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Vote OpenVote CloseDate of SubmissionStaff Contact and EmailStatement Number

08 March 2018

ADOPTED

15Y, 0N, 0A

06 March 2018

08 March 2018

15 March 2018

15 March 2018

09 March 2018

AL-ALAC-ST-0318-01-01-EN

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FINAL VERSION TO BE SUBMITTED IF RATIFIED

The final version to be submitted, if the draft is ratified, will be placed here by upon completion of the vote. 



FINAL DRAFT VERSION TO BE VOTED UPON BY THE ALAC

The final draft version to be voted upon by the ALAC will be placed here before the vote is to begin.

ALAC Statement on ICANN Draft FY19 Operating Plan and Budget and Five-Year Operating Plan Update

 

The At-Large Advisory Committee (ALAC) would like to thank the ICANN CFO and his team for the improvement made in the draft FY19 operating plan and budget in terms of clarity. The presentation of the draft budget in several separate standalone documents is helpful for direct access to the needed information without being obliged to read the whole draft budget document. The ALAC also appreciates the new information, such as the per-person costs for travel to ICANN meetings that was not previously readily available.

That being said, when such changes are made from year to year, it is imperative that context be provided. As an example, although we appreciate the travel information mentioned above, it should have been accompanied by comparable information from past years so the community can understand how it has changed over the last several years. This is all the more important given that decisions were made in the proposed budget based on such relative changes. Links between the multiple documents would also help those unfamiliar with the new formats. Additional graphics may be useful to show the relative changes over a multi-year period.

The ALAC notes that at least one document (Doc #2) was changed after it was posted with no notice on the Public Comment page of the replacement and no indication in the document that a change had been made (same document name and no indication in the document title or date that it had been revised). The ALAC also notes that the presentation of SO/AC travel seats was not accurate in that the total number of seats “per meeting” includes incoming leaders which only applies to the AGM and also includes the Technical Experts Group which is not an SO or AC. Both of these served to inflate the perception of actual travel allocated to SO/ACs.

The ALAC appreciates that ICANN is entering a period where we can no longer expect growing budgets, and strongly supports ICANN’s intent to both operate within its projected revenue and work towards having a reasonable reserve.

 

The ALAC does not support the direction taken in this budget however. Specifically we see an increase in staff headcount and personnel costs while services to the community have been brutally cut. ICANN’s credibility rests upon the multistakeholder model, and cuts that jeopardize that model should not be made unless there are no alternatives and without due recognition of the impact.

 

At-Large, unlike many parts of the ICANN multistakeholder community, exists solely through the benefit of individuals who are not employed in the domain industry and to a large extent, not even in jobs related to the Internet. Without ICANN financial support, we would simply disappear from the ICANN ecosystem - a cut in our support can severely damage At-Large involvement.

 

In this budget, there are two such clear examples. The CROP program (which just recently was transformed from a pilot program into a core budget-funded program) was eliminated. It was done with absolutely no mention in the documents. If the program was so expendable as to not even warrant a comment, why was it just recently incorporated into core budget? This program is relied upon by those parts of the community that are least able to self-finance outreach and engagement. There will be a significant impact of its disappearance. The budgets documents are silent on the logic, but finance staff have said it was due to the high cost of meetings this coming year (implying but not explicitly saying that this was a one-time cut which would be reinstated next year). The community has absolutely no say in meeting location choice and should not be penalized because of it, and particularly penalized in ways that impact our ability to deliver what is expected of us. At the time several years ago when the community indicated that it wanted to meet in a wide variety of locations, there was no discussion of that decision impacting other budgets.

 

The other example of such a cut is the SO/AC Additional Budget Requests (ABRs). Last year’s budget was $646,800. This budget proposal says that the ABR is being cut by “more that 50%”. Finance staff have told us that the FY19 placeholder envelope is $300,000, however, document #4, page 21 says that the placeholder envelope is $215,735, a cut of more than 2/3. Whichever number is correct, this will have a very significant impact on the ability of SO and ACs to operate effectively. Programs such as the Academy Leadership Training, the Global Indigenous Ambassador and real-time Teleconference Captioning originated as ABR projects before being taken into the core ICANN budget.

 

We also note that in addition to the above cuts, GSE will have reduced funding for sponsorships and contributions. Budget reductions such as these goes directly against ICANN strategic objectives:  

4.1 Encourage engagement with the existing Internet Governance Ecosystem at National,  Regional and International levels.

4.3 Participate in the evolution of a global, trusted and inclusive multi-stakeholder Internet  Governance Ecosystem that addresses Internet issues

The ALAC regrets the cut in the Fellowship. Some of our best leaders within At-Large, including our current Board Member were introduced to ICANN through the Fellowship Program.

