LSC Statement on the Budget Crisis

- Budget

DSA is in the midst of a financial crisis that threatens the very basis of our organization. Declining membership numbers and financial mismanagement in previous years will force us to make many difficult decisions in the coming months to ensure we can continue our work. During the two prior NPC terms (2019-2021 and 2021-2023), DSA undertook an ambitious program of persistent hiring. This was driven in part by the rapid expansion of our organization following the Bernie Sanders presidential campaign and the election of Donald Trump in 2016, but it was also driven by two political tendencies within DSA which we believe to have been shortsighted and ultimately disastrous. When the nature of DSA’s political work was still in flux, membership was growing rapidly, and the resources of the national organization seemed inexhaustible, a common method of demonstrating the seriousness of the organization in working on a particular issue was for convention resolutions to call for significant expenditures put towards a particular organizing project, and in particular to mandate hiring a staffer devoted to that work.

Over a third of the resolutions proposed at the 2021 convention either called for additional hiring or called for the national organization to carry out work which was estimated to require additional hiring; two resolutions even called for hiring multiple new staff. Frequently, these resolutions were ignored by the NPC, as resolution authors had no real plan for what it would mean to hire someone full time to work on a political priority, and the nullification of convention resolutions by the NPC is generally quite common. However, the attitude that DSA could simply continue to hire indefinitely, buoyed by the political crisis of the Trump presidency and two years of low costs due to the pandemic, created an atmosphere in which the NPC did hire far more staff members than DSA’s dues base could support.

We believe the push to “professionalize” DSA from 2017 to 2023, primarily by running the organization through paid staff rather than member volunteers, was ultimately responsible for far more of DSA’s budget crisis than injudicious spending by the convention. Late in the 2021-2023 term, a political crisis erupted over the potential hiring of an Electoral Director, a position hand-crafted for a particular applicant preselected by members of the NPC, and which had never been called for by a convention resolution. As late as the 2023 convention season, a year in which DSA was running a one million dollar deficit[1] as a result of over-hiring and declining dues numbers, NPC members campaigning for reelection were arguing that DSA could sustain a national staff twice as large as our current 30 staffers.

We believe that it is this tendency, the tendency to hire simply for the sake of hiring, regardless of the needs or expressed will of the organization, and to continue doing so beyond all reasonable limits, that has led DSA into a projected 2 million dollar deficit and ultimate financial insolvency in 2024. We believe that this tendency, cloaked in the language of unionism and the need to respect DSA’s dedicated staff members, caused irreparable harm to the organization and to the staff they hired by creating and filling positions they knew DSA did not have the financial resources to sustain. It now falls to the rest of DSA to mitigate those harms.

What do we do?

Our comrades in the Bread and Roses caucus have recently argued in their publication, The Call, that DSA should close our national office in New York and immediately appoint a volunteer member to replace the current National Harassment and Grievance Officer. These measures alone would save DSA ten thousand and thirty thousand dollars per month, respectively. As the caucus which initially introduced the resolution to replace the current NHGO, we wholeheartedly agree, but the scale of the budget deficit makes these savings woefully insufficient.

DSA is projecting 5 million dollars in income in 2024. Personnel expenses alone will account for a projected 4.4 million in expenses. Between constitutionally mandated expenses, such as the printing and shipping costs associated with Democratic Left; expenses which are practically impossible to avoid, such as financial transaction fees on DSA members’ dues payments; and DSA’s chapter dues share program, which we believe is vital to DSA’s cohesion as a national organization, the “floor” of DSA’s budget for 2024 without staff cuts already drastically overshoots projected income. This estimate ignores other significant expenditures, such as chapter grants, national committee budgets, tech tools, and other expenses which would normally be considered essential for the functioning of the national organization.

