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Your NEA financial report: an annual audit.

NEA is in solid financial shape. During the 1990-91 fiscal year, NEA membership continued its upward climb, as the Association added some 52,000 new members. The General Fund Statements of Activity (box immediately below right) show net (after expenses) revenues of more than $950,000, which have been added to our General Fund Balance (box at bottom of the page).

The renovation of NEA headquarters was completed this fall. That completion is reflected in our financial statements by a transfer of assets to the Capital Improvement Fund (top right on opposite page).

We will continue to carefully monitor our operations during this time of recession. Our goal, as always, is to maximize all available resources to fulfill the Association's mission.

Coopers & Lybrand, Certified Public Accountants

Report of Independent Accountants

To the Executive Committee and Members of the National Education Association of the United States

We have audited the accompanying balance sheets of the General Fund and the Capital Improvement Fund of the National Education Association of the United States (a nonprofit corporation incorporated by an Act of the United States Congress) as of August 31, 1991 and 1990, the statements of activity and related schedule of area expense by type, changes in fund balance and changes in financial position of the General Fund and the statements of activity and changes in fund balance of the Capital Improvement Fund for the years then ended. We have also audited the consolidated balance sheets of the Special Purpose Funds of the National Education Association of the United States and subsidiary as of August 31, 1991 and 1990, and the related consolidated statements of activity and changes in fund balances for the years then ended. These financial statements are the responsibility of the Association's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly the financial position of the General Fund, Capital Improvement Fund and the Special Purpose Funds of the National Education Association of the United States and subsidiary as of August 31, 1991 and 1990, the results of operations and the changes in financial position of the General Fund and the Capital Improvement Fund, and the consolidated results of operations of the Special Purpose Funds for the years then ended in conformity with generally accepted accounting principles.

November 12, 1991

Washington, D.C.

A Report from NEA Secretary-Treasurer Marilyn Monahan
NATIONAL EDUCATION ASSOCIATION OF THE UNITED STATES
GENERAL FUND BALANCE SHEETS
August 31, 1991 and 1990

                          ASSETS
                                                1991           1990

Current assets:

Cash and short-term investments at
  cost, which approximates market.         $14,182,871    $12,057,363
Membership dues receivable from state
  associations, net of reserves for
  cancellations and uncollectible
  amounts of $926,437 in 1991 and
  $852,466 in 1990 (Note 2)                 22,394,291     18,922,558
Amounts due from affiliates and other
  organizations, net  of reserve for
  bad debts of $59,926 in 1991 and
  $59,926 in 1990 (Notes 2 and 3)            1,112,190        763,515
Amount due from Special Purpose
  Funds (Note 2)                               392,668      1,638,250
Amount due from Capital Improvement
  Fund (Note 12)                             8,596,461             --
Publication and advertising
  receivables                                  384,188        124,581
Prepaid expenses                             2,212,164      1,894,369
Other current assets                           858,403        974,925
    Total current assets                    50,133,236     36,375,561

Long-term assets:
Equipment, at cost, less accumulated
  depreciation of $9,874,447 in
  1991 and $9,555,707 in 1990 (Note 2)       3,928,807      1,214,924
Notes receivable and
  other assets                               3,190,211      3,386,812
Deferred building renovation costs
  (Notes 2, 11 and 12)                              --     33,563,950
    Total long-term assets                   7,119,018     38,165,686
    Total general fund assets              $57,252,254    $74,541,247

LIABILITIES AND FUND BALANCE

                                               1991           1990
Current liabilities:
Accounts payable and accrued
  liabilities                              $16,319,704    $12,704,906
Accrued annual leave                         4,190,222      3,949,924
Amounts held for affiliates and
  other organizations (Note 3)                 184,920        181,175
    Total current liabilities               20,694,846     16,836,005

Long-Term liabilities:
Accrued severance pay (Note 2)               3,434,556      3,227,484
Amount due to Special
  Purpose Funds (Note 2)                    13,067,769     10,736,802
Construction loan payable (Notes
  11 and 12)                                        --     16,900,000
    Total long-term liabilities             16,502,325     30,864,286
    Total general fund liabilities          37,197,171     47,700,291

Commitments and contingencies
(Notes 5, 6, 7, 9 and 11)
Fund balance                                20,055,083     26,840,956
    Total general fund liabilities
      and fund balance                     $57,252,254    $74,541,247

The accompanying notes are an integral part of these financial
statements.

