Attendees:
Board of Directors: President John Hotchner, Immediate Past President Randy Neil, Vice Presidents: Dr. Peter P. McCann, Gordon Morison; Secretary Janet Klug, Treasurer John Apfelbaum, Directors-at-Large: Jeanette Knoll Adams, Lloyd de Vries, Ann Triggle, Wayne Youngblood.

Staff: Executive Director Robert E. Lamb, Attorney David Flood, Director of Expertizing Mercer Bristow, Editor Bill Welch, Director of Library Services Gini Horn, Controller Scott Frazier.

Guests: Lois & Bob de Violini, Rob Haeseler, Hugh Coughlin, Dr. Charles B. Lowry, Tom Foust, and newly elected Board members Diane Boehret and Nancy Zielinski Clark.

Hotchner: Called the meeting to order at 9:05 a.m. in the same venue as the previous evening. Hotchner asked McCann to introduce Dr. Lowry.

McCann: A couple of years ago the Board set up a committee initially headed up by John Foxworth and then by Bill Bauer to look at two issues: whether the Library needed expansion to continue its work and whether the APS Headquarters itself needed more space in terms of APS functions in general. That committee did a fair amount of work and produced a report that was adopted by the Board. The report indicated that both the library and APS Headquarters needed more space and that the most appropriate space would be an addition to the present facility. The decision by the Board was to remain in State College. The next phase of the process was to decide how much space we needed, what we would use the space for, how much would it cost, and how would we finance it. To start that process off, in consultation with Hotchner and Lamb, McCann contacted Dr. Charles Lowry, Dean of Libraries at the University of Maryland. He is one of the best known and outstanding library consultants in the country. He agreed to act for the APS as a consultant. He has been there once and will go back again to help give us some advice on this process.

Dr. Lowry: Distributed a draft report to the Board that reflects lengthy and detailed conversations with Bob Lamb and Gini Horn on site. Lowry indicated it was a learning process for him as well because he is an academic librarian, but much of what librarians do is the same regardless of the content of the libraries. The report is aimed at doing several things. Lowry was instructed that the report needed to be a document that made the case for an expansion of the facility, an expansion that not only provided for space for the library but provided space for other allied activities that are vital to the APS and could be more properly co-located with the APRL, such as the museum, exhibit space, research stamp collection all of which could form a more cohesive relationship with the APRL than they currently do.

In addition to doing the analysis of what the need was based on annual growth and actual service, the document is aimed at making a start at presenting a rhetorical position for such a facility. It is more a document for making the case of what the expansion would do. The report is about 15 single-spaced pages and is fairly dense in some places. The data presented does answer some of the fundamental and critical questions people ask about libraries and their future. This is a function of very rapid movement to electronics today.

The first two pages are the Executive Summary and the basic principles of an APRL campaign fundamentally answer the questions"what" and "why" and a little bit of "how" one would go about making an addition.

The subsequent sections are devoted to a much more thorough exposition of the basic cause of the condition of the APRL and some of the things that can be accomplished in a new facility and particularly the mission in the 21^st century.

One of the key issues is information technology and its impact. Computing and networked communications are the most important features of librarianship in the last 25 years. In particular, the shift in format from the print world to the electronic world is happening with some speed, but it is highly variable with respect to discipline. It is happening very fast in high-tech areas – science, technology, and medical literature is moving very rapidly in this direction. Disciplines such as social sciences, humanities, and the arts tend to be much slower in migrating to this area. Philately as a historic, retrospective, scholarly activity is one that looks to the past as well as to the future. The other element of philatelic publication that is critical to remember is that it is a small publishing universe. It is not big commercial press, therefore the scalability and money involved is not the same. That means it is less likely we will see a rapid transformation to electronic information. We will see it, but it will be at a slower pace.

In addition, one has to remember there is a question of property, both intellectual property and copyright. These are big inhibitors to what can be done with material that is already in print. If APS would have a windfall of tens of millions of dollars and a decision was made that the money would be best spent by putting everything online. If APS started to do that and investigated the legal ramifications, APS would find it would not be able to do it. Nothing published since 1922 is out of public domain therefore its format cannot be changed. It cannot be digitized and provide access to it because of the ownership issue. There is a sense with some that everything is electronic and everything is on the web, but nothing could be further from the truth. Nothing will remain further from the truth for a long time to come.

Lowry's report discusses how the electronic future factors into the APRL. The APRL's mission is going to be delivered in many of the same ways it already is simply because of the nature of information technology, its cost, the inhibitors of copyright, the complexity of the technology itself, and the basic added value. One has to consider if putting something in electronic form actually warrants the expense. The cost of doing digital libraries is fairly high. It costs approximately 16 times more to put a journal in electronic form to be made available than it does to bind it and put it on a library shelf. The economies of information technology are not there.

