USCF Financial Problems "The sky is falling."

http://chessusa.blogspot.com/2008/01/uscf-financial-problems-sky-is-falling.html

USCF Financial Problems "The sky is falling."

Many on all sides of the political universe that is the USCF are
predicting dire consequences about the Federation's finances. USCF
President Bill Goichberg, somewhat in the middle considering the cries
of the extremists, predicts that the USCF will lose about $100,000
this year (the fiscal year ending May 31, 2008). Goichberg issued a
statement detailing areas where possible savings may be had and areas
where savings had already been gleaned. ChessUSA reproduced that
statement on Sunday.


The Polgar Gambit

Others are predicting bigger losses, up to and including bankruptcy
and the dissolution of the Federation. Executive Board member Susan
Polgar has recently seized the issue of finances in what many view as
a distraction tactic related to the difficulty she and fellow Board
member and husband Paul Truong currently face regarding the Sloan
lawsuit and the EB Subcommittee's request for Truong's resignation.
Polgar writes:

"Joel Channing, Paul Truong and I told the board many times since
August 2007 about the potential financial problems that could occur if
no changes are made but the board majority completely ignored it.
Instead of recognizing the problems and finding solutions to help the
USCF, political decisions were made by some to keep their political
power. If we do not fix the problems, how can we turn around the
USCF?"



I have heard Channing speak about USCF finances several times, and
considering that until August 2007 Channing was the USCF Vice
President of Finance this seems natural. However, I can not find any
reference to dire financial predictions from either Susan Polgar or
Paul Truong, and what I have seen from Channing have been defensive
arguments against those who predict disaster. In the two recent
articles, no real plan or suggestions are made to save money. Rather,
each point seems to be an attack on political rivals and other
entities such as the USCF Issues Forum. Susan Polgar quit the Issues
Forum rather noisily in Spring 2007 and Paul Truong also quit soon
after the August 2007 Delegates' Meetings. In Early September 2007
Polger and Truong opened up the ChessDiscussion.com forums and now
reside there.
Polgar now writes:

"We should stop wasting at least $25,000 (approx) a year for
insurance and deductibles for the USCF political forums which only a
dozen members or two utilize on a regular basis. Joel Channing, Paul
Truong and I are on the record opposing this kind of waste. $25,000 a
year can benefit many other important chess initiatives."



USCF members with a sense of history will find it ironic that Joel
Channing is the one who wanted Internet insurance and is the one who
acquired it for the USCF. On May 31, 2006, in post #14464, Joel
Channing wrote:

"For those of you who may not be aware, I have been working with
an insurance agent for months to try to find affordable coverage of
our forum and some other activities. Insurance for moderated forums is
a relatively new field. In the meanwhile, I believe Mike Nolan and our
other moderators have done a good job of trying to do the right thing
while trying to be protective of USCF. I've just had a conference call
with the first carrier that is willing to look at our operations and
consider insuring us. Hopefully, something good will come out of
this."



Channing also sponsored the EB motion to obtain the insurance:

"EB07-007 - (Channing) Moved, (1) That we obtain Internet
liability insurance at an estimated cost of $15,000 per year, such
insurance to cover Officers, Directors, Moderators, and paid
Consultants, (2) That we enunciate clearly a policy on the website. We
will be aggressive in deleting posts the moderators consider
objectionable, and (3) From now on we insist that all posters post
under their real name. PASSED 7-0."



Polgar also assails the contracts with Hal Bogner's Chess Magnet
School to redo the USCF web site, USChess.org in her two blog items.

"We should stop giving large contracts to political allies or
friends without fair and open biddings. This is not the first time
this kind of mistake was made. The USCF spent over $50,000 to redesign
the USCF website TWICE because the first one did not work and the
second one is still not working properly way after the deadlines. We
need to know who authorized this and who should be held accountable
for wasting USCF members' money. I asked about this for 4-5 months and
still no answer."

It should be mentioned that Polgar and Truong, along with Gregory
Alexander, their web master for ChessDiscussion.com, were embroiled in
battles over several issues in September 2007 relating to the USCF
Issues Forum with Hal Bogner and the volunteer he recruited to install
the new forum software, Brian Mottershead.

What Got Us Here?

Donna Alarie is a member of the USCF Finance Committee and is another
that has long been stating that the USCF is headed toward serious
financial difficulties on a number of matters, serious enough that she
has at times predicted the USCF's demise. In a recent interview I
mentioned that no one had really stated the issue in layman's terms
and that I doubted anyone could. Alarie responded,

"I can do it. Here's layman's terms. USCF will run out of cash
before the scholastics events come in. It's inevitable. It will have
to hit the line of credit which is $150k of available cash if it
hasn't done so already. The discussion from various individuals is
already heading in the direction of what happens when the office blows
through the line of credit. Not if it does - when it does."



Indeed, a recent thread at the Issues Forum discusses the use of the
Life Membership Asset (LMA) account to offset losses, losses that
would deplete the $150,000 line of credit and the operations cash.
Past USCF President and current LMA Committee Chair Dr. Tim Redman
stated:

"The LMA has never said that we would help make payroll if that is
threatened. The position of the LMA is that Operations must solve its
own problems and that we would not be inclined to bail them out unless
a serious unforeseen emergency occurred, e.g., a weather or terrorist
occurrence that prevented or discouraged a large number of players
from attending one of our three Spring national scholastic
tournaments...I agree with President Goichberg's current estimation
that the Federation faces an operational loss in the six figures for
this fiscal year. Because it is expected, the LMA expects Management
to fix it. Although a majority of the LMA Committee would have the
final say in approving the certification by the Executive Director
that a financial emergency existed and the Federation needed help from
the LMA, this particular LMA Committee Chair will not be at all
sympathetic to failure of Management to adjust to actual budgetary
conditions."



Insiders and others with knowledge of how the USCF operates point to a
fundamental flaw in the way management and governance interact.
Several have stated that a strong Executive Director (ED) is needed to
enact a strong, focused agenda and direction for the Federation. The
members of the Executive Board represent a varied constituency that
demand different goals and initiatives from each Board member. Varied
factions such as Scholastic, tournament organizers, professional
players, and others place pressure on their Board representatives to
effect policy in their interest which often results in muddled
policies.

The position of ED, while a non-voting member of the Board, has
devolved into more of an office manager that implements the will of
the Board. Experiences from the previous decade and the disaster of
Summer 2003 when the USCF almost went bankrupt have acted to lessen
the autonomy of the ED office. Also, under Past President Beatriz
Marinello, the offices of the President and the ED were temporarily
merged to allow leadership the financial and managerial flexibility to
navigate those troubled waters. The end result of the process is that
the current ED, Bill Hall, is sometimes seen as weak and ineffective
with the Board both setting the agenda and providing micro managerial
oversight in execution.

In the end, contend those of this opinion, no one is truly accountable
for setting and implementing the direction and goals for the USCF. The
result is a hodge-podge of diverse interests and no real progress. Who
is accountable? Are the Board members? They are unpaid volunteers that
may leave office with little or no consequences. Is it the Executive
Director? He seems to be simply the facilitator for the Board. So, who
takes responsibility to get the nitty gritty done?

The answer to that question in the next few months may save the USCF,
or doom it.

Posted by Steve in TN at 9:32 AM
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