Put bluntly, DSA’s financial situation is so dire that even maintaining the bare minimum of functionality at the national level will require some level of cuts to staff, and every function beyond that will require corresponding additional cuts. DSA, however unwisely, has made a commitment to its unionized employees that we are unable to fulfill, but we should make every effort to meet as much of that commitment as possible while retaining a functioning national organization. For this reason, in addition to the cuts proposed by the Bread and Roses caucus, LSC is proposing the following program for the 2024 DSA budget:

1. A freeze on new direct spending.

DSA should honor its commitments to chapters and members for existing expenses, including dues share and approved matching funds for offices, but should not commit to any additional expenses until such time as DSA’s financial reserves have been replenished. This includes a pause on electoral and other chapter grants, any new applications for chapter office funds, and any costs associated with the National Activist Conference, which should be canceled or postponed to later years in light of the budget crisis.

2. A move to fully virtual NPC meetings and cuts to travel assistance for NPC members and staff.

As significant as the benefits of in-person NPC meetings, staff retreats, and chapter visits may be, they cannot reasonably be balanced against the harms of additional layoffs. If it can be demonstrated that chapter visits from staff, NPC members, or the National Co-Chairs have a sufficient return in terms of members recommitting, moving to monthly dues, or moving to income-based dues, it may be appropriate to continue reimbursing travel expenses for those trips.

3. Cap national committee expenditures at 10k per committee.

National committees make up the bulk of DSA’s national work, but we believe the majority of their efficacy can be traced to the members which make them up, rather than to their expenditures, and many national committees already operate with a nominal or even nonexistent budget. Capping national committee expenditures at less than ten thousand dollars per committee is not ideal, but we believe the bulk of DSA’s national work will be able to continue in spite of this.

4. Move to a virtual convention for 2025, or to a less expensive venue.

Expenses associated with the 2023 National Convention contributed roughly seven hundred thousand dollars to DSA’s budget deficit that year. With DSA’s financial reserves almost completely depleted and the likelihood of rebuilding the reserves in time for the 2025 convention vanishingly small, it is entirely implausible that DSA will be able to afford another fully in-person convention at a unionized hotel and convention space. Either DSA will be forced to hold a fully virtual convention, by far the least costly available option, or we will have to investigate alternatives to hotels and convention venues. DSA has in the past held conventions at (public, unionized) universities or other nontraditional venues. The 2022 YDSA Convention, for example, was held at the University of Minnesota, with costs per delegate a small fraction of the cost to attend the 2023 YDSA or DSA Conventions. Faced with the prospect of laying off staff in order to pay for our next convention, a return to dorm life regains some of its appeal.

5. A complete hiring freeze.

DSA should foreclose the possibility of hiring new staff members immediately and either eliminate or leave open indefinitely any positions currently unfilled. The NPC should create a list of positions considered absolutely essential for the functioning of the organization, and if any are at this or any other time left open, move or promote existing staff members from less essential roles to fill those positions. As DSA is likely to be operating at or near minimum financial reserves for some time, the alternative to reassigning staff is to fire non-essential staff to make room in the budget for filling essential positions. This freeze should continue until such time as DSA has both the reserves and income necessary to ensure that the impending crisis and any resulting layoffs will not be repeated.

6. No new paid leadership positions.

LSC opposed the addition of two paid co-chairs to the NLC during the convention on primarily budgetary grounds. The political basis for making these positions paid rested in large part on their nature as national political leadership elected by the convention, as opposed to DSA’s regular national committee chairs. After an utterly uncompetitive election in which both candidates ran unopposed, we believe the NLC Co-Chairs’ claim to be “elected political leadership” is weak. In light of the uncontested election and DSA’s extreme budget deficit, we believe that paying the NLC Co-Chairs is unwise.