The third section of the report deals with the operations of the APRL, how it works with its users, and how that effects what the Board should do in terms of thinking what its future is. For the next 10 to 15 years Lowry believes its future will be much like its past. There will be a breakpoint in the future when electronic media will start taking precedence. There is no question this will happen. The issue is when. Lowry's report attempts to address how to make the shift to electronic. Part of the solution remains in the planning of the facility to be sure that if the shift to primary electronic publishing happens later rather than sooner there is a way out. The way out is to simply build a facility that can be retro converted to the use of compact movable shelving so that there is row space. If it doesn't happen and the APRL does not have to double space the facility will still be fully functioning.

Another section of the report deals with some of the core issues such as how the facility will deal with museum pieces and artifacts of both stamp collecting and postal services. It discusses the research stamp collection, teaching, and the summer symposium.

There is a section about assessing need that is technical in nature and discusses items such as double-faced sections of library shelving, the number of items of print material you can get in a square foot of space, and what live loads should be in a library.

Finally, there is a section on planning for a multipurpose facility and how a fund-raising campaign would go together and what the considerations would be. Once the Board makes the decision to build a new facility, there are two fundamental tasks to be done. One is the planning, specification, program development, selection of architect, all the normal things one does in the creation of a facility. The other is figuring out where the financing will come from.

Klug: As far as finances were concerned, it was a surprise to see the estimated costs for building an expansion set at between $3 and $4.25 million. This is a figure much higher than has been discussed previously.

Lowry: In arriving at this figure Lowry was constrained by taking generics. There aren't specifications for a real building program as yet. We haven't really walked through and decided what sort of space is needed. Based on rough estimates of growth and the assumption that APS needs about a 20 year facility, this translates into about 15,000 square feet. The amount of space that is built directs how much the facility will cost. The second factor is how much per square foot it will cost. Lowry believed he had erred on the high side of his estimates in order to give the Board a worst case scenario. APS can probably build and furnish 15,000 square feet for less – maybe considerably less – than $3 million in State College.

Klug: This report assumes the APRL will continue its practice of keeping three copies of everything on site.

Lowry: Assumed the same collecting pattern the APRL has maintained previously. It is fair to ask the question if that is the right collecting pattern. That sort of analysis involves data collection, an examination of use, and a determination of the extent to which that margin has served the APRL in the past.

Klug: We could reduce the space we need by using offsite storage or closed stacks. Would that have any bearing on the size of expansion we would need?

Lowry: With the size of the APRL collection and number of staff available, offsite storage is probably the least economical approach that could be used. It would be better to use compact storage. Using offsite storage would not be cheaper than building on site. The same sort of climatic controls have to be maintained and you have the extra burden of staff going and getting things out of an offsite storage facility. Scale is very important in offsite storage. You have to have a lot of materials. In a collection the size we have at the University of Maryland, Lowry would not store anything until the collection reached at least 2 million volumes. In a very small collection with a small staff, you'd pay a high price to locate anything offsite. You have to build offsite storage anyway, because you can't rent suitable space. To come back to the original question of does the APRL need to keep three copies, Lowry was unprepared to answer that. That requires some study of the historical use of the collection. How often does the same two titles go off the shelf at the same time?

Youngblood: Aside from simply the dollar amount Klug mentioned, Youngblood asked if Lowry's basic assessment of the needs of equipment and facilities were optimal or minimal.

Lowry: The figures quoted include the furnishings. Lowry stated his estimates were conservative on the high side. For example, APRL would not need to replace the computing peripherals because it already has those. There are book stacks that can be used, but APRL will also need new ones for the new space. If some refurbishing is done, which is something that will probably be required to create a relationship between the new services and the APRL, there will be some costs in the old part of the facility in reworking and refurnishing.

Triggle: The report you have presented reflects the case for expansion. Triggle inquired if Lowry also looked at it from the point of view of reorganization of our present facilities.

Lowry: No. The present facility is almost packed now. Lowry guessed marginal gains can be made by reorganization. But scavenging space will only go for so long. It is not a long term solution.

Triggle: Lowry stated that during the next 15 years we would see a shift in our discipline to primarily electronic media. Is there a balance point there?

Lowry: Our planning scenario in an academic setting does not expect to build a library facility that projects anything less than 20 years growth in publication. There are a number of forces at work. While we are having a move to electronic media, we are also having continued growth in the amount of print publishing. The consequence of that is we think we are going to need print collections for at least that long. While the electronic media has been inching forward it has not been moving nearly so fast as predicted. There are inhibitors to books ever being online. There are questions as to whether a monograph will ever be put up electronically as a means of storage. While journals will move to network resources quickly, Lowry did not think books would.

In addition, if you aim at a 20 year horizon and find that the electronic media is not moving as fast as you want it to, you are probably going to have to install compact movable shelving in order to have the growth space needed. Electronic is not going to replace print completely at least in our lifetimes.

In philatelic publication much as in small university press publication, the number of books published in a title are not that many. A typical university press currently publishes around 500 copies of every title it publishes. The economy of publishing electronically for books is not present.

