Minutes | Board Finance Committee (BFC) Meeting | 5 February 2015
BFC Attendees: Cherine Chalaby (Chair), Chris Disspain, Asha Hemrajani, and Bruno Lanvin
BFC Member Apologies: Gonzalo Navarro
Other Board Member Attendees: Rinalia Abdul Rahim, Fadi Chehadé, Steve Crocker, Markus Kummer, George Sadowsky, Mike Silber
ICANN Executive and Staff Member Attendees: Akram Atallah (President, Global Domains Division), Susanna Bennett (Chief Operating Officer), Megan Bishop (Board Support Coordinator), Xavier Calvez (Chief Financial Officer), John Jeffrey (General Counsel and Secretary), Vinciane Koenigsfeld (Board Support Content Manager), Ashwin Rangan (Chief Innovation and Information Officer), and Amy Stathos (Deputy General Counsel)
The following is a summary of discussions, actions taken and actions identified:
BFC Meeting Schedule for FY15 – The Chair provided a brief status update regarding the BFC meeting schedule for FY15.
FY15 Financials – The Chair provided an overview of the FY15 Budget, noting that revenue budgeted for FY15 is US$158.9 million and operating expenses budgeted for FY15 is US$141 million. The Chair noted that the FY15 Contingency Budget is US$3.4 million, of which US$2.2 million was used in the first six months of the fiscal year. The Chair further noted that during FY15 Q2: the Operating Fund decreased by US$2.3 million; the Reserve Fund increased by US $1.7 million; New gTLD funds decreased by US$15 million; and New gTLD has collected US$26.4 million in auction proceeds.
Minutes – The BFC approved the minutes from the last meeting.
USG Transition Costs – The Chair provided an overview, explaining that the USG transition costs (which include all activities pertaining to Accountability, IANA stewardship transition, root zone strengthening, and bilateral relationships) were estimated in the FY15 Budget to be US$7 million and are to be funded from the Reserve Fund. Staff provided an overview of the costs incurred fiscal year-to-date and the proposal to draw down funds from the Reserve Fund in six-month increments. In the first six months of FY15, US$1.45 million has been spent on USG transition costs. The BFC discussed the matter and agreed to recommend to the Board to authorize the release of funds from the Reserve Fund for actual expenses incurred in six-month increments, up to the overall budgeted amount for the USG transition costs.
New gTLD Investment Accounts – Staff provided an overview of current new gTLD investment accounts for application fees established in 2012 with three different investment managers, chosen as a result of an RFP process. Part of the planned investment policy was to consolidate accounts to two managers when the funds reached a total aggregated amount of US$150 million, which the accounts are now approaching. Separately, over the past months, ICANN has collected auction proceeds of approximately US$33 million, which also need to be invested. The BFC discussed the investment account options and agreed to recommend to the Board the creation of a separate investment management account for auction proceeds to be governed under the same new gTLD investment policy.
IT Services – Staff provided an overview of current and proposed IT outsourcing. ICANN is currently contracting with numerous different providers for various IT-related tasks. In order to increase efficiency, synergy, leverage, flexibility and cost savings, ICANN conducted an extensive RFP process to consolidate services with a single IT provider. One provider, headquartered on two continents, has been identified that can provide both local and off-site services with a guarantee of 24-hour coverage. ICANN began a trial with the provider in November 2014, which concluded in January 2015. The BFC discussed the consolidation process, costs and advantages, and agreed to recommend to the Board to approve the disbursement of up to US$3 million per year for the next three years for development and other services from the single provider. It was made clear that this is not additional funding, but because the amount spent will be with one, rather than numerous providers, the disbursement levels exceed staff’s authority under the Contracting and Disbursement Policy, and therefore requires Board approval. Bruno Lanvin abstained.
FY15-Q2 Stakeholders Call Update – Staff provided an update on the two stakeholders calls that have taken place, each of which included financial sections in the quarterly reports. The BFC discussed the positive feedback received regarding the Q2 stakeholder call and the requests for the quarterly calls to be repeated at multiple times to accommodate stakeholders in different time zones. The BFC commended the hard work of staff in preparing these calls as well as the stakeholder attendance. The BFC discussed additional methods for improving the process, content and accessibility of the quarterly calls.
FY16 Budget Process Update – Staff provided an update on the status of the FY16 budget process. ICANN is at the early stage of the detail work on the budget. In an attempt to involve members of the community at an earlier stage of the process, the Staff/Community Budget Working Group will meet on 9 February 2015 to work together on draft budget assumptions, such as revenues, resource utilization, initiatives, calendar, and data format. The working group consists of ten community members that expressed interest and five staff members. The input of the working group will be taken into account in the development of the assumptions for the budget and provide the community with an opportunity to have an impact on the budget at the early stages. In addition, several kick-off calls will be conducted while the budget is in the public comment phase in order to provide additional opportunities for the community to be involved in the development of the budget.