Fiscal Policies
October 2006
Corporation
Rocky Mountain Coal Mining Institute (RMCMI) is a nonprofit corporation incorporated in the state of Colorado and is organized exclusively for the charitable, scientific and educational purposes within the meaning of Section 501 (c) 3 of the Internal Revenue Code. The nature of the business to be carried on by it is as follows:
Sponsor, disseminate and engage in all lawful activities that further educational programs pertaining to coal mining technologies and production techniques; mining management and safety; federal, state, and local laws, rules and regulations pertaining to coal mining; and other energy related issues.
Membership of the corporation shall consist of active members, life members, honorary members and senior members. The Board of Directors will determine annual dues. Life members are elected to that status by the Board of Directors and shall retain that status for life and will not be billed annual dues. Senior members are active members who have reached the age of 65. Active and senior members whose dues are not paid by the last Sunday in June are not entitled to vote nor hold office in the corporation.
The accounting records are prepared according to the cash method of accounting. The fiscal year of the corporation shall be from January 1 through December 31. Annually the Company will contract with a Certified Public Accounting firm to prepare the Form 990, Return of Organization Exempt from Income Tax.
Cash & Investments
Fund Balance Target
RMCMI shall maintain a General Fund for payment of ongoing expenses of the Institute. RMCMI will manage toward a General Fund balance of 30% to 40% of budgeted annual non-convention expenses. This level will allow RMCMI to function for approximately three to four months, at then-current levels of staffing and expenses, in the face of significant income loss. It will also enable RMCMI to weather substantial unanticipated expenses, and allow for an orderly response to the situation. In addition, RMCMI shall manage the General Fund to maintain an additional balance equal to the estimated cost that would be incurred in the case of a cancellation of the planned annual convention. This will mitigate the financial impact of such a cancellation.
The estimated cost of ongoing normal operation of the Institute is $210,000 per year, and the associated General Fund balance target is $84,000. The estimated cost of a convention cancellation is up to $105,000 depending on date of cancellation. The resulting indicated General Fund balance target is $ 191,000. This target balance may vary over the course of the year depending on expected near term income and expenses.
RMCMI will manage the Patrons of the Institute funds towards becoming self-funding over the long term. Withdrawals from the Patrons funds shall be set by the Board in conformance with the objectives of the Institute with due consideration for preservation of principle and the opportunity to grow the fund, in the face of significant income loss. This target will be achieved through managing the investment portfolio as outlined in this policy.
RMCMI will manage the Public Education funds towards maintaining a balance of 30% to 40% of total budgeted expenses. This level would allow RMCMI to efficiently manage the Public Education program, and provide funds to enable the Institute to take advantage of opportunities that may arise to effectively carry out the Institute’s Public Education objectives. It is recognized that the Public Education program is in the early stages, and that reliable budgets are difficult to formulate. Thus the fund balance may be in excess of targeted amounts until such time as the program reaches its steady state level.
Patrons of the Institute investment
RMCMI will invest its fund balance in the manner determined by the board, as may be revised from time to time. Currently, the funds are targeted for investment as follows:
As of September 15, 2006 Cash Fixed Income US Equities Foreign Equities Real Estate (10%) Total
Cash Requirements
RMCMI will target a minimum level of liquidity equal to at least three months average cash expenses for ongoing Institute administration plus monies to mitigate the potential of a convention cancellation. Liquidity shall be defined as RMCMI’s general funds and any funds residing in money market funds or similar instruments.
Funds Disbursement
RMCMI’s funds disbursement practices will recognize the importance of using secure measures in the movement of RMCMI’s cash. These measures will provide for the implementation of adequate internal controls and, to the extent practicable, the segregation of duties with respect to the initiation, approval and authorization for the release of funds via checks or through electronic transfers. RMCMI’s funds disbursement practices shall be set forth in RMCMI’s Financial Management Policy statement.
Savings and Other Investments
RMCMI’s savings and other investment accounts (Certificates of Deposits/Money Markets) will be implemented to achieve the highest performance.
Investment Management
RMCMI’s various investment portfolios will be managed under the following four directives:
- Ensure preservation of principal.
- Ensure liquidity sufficient to meet the known and projected needs for cash.
- Ensure highest performance of invested funds through professional and prudent management, within well-defined rules as established by the Board of Directors.
- Ensure proper diversification of the investment portfolio according to credit, security type and maturity.
On a quarterly basis the Board of Directors will receive statements and review RMCMI’s investment portfolios.
Financial Reporting, Risk Management
Financial Reporting
RMCMI will maintain its accounting books and records in accordance with the accounting requirements of a 501(c) 3 organization. On a quarterly basis, the Executive Director will present financial statements to the Board of Directors.
Auditing
An external audit of RMCMI’s financial statements, including full footnote disclosure, may be completed at the direction of the Board of Directors.
Insurance
Insurance will be maintained by RMCMI in types and amounts consistent with prudent business practices for other entities similarly situated. The insurance function may be subject to periodic outside evaluation with the results of such evaluation discussed with the Board of Directors.
Tax
RMCMI’s policy for all sales and use, and other taxes is to minimize RMCMI’s tax liability to the extent possible in compliance with applicable federal, state, and local laws and regulations. The Executive Director will report any unusual or material changes in taxes or tax related status to the Board of Directors.
Capitalization
Accounting treatment of capital expenses
RMCMI will expense capital purchases in accordance with guidance from its CPA. Capital items will be depreciated according to the expected lives.
Financial Forecasting
Annual Operating and Capital Budgets
The Executive Director will prepare Annual Operating and Capital Budgets for approval by RMCMI’s Board of Directors by the January board meeting.
- Annual Operating Budget. Reflects the projected revenues, and expenses for RMCMI’s fiscal year in sufficient detail to provide a basis for evaluating the financial objectives set forth and approved by the Board of Directors. The Annual Operating Budget will consider targets for the required fund balances in the Patrons of the Institute, General and Public Education Funds.
- Annual Capital Budget. Reflects a detailed estimate of the capital expenditures, if any, required for RMCMI’s fiscal year. The capital expenditures include, but are not limited to, replacements, improvements, additions, and leasehold improvements.
Fiscal Policy Review
Annual Review
RMCMI’s Board of Directors shall have the responsibility to modify this fiscal policy as required. The Fiscal Policy shall be reviewed at the time of presentation of the Annual Operating and Capital Budgets and more frequently, if necessary.
Approved by Rocky Mountain Coal Mining Institute Board of Directors.