Hotchner: What we gave Dr. Lowry as a commission was not to redo the work of the Foxworth/ Bauer committee, but to take the conclusions from that exercise and go forward with them.

Lowry: With some jury rigging of the present facilities a decision could be postponed for two years but by that time the APRL will be in deep trouble.

Hotchner: Asked about the year 1922 as being the break point. Why can't anything published after that be converted to electronic media? How rapidly does that break point move?

Lowry: It is a moving window. It will be 1923 in a few months. Last year the copyright life was extended from 50 to 75 years. It goes like this: 75 years renewable, with 75 years after the death of the author or owner. You cannot capture and make an individual copy or digitize copyright materials except for the purposes of preserving materials.

Boehret: Has been involved with the American Philatelic Congress for 20 years. We copyright our books that are an anthology with different authors and subjects but one editor. In the past 10 years many of the authors also got their own copyright. Boehret wondered how that would effect the process of converting to electronic media.

Lowry: It would make it frustratingly more complex. Most publishers are being much more vigorous about insisting on the relinquishment of copyright from the authors. The authors in essence are doing a work for hire, and they are required to sign a paper saying they do not have the copyright to the property.

Boehret: These authors are unpaid.

Lowry: It doesn't make a difference, they can still sign a surrender of the copyright. There does remain fair use and educational rights which means works can be copied for classroom use or library use or by individuals who wish to do research. But nobody can make money from such use.

Hotchner: Anything we put out on the web that people can download presents a problem.

Lowry: You would have to get permission or you would have to own it.

Adams: Assuming we go ahead and raise the money and build the building, what would be the impact to the annual budget to operate this facility?

Lowry: The real impact relates to basic services that are now being offered as well as the publication flow and the gift flow each year. The library staff is sized to control the current literature except they may get some efficiencies from a better organized facility that will help them deal with backlogs from periodic gifts. Unless there is a large expansion of the audience that demands the services, there should be no need for additional staff.

Lamb: That is something we would have to look at carefully. There would be new items such as maintenance and utilities that have to be considered beyond the library.

Clark: Page 13 of the report mentions a preliminary sketch.

Lowry: Passed out copies of a concept sketch. It calls for 25,000 square feet, which is not what Lowry is recommending. Its location is near the current main entry of the facility.

Youngblood: Given the fact that currently the library affects a relatively small percentage of our membership, what is the use of the library going to be like in the future.

Lowry: About 3% of the membership uses the library every year. That really is not a low number. A high number of the individuals are the people who are responsible for the ancillary publication, journal literature, creation of collecting media. The numbers don't reflect the total impact on the discipline and hobby of philately.

If a facility is built that creates an opportunity for people to come and use the services, there will be synergies with greater public knowledge of the hobby. As the electronic medium becomes more important there will be an increased amount of traffic. Everything that has been done in the last 25 years in library automation has increased library use. One of the things you should appreciate about your library is that it has done an extraordinary job of providing electronic access. The indexing work it has done is vital. This stimulates more use. The vision is for a facility that offers opportunities for affiliates to meet, for teaching to occur in the facility and to exploit the collections will all stimulate greater use and growth in the hobby. There are consequences that are economic. If you get a lot more use you might have to think about staff.

Flood: We are coasting as a tax exemption under our library. The bigger the library the better the tax exemption. In Centre County there is some trouble with tax exempt organizations. The hospital just lost one and so did the university.

Triggle: Inquired if the figure of $3 -$4.25 million takes care of only the library expansion.

Lowry: No, it takes care of the library expansion and the reutilization of some of the space for meeting rooms. That is the total cost.

Apfelbaum: Suppose we were to say we don't have $3.5 million, that we don't even have $2 million. What should we do in the next 5 or 10 years?

Lowry: You would have to do some things you might not like to do. The question has been raised if the library should hold three copies of everything. Under such circumstances you might have to ask the question can we get away with one? You would face some really unpleasant realities. There might be some makeshift solutions such as inexpensive warehousing. If you put those materials in anything less than properly air conditioned setting, you will lose them in fairly short order. You can't just put stuff anywhere. At the University of South Alabama where Lowry was the Director of the general and medical library from 1980- 85 we had a space crunch. The people in charge of the physical plant agreed to retrofit a space they had for the library to store its medical journals. We had a memorandum of understanding about the HVAC that would be done. This is a Gulf Coast location. It is a damp place and it gets very warm. From time to time they made decisions about cutting air conditioning costs, the worst possible conditions for storing print materials. Within about two years the whole retrospective medical journal collection was ridden with mold, mildew, and deterioration. You need to take great care before you do something.

Klug: We keep referring to the affiliates and providing them a space to meet. Before we put much credence in that idea we should survey our affiliates and chapters to find out how many would actually be willing to meet at APS Headquarters if the facilities were available. Additionally, can we realistically hope to raise the kind of money we are talking about? Has anyone checked into the possibility of qualifying for local, federal, or corporate grants?

