September 24 2025 SPECIAL MEETING Minutes

EC Meeting Minutes 09/24/25

September 24, 2025

Virtual

8:00 p.m.

Meeting began at 8:06pm

In attendance

• President Rich Hanson, Fishers IN
• Executive Vice President (EVP) Randy Cameron, Pittsburg MO
• Chief Financial Officer (CFO) Marc Guerra, Rancho Mission Viejo CA
• District I Andy Argenio (virtual), Smithfield RI
• District II Eric Williams (virtual), Schenectady NY
• District III Randy Adams, Fairfield OH
• District IV Jay Marsh (virtual), High Point NC
• District V Andrew Griffith (virtual), Jacksonville FL
• District VI Gary Himes, Kansas City MO
• District VII Randy Gibson (virtual), Lansing MI
• District VIII Lawrence Harville (virtual), Hurst TX
• Mandan ND
• District X Greg Stone (virtual), Yorba Linda CA
• District XI Phil Tallman (virtual), Medical Lake WA
• Executive Director Tyler Dobbs (virtual)
• Katie Albert, recording secretary (virtual)
• Melissa Elmore (Comptroller and Accounting Manager)
• Amy Spowart (NAA)

Guests

• Twana Cheek (Brady Ware Audit Director)
• Chelsea Detling (Brady Ware Senior Audit Director)

1. Opening Business — Rich Hanson (President)

• A. Introduction of guests
• B. Additions to the agenda

2. Brady Ware Audit Report

• A. Twana Cheek (Brady Ware Audit Director) informed the group that Brady Ware met last week with Melissa Elmore (Comptroller), Tyler Dobbs (Executive Director), Rich Hanson (President), and Mark Guerra (CFO) to discuss the financial statements and management letter. If anyone has questions, please reach out to one of those individuals.
• B. Highlights from the draft audited financial statements
  1. i. The audit covers both AMA and the AMA Foundation, with any intercompany transactions eliminated.
  2. ii. Independent Auditors’ Report
     1. 1. Although the primary audit was for 2024, the auditors also reviewed 2023, so this report includes comparative information for both years. It is a clean, unqualified audit report.
  3. iii. Consolidated Statements of Financial Position
     1. 1. AMA has approximately $17.7 million in total assets, $7.8 million in liabilities, and $9.8 million in net worth/equity. The statement of financial position indicates that we have a solid financial cushion.
• a. Assets
  1. 1. Of the $9.8 million in net worth, $2.7 million is donor-restricted, meaning those funds must be used as specified by the donors.
  2. 2. The organization’s financial position remains strong as of December 31, 2024. The largest asset categories are cash, investments, and property/equipment. Investments increased by $1.3 million, with approximately $405,000 in withdrawals.
  3. 3. The largest liability item is deferred membership revenue. Memberships must be recognized over the duration of the membership term, so revenue is deferred across multiple periods. For example, memberships purchased on December 31 are deferred to the following year. Membership revenue decreased slightly.
  4. 4. Accounts payable increased modestly this year.
  5. 5. Accrued expenses include approximately $248,000 related to a settlement.
  6. 6. In the Net Assets section, the Council has the authority to designate or un-designate these assets at any time, treating them as unrestricted funds if desired.
• b. Statement of Activities
  1. 1. The largest line-item for revenue is memberships. This figure is comparable to last year’s, with no membership rate increases, though membership numbers declined slightly.
  2. 2. There was an overall increase in net assets of approximately $482,000, supported by a positive bottom line.
  3. 3. The budget is structured differently this year. Net investment return positively impacted the bottom line, totaling about $1.7 million. Our investments are marked to market, meaning that when markets rise, we recognize income, and when markets fall, we recognize a loss. Only a set percentage of investment income is drawn into the operating budget.
  4. 4. In summary, membership revenue remains our largest income source. We need to identify ways to preserve and grow this area. Twana Cheek (Brady Ware Audit Director) encouraged small, annual membership dues increases. While investments are currently supporting us, the goal is for operations to break even without relying on investment funds.
  5. 5. Total revenue was approximately $10.9 million, down about $575,000 from the previous year. The prior year’s net investment return was higher. This does not indicate a loss but reflects a smaller market gain compared to the previous year. Overall results remain positive.
  6. 6. Contributions and grants totaled $693,000 last year, down roughly $300,000 from the previous year, primarily due to a large estate gift received in the prior year.
  7. 7. Total expenses were $10.3 million compared to $10.2 million the previous year, an increase of about 1.8%. Payroll rose approximately 4%, and additional legal and claims expenses also contributed to the increase. The organization still ended the year with a positive bottom line of about $481,000.
• c. Remaining Financial Statements
  1. 1. The rest of the financial statements were discussed in detail at the previous meeting, so they were not reviewed again with the full Council during this meeting.
• d. Management Letter
  1. 1. This was discussed in detail with AMA management last week and will not be reviewed with the Council tonight. Management is aware of the items that need to be addressed.
  2. 2. Andy Argenio (I) asked about the idea of raising dues annually. He noted that the last increase was in 2022 and, although membership decreased slightly, overall revenue increased. He asked what a reasonable increase would be and how such a decision could be justified to members. Twana Cheek (Brady Ware Audit Director) explained that most members understand that the bulk of AMA’s revenue comes from membership dues. A budget can be built on this foundation, supported by investment earnings. Keeping dues unchanged for multiple years is not sustainable. Adult full members made up 42% of total membership in 2024, and senior members made up 47%. Tyler Dobbs (Executive Director) mentioned that the Council would later discuss reducing the senior membership discount. Twana Cheek added that adult full membership currently costs $85 and senior membership $75, and that decreasing the senior discount would help improve overall revenue.
  3. 3. Rich Hanson (President) said that raising fees in line with inflation is reasonable, but noted that AMA membership is a discretionary expense. Membership is a leisure activity, not a necessity, and there are various factors that influence members’ willingness to remain part of AMA. These factors must be considered when deciding whether to raise dues.
  4. 4. Twana Cheek (Brady Ware Audit Director) provided an example, suggesting an adult membership increase to $87.50 (a 3% increase), noting that this would be a minimal adjustment. She also reminded the Council that insurance is a major expense for AMA and a significant benefit for members.
  5. 5. Twana Cheek (Brady Ware Audit Director) is awaiting the attorney letter response, expected to be ready by Friday.