7. Task director duties to the National Co-Chairs or NPC Steering Committee members.

DSA’s national directors and managers are not included in the DSA staff union, and while we are not eager to eliminate any positions, we believe eliminating director-level roles is preferable to eliminating represented positions, in particular because oversight of the national staff is already part of the mandate of the National Political Committee. Two NPC members, the National Co-Chairs, are already paid full time by the organization, and NPC Steering Committee members receive a part-time stipend. We believe it is appropriate to ask the NPC SC and the National Co-Chairs to take on additional work overseeing the national staff directly, in particular when the alternative is further cuts to bargaining unit staff.

8. Lay off as few staff as possible and restructure staff duties to accommodate a reduced staff-to-member ratio.

It is simply impossible to solve DSA’s budget crisis without laying off any staff. We believe the measures we have laid out will minimize the number of staff DSA will ultimately lose, but minimal is not zero. Layoffs should be conducted in accordance with the staff’s collective bargaining agreement, in reverse order of seniority, and if DSA’s financial status experiences a dramatic and persistent reversal, staff members should be retained and any laid off permitted to return, should they wish to. However, we cannot afford to assume that this will be the case, nor can we make any promises to DSA’s staff to retain their positions on the basis of such assumptions. We have heard arguments that DSA can fundraise and recruit our way out of a deficit before, sometimes even by hiring more staff! These arguments led to our current crisis. A reliance on prayer and wishcasting to pay our staff has no place in a materialist organization.

9. Let members do work.

Wherever feasible and permitted by the staff CBA, vetted member volunteers and committee members should be granted access to non-rival national resources necessary to carry out more of the organization’s work. National committee work is frequently bottlenecked by the scarce time of national staff, and National Tech Committee projects have been stalled completely due to an unfilled tech staffer role. As it is increasingly likely that numerous staff positions will go unfilled for the foreseeable future or be eliminated entirely, regardless of which cuts the NPC chooses to make, maintaining the functioning of the national organization requires granting members more access than has previously been allowed. DSA will be forced to choose between expanding the scope of direct member involvement or allowing functions of the national organization to atrophy entirely.

Where do we go from here?

DSA cannot afford to allow the delusions which led to this crisis to persist. As DSA’s finances recover from this crisis, we hope and expect that many of the measures we are advocating will be lifted, but the lessons must remain. It was always unwise to run a deficit in the hundreds of thousands of dollars every other year as a result of the convention, a practice which deceived DSA’s membership and leadership alike into unwarranted confidence in the organization’s finances even as we broke dead even in 2022: a year in which, by historical trends, we ought to have been building reserves to pay for the heightened expenses of the 2023 convention year. DSA should either move to a biennial budgeting process, or adopt an explicit policy of budgeting half the cost of a convention in even years as reserved for the following convention.

We should never again make the mistake of hiring new staff members on the basis of the strength of our financial reserves, rather than on the strength of our income. Even as dues cratered from 2021 to 2022 and again from 2022 to 2023, members of the NPC continued to push for more hiring. It was wildly irresponsible and unfair to staff members to offer jobs which we could not reasonably expect to afford in one or two years. We should also consider permanent changes to DSA’s national in-person events, which consistently constitute DSA’s most significant expenditures after personnel and the dues share program. Moving to less expensive venues or merging national conferences with national conventions would have extended DSA’s reserves and given the organization more time to salvage its finances prior to considering layoffs.

DSA cannot undo the choices which led to this point, nor can we avoid the consequences of those choices. What we can do is safeguard as much as possible the integrity and operational efficacy of the national organization, and ensure that this crisis never repeats.

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  1. [5/9/2024] An earlier version of this statement made the claim that DSA ran a 3 million dollar deficit in 2023. This was based on erroneous information in the DSA Financial Condition Analysis sheet linked in the DSA Open Budgeting thread on the DSA Forums. That sheet has since been corrected, and we have updated our statement accordingly. We believe our core point, that some tendencies in DSA have pushed for increasing staff spending even as DSA ran unsustainable deficits, remains well-supported. Other statistics included in the statement which were accurate at time of publication but have since been updated by DSA, such as DSA's income projections for 2024, have not been changed in this statement. ↩︎