Alaska's governing body for high school activities has the kind of money problem anyone would envy.
At its October meeting, the Alaska School Activities Association board of directors heard a report detailing a $450,000 net profit during the preceding fiscal year.
That's a big turnaround from just a few years ago, when the nonprofit group was forced to increase fees for member schools and cut costs because of a budget shortfall that threatened its solvency.
"Our net income has seen a huge turnaround," said Pete Hoepfner, a board member from Cordova who sits on the finance committee.
Hoepfner said the surplus is due to a number of factors, including more sponsorships and increased revenue from state tournament events. Providence Hospital recently committed to a three-year, $105,000 sponsorship, last season's large-school football championship game and Class 4A basketball championship games were heavily attended, Hoepfner told the board. Parking fees were also added at the state basketball tournament to cover the lot's rental.
Things are looking good for the future too, said Isaiah Vreeman, ASAA's state championship director.
"I would anticipate more revenues and less cost," Vreeman told the board.
But while a budget surplus might seem like cause for celebration, ASAA executive director Billy Strickland said something needs to be done with the extra money. Although nonprofits are allowed by law to bring in more money than they spend, that money must be spent on activities directly related to the group's mission.
"We've got a great problem here right now," Strickland told the board.
He said ASAA needs to figure out a way to return a portion of those funds to schools across the state.
"As some point, we don't need to hoard a bunch of money," Strickland said.
Some excess money is a good thing, said ASAA bookkeeper Jeannie Farley. ASAA's annual budget is about $1.3 million, and Farley told the board it should put aside a reasonable amount of money -- she recommended six months' worth of expenses -- in case of unforeseen events.
"You, as a board, need to decide how much you need," she said.
According to Strickland, about 25 percent of ASAA's annual income comes from state championship events, 25 percent comes from sponsorships and the rest comes from membership dues. The organization's 191 member high schools pay dues based on a sliding scale depending on enrollment.
In a follow-up interview, Strickland explained that beginning about five years ago, a cascade of events began that sapped ASAA's finances: a couple of state tournaments had smaller-than-expected attendance; an unsuccessful lawsuit ate up legal funds; the Alaska Legislature passed a law requiring ASAA to track concussions statewide without providing funding for the task; and a basketball floor at Sullivan Arena had to be refurbished.
"It was kind of a perfect storm," said Strickland, who at the time was an educator in Bethel serving on the ASAA board.
It put ASAA in a dire financial predicament three years ago.
"It got close to whether we would finish the year without going bankrupt," Strickland said.
One of the things the board did to stop the bleeding was institute participation fees for state tournament events. The new $10 per-student participation fee, capped at $150 per team, is assessed to each high school team that reaches a state tournament. The board also raised its dues for member schools -- annual membership dues range from about $250 to $750 per high school -- and cut things like office expenses and travel money for out-of-town referees.
The additional fees, the cost-cutting and the new sponsorships -- like the one from Providence and an $80,000 commitment from the Alaska National Guard -- turned things around. Strickland, who is in his first year on the job, credited former executive director Gary Matthews, along with ASAA's six other full-time employees, with spurring the reversal of fortune.
"Good job to them," he said.
However, overflowing coffers aren't ideal for a nonprofit that draws much of its funding from member schools.
At last month's board meeting, several board members said ASAA needs to decide quickly what to do with the surplus before school administrators start to get testy. Board members said schools might be upset about the additional fees while ASAA is sitting on a surplus.
Region 1 representative Ed Lester of Illiamna said the board needs to act or risk losing credibility.
"There's going to be some hard feelings" if the surplus isn't dealt with in a way that returns some money to schools, he said.
Strickland said that's why he wants to spur discussion about what to do with the excess. Once ASAA decides how much to keep in reserve, he said, he'd like to see a system put in place to either credit money back to the schools or cut fees.
"My goal would be not to hoard it, but maybe we can do away with those participation fees," he said.
He said he thinks the board needs to be proactive in deciding how much to keep in reserve and how much to return to schools.
"If the trends continue, we're going to look bad unless we're in front of it again," he said.
At a recent national conference of state athletic associations, Strickland spoke with his counterpart from Missouri who had encountered a similar problem. In that state, Strickland said, the activities association initially increased dues to make up a shortfall, then cut them when the budget was balanced. But that turned out to be a mistake, he said, because the association was forced to again raise dues after a natural disaster strained the budget.
After that experience, Strickland said, Missouri devised a system that credits excess funds to member schools when the following year's dues are assessed.
The ASAA board will take up the issue at its Dec. 15-16 meeting in Anchorage.
It won't necessarily be an easy solution, Strickland said. Schools and districts will likely have different ideas on how the surplus should be dealt with -- some might want state tournament fees cut, others might prefer to have annual dues credited back to them.
Whatever the board does, Strickland said he wants to make sure the money goes toward helping students participate in school activities.
"We're going to find a way to give it back to kids," he said.
The situation will call for careful deliberation by the board. But as longtime board member Mike Boyd of Region 3's Colony High pointed out during the October meeting, it's a much better problem to have than the one the board faced three years ago.
"This sure feels better than when we were on that white board trying to erase everything," Boyd said.
Contact Matt Tunseth at 257-4335 or mtunseth@alaskadispatch.com
Alaska Dispatch Publishing