The ALAC also has concerns that industry sources seem to believe that the “Low Estimate” and “Best Estimate” for expected registrar and registry revenue may be rather optimistic, implying the possibility of further cuts or impact on the reserve. Perhaps ICANN should consult with their larger registrars and registries to ensure that revenue estimates are not overly optimistic.

Non-IANA personnel costs account for about 50% of the non-IANA expense budget (48% of the FY18 adopted budget, 50% of the FY18 budget forecast, and 56% of the FY19 draft budget. As such, these costs bear closer examination. FY19 personnel costs increased 11.0% from the FY18 adopted budget, and 12.8% from the FY18 forecast. Noting that ICANN often uses contracted services in lieu of staff, it is reasonable to compare the total of the two. In that case, the FY19 amount is 2.9% over the FY18 adopted budget, and 4.8% over the FY18 forecast. So even considering contracts (which include a wide range of other non-personal costs), we are seeing a substantial increase. In a budget that is supposed to be based on “stabilized” such increases do not seem reasonable in the absence of a carefully reasoned rationale.

 

To be clear, the ALAC does not oppose staffing increases as such. In any dynamic organization such as ICANN, there will always be changing needs and demands which warrant bringing in new people. From an ALAC point of view, in the middle of an Organizational Review, we may well be able to justify the need for additional support and we presume the same may be true for other policy groups and support services throughout the organization. And as needs change, we need to be confident that that staff are deployed factoring in fitness-for-purpose. Appropriate changes to improve effectiveness are critical. But there needs to be clarity when such changes are presented to the community.

 

Looking at this draft budget and the history in ICANN indicates that there are often budgetary issues where funding is spent counter to established policy and practice. Although this may not be the right forum to look at examples, ICANN needs to be careful that if we ask the community to make sacrifices, that we scrupulously treat all parts of the community with fairness.

 

In terms of overall budget philosophy, it is common in constrained budgets to cut “easy” areas such as education and travel. In the long term, these usually turn out to be easy but bad decisions.

We must accept that domain registration revenue is constrained at this point. In fact, if anti-abuse measures are effective, we may see a drastic drop in registrations associate with such abuse. Although the number of gTLDs has grown, there is great pressure on ICANN to reduce registry fixed costs. At-Large does not support such actions – ICANN should not bear the costs of unsuccessful business models. ICANN must investigate alternative revenue options, both steady state and one-time. Examples include use of reasonable percentage of auction proceeds for the reserve and using some percentage of New gTLD fees to fund operational expenses. This is completely justifiable based on two rationales:

 

  • New gTLDs have little merit if ICANN is not finically stable;
  • As the number of TLDs increase, so will contractual compliance costs. Yes the increased revenue based on 2nd level names has not kept pace.

In summary, the ALAC supports a balanced budget, but if cuts are necessary, they need to be balanced and fair and not target only the most vulnerable. Moreover there needs to be a clear rationale provided if there are to be increases such as presented for personnel in this FY19 plan.

 

The ALAC wishes to call attention to one of its prime methodologies for engaging the globally distributed At-Large Community. Based on processes that have been developed and evolved over the previous decade, in 2016 the ICANN Board approved the ALAC Proposal for Multi-Year Planning of At-Large Face-to-Face Meetings and it was integrated into the ICANN Operational Plan. This program calls for periodic regional gatherings (General Assemblies) and a global meeting every five years (At-Large Summit - ATLAS). The last such meeting was held in 2014 and the next is currently being discussed for FY20 during ICANN66 in Montreal. Although any budget for such a meeting will only be formally approved in June 2019, it is clear that both ICANN meeting staff and the At-Large ATLAS III Organizing Committee will have to begin planning long before that.  This forward planning was the reason that the multi-year proposal was made and accepted by the Board. The ALAC is well aware of the current budget situation, and notes that despite significant growth in At-Large over the past years, the ATLAS meeting being discussed will need to be based on a more focused approach in terms of topics covered and participants.  ATLAS III will focus on enhancing facilitation and support of policy involvement by those in regions who otherwise have little direct contact with ICANN with the aim of increasing their input into At-Large and ICANN policy activities. The meeting will fully support the initiatives to increase regional and individual participation being discussed in connection with the At-Large Organizational Review.

 



FIRST DRAFT SUBMITTED

The first draft submitted will be placed here before the call for comments begins.

New Draft Submitted by Alan Greenberg, 12:11 pm UTC-04:00


The At-Large Advisory Committee (ALAC) would like to thank the ICANN CFO and his team for the improvement made in the FY19 operating plan and budget in terms of clarity. The presentation of the draft budget in several separate standalone documents is helpful for direct access to the needed information without being obliged to read the whole draft budget document. The ALAC also appreciates the new information, such as the per-person costs for travel to ICANN meetings that was not previously readily available.