GENERAL FUND STATEMENTS OF ACTIVITY
for the years ended August 31, 1991 and 1990

                                 1991          1991          1990

                                Budget        Actual        Actual
Revenues:
Membership dues (Note 2)   $147,304,000   $148,988,179   $136,862,755
Other income, fees,
  and services                  200,000        908,215          1,019
    Total revenues          147,504,000    149,896,394    137,881,630

Expenses by area:
Membership and
  Affiliates                 51,805,878     53,123,870     48,840,384
Collective Bargaining
  and Compensation            1,307,200      1,317,357      1,692,724
Communications                6,831,946      7,022,328      6,177,515
Government Relations          8,638,683      8,534,943      7,930,358
Human and Civil Rights        4,717,949      4,746,442      4,699,044
Education Policy and
  Professional Practice       4,167,531      4,086,258      4,030,568
Legal Services               17,552,184     17,174,128     15,817,951
Publishing                    7,730,129      7,532,819      6,890,149
Research                      6,000,102      5,827,050      5,292,230
Administration               11,849,101     12,396,048     10,145,912
Business and Finance          5,603,480      5,709,557      5,406,275
Data Processing               5,068,469      4,989,794      4,279,429
Governance                    9,929,308     10,684,083      9,346,519
    Total expenses
      by area               141,201,960    143,144,677    130,549,058

Other expenses:
NFIE (Note 8)                 2,300,000      2,300,000      2,300,000
Building renovation
  (Notes 2, 11, and 12)       3,500,000      3,500,000      4,239,817
    Total other expenses      5,800,000      5,800,000      6,539,817
    Total expenses          147,001,960    148,944,677    137,088,875
    Excess of revenues
      over expenses            $502,040       $951,717       $792,755

SCHEDULES OF AREA EXPENSES BY TYPE
for the years ended August 31, 1991 and 1990

                                               1991           1990

Salaries and benefits (Notes 2 and 5)      $45,780,512    $40,426,232
Grants to, and joint projects with,
  state and local associations              42,611,252     37,732,395
Kate Frank/DuShane Program
  expenditures (Note 4)                     10,211,624      9,314,891
Travel                                      12,636,924    13,081;146
Publications costs, net of
  advertising income                         4,107,563      3,793,940
Outside services (including
  consultants, legal and audit)             18,949,792     17,348,640
Machinery rentals, repairs,
  materials and supplies                     2,152,451      1,850,267
Office expenses (in cluding
  telephone, office supplies and
  utilities)                                 3,358,027      3,897,848
Administrative expenses (including
  insurance and rent)                        3,336,532      3,103,699
Total area expenses
  by type                                 $143,144,677   $130,549,058

The accompanying notes are an integral part of these financial
statements.

STATEMENTS OF CHANGES IN FUND BALANCE

Fund balance, August 31, 1989                             $26,048,201
Excess of revenues over expenses                              792,755
Fund balance, August 31, 1990                              26,840,956
Excess of revenues over expenses                              951,717
Transfer to capital improvement fund (Note 12)            (7,737,590)
Fund balance,
  August 31, 1991                                         $20,055,083

The accompanying notes are an integral part of these financial
statements.

