RRCA 2003 Invoice

Information and Questions You May Want to Ask

Before Paying Club Dues

 

INFORMATION ABOUT THE INSURANCE FEE

 

The 2003 invoice includes billing insurance for the additional club dependent members. Clubs should know that the RRCA pays a fixed fee to the insurance provider that continues under a three-year contract. It is our understanding from one of the former staff members who handled insurance, that the $1.58 per member was calculated based on the existing number of RRCA club members, plus an RRCA administrative fee, and an amount for insurance reserves. A question you may want to ask; is the income from billing additional members going to be put into the insurance reserve and if so why is that needed this year? Will this additional insurance income be used for any purpose other than insurance? We can't find that information in the invoice.

 

WHAT IF YOUR MEMBERSHIP INCREASES DURING THE YEAR

 

In the past the RRCA Invoice has included the following information:

"There are no additional charges/refunds for fluctuations in membership numbers during the course of a calendar year."

That message DOES NOT appear on the 2003 Invoice. Considering what this current RRCA administration has been doing, we have concerns that they may bill clubs for additional members when they update their membership database with the RRCA if it includes more members than the previous database update, or for that matter, any membership number on any form a club may submit for whatever the purpose.

 

WHAT THE RRCA BYLAWS SAY ABOUT DUES

 

You should know what the RRCA bylaws state about local road runner club dues:

"ARTICLE V - DUES"

"A. The amount of annual dues for local road runner clubs shall be determined by the RRCA membership. The number of members as of September 30 shall be the total on which annual dues for the following calendar year for local road runner clubs shall be determined."

 

A COMPARISON OF THE 2002 INVOICE TO THE 2003 INVOICE

 

The 2002 RRCA Invoice sent to local road runner clubs included the following:

Note that this is the last billing policy approved by a vote of the clubs.

 

We provide this information as a comparison to the 2003 invoice which follows.

A one and a half page cover letter of explanation. 

            2002 RRCA Fee Information Sheet

            2002 RRCA Club Invoice (form to be filled out and returned)

            2002 RRCA Insurance Information Sheet (form to be filled out and returned)

            Liability Insurance Flyer

            Return Envelope

 

The following information was included on the 2002 RRCA Fee Information Sheet:

"Dues must be paid annually. For calculating dues and insurance rates, a "member" can be defined as a "household." Clubs joining the RRCA must submit a current roster of their membership. Dues and insurance fees for renewal of membership are based on the number of members reported to the RRCA in the fall of each calendar year. If no updated number is reported, fees will be calculated based on the last number received. There are no additional charges/refunds for fluctuations in membership numbers during the course of a calendar year." (emphasis ours)

 

The 2003 RRCA Invoice sent to our club included only the following items:

            2003 Club Membership Invoice (form to be filled out and returned)

            2003 Insurance Information (requires signature for statements and waiver)

            2003 Club Event Information on backside (form to be filled out and returned)

That's it, not even a return envelope. Seems things are missing considering what was sent in past years. Is this what all clubs received?

 

The following information was included on the 2003 Club Membership Invoice:

"NOTE: Your 2003 membership dues and insurance coverage were calculated based upon information you provided to the RRCA. At the October 2002 meeting, the RRCA Board of Directors, under advisement of the RRCA legal counsel, unanimously agreed that for billing purposes a "member" is defined as an "individual person" as opposed to a "household". (emphasis ours)

 

Clubs did not vote and approve the above 2003 billing policy, in fact clubs knew nothing about this billing policy until the invoice was received in the mail. As noted in the bylaws, dues are determined by a vote of the clubs. The bylaws do not give the Board authority to determine dues.

 

FACTS ABOUT THE 2003 INVOICE

 

In the above 2003 invoice information:

There is no statement concerning "no additional charges/refunds".

 

Membership has always been based on number of members reported in the database provided by the club. This year it was based on "information you provided". For many clubs that number did not come from the membership database provided by the clubs.

 

There is no statement relative to the billing date used when the number of members were reported. The bylaws state "September 30". Our club was billed based on a number from a club information form requested by the RRCA in June 2002 that had nothing to do with a membership database.

 

As for the definition of "members", it is not defined in the bylaws, but the bylaws imply that determination is left to the clubs submitting their membership. There are a number of letters posted on the RRCA Information Webpage relating to this issue: http://www.huntsvilletrackclub.org/RRCAForum/info.html

 

In the above 2003 statement the words "under advisement of the RRCA legal counsel" are included. Thus it would appear that the legal counsel advised the Board to interpret "members" as being "all members" and not "household" members (which has a 27+ year precedence). There was no research of the opinion. There was no written opinion. The opinion was an on-the-spot non-committal answer (lawyer talk) that the Board interpreted as they desired to support a decision, that according to a participant of that meeting, they had decided to do it before they asked.