That being said, when such changes are made from year to year, it is imperative that context be provided. As an example, although we appreciate the travel information mentioned above, it should have been accompanied by comparable information from past years so the community can understand how it has changed over the last several years. This is all the more important given that decisions were made in the proposed budget based on such relative changes. Links between the multiple documents would also help those unfamiliar with the new formats. Additional graphics may be useful to show the relative changes over a multi-year period.

The ALAC notes that at least one document (Doc #2) was changed after it was posted with no notice of the replacement and no indication in the document that a change had been made (same document name and no indication in the document title or date that it had been revised). The ALAC also notes that this presentation of SO/AC travel seats was not accurate in that the total number of seats “per meeting” includes incoming leaders which only applies to the AGM and also includes the Technical Experts Group which is not an SO or AC. Both of these served to inflate the perception of actual travel allocated to SO/ACs.

The ALAC appreciates that ICANN is entering a period where we can no longer expect growing budgets, and strongly supports ICANN’s intent to both operate within its projected revenue and work towards having a reasonable reserve.

The ALAC does not support the direction taken in this budget however. Specifically we see an increase in staff headcount and personnel costs while services to the community have been brutally cut. ICANN’s credibility rests upon the multistakeholder model, and cuts that jeopardize that model should not be made unless there are no alternatives and without due recognition of the impact.

At-Large, unlike many parts of the ICANN multistakeholder community exists solely through the benefit of individuals who are not employed in the domain industry and to a large extent, not even in jobs related to the Internet. Without ICANN financial support, we would simply disappear from the ICANN ecosystem - a cut in our support can severely damage At-Large involvement.

In this budget, there are two such clear examples. The CROP program (which just recently was transformed from a pilot program into a base-budget-funded program) was eliminated. It was done with absolutely no mention in the documents. If the program was so expendable as to not even warrant a comment, why was it just recently incorporated into base budget. This program is relied upon by those parts of the community that are least able to self-finance outreach and there will be a significant impact of its disappearance. The budgets documents are silent on the logic, but finance staff have said it was due to the high cost of meetings this coming year (implying but not explicitly saying that this was a one-time cut which would be reinstated next year). The community has absolutely no say in meeting location choice and should not be penalized because of it, and particularly penalized in ways that impact our ability to deliver what is expected of us. At the time several years ago when the community indicated that it wanted to meet in a wide variety of locations, there was no discussion of that decision impacting other budgets.

The other example of such a cut is the SO/AC Additional Budget Requests (ABRs). Last year’s budget was $646,800. This budget proposal says that the ABR is being cut by “more that 50%”. Finance staff have told us that the FY19 placeholder envelope is $300,000, however, document #4, page 21 says that the placeholder envelope is $215,735, a cut of more than 2/3. Whichever number is correct, this will have a very significant impact on the ability of SO and ACs to operate effectively.

We also note that in addition to the above cuts, GSE will have reduced funding for sponsorships and contributions. Budget reductions such as these goes directly against ICANN strategic objectives:  

4.1 Encourage engagement with the existing Internet Governance Ecosystem at National,  Regional and International levels.

4.3 Participate in the evolution of a global, trusted and inclusive multi-stakeholder Internet  Governance Ecosystem that addresses Internet issues

The ALAC also has concerns that industry sources seem to believe that the “Low Estimate” “Best Estimate” for expected registrar and registry revenue may be rather optimistic, implying the possibility of further cuts or impact on the reserve. Perhaps ICANN should consult with their larger registrars and registries to ensure that revenue estimates are not overly optimistic.

Non-IANA personnel costs account for about 50% of the non-IANA expense budget (48% of the FY18 budget, 50% of the FY18 budget, and 56% of the FY19 draft budget. As such, these costs bear closer examination. FY19 personnel costs increased 11.0% from the FY18 budget, and 12.8% from the FY19 forecast. Noting that ICANN often uses contracted services in lieu of staff, it is reasonable to compare the total of the two. In that case, the FY19 amount is 2.9% over the FY18 budget, and 4.8% over the FY18 forecast. So even considering contracts (which include a wide range of other non-personal costs), we are seeing a substantial increase. In a budget that is supposed to be based on “stabilized” that does not seem reasonable in the absence of a carefully reasoned rationale.

It is not clear what is driving this increase in staff, but there is a definite trend within ICANN Organization to build complex process in the name of transparency and accountability. Indeed, some of the increases may be driven by the overall push in ICANN for transparency and accountability. But we must do so we a real regard to costs and benefits.