GENERAL FUND STATEMENTS OF CHANGES IN FINANCIAL POSITION
for the years ended August 31, 1991 and 1990

                                                1991           1990
Sources of cash and short-term
investments:
From operations:
  Excess of revenues over expenses            $951,717       $792,755
  Increase (decrease) in excess of
    revenues over expenses from
    noncash revenues and expenses:
      Depreciation and amortization            318,740        143,201
  Decrease (increase) in other
    assets, net                                313,123    (2,246,979)
  Accrued severance pay                        207,072        401,445
  Accounts payable and accrued
    liabilities                              3,614,798      1,617,917
  Accrued fringe benefits                      240,298        299,742
  Amount due to Special Purpose Funds,
    net                                      3,576,549      3,505,701
  Amounts held for affiliates and
    other organizations                          3,745         79,802
  Transfer of deferred building
    renovation costs to
      Capital Improvement Fund              59,737,590            --
Loan proceeds                               26,503,539     14,000,000
    Total sources of cash and short-
      term investments                      95,467,171     18,593,584

Uses of cash and short-term
investments:
Membership dues receivable                   3,471,733        322,618
Due from Capital Improvement Fund            8,596,461            --
Publication and advertising receivables        259,607       (20,558)
Prepaid expenses                               317,795       (77,177)
Advances to (repayment from) affiliates
  and other organizations, net                 348,675       (40,449)
Purchase of equipment                        3,032,623      1,203,191
Increase in deferred building
  construction costs                        26,173,640     17,156,106
Transfer of loans to Capital
  Improvement Fund                          43,403,539            --
Transfer to Capital Improvement Fund         7,737,590            --
    Total uses of cash and short-term
      investments                           93,341,663     18,543,731
    Net increase in cash and
      short-term investments                 2,125,508         49,853
Cash and short-term investments,
  beginning of year                         12,057,363     12,007,510
Cash and short-term investments,
  end of year                              $14,182,871    $12,057,363

The accompanying notes are an integral part of these financial
statements.

CAPITAL IMPROVEMENT FUND BALANCE SHEETS
August 31, 1991 and 1990

                                   ASSETS
                                                1991           1990

Cash                                              $ --         $1,335
Land, at cost                                1,753,777      1,753,777
Building, at cost, less accumulated
  depreciation of $7,244,862 in 1991
  and $7,005,871 in 1990 (Notes 2
  and 11)                                    4,652,935      4,891,926
Building renovation, at cost,
  (Notes 2, 11, and 12)                     59,737,590             --
    Total capital improvement fund
      assets                               $66,144,302     $6,647,038

                                FUND BALANCE

Current liabilities:
Construction loan payable refinanced--
  current portion                             $595,986           $ --
Amount due to General Fund                   8,596,461
    Total current liabilities                9,192,447             --

Long-term liabilities (Notes 6,
11, and 12):
Refinanced loans:
  Line of credit                             7,403,539             --
  Construction loan payable                 35,404,014
    Total capital improvement fund
      liabilities                           52,000,000             --
Fund balance (Note 2)                       14,144,302      6,647,038
    Total capital improvement
      fund balance                         $66,144,302     $6,647,038

The accompanying notes are an integral part of these financial
statements.

CAPITAL IMPROVEMENT FUND STATEMENTS OF ACTIVITY AND CHANGES IN
FUND BALANCE

Fund balance, August 31, 1989                              $6,885,961
Depreciation expense                                          238,992
Other (revenue) expense                                          (69)
Fund balance, August 31, 1990                               6,647,038
Depreciation expense                                          238,992
Other (revenue) expense                                         1,334
Transfer from general fund (Note 12)                        7,737,590
Fund balance, August 31, 1991                             $14,144,302

The accompanying notes are an integral part of these financial
statements.

SPECIAL PURPOSE FUNDS CONSOLIDATED BALANCE SHEETS
August 31, 1991 and 1990

                              ASSETS

                                                 1991           1990

Cash                                          $851,279     $1,228,163
Accounts receivable                          4,526,457      4,191,820
Note receivable--NEEAF                         191,051      1,068,417
Prepaid expenses                               290,188         76,950
Leasehold improvements, furniture and
  equipment, at cost, net of
  accumulated depreciation of
  $1,066,219 in 1991 and $826,209 in
  1990                                         449,344        291,313
    Total current assets                     6,308,319      6,856,663
Amount due from general fund (Note 2)       13,067,769     10,736,802
    Total special purpose                  $19,376,088    $17,593,465
      funds assets