Lamb: We understand the Pennsylvania Museum Commission has some assistance for museums in Pennsylvania and we have corresponded with them about our eligibility for grant aid for that. We don't have an answer yet.

Klug: So that is something that is being explored?

Lamb: Yes.

Klug: And as far as the survey goes, will we survey our affiliates to find out exactly how much meeting space we would realistically need?

Lamb: If the Board decides we will look at the expansion that is something we would have to do. It is not something we have done yet. It would be premature now.

McCann: Dr. Lowry's meeting with us today was to give us a first progress report of one visit he has made to State College. It is important that he now goes back again with some of the questions we have raised. Utilization of space is not something he has looked at very carefully. This is an information gathering process.

Morison: Is there a procedure that we should initiate for monographs whereby as part of the copyright process that we get some sort of a waiver that would allow us to distribute it to our membership electronically in the future? Can we start to lay the groundwork that would allow the APS to be a distributor of this information over the Internet?

Horn: Most people donate a copy of their book to the APRL. There are some small run books who won't do that because they claim it costs them sales of the books because we will loan them. If we went to put that on electronic media, it would not be accepted.

Lowry: There is a model called J-Store for academic libraries. It is traditional journals that are held by many colleges and universities in this country. J-Store has scanned the journals and done some conversion so that it is searchable. Libraries by a license to this file and all of their students get to use it. The reason why it works is because it is after market. These are journals that have been sitting on library shelves and nothing is scanned that is more recent than 4 years. The journal publishers know that their window of opportunity to sell isn't changed at all.

Horn: It is going to be very difficult for us to get the rights to put new books on the web.

Lowry: If you promised to pay some additional licensing fee it might be workable. The process of creating online what you now have on your shelves is well understood. The cost of the technology is very high. If you think the library is expensive now, put it online.

Apfelbaum: Was impressed with the report. What it seems to be saying is that we can't keep the status quo. If we don't make a decision the library won't be as good as it is, but in fact in a short period of time will begin to deteriorate. In essence, reading through the plan we really don't have a choice if we want to maintain the library to the standards we have kept it at.

Lowry: Yes, you don't have a choice. Something will change. No action will mean you made a decision.

Adams: The library right now is configured for relatively heavy public use. There are tables at which to work, and you can walk among the books. Do we have the number of users now to justify that configuration and do we expect numbers in the future to continue that configuration?

Lowry: What would Adams propose as an alternative?

Adams: Didn't know the number of users, but would propose fewer working areas and compact movable shelving. The library would look less like a local public library and more for one that is used by people off site.

Lowry: There are 20 seats in the library at present. This is pretty minimal seating space, and no doubt there has been some scavenging of reader space for stack space so that space has been declining. Compact movable is something that is definitely in the APRL future, especially if a new facility is built. Lowry advises to build a new expansion with that in mind.

Adams: Would like to see numbers on how many walk-in users there are now.

Horn: During one week in the year we have 20 seats and potentially 90 users. That is during Summer Seminar. During the summer months it is not unusual to find every table occupied by one to three people. During the winter not so many people use the facilities.

Lowry: That's one of the problems you have with any service organization. You can't take the average. You've got to create the availability of service that meets peak load time. If you took the average you could have a lot fewer seats but you couldn't serve the public when they really wanted to use the facility.

Horn: If we go with the idea of meeting space for our affiliates our one peak week would be spread out throughout the year. We would have a higher usage the rest of the year. If you just wanted to enlarge the library we probably could reduce the seating space, but if the plans include seminar space then we can't reduce the seating.

Lowry: Right now the stacks don't comply with the old standards of 36 inches. They are closer together than they should be. The space utilization is pretty packed. A question arose about closed stacks and if that would help. Closed stacks are those that are accessible only by staff. It costs more because then staff has to fetch. Almost all libraries have abandoned closed stacks except for special collections.

Triggle: The Health Science Library at the University of Buffalo uses offsite storage very well. It has been very successful in relieving space.

Lowry: There are highly effective offsite storage facilities.

Flood: Worries about limiting public access to our library facility from a tax exemption standpoint. We are providing a service. People can walk in off the street and use our library. The more accessible it is the safer our tax exemption is.

Lowry: The library is officially a public library by Pennsylvania standards.

Hotchner: Thanked Dr. Lowry for coming and answering a lot of questions. If anything else occurs to Board Members Hotchner urged them to contact Dr. Lowry.

[A 15 minute break was called at 10:00 a.m. The session resumed at 10:15 a.m.]

