revenues for the future.

During his presentation, Dr. Hopping also reviewed AOA spending trends for the past several years as well as compared AOA financial markers to other similar-size organizations.

Dr. Hopping was pleased to report that once again a required report and audit by BKD Certified Public Accountants and Advisors of St. Louis found AOA financial statements for 2009 fairly and accurately reflect the association’s fiscal status.