Even a brief review of the budget shows there are costs that can be questioned. As just a minor example, the policy for ICANN, other than the Board, is that non-Chair travel be in economy class. Yet the entire Technical Experts Group, counter to policy, always travels in business class, resulting in a $50,000 annual additional cost (comparable to the At-Large CROP funding which has been eliminated). There may well be other such “easy” cuts as well, but without more detailed knowledge of where all personnel are deployed, it is difficult for someone outside of the ICANN Organization to present alternative cuts.

In terms of overall budget philosophy, it is common in constrained budgets to cut “easy” areas such as education and travel. In the long term, these usually turn out to be easy but bad decisions.

We must accept that domain registration revenue is constrained at this point. In fact, if anti-abuse measures are effective, we may see a drastic drop in registrations associate with such abuse. Although the number of gTLDs has grown, there is great pressure on ICANN to reduce registry fixed costs. At-Large does not support such actions – ICANN should not bear the costs of unsuccessful business models. ICANN must investigate alternative revenue options, both steady state and one-time. Examples include use of reasonable percentage of auction proceeds for the reserve and using some percentage of New gTLD fees to fund operational expenses. This is completely justifiable based on two rationales:

  • New gTLDs have little merit if ICANN is not finically stable;
  • As the number of TLDs increase, so will contractual compliance costs. Yes the increased revenue based on 2nd level names has not kept pace.

In summary, the ALAC supports a balanced budget, but if cuts are necessary, they need to be balanced and fair and not target only the most vulnerable. Moreover there needs to be a clear rationale provided if there are to be increases such as presented for personnel in this FY19 plan.

The ALAC wishes to call attention to one of its prime methodologies for engaging the widely distributed At-Large Community. Based on processes that have been developed and evolved over the previous   decade, in 2016 the ICANN Board approved the ALAC Proposal for Multi-Year Planning of At-Large Face-to-Face Meetings and it was integrated into the ICANN Operational Plan. This program calls for periodic regional gatherings (General Assemblies) and a global meeting every five years (At-Large Summit - ATLAS). The last such meeting was held in 2014 and the next is currently being discussed for FY20 during ICANN66 in Montreal. Although any budget for such a meeting will only be formally approved in June 2019, it is clear the both ICANN meeting staff and At-Large will have to begin planning long before that – that was the reason that the multi-year proposal was made and accepted by the Board. The ALAC is well aware of the current budget situation, and notes that despite significant growth in At-Large over the past years, the ATLAS meeting being discussed is quite modest and will be focusing on supporting and enhancing policy involvement by those in regions who otherwise have little direct contact with ICANN. The meeting will fully support the initiatives to increase regional participation being discussed in connection with the At-Large Organizational Review.

----------------------------------------------


FY19 Operating Plan and Budget

----------------------------------------------

ALAC Comment

------------------

 The At-Large Advisory Committee (ALAC) would like to thank the ICANN CFO and his team for the improvement made in the FY19 operating plan and budget in terms of clarity.

The presentation of the draft budget in several separate standalone documents is really helpful for a direct access to the needed information without being obliged to read the whole draft budget document.

 ALAC notes the will of ICANN org to reach a more stabilized budget through the upcoming fiscal years and supports this intention for sustainability and stable financial situation.

 While walking through the documents of the budget, we notice that the so called stabilization consists in the reduction of the community services and an increase of the personal expenses.

 Comparing FY18 forecast budget and the one of FY19, we notice that the funding didn’t decrease, but increased by $3.5 Millions (138-134.5), which means that if we keep everything the same in terms of cash expenses, our budget for FY19 will have an excess.

 As for the FY19 cash expenses, we notice that there is a decrease in almost everything except the Personnel where we have an increase of $8.1 Millions (76.8-68.7). This is also reflected on the Headcount.

 We can’t find a convincing argument of this increase in the Personnel expenses in the budget documents: no new project, reduction/removal of certain projects, reduction in the services provided to the community, etc.

 The ALAC doesn’t believe that we should compensate the increase of the personnel expenses by a reduction of the services provided to the community (CROP, Fellowship, NexGen, additional budget request, etc.).

 We would like to emphasis on the not for profit character of ICANN and find that ICANN budget is already well stabilized for the previous fiscal years

 At-Large had its third Summit programmed for FY19 (Kobe), and then postponed for FY20 (Montreal). We will be planning for it in FY20 and we believe that ICANN Org should now give it all necessary budget considerations.

 Reducing the Additional Budget Request envelop by 67% is almost deleting it (from 646,800 to 212,735). ICANN needs to remain involved in supporting the Internet Governance Ecosystem,

Such a reduction will be against the following ICANN strategic objectives:  

4.1 Encourage engagement with the existing Internet Governance Ecosystem at National,

       Regional and International levels.