Americover as WSP Show
McCann: More than a year ago this Board was considering whether the American First Day Cover Society show AMERICOVER might become part of the World Series of Philately. A committee was appointed by Hotchner and headed by Ken Lawrence to explore this possibility. There are a number of reasons why this committee and the APS thought this was a good idea. As a result of that process we had a number of discussions. The AFDCS Board, who is represented here by their President Tom Foust, met and as a result of an exchange of letters between the AFDCS, the APS, and the Accreditation Committee. We got closer and closer together to an agreement to hopefully finalize this process of having AMERICOVER become the newest WSP show. As the last step in that process, Hotchner appointed a sub-committee of the Board who happened to all be members of the Accreditation Committee as well. That committee was Janet Klug, Jeanette Adams, and Ann Triggle who were attending the last AMERICOVER show as apprentice first day cover judges. They went and talked with their counterparts in the AFDCS and met with their Board.

Klug: The two sub-committees came to an agreement which they then presented to their Executive Committee which approved it, and then on Saturday, August 14 their Board approved it unanimously. Each of our Board has been given a copy of that agreement, and AFDCS President Foust is here to answer any questions anybody has. The entire sub-committee was very impressed with the AMERICOVER show and highly recommended attendance at the next one in Houston. Klug urged the APS Board to approve the agreement and said it would be an excellent addition to the WSP shows.

Motion: To accept the agreement that would bring AMERICOVER into the accreditation process to become a WSP show. Moved by Neil. Seconded by Morison.

Lamb: Said he attended AMERICOVER in Indianapolis and it was the first one he had been to. The members and officers of the AFDCS really made the APS feel welcome and they were generous with their time and support.

Hotchner: Called the question. The motion passed unanimously.

Foust: At the AFDCS annual meeting in Indianapolis Foust asked for a show of hands of all the AFDCS members who were APS members and virtually everyone in the meeting raised their hands. The AFDCS is pleased to be aboard.

Hotchner: This agreement will do good things for both organizations.

Budget
Apfelbaum: In the last 4 years we have taken serious strides in putting the Society in much stronger footing. We have instituted credit card affiliations and have done a number of things to make the Society as a marketable commodity. Before the attitude was that if we needed more revenue we should just raise dues. It became apparent that dues represent one of the smaller income items on our financial statement. We looked toward using our membership as a way to market services to them such as insurance services, sales circuit services, credit card services and a variety of other services. We continue to plan to move ahead in that regard.

The dues are high enough. In an environment where we are losing members, raising dues would be a tremendous mistake. This year the Finance Committee came very close to recommending we reduce dues by a dollar or two.

In terms of losing membership, it is something that has been going on the past several years and Apfelbaum recognized this concerned the Board. Apfelbaum was not sanguine about our ability to reverse this trend. The Internet is changing our hobby in ways that were unforeseen several years ago. A lot of collectors don't collect with the passion of those on the Board. It is a hobby they enjoy perhaps a few hours each week. Traditionally those kinds of people, and that includes most of the members of the APS, had to belong to the APS, had to subscribe to Linn's or Stamp Collector in order to get their fill of the weekly dose of their hobby. That isn't the case anymore. Any hour of any day a collector can tap in and go anywhere in the world of stamps. For us to thrive we have to market ourselves as a place for stamp collectors to go to get services they can't get anywhere else. We should sell stamps on the net, but there will always be a large percentage of our members who want a sales circuit. We have a business there that works for us. It would be foolish for us to change it. If we want to add something to it we can.

We market insurance services. The previous Board made the decision to move it to another carrier. Frankly it didn't work out the way we expected but Apfelbaum still believes we made the right decision. It will improve as time goes on, and even if it doesn't improve we will have accomplished what we wanted for stamp collecting. Insurance rates are cheaper now and insurance coverage is better. Competition makes things work. Our job is not just to increase our revenues, it is to see that the market moves in the most efficient manner. This is our goal.

One of the areas we need to address ourselves is the issue of the library. The library is something no one else in the stamp world can offer collectors, only the APS can do that. We need to make sure we continue to be a place where people who love stamps can come to get things they can't get anywhere else.

Will our membership stay up? Apfelbaum did not think it would and does not think it has to. The Society is economically strong enough that if we don't do anything stupid we will be able to continue as a viable organization giving services and enjoyment to a core group of stamp collectors. Right now it costs us far more to get new members than that member produces in dues.

Hotchner: For the first year.

Apfelbaum: Yes, for the first year. If we gave everyone $40 gift certificates to join the APS we would have a quarter million members in no time. There is a point in which it just doesn't pay to get members. We have to be very careful in how we market ourselves to people.

The operating budget of the Society is not the most important thing. One wants their operating budget to be close to in order and close to balanced. In the last four years we have increased the value of our Society by $2.25 million. Some of that has been through contributions, but the vast majority has been through the decision the Finance Committee made four years ago to invest a portion of our funds differently than had been invested before. The great run up in the stock market was a phenomenon of the 1990s and is largely over. We can't keep seeing that every decade. It has to stop some time. That being said we can still expect 6 to 9% return on our $5 million. That's $400,000 a year. That's equal to 15% of our entire budget. Apfelbaum wants an operating surplus as much as anyone else, but we would be remiss if we gave up valuable programs because we are a slave to the idea we have to have an operating surplus.