Motion 1: Motion by Greg Stone (X), seconded by Randy Cameron (EVP), to accept the 2024 audit report as presented by Brady Ware, provided that no changes are identified by the attorneys when the attorney letter is received.

Motion passed: 12 yes, 1 absent.

Twana Cheek (Brady Ware Audit Director) and Chelsea Detling (Brady Ware Senior Audit Director) left the meeting.

e. Discussion Continued — Audit Findings and Budget Concerns

1. 1. Rich Hanson (President) stated that AMA is in a strong financial position as of the December 2024 audit. However, there are budgetary challenges ahead. Membership revenue projected for 2026 is approximately $6.7 million, while the audit showed $7.2 million—about a $500,000 shortfall, in addition to inflationary pressures. He emphasized that difficult financial decisions lie ahead and asked the Council to consider potential solutions for the October meeting.
2. 2. Tyler Dobbs (Executive Director) noted that while membership is declining, expenses continue to rise significantly. He does not anticipate meeting the projections for the 2025 budget. Membership estimates were set higher than what is likely to be achieved, and expenses were budgeted lower than actuals. He also mentioned having presented two different budget drafts to Mark Guerra (CFO) and will schedule a Finance Committee meeting soon for the 2026 budget.

3. Capitalization Policy

• A. Tyler Dobbs (Executive Director) discussed AMA’s capitalization policy, noting that Brady Ware recommended revising the current language. The existing policy states that an individual item must cost at least $1,000 to be capitalized. For example, if purchasing office furniture, each piece must cost $1,000 or more to qualify. Brady Ware suggested modifying the language to allow capitalization of grouped items (e.g., multiple pieces of furniture or computer equipment) that together exceed the $1,000 threshold.
• B. Melissa Elmore (Comptroller) reported that she and Brady Ware were unable to locate a written copy of the capitalization policy.
• C. The revised policy should read: “The costs of assets or parts of an asset that form part of a network (e.g., computer systems and office furniture) should be aggregated when applying the capitalization threshold.”
• D. Rich Hanson (President) noted that since no official policy document currently exists, there is technically nothing to amend.
• E. The Finance Committee will look into this issue.