                    LIABILITIES AND FUND BALANCES

                                              1991           1990

Liabilities:
Note payable--NEEAF                           $191,051     $1,068,417
Accounts payable and accrued
  liabilities                                3,215,859      2,821,654
Amount due to general fund (Note 2)            392,668      1,638,250
    Total current liabilities                3,799,578      5,528,321
Deferred Income NEA-Retired Program
  (Note 2)                                   1,969,546      1,930,307
Accrued post-retirement health-care
  benefits (Notes 2 and 5)                   7,914,278      6,213,822
    Total long-term liabilities              9,883,824      8,144,129
    Total special purpose funds
      liabilities                           13,683,402     13,672,450
Fund balances                                5,692,686      3,921,015
    Total special purpose funds
      liabilities and fund balances        $19,376,088    $17,593,465

The accompanying notes are an integral part of these financial
statements.

SPECIAL PURPOSE FUNDS CONSOLIDATED STATEMENTS OF ACTIVITY AND CHANGES
IN FUND BALANCES
for the years ended August 31, 1991 and 1990

                            Fund                Revenues
                          balances
                         August 31,        NEA
                            1989      appropriation      Other

UniServ Fund (Note 2)      $118,921     $27,352,370          $ --
Special Services and
  Education Travel
  Trust Funds             1,179,889              --    15,253,429
National Education
  Employees Assistance
  Fund (Note 7)             108,927         155,000         5,916
NEA-Retired Program
  Fund (Note 2)           1,493,024         369,537       496,182
                         $2,900,761     $27,876,907   $15,755,527

                                          Fund          Revenues
                                        balances
                                       August 31,        NEA
                          Expenses        1990      appropriation

UniServ Fund (Note 2)    $26,600,325     $870,966     $29,839,811
Special Services and
  Education Travel
  Trust Funds             15,271,228    1,162,090              --
National Education
  Employees Assistance
  Fund (Note 7)              221,091       48,752         100,000
NEA-Retired Program
  Fund (Note 2)              519,536    1,839,207         550,821
                         $42,612,180   $3,921,015     $30,490,632

                          Revenues                     Fund
                                                      balances
                                                     August 31,
                            Other       Expenses        1991

UniServ Fund (Note 2)          $ --    $29,783,686     $927,091
Special Services and
  Education Travel
  Trust Funds             18,573,313    17,251,711    2,483,692
National Education
  Employees Assistance
  Fund (Note 7)               26,234       149,937       25,049

NEA-Retired Program
  Fund (Note 2)              576,022       709,196    2,256,854
                         $19,175,569   $47,894,530   $5,692,686

The accompanying notes are an integral part of these financial
statements.


[ILLUSTRATION OMITTED]

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

The National Education Association of the United States (NEA) is a nonprofit corporation incorporated under a special Act of the United States Congress. Its mission statement reads: "To fulfill the promise of a democratic society, the National Education Association shall promote the cause of quality public education and advance the profession of education; expand the rights and further the interests of educational employees; and advocate human, civil, and economic rights for all."

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The financial statements of NEA have been prepared on the accrual basis. To ensure observance with its bylaws, the resources of NEA are classified for accounting and reporting purposes into funds established according to their nature and purpose. The assets, liabilities, fund balances and changes in fund balances are reported in the following fund groups:
   General Fund

   The bylaws of NEA provide that the General Fund
   shall comprise all income received in the form of
   dues, interest, dividends, fees, earnings from
   advertising, sales of NEA publications and payments
   for services and funds received by gift,
   bequest, devise or transfer to NEA, which are not
   specifically designated for deposit in the Capital
   Improvement Fund.

   Capital Improvement Fund

   The bylaws of NEA provide that the Capital
   Improvement Fund shall comprise the properties
   and permanent investment of NEA and other funds,
   or properties received by gift, devise, bequest or
   transfer for deposit in the Fund. Disbursement from
   the Capital Improvement Fund to acquire new
   properties or to provide for major long-term
   improvements in existing properties, must be
   authorized by a two-thirds vote of the Board of
   Directors. Expenditures from this Fund for any other
   purpose must be authorized by a two-thirds vote of
   the Representative Assembly.