Apfelbaum drew the Board's attention to Page 4 of the 2000 budget, Consolidated Format. The deficit is $99.900. The lines below that are for items such as depreciation. Depreciation is a non-cash item. It is shown as a negative but it costs us no money. That money largely represents the computer equipment we bought which we can't expense as an organization. We have an $80,000 deficit for depreciation but it doesn't cost us any money. It has already been paid out in previous years. There was another $7,200 in deferred payments which Apfelbaum did not know what it was but said it didn't matter. In a $3 million budget, a $7,000 item is not important.

$83,000 was listed as a transfer to the insurance fund. It is a non-cash item. All of our money is pooled together. One sliver is called the Insurance Fund and the various slivers make up the whole. When we say we move this money out, we have chosen to take out $83,000 and put it back into the budget. It is a decision that is made by the Finance Committee, usually based on the amount we took out in the previous year.

Lamb: The transfers to Tiffany and Youth Funds are contributions that we show above as income but they are specifically designated as Tiffany or Youth, therefore we have to take them out below the line as a transfer to that fund. It is a paper transfer on that page.

Apfelbaum: If you eliminate most of the major items from there, if you eliminate the $85,000 transfer and the $73,000 depreciation we have a deficit that is under $100,000.

Triggle: If a depreciation is listed as a negative, isn't it actually a positive rather than neutral?

Frazier: It is increasing the deficit down at the very bottom of the page.

Lamb: It's a decrease in the value of the Society's assets. For example, if we buy a car for $20,000 then next year the value of the car declines. Therefore it is a subtraction each year.

Triggle: Apfelbaum had made the statement it was neutral.

Apfelbaum: No, it is a non-cash item. It doesn't cost us anything out of pocket.

Triggle: Was sure Apfelbaum didn't mean it when he said he wasn't concerned about $7,000.

Apfelbaum: Indicated what he meant to say was he was sure there was a good reason for it but he didn't have it at his fingertips.

Boehret: Questioned figures for Unrealized Investment Gains for 1996, 1997, and 1998 and wondered why there was no entry for that category before 1996 or after 1998.

Frazier: Starting in 1996 the laws required that investments be written up or down to market value on financial statements. The figures given for 1996, 1997, and 1998 are the increases in the market value of the investments at year end for each one of those years. It is not an item that is budgeted for the 1999 or 2000 budget because we don't know how to predict it.

Adams: Did not see any income from payment from the insurance provider.

Frazier: It is listed under the miscellaneous column. Back in the body of the report we have a breakdown of the miscellaneous income and expenses. We budgeted it as $50,000 for this year and $55,000 for next year. We have seen so far about $43,000 - $44,000 of that.

Apfelbaum: The previous board has taken a lot of flack for the decision on the insurance we made. At the time there was no other choice we could have made, and in retrospect Apfelbaum felt it was the right choice, although it hasn't worked out as well as we had hoped.

Frazier: Insurance income is shown on the miscellaneous breakdown and it is also shown on the administrative office budget page.

Apfelbaum: We didn't have the Miscellaneous breakdown when we had the Finance Committee meeting. It is delightful to work with Frazier. He is truly an excellent controller. He always has the answers and if we want something done it is no problem. At the Finance Committee meeting 5 or 6 weeks ago there was an issue over miscellaneous income that was mentioned in passing and now suddenly it is here.

Triggle: We were looking at $100,000 budget from the insurance income on page 10 of the financial statement, and now that has been revised to $50,000. At this point we are already at $43,000. Is it conceivable we could go between those two figures?

Lamb: Yes. We're looking at something between $50,000 and $60,000. We're getting about $21,000 per quarter.

De Vries: On page 39 of the report there is a Hugh Wood advertising income for insurance and we are budgeted next year to receive two-thirds of what we are earning for that this year. Does this mean that HWI will be taking out a lot fewer ads?

Frazier: The agreement originally was that we would receive $31,000 in 1998. That was an agreement where Wood was contributing up to 50% of what we paid for advertising the insurance program. This year we are anticipating less money for that and the budget for 2000 reflects even less money. Therefore Wood's contribution to advertising is going down.

Lamb: The amount of advertising money is decreasing because when we were trying to get the program launched there was a lot of money going into it.

De Vries: Another question concerns a letter from Lamb to Apfelbaum under the rising cost of stamp shows and USPS support for Cleveland was reduced by $50,000 while decorator expenses increased by $56,000. That is a concern. The decorator expense is something the USPS insists upon.

