LSC's Budget Follow-Up: DSA Should Budget for the Long Term

- Budget

DSA’s budget situation has developed significantly since LSC released our initial statement. Our comrades in Bread and Roses, Socialist Majority Caucus, Marxist Unity Group, and Red Star have each released statements elaborating on their respective positions on the budget, the NPC met to make substantial cuts and revisions to the budget, two updates to the draft budget for 2024 have been released to the membership, DSA reached a new Collective Bargaining Agreement with the DSA Union, and multiple resolutions have been submitted to the NPC to address the budget crisis. We appreciate the transparency of the NPC in addressing this crisis and the willingness of our comrades in other caucuses to participate in open debate, and we believe their contributions have clarified the importance of a number of questions which were addressed insufficiently or in passing in our initial statement. Rather than reiterating our entire position, we will attempt to briefly answer these central questions.

Is it necessary to eliminate the deficit?

Yes and no. We believe it is essential for DSA to reach financial stability, and to not start the 2025 Convention with a million-dollar deficit and depleted cash on hand. However, we are almost 2 months into 2024 and DSA has already incurred significant expenses that we know will not recur, such as the NHGO contract and rent for the national office. We expect there will be further one-time costs associated with the transition to a permanently reduced budget, including the up-front costs of switching to new tech tools and the cost of layoffs. These costs will further deplete DSA’s cash on hand and make it extremely difficult to eliminate the 2024 deficit, but do not change the long-term budget calculus.

We believe DSA must budget for the long term, for which the projected 2025 budget is a reasonable proxy. So long as the cuts necessary for DSA to break even in 2025 are made in the next 6 months, DSA’s cash above reserves should last long enough for the organization to find its footing. This also means we cannot frame existing or upcoming budget cuts as short-term measures, or premise DSA’s external political strategy on that basis. Although we hope and expect that some of the cuts will be reversed as our recruitment and fundraising efforts begin to bear fruit, the scale of those reversals is impossible to predict in advance. It’s also possible that our fundraising will not be successful, or will be insufficient to turn around the broader trend toward membership stagnation and decline, in which case further cuts will be necessary. We must understand a balanced 2025 budget as a long-term baseline from which to build as further resources become available, or from which to cut as resources dry up, not as a temporary stopgap.

What, exactly, is going to be cut?

Taking the 3rd draft budget and DSA’s past convention expenditure and fundraising returns as baseline assumptions, and excluding non-recurring 2024 expenses, DSA can break even in 2025 by moving all in-person events fully online and cutting roughly a quarter of existing staff expenditure, or about 8 positions. Some of those positions are already empty, and a handful of layoffs could be avoided by hiring internally and not backfilling the empty positions, but one way or another, a significant portion of DSA’s current staff structure will be left empty for the foreseeable future or removed altogether. There is no scenario in which DSA can reach financial stability without any impact to our organizing capacity, and even after the hiring freeze recently instituted by the NPC, DSA’s staff expenditure remains an untenable proportion of the DSA budget.

Other than staff and dues share, DSA’s next largest expense is the National Convention. Although an in-person convention is valuable for organizational cohesion and leadership development, its core function is to serve as DSA’s highest deliberative body, and that function can still be served by a virtual convention, as it was in 2021. The benefits of an in-person convention cannot reasonably outweigh the costs of additional layoffs, and thousands of hours of staff time are spent organizing in-person national gatherings like the Convention. It would be a mistake to suggest that DSA could put on an in-person convention after cutting staffing by a third (the probable result of an in-person 2025 convention) without stretching our staff well past the breaking point.

How will layoffs be handled?

A staff review is long overdue. Under better circumstances, a staff review could be used to enhance transparency and expand the national organization’s capacity. Much of the debate around replacing DSA’s outgoing National Director, Maria Svart, had revolved around the suitability, or lack thereof, of DSA’s National Co-Chairs to take on some or all of her job duties. From those discussions, it has become clear that not even the National Political Committee has a clear picture of what DSA’s directors actually do. It is unacceptable for a democratic organization that both DSA’s membership and our elected leadership seem unaware of the day-to-day functions of DSA’s highest paid employee.