   Special Purpose Funds

   NEA has various Special Purpose Funds which
   consist of restricted funds or funds designated for
   specific projects and purposes. Special Purpose
   Funds include activities such as the UniServ Fund,
   NEA-Retired Program Fund, accrued post-retirement
   healthcare benefits, and the administration of
   various services such as insurance plans for
   members. These funds also include the activity of
   Member Benefits Corporation (MBC), a wholly-owned
   subsidiary of NEA. MBC provides support to
   the Special Services and Educational Travel Trust
   Funds primarily in the areas of membership services,
   affiliate support, marketing and training.


General Fund budget

The budget of NEA is designed to achieve the mission and strategic objectives of NEA. The budget amounts included in the statements of General Fund activity are as approved by NEA's Representative Assembly and amended by the Board of Directors, as set forth in the guidelines approved by the Representative Assembly and the Board of Directors.

NEA-Retired Program

During 1982, NEA began offering life memberships to retired members through a new special purpose fund known as the NEA-Retired Program. Payments to the fund qualify retired members for certain services provided to active members, as well as services designed specifically for retired persons. Payments to the fund are recorded as deferred income when received and amortized over the estimated life expectancy of its members.

Property, equipment, and depreciation NEA records depreciation on its building in the Capital Improvement Fund. This depreciation is recorded using the straight-line method over the estimated useful life of the building of 50 years. Depreciation on the building was approximately $239,000 in t 991 and 1990, reflecting the change to the Capital Improvement Fund balance.

NEA capitalizes equipment with a cost in excess of $2,500 in the General Fund and depreciates these assets using the straight-line method over the estimated useful life of the assets.

Building renovation costs and expenses

Construction, architectural, design, engineering services and construction-period interest costs related to the renovation of the building had been recorded as deferred costs in the General Fund. Effective August 31, 1991 the building renovation costs were placed in service and the accumulated costs transferred to the Capital Improvement Fund. Amounts incurred during construction related to asbestos removal, moving and facilities rental expenses have been expensed as incurred.

Membership dues

Membership dues are recognized as income over the membership year, which is September 1 through August 31. Dues are assessed to members as provided in the bylaws. An estimated provision for uncollectibles, write-offs and cancellations is charged against membership dues revenues.

In accordance with the bylaws, a percentage of the membership dues is allocated to UniServ grants, (which are included in the expenses of membership and affiliates), whereby NEA provides grants to affiliates to assist in funding their staff representatives whose responsibilities are to implement, improve and coordinate programs of NEA.

Employee benefit plans

NEA has a policy entitling employees with over 10 years of service to severance pay equal to 10 weeks of salary. NEA recognizes the liability for severance pay at the time the employee reaches 10 years of employment and is entitled to the severance pay.

Pension plan expense is funded and expensed as contributions are due and payable.

Post-retirement health care and life insurance benefits for present retirees are expensed when the premiums are payable. NEA has adopted an accrual method of accounting for future benefits to be provided to retirees and qualified active employees (see note 5).

Reclassifications

Certain amounts for the year ended August 31, 1990 in the General Fund Statement of Activity have been reclassified to conform with the August 31, 1991 presentation.

3. GOVERNANCE AFFILIATES, NONGOVERNANCE AFFILIATES AND OTHER ORGANIZATIONS

NEA provides various administrative services and acts as custodian for the funds of certain Governance and Nongovernance Affiliates and other organizations, which also offer services to members of NEA and to other educators. However, each of these organizations has a separate Board of Directors and operates independently of NEA. Accordingly, the accompanying financial statements present the financial activity of NEA exclusive of these organizations, except for the funds held by or due to NEA as custodian.

4. KATE FRANK/DUSHANE PROGRAM

The Kate Frank/DuShane Program (the Program) was established by the Representative Assembly to protect the human, civil and professional rights of school employees. The major project of the Program, the Unified Legal Services Program, provides reimbursement for legal assistance to educational employees in matters related to their employment.

