[nc-budget] DRAFT REPORT OF BUDGET COMMITTEE TO NAMES COUNCIL

["Cochetti, Roger" <RCochetti@verisign.com>]

Attached is a draft Committee Report to the Names Council.  Please provide
me with any comments/edits by COB EST on Wednesday, 8 August.  

Thanks,

Roger



REPORT OF THE NAMES COUNCIL BUDGET COMMITTEE 

The Names Council Budget Committee met twice since that last Council meeting
and addressed three important topics:

1)	The status of dues payments by Constituencies pursuant to the new
procedures adopted by the Council for failures to pay; and

2)	The status and outlook of the campaign to generate voluntary
donations to the DNSO; and

3)	Revisions to the spending allocations under the DNSO's 2001 budget.

A brief report on each follows.


		1.  STATUS OF DUES PAYMENTS BY DNSO CONSTITUENCIES

In an effort to improve the payment of DNSO mandatory dues by
Constituencies, on the Committee's recommendation, the Council adopted the
following procedures earlier this year:

NC PROCEDURES FOR CONSTITUENCIES PAYMENT OF DUES
		Regarding the procedures of the Budget Committee, the
Committee decided that its meetings should not be routinely open, but rather
should be open to members of the Committee and any member of the Names
Council who would like to observe.  The Committee reached this conclusion
because:
		(1)	it often discusses financially sensitive
information; (2) members felt that the work of the Committee would benefit
greatly by an atmosphere in which innovative ideas could be floated; and
most importantly, (3) all of the Committee's reports to the Council and
actions by the Council are publicly accessible.

		Regarding procedures to address the failure of DNSO
Constituencies to pay their assessed dues, the Committee discussed this
matter during three different meetings and in its January meeting agreed to
propose to the Council the following procedures:
	>From the date that invoices are mailed/e-mailed to representatives
of
Constituencies, if payment is not received by the DNSO or its agent by:
	** 30 days, the Constituency is sent a reminder letter and another
	invoice
	** 60 days, the Constituency is sent a delinquency notice and the
	delinquency notice is posted on the DNSO Website
		** 90 days, the Constituency is sent a "show cause notice"
(in which they are asked to show cause as to why their voting rights in the
Names Council should not be suspended) and they are charged a 5% late
payment fee to cover the cost to the DNSO of the cost of money.  The 5%
penalty is added to that Constituency's dues for the next (not the current)
DNSO budget year.
	** 120 days, the Constituency is sent a "final notice to pay" and
	charged an additional 5% late payment fee, which is also due as a
added
	payment for their next year's DNSO dues
		** 180 days, the voting rights, but not the right to
participate, of that Constituency's representatives to the Names Council are
suspended until such time as the DNSO or its agent receives all past due
amounts including the varies late payment fees.


On July 11th, ICANN management reported the following status of dues
payments by DNSO Constituencies for 2000 and 2001 (The DNSO operates on a
January-to-January, calendar year.  So, 1st Call refers to 1999, 2nd Call to
2000, and 3rd Call to 2001):

	> Amounts in US$.
	> 
	> Receipts:
				>                           		1st
Call   	 2nd Call  	3d Call		Total Recd
	
	> Business Constituency   	$5,000.00  	$13,642.86
$0.00  		$18,642.86
	> ccTLD Constituency       	$5,000.00   	$1,292.59
$0.00   		$6,292.59
	> gTLD Constituency        	$5,000.00    	$13,642.86
$15,371.00  	$34,013.86
	> IP Constituency          	$5,000.00       	$13,642.86
$15,371.00  	$34,013.86
	> ISP Constituency         	$5,000.00      	$0.00
$0.00   		$5,000.00
	> NCDNHC                   	$5,000.00        	$0.00
$50.00   	$5,050.00
	> Registrars Constituency  	$5,000.00    	$13,642.86
$16,857.14  	$35,500.00
	> Total Paid              		$35,000.00        $55,864.03
$47,649.14	$138,513.17
	> Total Called For        	$35,000.00  	$95,500.00
$107,597.00
	> 
	> Other Donations
$9,050.00
	> Constituency Donations
$138,513.17
	> Total Donations
$147,563.17
	> Earned Interest &
	>    (Bank Charges)
$1,487.46
	> Disbursements
$(14,008.16)
	> Total Funds on Hand
$135,042.47