Lamb: We are concerned about it, too. It is something we have to watch very carefully. That is why Lamb flagged it. We have had subsequent negotiations with the USPS and Lamb said they are not concluded yet. We reduced the decorator expenses substantially in the negotiations with them. This is a figure that is already six weeks old and it is a dynamic situation. One of the numbers the Board should watch is the profit off of stamp shows. We used to count on $30,000 a year as steady income. With the USPS involved in this all of the numbers are in an entirely different range. We are talking about hundreds of thousands where we used to talk about tens of thousands. We have to keep our eyes fixed on the bottom line. A lot of this is flow through money. If we start to drop below $30,000 in income then we have to start to look more deeply into the relationship with the USPS. It does not look as though that will happen this year.

De Vries: How much notice did we get that the USPS was reducing its support?

Lamb: Dealing with the USPS is like the proverbial elephant. They sling their trunk and it could hurt if it goes the wrong way. We got adequate time but it is not clear what it all meant. They told us they had budget problems and had to reduce their expenses, but again all of it may turn out to be flack. We have to keep our eyes on that bottom line. Are we making our $30,000 or are we not? If we are not then we have to go back into further discussions with the USPS.

Triggle: Are we not saying in this report that we are losing money on STAMPSHOW? Is this an internal complication?

Lamb: We attribute certain costs for the operation of the Society to STAMPSHOW. We attribute those costs to all of the Society activities. Based on those numbers, when you throw all the costs in, such as a share of the accounting and a share of the Executive Director's time, etc., we are losing money. The $30,000 Lamb refers to are before those costs are deducted.

Apfelbaum: On that basis we lose money on a lot of the things we do.

Triggle: When one looks at page 18 (Communications Statement of Activities) we see $109,000 loss. Triggle did not see where the positive was in the first place.

Apfelbaum: But that is for the Communications department which has always shown a loss because it does not generate revenue.

Lamb: That is within what we anticipated.

Klug: Some of the Miscellaneous income items on page 39 are recurring. Should they not be part of the Statement of Activities Consolidated Format so that we don't have to keep flipping back and forth to find out what they are? Items like insurance income and the affinity card royalty.

Apfelbaum: If it is less than 3% per year revenue it doesn't get a line of its own. To keep the consolidated format as simple and as clear as possible we need to try to get away with fewer lines.

Klug: But some of these items are $48,000 - $50,000 each.

Apfelbaum: But our revenue is $3 million a year. Three percent of that is $100,000. Anything less than that is not significant. If the Board decides it wants them there it can be done.

Klug: Felt that insurance income is something the Board found very important. We are watching that closely. That is something that should be separated.

McCann: Agreed.

Apfelbaum: Is that the sense of the Board?

[It was the sense of the Board that income from the insurance program should have a separate line of its own on the Consolidated Format.]

De Vries: If we are doing new programs or programs that are in change where we are trying to watch the income and expenses, they should be separated out from miscellaneous.

Apfelbaum: Any information that any Board member wants is obtainable from the controller.

McCann: It would be a lot easier if it was just on the Consolidated Format for us to see each month.

Apfelbaum: With the attention of the press there is no reason to draw attention to it as a separate line item.

Adams: Felt that any item that was close to $50,000 should have a line of its own.

Lamb: Our goal has been to get the summary page to one page. There are two options: we limit the number of lines or we make the print even smaller.

Apfelbaum: You can have it whatever way you want. If you look at really big companies like PepsiCo don't list things that are that small. Why don't you communicate that to the next treasurer if you want it done?

Clark: Consider it done.

Triggle: Inquired what a line item for "Extraordinary Membership Recovery" was.

Frazier: Sente put that in the original 1999 budget where he anticipated pulling people back into membership who had dropped out because of the insurance plan change.

Motion: To accept the report of the Treasurer and Budget for the year 2000. Moved by Neil. Seconded by de Vries.

Hotchner: Distributed a suggestion from APS member Steve Luster to approve the budget as a continuing resolution so that the Board could finish its Strategic Plan work, prepare budget guidance, and direct the Finance Committee to prepare a revised 1999 and new 2000 budget reflective of the Board priorities.

McCann: The implication of this is that the budget and Strategic Planning process that we are undergoing now be integrated. If the Strategic Plan is going to mean anything we really have to do that. The Strategic Plan is something we follow and provides guidance for how we allocate our resources over a long period of time. It is a very good idea. The problem we have is that we haven't finished the Strategic Planning process so it is difficult to reallocate how we use the budget. It is something we should do and the incoming Board would be interested in doing this process, but McCann discussed it with incoming treasurer Clark and both thought it was complicated to implement at this time. The idea they came up with was to have another meeting with the new Finance Committee sometime in the fall and integrate the Strategic Plan with the budget.

Apfelbaum: We would only be approving a working document. Would there be another Board meeting to approve the new budget? Or would the Finance Committee be drafting what it believes to be the sense of the Board? That would mean it would produce a budget without the Board having a final vote on it.

McCann: We would vote on it at the next Board meeting.

Apfelbaum: That's not until February.

McCann: We would vote on it in February. We can look at a budget at any time and make decisions.

Apfelbaum: As a practical matter you can't change it. We would be working with a budget that had only been approved by the Finance Committee. That's extraordinary.