4. Reducing the Senior Discount

• A. Tyler Dobbs (Executive Director) reported that Randy Cameron (EVP) proposed reducing the senior membership discount from $10 to $5. Greg Stone (X) asked for an analysis of how this change would affect revenue and membership retention over time. Andy Argenio (I) suggested reviewing data from previous dues changes to estimate the potential impact. Eric Williams (II) noted that any effect of the change would likely be seen quickly. Tyler Dobbs (Executive Director) stated that, based on current numbers, if membership remains flat (though it is trending downward), reducing the discount from $10 to $5 would generate approximately $222,406 in additional revenue once renewals are fully realized in three years.
• B. Randy Gibson (VII) expressed concern that this change could accelerate the current membership decline. He mentioned that many senior members maintain their memberships for the magazine or for access to clubs and flying sites, even if they no longer fly. Since some seniors are on fixed incomes, increasing their costs could cause attrition.
• C. Randy Gibson (VII) suggested conducting a member survey before making any decisions. Andy Argenio (I) emphasized the importance of the overall value proposition, noting that members spend thousands on aircraft yet often resist even small dues increases. He added that any adjustment should be balanced across membership types and benefits (adult, youth, magazine, etc.).
• D. Eric Williams (II) pointed out that surveys typically show members opposed to increases, and that dues and discounts must be evaluated together, not in isolation. He added that the cost of living has risen significantly over the past 6–8 years. Andy Argenio (I) noted that previous Foundation data show senior members’ average incomes, suggesting many could absorb small increases. He also said most are not solely reliant on Social Security.
• E. Eric Williams (II) supported Twana Cheek’s suggestion of small, incremental increases in dues, noting that a $1 annual increase over ten years could generate about $2 million in additional revenue. Andy Argenio (I) agreed, noting that nearly all other expenses have increased except membership dues.
• F. Randy Gibson (VII) cautioned that even without recent dues increases, membership has still declined, questioning whether higher dues might accelerate the loss. Eric Williams (II) countered that no clear evidence links dues increase to membership loss. Rich Hanson (President) disagreed, saying exit interviews show members cite cost, government issues, and club experiences as reasons for leaving. Andy Argenio (I) noted that some members will leave regardless of cost, and that the focus should be on balancing potential losses with sustainable revenue. He added that cutting publication expenses could be another option. Eric Williams (II) mentioned that when dues were raised to $85, membership briefly increased, and the recent decline likely stems from other causes.
• G. Tyler Dobbs (Executive Director) summarized that the main options are a reduction of staff, reduce member benefits, draw from reserves, or increase fees/dues. He stressed that action must be taken to balance the budget.
• H. Jim Martin (III) noted that “final flight” (deceased) members contribute to declining membership numbers, which cannot be controlled. Rich Hanson (President) agreed, observing that over half of AMA’s members are seniors, and the organization could see its membership cut in half within ten years.
• I. Andy Argenio (I) suggested evaluating which programs provide a positive return on investment (ROI) and eliminating those with minimal impact. He said that while he values the physical magazine, he would support switching to digital if it meant ensuring AMA’s long-term success. He urged balancing dues adjustments with consideration for members’ financial situations.
• J. Eric Williams (II) asked whether other national organizations offer senior discounts. He noted that while a few may, it is not an industry standard.
• K. Randy Cameron (EVP) proposed reducing the senior membership discount by half, or, if overall dues are increased, applying a smaller discount reduction. Jim Martin suggested that any changes result in whole-dollar amounts for ease of transaction. Randy Gibson (VII) recommended postponing the decision until after the new Executive Council President is elected. Rich Hanson (President) responded that the decision must be made before then, at the October meeting. He urged Council members to consider possible solutions and bring ideas to that meeting. Hanson also emphasized the need for a focused effort to attract new members. The budget meeting will be held at the beginning of October, and spreadsheets will be distributed in advance to allow sufficient review.

5. Adjournment

The meeting adjourned at 9:28 p.m.