4.3 Participate in the evolution of a global, trusted and inclusive multi-stakeholder Internet

      Governance Ecosystem that addresses Internet issues

 The ALAC supports the budget stabilization concept, but doesn’t find the proposed draft FY19 budget serving this objective in the right way 

23 Comments

  1. During our recent call, I have heard rumours of CROP being slashed in FY19. I had to check this out myself, and could not find it in any of the Budget documents, nor was there a mention about CROP on any budget summaries, nor any announcement of CROP being slashed.

    I compared FY18 and FY19 master budget documents, along with project numbers and although this was a bit time consuming, I think I have found the answer:

    In the overall budget Excel Master Document - Section 1.2 for FY18 had projects 151053, 151157, 151171, 151172, 151173, 151177, 151180, 151187, 151188, 151190, etc.

    In FY19, there is 151055 to replace 151053, then 151157, 151171, 151173, 151177, 151180, 151189, 151190, 151191 etc.

    Thus missing from the list are 151172, 151187, 151188

    151172 = FY18 Ongoing ccNSO Council Support

    This was a budget item that appears to have been folded into 151171 the ongoing ccNSO General Support.

    151187 = FY18 Ongoing SO-AC, GNSO Secretariat Support Program

    That was probably folded into 151206 - Recurring Activity - GNSO PDP Support & Activities. In FY18 this line used to be more restricted to just policy support with 7.7FTE & $1.2M. In FY18 151206 is 9.6FTE & $1.7M

    And that leaves 151188 missing from FY19. Budget Item 151188 is: CROP.

    Thus is appears that CROP has been discontinued, unless it is covered by another budget elsewhere, but I have gone through the whole account with a fine tooth-comb and not found any mention of CROP or its various denominations.

  2. Elements of a Statement are being discussed on a Google Doc: https://goo.gl/LzB7Mu

  3. A few things to consider:

    1. We need to mention ATLAS III. We were originally hoping that it would occur in FY19, but that is clearly not the case. So FY20 is our target. It is reasonably clear that although the GA/ATLAS concept is now in the five year operational plan, it has NOT been considered in budgets. Specifically, our hope was that it could logically be funded over several years, but to date there is no evidence of money being put aside. So we need to
      1. serve notice that we will be planning for it in FY20 and budget consideration should be given to it now (implying but not saying that they should put some money away for it)
      2. in the era of the Empowered Community, we need to give a discreet heads-up that it wil be coming.
    2. The document says that the Additional Budget Request (ABR) envelope in FY18 was envelope has been cut by "more than 50%" (document #2, page 22). The ABR funding for FY18 was $646,800 (https://community.icann.org/download/attachments/64083657/FY18%20SO-AC%20Additional%20Budget%20Requests%20Explanations%20Adopted%20Final.pdf, For FY19 the placeholder is $212,735 (document #4, page 21). If those two figures are for the same item - they seem to be but the budget documents change from year to year, that seems to be a cut of 2/3! When you then add the complete cutting of CROP, they have ripped out the vast bulk of "discretionary" spending for the SO/ACs.Have similar cuts been made elsewhere in ICANN?
    3. We need to review budget with some care, looking for places where ther eare clear opportunities to reduce costs, or places which have not been at all impacted by the funding "crisis". Once example I found is the Technical Experts Group (TEG). The TEG was created wghen the Board abolished the Liaison from the Technical Liaison Group which consisted of members from several standards organizations. Instead the TEG meets with the Board for 90 minutes at every ICANN meeting. They are allocated six members for each ICANN meeting and they all travel in business class. The budget shows (document # 4, page 21) that if they only were provided with economy travel (like most volunteers, the savings  in FY19 would be $75,000 - 50% more than the cost of CROP for At-Large.
    1. Alan, Great suggestion.  I never knew why the TEG travels in business class while all others travel in economy

      As for the ABR, if that is the case thanyou are correct, the ABR was cut by 2/3. 

      At the same time the documents show that staff continue to increase when all else is being cut.

      The NCSG have intersessionals every year that are funded but yet we cannot get an ATLAS funded? 

      1. Whether we can fund ATLAS remains to be seen. There will no doubt be obstacles, but let's not PRESUME it will not be funded...

        To be precise, I do not beleive that NCSG has an intersessional meeting, but the Non-Contracted Party House does, of which NCSG is a part.

  4. Alan - you asked about other topics that we should mention on our comments regarding the budget, in addition to the travel issues (CROP, Fellowship, NextGen etc.)