Note that on the RRCA Invoice to clubs the following appears:

 

"Total Amount Due by December 31, 2002: (Non-refundable)"

 

Take note of the "Non-refundable" in small print. It was there last year and before that, so it wasn't unexpected to be there this year. The problem is; the 2002 budget approved by the RRCA Board at their January Meeting showed income exceeding expenses by approximately $25,000. Yet, long before the end of the year they were claiming financial problems and asking clubs to donate $1 per club member. There was no revised budget given, no reason why there was suddenly a financial problem, and no recovery plan to show how this problem would be avoided in the future. Put straight and simple it was a letter begging for donations without obligations. There was also a call for a number of the larger clubs to pay dues early to help relieve the financial crisis. Did the RRCA not attempt to borrow money? Was that due to oversight or a credit rating problem? Was the RRCA already in debt and know they could not repay a loan? With no answer to these questions it seems risky to pay a full year of dues and insurance.

 

SOME INTERESTING FACTS ABOUT DUES

 

Did you know that in 1999 clubs paid dues of $1.00 per household member?

 

The information is from the Summer, 1999, RRCA Footnotes, page 36, under the title "RRCA Business Meeting Minutes, Spokane, WA, May 1, 1999." The following are from the "Treasurer's Report". Clubs approved a $0.25 per member dues increase, with a minimum of $75 per club and a maximum of $10,000 per club.

 

"Hollister then discussed the RRCA Board's proposed dues increase. He noted that the last time the RRCA raised dues for members was seven years ago in 1992. (operating cost increase reasons not included here) Hollister noted that the RRCA Board met prior to the convention to discuss recent financial projections for the next couple of years and decided to reduce the original proposed dues increase that was communicated by mail to clubs earlier in the year. The dues increase that would be voted on during this business meeting would be a one time $.25/member increase in the year 2000, a minimum charge for of $75 for all clubs, and a cap on dues of $10,000 per club." (first part of this next paragraph unrelated to dues issue and not included) "After the Treasurer's report, President Kardong asked for a motion to accept the proposed dues increase. The motion was duly seconded and approved unanimously." (end of Treasurer's repot).

 

Note that dues at the time of the convention were $1.00. Thus the dues were raised to $1.25 beginning in 2000. This was the first dues increase since 1992.

 

There was no dues information in the 2000 Convention Business Meeting Minutes published in Footnotes, thus no dues change voted by member clubs. Yet a fourth payment item appeared on the 2001 Invoice titled "Membership Fee". This was in addition to "Dues", "Liability Insurance", and "Directors and Officers Insurance."

 

The 2001 Convention Business Meeting Minutes in Footnotes covered the switch of the $1.02 of something created the year before, called "Membership Fee", to $1.00 increased dues. The $0.02 was evidently dropped. The $1.02 Membership Fee had been over charged insurance (see next paragraph), because in the 2001 invoice, insurance was $1.58. Interestingly, in 2000 (the year before) the insurance fee was $2.60 for clubs our size (the typical size for most club invoices). Seems when you add $1.02, to $1.58 you get $2.60. Clubs bought into this because it did not increase the total amount paid, actually it decreased by $0.02 per member.

 

Explanation for the above was published in the Summer 2001, RRCA Footnotes, page 20, under the title "RRCA Annual Business Meeting Minutes, Albuquerque, NM, May 5, 2001."

 

"Fort discussed the 2001 membership fee, explaining that it was caused by an independent audit of our 1999 financial statements, which indicated that the difference between insurance fees charged to the clubs, and the premiums paid to our insurance carrier, should have been classified as unrelated business income. This classification (as business income) would result in Federal Income Taxes due on this difference. According to Fort, the RRCA has requested that the IRS allow the RRCA to reclassify this difference as a membership fee for 1999, and thus not taxable. If the RRCA is successful, we will request that all open tax-year returns also be so modified. The membership fee, $1.02 per member for 2001, was put in place to avoid a potential tax liability for this year."

 

What the above shows, but does not state, is that clubs were being overcharged $1.02 for insurance. Instead of those funds being put into the insurance reserve, which would not be taxable, they were evidently being used for business expenses. Since the $1.02 was not being used for insurance and was not dues, it comes under business income, which is taxable. So that it would not be taxable, it was first made to appear as dues (membership fee - 2001) but not called dues, and then voted by the membership to be included in the dues for 2002.

 

The 2001 vote increased the dues from $1.25 to $2.25 for the 2002 invoice that billed for household memberships.  That was a fee of $3.83 paid to the RRCA for dues and liability insurance for each household membership.

 

The 2003 invoice sent to our club would require our club to pay $6.64 to the RRCA for each of the 701 household memberships we submitted 5 days prior to the September 30 date of record for number members as stated in the bylaws.