Restructuring, Cost Savings At Girl Scouts Includes Buyouts

Racing to cut expenses before the end of its fiscal year in September, Girl Scouts of the USA (GSUSA) has offered a voluntary separation incentive in an effort to reduce the headcount at the century-old organization’s national office.

Employees who are 55 or older with at least 10 years of service at the headquarters in New York City were offered the incentive package in mid-June and had until mid-July to accept.

As many as 90 employees were eligible for the program. Most of the organization’s 325 employees work at the Midtown Manhattan offices, with some in outlying offices in the metropolitan area.

“There won’t be any layoffs because that’s a technical term. It will affect the number of positions we can keep in place, how many we can hire, that sort of thing,” Victor Inzunza, interim vice president, communications, for Girl Scouts of the USA, said. “Continuing with staffing levels we have now through the end of the (fiscal) year would make it very difficult financially,” he said. Last year, the national office had expenses related to salaries and compensation of about $41.3 million, down from nearly $43 million the previous year.

How many positions the organization will have when its new fiscal year begins Oct. 1 will depend on how many people choose the voluntary separation package. There’s no set goal or number of positions to be eliminated, Inzunza said, “all we know is it’s been a challenging financial year this year and we need to reduce the number of positions.” It’s an issue related to membership, which has been decreasing for years, that’s had the most impact, according to Inzunza.

Inzunza declined to provide details of the voluntary separation incentive or estimates on potential savings but described it generally as “fairly standard to what most of these packages offer.” Voluntary separate incentives tend to have a financial reward or lump sum payment based on service as well as some health insurance coverage.

American Cancer Society offered $1,000 for each year of service as part of a voluntary separation program earlier this year. Staff with at least three years of service were eligible.

Once it’s determined who will leave, then the organization will decide where it stands and it’s possible some new positions will be created and new people hired while some positions go unfilled, Inzunza said. “It’s hard to know at this point until we determine the situation with those early retirements,” he said.

It is unclear when staff would leave as it could differ based on the positions. “Our goal is by the first of the fiscal year (Oct. 1) to have a team and structure in place. We’ve been in a process of change for a long time. We’re finishing up that process, and we hope to have that work completed and really have the team structure by Oct. 1,” Inzunza said.

Cookie sales have not really been affected, Inzunza said, and in fact have been up a few percentage points in recent years. There is concern, however, that if there are fewer Girl Scouts participating, it stands to reason revenue will be impacted.

Membership dues were increased from $10 to $12 in 2008 while cookie sales have seen a 4-percent increase compared to the previous year in package volume.

The most recent changes are a result of membership declines. “We’ve had peaks and valleys in the past,” said Inzunza, adding that Girl Scouts lost about a million members between 1970 and 1980, to some extent a result of the economic recession and women entering the workforce in larger numbers. During the past 10 years, Girl Scouts has lost about 20 percent of its membership but has stabilized in recent years.

The Girl Scouts’ most recent annual report touted 2.282 million girls and 883,521 adults as members in 2011. Inzunza said in some councils the issue isn’t membership but finding enough adult volunteers to lead and mentor members.

Girl Scouts plans a new membership campaign this fall, the first in three years, Inzunza said. In 2010, the “What Did You Do Today” campaign helped boost membership, he added.

It’s been a tumultuous few years for the Girl Scouts. After a massive consolidation, getting 312 councils reduced to about 110, headquarters has seen some executive turnover since CEO Anna Maria Chavez started in November 2011. At least eight executives and four development staff either left or were asked to the leave the organization, prompting anonymous letters to the organization’s board as well as media, questioning Chavez’s leadership and management style. One local council was able to avoid consolidating after winning a lawsuit last year while other legal skirmishes have erupted around scout camps and the Girl Scouts’ woefully underfunded pension plan liabilities.

The biggest financial challenges for the Girl Scouts are donations and membership fees and a reliance on revenue from cookie sales, which make up about 60 percent of operational revenue for the average Girl Scout Council, Chavez said during a keynote speech last month to the American Institute of CPAs (AICPA) in Washington, D.C.

“Our business model was based on a 1950s model,” Chavez said during a question and answer segment of  the general session after her keynote. She described Girl Scouts as a “very flat organization” after reducing the levels between the CEO and individual councils from 15 when she began to five at the start of this fiscal year in October.

The national office reported total revenue of $105 million for the fiscal year ending September 2012, a steady climb from $69 million in 2009. Membership fees generated a consistent $37 million in the past three years. Prior to that, membership revenue was about $32 million for headquarters.

Net assets stood at $162 million in 2008 before the economy declined and dipped to $109 in 2011 before rising to $126 million last year.  NPT