    Let me suggest (in no particular order):

    1. Ongoing growth in staff FTEs. Whilst salaries appear to represent over 50% of ICANN costs, nowhere is there a simple table showing the largest growth in FTEs per department. Whilst the FTE count of policy staff has increased over the years, it has been rather modest than when compared to other departments. Hence if costs need to be cut, then all departments need to be assessed according to the staffing growth they have experienced over the years.
    2. The need for one or more graphics, probably a compounded line graph chart, that shows costs according to capital expenditures, salaries, research, operations, one-off project costs, travel, external contractors etc. over the past 5 years. Indeed, it is impossible to gain a control over costs if unable to see trends in what are the costs that weigh most in the increasing budget
    3. Expressing concern that we also believe that ICANN needs to remain involved in supporting the Internet Ecosystem, and that includes supporting the IGF etc. There have been calls by other parts of the community to effect cuts in this, and this should be opposed, as it is important that ICANN support its view of the multistakeholder environment. (the threats to this environment are both real and on the increase)
    4. The use of 21st century technology at all levels of ICANN that should bring cost cuts in the longer term. At present, it appears that a lot of people are employed doing tasks that are below their pay grade, in jobs that are not rewarding
    5. 6 Sigma? LEAN? AGILE? Should we suggest that these be used to manage an efficient organisation?
  5. A few more thoughts.

    • It is a common phenomena in organizations that when things get tight, budget items such as education go. It is often a very short-sighted decsiioon and one that is paid for dearly later. Some of the cuts proposed in this budget seem to be in that category.
    • The At-Large review has now been going on for three years, but the end of the review and start of implementation is in sight. Based on the issues raised by the reviewers, there is little doubt that we will be hard pressed to implement with the current staff resources.
    • The historic model on which ICANN budgets are based has relied on growing revenues from gTLD domain registrations. It now appears that we can no longer work on this basis. Although cost cutting will be an inevitable part of our future, we must also look for other revenue opportunities. Although it is not clear how popular new gTLDs are with registrants, it is clear that there is a market for TLDs. Perhaps it is time to rethink the principle that the application fee for new TLDs must be set to only cover the application processing costs. It is certainly reasonable to use funds for activities such as Contractual Compliance and support operations within GDD, and perhaps it is even reasonable to use it as a source of general funds. There are already discussions within the gTLD Subsequent Procedures PDP on setting a minimum cost to reduce the TLDs being applied for as speculative investments (hoarding) if the price is too low), so the concept of going past just cost recovery is already on the table.
  6. Today in the webinar on the reserve, James Bladel made an interesting comment. He said that the revenue predictions in the budget do not match what he seems as the current industry expectations. Specifically, the budget is expecting from 2.7-4.1% growth in gTLD revenue and 19.9-36.5% in new gTLD revenue (both from the variable fees).

    As painful as these expense reductions are, I find it absolutely foolish if we are using unrealistic revenue predictions.


    On another issue, that of "the increased costs of meetings", it would be useful to understand exactly what the norm was that is used before. On page 21 of Doc #4, they give the standard amount allocated per seat (economy) as $3995 for Barcelona, 3500 for Kobe and 2550 for Panama.




  7. Perhaps ICANN and the ICANN multi stakeholder community needs to rethink the ICANN meetings strategy of 3 F2F meetings a year.

    If ICANN were to have only 2 ICANN F2F meetings a year with the Meeting B (Policy Forum) in the 1st half of the year and the Meeting C (Outreach / AGM) in the 2nd half of the year, there would be considerable financial savings - ICANN doesn't have to invest in meeting logistics to transport and setup equipment ; doesn't have to spend money in fly persons, iCANN staff and sponsored community members (which includes  airfare, hotel and per diem).

    Such savings can offset the potential cutbacks in community outreach (be it CROP, Fellowship, Nextgen) and supporting the Internet ecosystem and multistakeholderism.

    With 2 meetings a year, there is great potential that this will allow the community and ICANN to use the time in between the two meetings to focus on ICANN policy issues.




  8. I find the draft rather disjoint and not nearly as strong as indicated by the comments here and elsewhere.


  9. I posted the first draft, waiting for constructive comments and alternative language. 

  10. HI Tijani

    Personally, Id like to alter your first sentence to thank them for their attempt to improve the FY19 Budget in terms of clarity, but find it lacking in transparency.

    Contrary to your statement that the separate documents were helpful, I think that rather they were used to conceal important issues of concern to us as a community that were separated from the main summary document, so that if not for the intense investigation by OCL of the individual reports that had been removed, we might not have seen that CROP was one of the chopped projects. I think that Alan earlier mentioned, that with the cuts to the ABRs and then the removal of the CROP slots has doubly compounded the impact of loss to what was already a minimal budget for At-Large outreach and engagement. 