In addition, ICANN management reported that  invoices for all DNSO
Constituencies, except the Non-Commercial Constituency, had been sent out on
April 18, 2001.  (The NCDNHC invoices is being sent out by ICANN management
this week.)  According to this report, three Constituencies ( ccTLDs, ISPs,
and NC) have failed to pays their dues from 2001 and the same three
Constituencies, along with one more (Business Constituency) have failed to
pay their deus for 2001.
Importantly, the Committee took note of the fact that  since the 2001
invoices were sent out on April 18th, the DNSO had failed to send out to
Constituencies 30, 60, or 90 day notices as provided in the procedures
(There was some confusion with ICANN management on this matter, which
resulted in the failure by the DNSO to act.)
Under these circumstances the Committee addressed two questions:  (1) Did
the Council intend that arrearages resulting from Constituencies failure to
pay dues that were invoiced during 2000 would trigger the new procedures (or
do the new procedures only apply to dues invoiced in 2001 and later/).  On
this question, the Committee concluded that the new procedures do not apply
to invoices prior to 2001; and (2) Does the failure by four Constituencies
to pay their 2001 dues trigger any of the actions envision in the new plan
notwithstanding that the DNSO failed to provide the follow-up notices that
were contemplated under the plan.  On this question, the Committee concluded
that since the DNSO had failed to provide 30, 60, and 90 day notices as
contemplated under the plan, then Constituencies that were invoiced on April
18, 2001 should not be held liable under the terms of plan.  Accordingly,
the Committee decided to have the 30 day notices sent out as soon as
possible by ICANN management and recognized that the 60, 90, 120, and 180
day penalties would kick in over 30 day increments after the 30 day notices
were actually sent.


2.	STATUS AND OUTLOOK OF THE CAMPAIGN TO GENERATE VOLUNTARY DONATIONS
TO THE DNSO

The Committee discussed the state of the current campaign to generate
voluntary donations to the DNSO.  (These will be used by the DNSO to cover
the costs of providing professional support for the DNSO and such donations
will be matched by the VeriSign Registry on a dollar-for-dollar basis up to
$100K.)   Unfortunately, no donations had been recorded as of July.
The Committee again encourages each  Constituency to request that its
members donate funds to the DNSO to permit it to operate more professionally
and competently.  (If each member organization of each Constituency would
donate to the DNSO one tenth of the amount of money that they spend on
travel/entertainment for ICANN meetings, then the Budget Committee's goal of
raising $60,000   --or $120,000 after the VeriSign Registry match-would
easily be met!!)
The Committee gratefully accepted four volunteers who stepped forward and
agreed to serve as DNSO fundraising chairs:  One will focus on donations
from outside of the DNSO and three will focus on donations from members of
the Constituencies.  Together, they make up a new fund-raising work group of
the Budget Committee.


3.	REVISIONS TO THE SPENDING ALLOCATIONS UNDER THE DNSO'S 2001 BUDGET

The Committee re-examined the spending categories and allocations that were
approved by the Council for the DNSO's 2001 Expense Budget and recommends
several changes to the Council in light of changed circumstances.  (Thus far
this year, the DNSO has spent around $37,000, mostly in charges from AFNIC
for the provision of technical management services)  These proposed changes
DO NOT CHANGE THE TOTAL DNSO SPENDING and THEY DO NOT CHANGE THE AMOUNT OF
DUES.  The proposed changes re-name of category and re-allocate spending
among the several categories.  

The original 2001 DNSO Budget is

	> 	Administrative			$12,000
	> 	Telecommunications		$18,100
	> 	Travel				$25,500
	> 	Web/Listserv Maintenance	$30,000
	> 	Language Translations	$10,000
> 	Professional Services 		$12,000
Contingency			$35,000


The proposed DNSO 2001 Budget is:

Admin				$12,000
Telecom			$18,100
Travel				$10,000
Technical Services		$70,000
Language Translations	$5,000
Professional Services		$5,000
Contingency			$22,500
			 
  Essentially, these changes re-label the category "Web/Listserv
Maintenance" to Technical Services and re-allocate an additional $40,000 to
that category, with the reductions coming from Contingency, Travel, and
Language Translations.  The under-spending in these categories mainly
reflects the fact that the increase in  professional support that was
envisioned for the DNSO has not occurred by mid-year.


Roger Cochetti, Chair
Names Council Budget Committee





Roger J. Cochetti
Senior Vice President & Chief Policy Officer
VeriSign
rcochetti@verisign.com
202-973-6600