McCann: The new Finance Committee would come back to the Board with recommendations. In all practicality if there were major changes that needed to be made that would have a dramatic impact on the current budget, we couldn't do it. At least we could start the process.

Apfelbaum: This puts the cart before the horse.

Hotchner: Suggested we approve the budget with additional language that accomplishes what we are trying to do.

Apfelbaum: This is a radical change in policy that has held the Society in good stead for 50 years.

Morison: There is no reason why the Finance Committee cannot come back and state we are not properly funding some programs, we can appropriate the funds then. Morison agreed with Apfelbaum that we should approve the budget at the Board meeting and then let the Finance Committee come back and tell us if there are items that need to be adjusted in the budget to go along with the Strategic Plan. That could be accomplished. The following year when the Plan is completed Luster's idea will work. The budget and Strategic Plan should be in sync.

McCann: It will be a several step process to do that but McCann did not anticipate the Finance Committee would actually have the power of changing the budget without the Board approving it.

Morison: We should get the budget approved.

McCann: Of course. He was not suggesting that we didn't approve the budget.

Neil: There have been numerous occasions where the Board has revised the budget at the Winter or Spring meeting. It is always possible to revise the budget.

Adams: We should pass the budget today in the traditional manner and then have the Finance Committee look at the budget after we complete the Strategic Plan, and then, if the Board so chooses we can amend the budget.

Flood: Said it was always possible to take a phone vote on any amendments to the budget.

Lamb: It is difficult to do that with a budget issue.

Hotchner: Called the question of approving the treasurer's report and budget. The motion passed unanimously.

Motion: To move to Executive Session. Moved by Neil. Seconded by de Vries. Passed unanimously.

[The Board moved to Executive Session at 11:00 a.m.]

Motion: To move back into open session at 12:55 p.m.. Moved by Apfelbaum. Seconded by Morison. Passed unanimously.

Motion: To ratify decisions made in Executive Session with regard to a contract renegotiation, nominations of Herman Herst, L. Norman Williams, and Robert Ackerman to the Hall of Fame, and nomination of Charles Peterson for a director slot in the FIP elections in the year 2000. Moved by Neil. Seconded by McCann. Passed unanimously.

Hotchner: Recognized Neil who had asked for time to make a statement.

Neil: Neil stated this was his last official APS Board meeting. It has been the most profoundly positive experience of his life. It was a chance to give back some time, effort, and labor to the hobby that has nurtured Neil since he was a child. It rescued him at a time of serious trouble in his life. The APS has been a part of Neil's life all these years.

Neil paid particular tribute to Bud Sellers, the individual who proposed Neil for membership in 1969 and who Neil served under as Director-at-Large when he was elected President in 1985. No finer man has existed in this hobby. No one has ever contributed more to the APS than this man.

Keith Wagner – over the span of time Wagner was the Executive Director of the Society he oversaw it with a firm and steady hand. As an attest to Wagner's warmth and kindness, when he would attend the ASDA show in New York there would be little old ladies and obscure collectors who would seek Wagner out at that show. His kindness and the time he would take with these people served as a model to Neil.

John Apfelbaum – whom Neil met in 1982 and suggested Neil should run for the Board. Apfelbaum has been a strong supporter of Neil especially when he was President.

Dave Flood – whose sense of humor and steady hand taught Neil many lessons. When Neil was President in the fall of 1993, it was a difficult time and Flood made it easier.

Bob Lamb – Neil made the mistake on the old GEnie Internet network to express the point of view that we had already picked Lamb as Executive Director during the interview process. We still had over 30 candidates we had to review. All of those people were capable, and of the 5 or 6 finalists any of them could have been Executive Director. The fact that this man was the person to beat, he has borne that out ever since he has become Executive Director.

Dan Walker and Steve Schumann – two of Neil's closest friends. It was their encouragement that Neil made the decision to run for President of APS.

In essence Neil's tenure as President and then Hotchner's was a plan that began in the summer of 1983 when Hotchner and Neil became close friends. Our plan was to position ourselves so that we could effect a generational change in the leadership of this organization. That change took place in August 1993 when Neil was sworn in as President. That morning one of the dealers said, "The rock and roll generation has come to the fore." What you have seen in the past six years is that generational change and the people in this room are a part of that. There is no better person to join in this effort than Dr. McCann. He was chairman of Neil's campaign committee in 1993.

All of these people have a deep dedication to the hobby and to the APS and deserve our thanks.

Apfelbaum: Said he was going off the Board as well. He has sat on three different Boards and wanted to compliment this Board. On previous Boards there tended to be factionalism. One person would represent the FIP interest another would be representing dealers' interest, etc. Every one of the Board comes in as an APS director and that is the only agenda this group has had. It is a welcome change and it is very nice.

Motion: To adjourn. Moved by Klug. Passed unanimously.

[Meeting adjourned at 1:15 p.m.]