    And in para 4.. I think you are referring to the increase in "personnel" expense

    In each document, new information is revealed that isn't clearly explained in the summary. In Doc2, the increase of $8m for personnel does not appear to fit their needs.. especially when their project load has been greatly reduced. But apparently there are fewer projects that are less than $100k, so they obviously need higher skilled personnel to manage the fewer projects remaining. Currently, $5m of the $30m support for Key Projects is being kept for secretarial support for policy development across the various ACs and SOs - but will this distribution be equitably across the SO/ACs? (Doc3). .  Doc4 describes the focus of GSE on business interests and the technical training of GSE staff, and at the same time, seeking a higher level of accountability from any community involvement - but certain GSE VPS will manage their own funding (is this instead of CROP?). There is so much to go through to find the anomolies that affect us in At-Large.

  11. "The ALAC supports the budget stabilization concept, but doesn’t find the proposed draft FY19 budget serving this objective in the right way" -→ According to Alan comment about the incomes, more or less showed during ICANN 60 budget meeting, the incomes are going down, not up. And it seems it will be decreasing over the time, since a good portion of new names were reserved or parked and no new gTLD round in a close future. 

    So if we are in a situation where the income trend is at best stabilizing, instead of growing and growing at fast pace, a call for everyone to cut down, to understand the issue, to explain this at Board level. No ICANN is not broke, but its revenues are at the best flat. This points to maybe take drastic measures, as the one suggested by Dev above, or extending in time the reviews (that not only cost the money of making them, also cost time and money answering them).

    I don't expect a real change in this year budget, but I hope next one is made with this sense of  in mind.

  12. On a specific point, the ABR envelope is not clear. Becky Nash has said it is $300k, but the line item says $215k. No answer yet regarding discrepancy.

    Also, although it may be easy for them to permanently discontinue CROP, in these documents they are claiming it is ONLY due to the higher meeting expenses. And indeed, compared to FY18, the travel expenses are up by about $50k, the cost of CROP for At-large. We do not know is with Panama and PR, FY18 was significantly below previous years, which I suspect is the case.

    We are up against a very tight time deadline. I can try a redraft, but we have VERY little time to play with this. Any other comments??



  13. Last call for input. I will try to pull it together my Wednesday am before boarding a plane.

    I have requested and extension of a few days, but have not heard back yet.

  14. Hi All, I believe what is missing from the draft statement is a suggested alternative because according to the proposed budget the funding has decreased by $4.8, there is an increase in the expenses of the the IANA/PTI  across all segments ( Which definitely looks reasonable) and an increase in ICANN's personnel expenses and a decrease across all other segments, however I think that the information provided through the documents is not enough to understand the need and logic behind the proposed budget and hence I find it difficult to propose an alternative. I find it very difficult to decide through the presented documents whether this is the best proposal for the budget or if better alternatives do exist    

  15. Dear All, please find herewith my suggestions, my additions/changes are underlined


    Such a reduction will be against the following ICANN strategic objectives:  

    4.1 Encourage engagement with the existing Internet Governance Ecosystem at National,

           Regional and International levels.

    4.3 Participate in the evolution of a global, trusted and inclusive multi-stakeholder Internet

          Governance Ecosystem that addresses Internet issues

    and while  the ALAC supports the budget stabilization concept, we do not find the proposed draft FY19 budget serving ICANN's strategic objectives in the right way. To this end the ALAC would like to suggest alternatives to the draft FY19 budget, however we find that the information provided through the documents put forward by the board not sufficient to do so. Therefore we request from the board second level details about the proposed budget.

  16. @ Maureen, When I work on the budget, I make a first reading of the whole documents, and then I go the specific paragraph for specific comment. before, after my first reading, I was obliged to search in the whole document the parts I wanted to use for my specific comment, while now, I go directly to concerned document among the 6 doc that form the budget. This is why I find it now much helpful. 

  17. This is not complete, but I need to catch a plane and wanted to show where this was heading.  Will update in a few hours.

    The At-Large Advisory Committee (ALAC) would like to thank the ICANN CFO and his team for the improvement made in the FY19 operating plan and budget in terms of clarity. The presentation of the draft budget in several separate standalone documents is helpful for a direct access to the needed information without being obliged to read the whole draft budget document. The ALAC also appreciates the new information, such as the per-person costs for travel to ICANN meetings that was not previously readily available.

    That being said, when such changes are made from year to year, it is imperative that context be provided. As an example, although we appreciate the travel information mentioned above, it should have been accompanied by comparable information from past years so the community can understand how it has changed over the last several years. This is all the more important given that decisions were made in the proposed budget based on such changes.

    The ALAC also notes that at least one document was changed after it was posted with no notice of the replacement and no indication in the document that a change had been made (same document name and no indication in the document title or date that it had been revised).

    The ALAC appreciates that ICANN is entering a period where we can no longer expect growing budgets, and strongly supports ICANN’s intent to both operate within its projected revenue and work towards having a reasonable reserve.

    The ALAC does not support the direction taken in this budget however. Specifically we see an increase in staff headcount and personnel costs while services to the community have been brutally cut. ICANN’s credibility rests upon the multistakeholder model, and cuts that jeopardize that model should not be made unless there are no alternatives and without due recognition of the impact.