5. RETIREMENT BENEFITS

NEA participates in a multiemployer, defined-benefit retirement plan which is noncontributory for NEA employees and which covers substantially all permanent employees. Approximately 70% of the employees covered under the plan are employed by NEA; the remaining 30% are employees of various state and local affiliates of NEA. NEA's policy is to fund retirement costs accrued.

NEA's retirement contribution expense for the fiscal year ended 1991 was approximately $3,655,671. The accumulated plan benefits and plan net assets available for benefits as of the date of the latest actuarial valuation are presented below:
                                        January 1

                                    1991          1990
Actuarial present value of
accumulated benefits:
  Vested                     $76,803,953   $71,111,281
  Nonvested                   12,848,651    12,293,699
                             $89,652,604   $83,404,980
Net assets available
for benefits                 $27,310,894   $27,281,219


The increase in the actuarial present value of accumulated benefits reflects plan amendments including a standard cost of living adjustment for retirement benefits.

The actuarial present value of accumulated plan benefits ignores the effects of future compensation increases on the benefits that participants will receive for their past service. If this value is adjusted for projected salary increases, consistent with the assumed rate of return, the adjusted actuarial present value of accumulated plan benefits would be approximately $117,777,000 and $118,808,000 as of January 1, 1991 and 1990, respectively.

The assumed rate of return used in determining the actuarial present value of accumulated plan benefits was 8.5% for 1991 and 8% for 1990. As of January 1, 1991, the retirement plan had no unfunded liabilities.

NEA's employees are also eligible to participate in the 401 (k) Salary Reduction Plan of the National Education Association (the Plan) in which the employee can make voluntary, tax-deferred contributions within specified limits. The Plan was established under the provisions of Internal Revenue Code Subsection 401(k) and has received a favorable determination as to its tax status. NEA's contributions to the Plan are based on a set percentage of employee contributions which amounted to $772,508 and $487,230 for the years ended August 31, 1991 and 1990, respectively.

In addition to providing pension benefits, NEA provides various pest-retirement health care and life insurance benefits for retirees. Substantially, all of NEA's employees are eligible for these benefits upon retirement. The annual cost for providing such benefits to current retirees is expensed as the premiums are payable, and amounted to approximately $796,000 for fiscal year 1991 and $530,000 for fiscal year 1990.

NEA has adopted an accrual method of accounting to provide for future payment of post-retirement health care benefits. In order to accrue for the estimated obligation to provide such benefits for present retirees and eligible active employees upon retirement over an estimated period of 10 to 12 years, approximately $1,700,000 in fiscal years 1991 and 1990, was accrued and expensed in the General Fund. This obligation, amounting to $7,914,278 and $6,213,822, is included as a liability in the Special Purpose Funds as of August 31, 1991 and 1990.

6. BANK LINE OF CREDIT

NEA has a line of credit of $12,500,000 which was from a commercial bank at the bank's prime interest rate. As of August 31, 1991, the bank's prime interest rate was 8.5% per annum. As of August 31, 1991, $7,403,539 was borrowed against this line to partially finance the building renovation. The amount outstanding was refinanced on October 15, 1991 as part of the permanent loan collateralized by the building renovation (see Note 11).

7. NATIONAL EDUCATION EMPLOYEES ASSISTANCE FUND, INC.

The National Education Employees Assistance Fund, Inc. (NEEAF), formerly the National Teachers Assistance Fund, Inc., is a nonprofit corporation established for the purpose of providing financial and other assistance to member organizations and their individual members involved in disputes over terms and conditions of employment. In this capacity, NEEAF, from time to time, has guaranteed loans made by lending institutions to members who were involved in such disputes. These loans are collateralized by letters of credit from those state affiliates which are members of NEEAF and also by NEA's guarantee in the amount of approximately $2,292,000. In the event of default on a loan, the bylaws of NEEAF provide that the bank shall first draw upon the letter of credit of the state affiliate from which the funds were transmitted and, thereafter, proportionately from all other letters of credit, including NEA's line of credit.

