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Red Star's 3/11 Budget Meeting QuickSheet

Red Star

• 8 min read

Two forum posts from Red Star members:

Layoff Resolution - FAQ:

This is part of an ongoing budget process. We have been through multiple rounds, where we made cuts at both the B&F committee and NPC stage. 

  • Our current budget has cut $974,000. In addition to cuts originally recommended by the Budget & Finance Committee, the NPC cut over $500,000 from what was requested in the January meeting. 
  • The NPC voted on 2/20 to initiate layoffs and set a target for the budget based on ensuring the organization would be able to extend its reserves through 2025. This resolution called for the treasurer to calculate this threshold as deficit reduction for both 2024 and 2025 and finalize the layoff numbers 
  • The treasurer has run the numbers. We require cuts to get us to a deficit of $630,264 in 2024 and $57,260 in 2025. This means we need to cut another $600,000 for 2024 and $1.1 million in 2025, which would mean 12 staff positions without further cuts to non-staff expenses. 

These layoffs seem harsh, but that is a function of how dire the situation is. They do not even get us a net gain in money. It just pushes off the bleed through the end of 2025. We are still targeted to run a slight deficit, even with these layoffs. We need to do this and fundraise. 

Only permanent cuts to DSA’s budget (until we run a surplus and increase our reserves) will save jobs.

  • If we cut once and bring the expense back, it will only delay the layoffs we need to make.
  • This is why the February resolution set a runway target, which the treasurer has mapped to a deficit calculation for 2024 and 2025. In order to actually ensure any cuts (organizing, overhead, or staff) have the impact we need, they need to apply until DSA runs a surplus. Just budgeting for 2024 would mean we have this same conversation again at the beginning of next year.

Why do this now?

  • DSA is on track to hit its critical cash reserves, which would obligate it to shut down all national activity and lay off its entire staff with severance. We hope for and will fundraise, but we have a responsibility to the org to be realistic.
  • Our margins are so thin that every month we wait means the difference of about a whole staffer.
  • We want to and will fundraise, but it would be an abdication of our duty as the board of the organization not to meet the reality that our current spending levels are leading to the death of the organization. 

Why not wait for the consensus process/fundraising?

  • The resolution explicitly says that we will make adjustments based on discussions with the staff union and that the number will change as a result of any further cuts. But we need to send the union official notice today to save as many jobs as possible.
  • Every month without starting the layoff process means DSA spends deeper into its reserves. Each month delay means having to cut about one additional 1 staff position to have the same budget impact, unless DSA increases recurring donations by $100k per year, or indefinitely cuts $100k of other yearly spending.
  • DSA needs to engage in a massive fundraising campaign, and we expect all NPC members to commit any energy they have (especially that they have been putting into the budgeting process) towards that effort. But the time to do so and prevent any layoffs would have been last year. We recognize that engaging in staff layoffs will make it harder to make a compelling pitch to members, but we recognize that the situation we’re in makes finding a way to do both unfortunately necessary.

Why not come to the union without specific targets and work collaboratively?

  • DSA held a meeting with the staff union in which they asked directly for economic justification and more details about the proposed cuts. Given that there was not clarity about whether the previous resolution counted as formal notice under the CBA, this resolution would make it clear that the notice period starts upon passage.
  • If any cuts are necessary, DSA needs to make a decision quickly and provide the staff union with enough information to make counterproposals. It may seem disrespectful for management to come to the union with a hard number, but we think it is important for us to be clear with the staff union and provide them with information in order to have a real negotiation process.

How does the collective bargaining agreement affect layoffs?

  • The collective bargaining agreement (CBA) specifies two major constraints on layoffs: a 45-day negotiation window (discussed further in the next answer) and a per-department seniority-based ordering of affected staff. The ordering constraint means that the NPC can only specify the total numbers by department to lay off. Then, within each department, the affected staff will be determined on a first-in-last-out basis, meaning that those hired most recently will be first to lose their jobs. The union may decide to agree to exceptions to these constraints during negotiations, but this is what the letter of the CBA specifies and the assumptions that the NPC must work under. Note that directorial and management staff are not unit members and thus are not covered under the CBA.

What does the process look like from here if the resolution passes?

  • The collective bargaining agreement (CBA) specifies that once the union formally receives economic justifications for a layoff, a 45-day timer will start. During this time, the NPC and the union will negotiate specific details of a layoff plan, including the possibility for the union to counter-propose other non-staff cuts. The NPC will then decide on a final layoff plan, including per-department layoff numbers.

Isn’t the proposal passed by the NPC of extending our runway based on the emergency trigger of 4 months risky?

  • Yes. The reality is that the time has passed to avoid dipping below the 6-month Required Reserve target, but these layoffs significantly extend the period within which DSA can work to mitigate this risk. That’s why we need some further cuts, layoffs, and a massive fundraising campaign to keep DSA stable.
  • All options are risky, but we believe this is the most sustainable path for DSA.

Why not make other cuts?

  • DSA has already made major cuts to organizing work passed at convention, including some leadership stipends, travel, paid NLC co-chairs, YDSA convention, and more. We believe that many of the remaining cuts would either create major damage to the relationship between national and chapters (Dues Share) or actually not have the intended financial impact.
  • Co-chair salary reductions risk bringing co-chairs below the salaries required to make employees exempt, which may make them eligible for overtime that may negate the salary savings - and we know that co-chairs are working overtime!