    At-Large, unlike many parts of the ICANN multistakeholder community exists solely through the benefit of individuals who are not employed in the domain industry and to a large  extent, not even in jobs related to the Internet. Without ICANN financial support, we would simply disappear from the ICANN ecosystem, So a cut in our support can severely damage At-Large involvement.

    In this budget, there are two such clear examples. The CROP program (which just recently was transformed from a pilot program into a base-budget-funded program) was eliminated. It was done with absolutely no mention in the documents. If the program was so expendable as to not even warrant a comment, why was it previously incorporated into base budget. This program is relied upon by those parts of the community that are least able to self-finance outreach and there will be a significant impact of its disappearance. The budgets documents are silent on the logic, but finance staff have said it was due to the high cost of meetings this coming year (implying but not explicitly saying that this was a one-time cut which would be reinstated next year). tThe community has absolutely no say in meeting location choice and should not be penalized because of it, and particularly penalized in ways that impact our ability to meet deliver what is expected of us. At the time several years ago when the community indicated that it wanted to meet in a wide variety of locations, there was no discussion of that decision impacting other budgets.

    The other example of such a cut to the SO/AC Additional Budget Requests (ABRs). Last year’s budget was $646,800. This budget proposal says that the ABR is being cut by “more that 50%”. Finance staff have told us that theFY19 placeholder envelope is $300,000, however, document #4, page 21 says that the placeholder envelope is $215,735, a cut of more than 2/3. Whichever number is correct, this will have a very significant impact on the ability of SO and ACs to operate effectively.

    Budget reductions such as these goes directly against ICANN strategic objectives:  

    4.1 Encourage engagement with the existing Internet Governance Ecosystem at National,  Regional and International levels.

    4.3 Participate in the evolution of a global, trusted and inclusive multi-stakeholder Internet  Governance Ecosystem that addresses Internet issues

    The ALAC also has concerns that industry sources seem to believe that the “Low Estimate” “Best Estimate” for expected registrar and registry revenue may be rather optimistic, implying the possibility of further cuts or impact on the reserve. 

    Non-IANA personnel costs account for about 50% of the non-IANA expense budget (48% of the FY18 budget, 50% of the FY18 budget, and 56% of the FY19 draft budget. As such, these costs bear closer examination. FY19 personnel costs increased 11.0% from the FY18 budget, and 12.8% from the FY19 forecast. Noting that ICANN often uses contracted services in lieu of staff, it is reasonable to compare the total of the two. In that case, the FY19 amount is 2.9% over the FY18 budget, and 4.8% over the FY18 forecast. So even considering contracts (which include a wide range of other non-personal costs), we are seeing a substantial increase. In a budget that is supposed to be based on “stabilized” that does not seem reasonable in the absence of a carefully reasoned rationale.

    Even a brief review of the budget shows there are costs that can be questioned. As just an example, the norm for ICANN, other than the Board, is that non-Chair travel be in economy class. Yet the entire Technical Experts Group , counter to policy, always travels in business class, resulting in a $50,000 cost (comparable to the At-Large CROP funding which has been eliminated). There may well be other such “easy” cuts as well, but without more detailed knowledge of where all personnel are deployed, it is difficult for someone outside of the ICANN Organization to present alternative cuts.

    In terms of overall budget philosophy, it is s\common in constrained budgets to cut “easy” areas such as education. In the long term, these usually turn out to be easy but bad decisions.

    We must accept that domain registration revenue is constrained at this point. Although the number of gTLDs has grown, there is great pressure on ICANN to reduce registry fixed costs. At-Large does not support such actions – ICANN should not bear the costs of unsuccessful business models. ICANN must investigate alternative revenue options, both steady state and one-time. Examples include use of reasonable percentage of auction proceeds and using some percentage of New gTLD fees to fund operational expenses. This is completely justifiable based on two rationales:

    • New gTLDs have little merit if ICANN is not finicially stable;
    • As the number of TLDs increase, so will compliance costs. Yes the increased revenue based on 2nd level names as not kept pace.


    =============


  18. I have submitted a revised statement which I believe captures most of what was said here.


    Exceptions:

    Maureen's comment about the multiple documents being more complex. I largely left Tijani's comments but added that there needs to be more description and cross references.

    Dev's comment on 2 meetings per year. The recent consultation on meetings confirmed that 3 was still the preferred option. The only comment to the contrary that I heard was from registries who said there were plenty of other meetings being held (for contracted parties).

    1. Realized no reference to Fellows. Will add.

  19. No problems, Tijani and Alan. Just having my rave.

    Have really appreciated the inputs of Ricardo and Hadia