As of August 31, 1991, NEA is contingently liable for $606,149 of the $1,212,298 in loans guaranteed by NEEAF in the event of default. Subsequent to August 31, 1991 NEEAF guaranteed additional loans of $3,111,408 for an additional contingent liability of $1,555,704.

8. NATIONAL FOUNDATION FOR THE IMPROVEMENT OF EDUCATION

The National Foundation for the Improvement of Education (NFIE) was created in 1969 by the National Education Association as a tax-exempt public foundation to improve the quality of education for citizens of the United States.

The Foundation develops strategies that address the most challenging problems confronting American education. NFIE has designed its direction to develop programs in three focus areas: improvement of students' educational success, improvement of teachers' professional capability and improvement of the effectiveness of curriculum and instruction.

During the year ended August 31,1991, payments totaling $2,300,000 were made to NFIE. Of this amount, approximately $1,800,000 was allocated for an endowment that will help fund other programs to meet critical needs of students and teachers in years to come. The remaining funds were provided to cover administrative supporting services of the NFIE.

9. COMMITMENTS AND CONTINGENCIES

In April 1989, the Executive Committee approved that NEA guarantee a five year loan from American Security Bank to the Indiana State Teachers Association (ISTA). As of August 31, 1991, the amount outstanding on this loan was $1,265,134.
NEA leases office space at a number of locations
under noncancelable operating leases. Future minimum
lease payments under these leases as of August
31, 1991, are as follows:

  1992                        $496,015
  1993                         294,508
  1994                          68,652
                              $858,652


Rental expense for all operating leases was approximately $1,904,000 in 1991 and $1,035,000 in 1990.

NEA has been named as a party in several legal matters, the outcome of which cannot presently be determined. Management believes that the net results of these claims will not have a material impact on NEA.

10. INCOME TAXES

Under provisions of Section 501(c)(5) of the Internal Revenue Code and the applicable income tax regulations of the District of Columbia, NEA is exempt from taxes on income, other than taxes on unrelated business income. Since NEA has incurred a cumulative loss from these unrelated business activities, no provision for income taxes has been recorded in the accompanying financial statements.

11. CONSTRUCTION FINANCING

On October 20, 1988, NEA entered into a construction loan agreement amounting to $36,000,000 of which $36,000,000 is outstanding at August 31,1991 to be used to partially finance the construction of the NEA headquarters office building. The loan agreement provides for monthly interest only payments on the unpaid principal balance, at variable rates, during the construction period. At August 31, 1991, the interest rate was 8.75% per annum. The loan was collateralized by NEA's headquarters office building, personal property, assignment of future leases and construction contracts.

During the year ended August 31, 1991, approximately $4,925,600 of interest charges has been incurred and has been capitalized as part of building costs.

On October 15, 1991 the present construction loan along with the outstanding balance on the line of credit in the amount of $7,403,539 (see Note 6) was refinanced into a permanent mortgage loan with an 20-year maturity in the amount of $52,000,000 at an average interest rate of 10.125% collateralized by NEA's headquarters office building and personal property.

The future maturities of the loan payable are as follows:
Year ending August 31:
  1992                        $595,986
  1993                         783,888
  1994                         866,264
  1995                         957,299
  1996                       1,057,897
  Thereafter                47,738,666
                           $52,000,000


12. INTERFUND TRANSFERS

As of August 31, 1991, upon completion of the construction of the building renovation, the total cost of $59,737,590 and debt totaling $43,403,539 were transferred from the General Fund to the Capital Improvement Fund. As of August 31, 1991 the Capital Improvement Fund established a payable of $8,596,461 to the General Fund to reimburse the General Fund for a portion of renovation costs. A permanent transfer from the General Fund to the Capital Improvement Fund of $7,737,590 has been recorded as of August 31, 1991.
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Author:Monahan, Marilyn
Publication:NEA Today
Article Type:Financial report
Geographic Code:1USA
Date:Feb 1, 1992
Words:4855
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