Minutes | Board Finance Committee (BFC) Meeting | 14 May 2016
Published on 31 May 2016
BFC Attendees: Cherine Chalaby (Co-Chair), Ron da Silva, Chris Disspain, Asha Hemrajani (Co-Chair), Markus Kummer and George Sadowsky
Other Board Member Attendees: Rinalia Abdul Rahim, Rafael Lito Ibarra, Lousewies van der Laan and Bruce Tonkin
ICANN Executive and Staff member Attendees: Susanna Bennett (Chief Operating Officer), Xavier Calvez (Chief Financial Officer), Samantha Eisner (Associate General Counsel), Melissa King (VP, Board Operations), Becky Nash (VP, Finance), Wendy Profit (Board Operations Specialist), and Amy Stathos (Deputy General Counsel)
Invited Guests: J. Beckwith Burr
The following is a summary of discussions, actions taken and actions identified:
Minutes – The BFC approved the Minutes from the 3 March 2016, 12 April 2016, and 3 May 2016 BFC Meetings.
BFC Schedule – The BFC reviewed the FY16 schedule. The BFC also discussed that staff is in the process of gathering the public comments on the draft FY17 Operating Plan & Budget and Five-Year Operating Plan Update, and is working on responses to the comments and questions. Responses will then be collated and sent to the BFC member who attended the call with that particular portion of the community. The BFC member will then be asked to review staff responses and provide feedback. The BFC also discussed meeting before Helsinki in order to review and recommend that the Board approve the FY17 Operating Plan & Budget, which the Board will review in Helsinki. The BFC also noted that the BFC will be evaluating the recommended level of the Operating Fund at its meeting in Helsinki, and discussed whether to add on to the Helsinki agenda review of the Reserve Fund governance material from the Reserve Fund working group.
Financials – The BFC reviewed the FY16 approved budget. The BFC discussed the change in the remaining amount of the FY16 contingency budget. The BFC further discussed the four "funds" under management including the new gTLD auction proceeds, the new gTLD cash, the Operating Fund, and the Reserve Fund. The BFC also discussed that all but the Operating Fund are invested at investment management firms and not held in cash. The BFC also noted that the Operating Fund should equate to three months of operating costs, but ICANN's operating fund is currently not at that level. The BFC also noted that the Reserve Fund is currently US$78 million but will be reduced to US$60 million after expenditures related to the IANA Stewardship transition through June 2016. Further, the BFC discussed FY16 Q3 Results and the FY16 Forecast finalized in December, noting that revenue has exceeded and expenses are less than the original budget projections.
Reserve Fund: Quarterly Investment Performance Review – Staff provided the BFC with an overview of the Reserve Fund's investment performance for FY16 Q3 and noted that it has gained by approximately US$2 million. Staff noted that the Reserve Fund investment policy is more conservative than the general market, and consists of relatively low risk investments. Staff explained that the performance of the Reserve Fund investment over the last 12 months has generally followed the trend of the overall market (including both the decreases and increases over that time period). Staff also noted that the current level of the Reserve Fund takes into account the US$7.3 million withdrawal in FY16 Q2 for expenses of the IANA Stewardship transition.
IANA Stewardship Transition Project Costs – The BFC discussed the actual and projected costs associated with the IANA Stewardship Transition and the work of the Project Costs Support Team (PCST). The PCST was established in March 2016 and tasked with determining a more specific estimate of costs for the remainder of FY16 and for FY17. The PCST works for the cross-community working groups involved in the IANA Stewardship Transition as well as all SOs and ACs and ICANN. ICANN spent US$8.7 million in FY15 on the IANA Stewardship Transition; has spent US$13.3 million thus far in FY16; and the PCST estimates expenditures of US$5 million for the remainder of FY16, which totals approximately US$27 million spent on the IANA Stewardship Transition through the end of June 2016. The PCST will provide an estimate of costs for FY17 by the end of May 2016, which will be incorporated into the FY17 budget.
ALAC Multi-Year Budget Submission – The BFC discussed ALAC's long-standing request to avoid submitting budgets for meetings on a yearly basis and instead integrating these meetings into ICANN's operating plan, which the BFC noted could result in lower costs of administration and more certainty in planning. At the suggestion of staff, ALAC submitted a proposal as a public comment to the FY17 Operating Plan & Budget on 1 May 2016. The scope of ALAC's proposal covers its general assemblies and at-large summits. Staff will review the proposal along with the other public comments to the FY17 Operating Plan & Budget, and will respond to ALAC by 6 June 2016. The BFC explained that, if this proposal is approved, it would be incorporated into the Five-Year Operating Plan and the funding available for ICANN-funded meetings each year would be subject to economic constraints.
FY17 Operating Plan & Budget and Five-Year Operating Plan Update – The BFC discussed the status and schedule for finalizing the FY17 Operating Plan & Budget and the Five-Year Operating Plan Update. The public comment period ended on 30 April 2016, with more than 150 comments submitted. Staff and Board members held community calls with various SOs and ACs regarding the comments submitted by each. Staff is currently working on drafting responses to the comments, which will then be collated and sent to the BFC member(s) who attended the call with that particular portion of the community. The BFC member will then be asked to review staff responses and provide feedback. Staff will publish the Report of Public Comments by 30 May 2016. Staff will then update the FY17 Operating Plan & Budget and the Five-Year Operating Plan Update based on the public comment. The BFC will review the finalized documents and listed changes in early June 2016. Then the updated FY17 Operating Plan & Budget and the Five-Year Operating Plan Update will be submitted to the Board for approval at ICANN56 (25 June 2016).