Resolution for 3/11: Resolution to Achieve Fiscal Sustainability through Staff Layoffs and Union Engagement

Formalizes the runway target already approved by the NPC in the Resolution to initiate layoffs and uses those targets to calculate the initial number of staff positions (unit and non-unit) needed to reach that target. This will mean 12 positions. 

This will require:

  • 2024 Deficit target = $630,264
  • 2025 Deficit target = $57,260

This number of 12 will be readjusted in negotiations with the staff union and if other cuts are passed. It is not 100% final - we can keep making cuts and lay off fewer staff. 

  • Language: “[The NPC] will seriously consider any requests and recommendations the staff union may make as an alternative to certain layoffs and may adjust the layoff number accordingly.”

2024 DSA Budget Timeline

1/11: Emergency Budgeting (Ripcord) Resolution:

  • Provision where DSA starts the organizational shutdown process when we have less than four months of cash on hand.

1/21: Hiring Freeze enacted 

1/21: Provisional Budget was passed: 

  • At the January meeting, the NPC approved cuts of approximately $500,000. This brings the budget to $974,496 less than the 2023 budget. However, it still has a deficit of over $1.2 million. 

1/24: Resolution to meet with the staff union regarding the reach layoffs:

  • Initiate discussions with the DSA staff union regarding potential layoffs, alternative proposals, and organizational restructuring, ensuring formal communication channels and union input. Sets up multiple meetings with staff. 

2/20: Consensus Cuts and Spending Freeze

  • Institutionalizes spending freeze of all non-essential expenses 
  • Creates a consensus budget process for making additional cuts. Amended to exclude layoffs and to create a 50% threshold. Cuts that went over 50% will be decided by the NPC on the 11th. 

2/20: Resolution to initiate layoffs - Initiates a process for potential staff layoffs 

  • The layoff goal is to extend the emergency trigger threshold of four months' worth of operational reserves through the end of 2025. Links back to the emergency trigger passed on 1/11. 
    • Difference between required reserve and emergency trigger
      • Required Reserve - the financial best practice that the 2019-2021 NPC passed that sets the policy that DSA always needs to have 6 months of cash on hand
      • Emergency Trigger - When DSA has less than 4 months of cash on hand, the Emergency Budgeting Resolution takes effect. We start dismantling DSA.  
        • Currently, we will meet that Emergency Threshold in November 2024
  • This resolution says that we will make cuts and layoffs as necessary for the “runway” to the emergency trigger state through the end of 2025.
    • Deficit is how far you’re falling, the runway is how long until you hit the ground. 
  • Commits to working through the consensus budget process and staff union negotiations to reach a final number. 
    • Note that a cut must be held over multiple years to protect a job
  • Staff Union emails the NPC and says they require: “a completed budget with a numerical goal” to meet the economic justification required to be noticed. 
  • 3/9: Consensus Cut process step 1 completed. To be agendized for a final vote on the 3/11 meeting 
    • Items hitting 50%:
      • Printing + Copying of Dem Left (up to 100%)
      • Postage for Dem Left (up to 100%)
      • NPC SC Stipend (up to 100%)
      • Co-chair salary (-14.5%)
      • Co-chair travel (up to 75%)
      • NLC Phone/Text-banks (up to -37.5%)
      • NEC Phone/Text-banks (up to -25%)
      • All Committee Swag (up to 60%)
      • All Committee Grants (20 percent)
    • Total Max Cuts
      • $258,104
    • Total Lowest Deficit
      • -$991,652

Helpful Numbers:

  • We have made enough cuts so that the 2024 budget as it stands now is $975,000 less than it was in 2023. We have to cut the budget by almost 20%. 
  • This does not include the $100,000+ of new spending that was approved at convention but never even agendized at Budget & Finance. 
  • DSA's peak surplus was $1.6 million at the end of 2021. However, this growth wasn’t responsible for the surplus, and hiring based on it was not sustainable.
    • $650,000 saved because there was no in-person convention in 2021 
    • Over $150,000 was saved because no staff travel in 2020/2021 
  • Payments to external grievance consultants from 2018 to now: over $2 million
  • Staffing numbers 
    • DSA increased its staff headcount by 60% from 2020 to 2021, going from 20 to 32 staffers. At the end of 2019, we had 49,000 dues-paying members.
    • DSA maxed out at just under 90,000 dues-paying members 
    • DSA now has 53,342 dues-paying members (as of 2/29/24), and we have more than 32 staffers. 
    • This is an adjustment back down to more sustainable numbers that match 2020 levels.

Other proposed cuts: 

  • Dues Share: $700,000. A quarter of it has already been spent, so we would need to cut more for the next three quarters to meet any annual target we set. 
  • Other Organizing Expenses: About $180k; some of them have been cut in the consensus proposal
  • Stipends: Potentially only co-chair salaries remaining 
  • Co-chair salaries: Additional cuts could move the co-chairs into non-exempt status (making co-chairs eligible for overtime), and that would be a financial problem. 
    • The co-chairs will be taking on part of the duties of the National Director alongside the National department directors. A layoff of the national co-chairs would mean that we need to hire a new National Director. That expense could be as high as the combined salaries of the two co-chairs. There would be massive gaps in leadership during the time that the co-chairs were not full-time and we did not have a national director.

Find discussion here on the DSA forums.

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