There are cuts to other aspects of DSA’s work (publications, national committees, travel, etc.) which could be pursued to reduce impacts on staffing, but the “easy” cuts (and many difficult cuts) have already been made. There is no more low-hanging fruit. In the context of a million-dollar budget deficit, we shouldn’t be coy that the function of a staff review is to prepare for extensive layoffs. The NPC should make decisions on what to keep in the budget first and foremost on the basis of the relative utility of DSA’s various expenses. It is important to reiterate that there is no scenario in which DSA can reach a balanced budget without any impacts to organizing capacity. It is not the function of a staff review to decide whether layoffs will happen, but to minimize the impact of a bad financial situation. The NPC must have the information necessary to preserve as much of DSA's capacity as possible in the face of inevitable cuts and to negotiate the specifics with the DSA Union on an informed basis.

Why not fundraise to cover the deficit?

We must work toward stabilizing and increasing DSA’s dues income while remaining aware of the possibility that our efforts will be only partially successful. We believe a recruiting and income-based dues drive is absolutely necessary given the state of our organization’s finances, but prior dues drives have not been sufficient to stably arrest the decline in DSA’s membership or dues income. DSA’s membership numbers are strongly influenced by external political conditions beyond our control. The 2022 Recommitment Drive produced a temporary uptick in membership, but the long term trend quickly reasserted itself. It would be irresponsible for the NPC to implicitly promise a return to pre-2024 funding or staffing levels to national committees or to the DSA Union on the basis of fundraising returns that do not yet exist, or to fail to plan for scenarios in which dues income remains steady or continues to decline.

Why not cut leadership stipends?

LSC argued in our initial budget statement that DSA should not establish new paid leadership positions, and we stand by our position. However, DSA should maintain its remaining paid leadership positions, namely the National Co-Chairs, as well as stipends for the NPC Secretary and Treasurer, YDSA National Coordinating Committee, and NCC Co-Chairs. We believe that DSA’s existing paid political leadership is a demonstrably effective use of our limited resources, and that the return in terms of organizing capacity outweighs cuts which we acknowledge will be necessary to other parts of the budget, including staff, in order to continue to fund them. Being full-time students in addition to employment and organizing responsibilities, YDSA’s national leadership is already stretched thin. For less than the cost of one director-level position, YDSA NCC stipends have produced an unprecedented expansion in capacity for YDSA, permitting NCC members to quit part time jobs and devote that time to YDSA instead. In effect, YDSA receives the benefits of 9 part-time employees for the cost of 1 full-time employee. In DSA, current and former NPC Steering Committee members have stated plainly that the leadership stipends are transformative, and the quality and quantity of their work would not have been possible without them. Without the work of the current Treasurer, John L, it is unlikely that DSA members would understand the scale or specific nature of the budget crisis at all.

Why not cut dues share?

We believe the chapter dues share program is not just essential in giving chapters a reliable basic income with which to fund their activities, it is an integral part of the social and organizational ties which bind DSA’s many local chapters into a single organization. If dues share is cut, many chapters will be obliged to lean on local dues instead, which do not contribute to the national budget. Individual members frustrated with a lack of assistance from national and by real or perceived deprioritization of local organizing will become more likely to either reduce or cancel their dues. Chapters suddenly untethered from the largest direct benefit of affiliation with DSA may begin to disaffiliate in protest, either immediately or when the next major political crisis hits DSA. On the other hand, if dues share is maintained, chapters will continue to be able to incorporate the direct benefit to local projects into national fundraising asks, one of the strongest motivators for members to switch to monthly or income-based dues. We should not hamstring our fundraising efforts and risk a direct conflict between chapters and national in the midst of an existing organizational crisis.

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