LEAGUE OF UNITED LATIN AMERICAN CITIZENS

NATIONAL LULAC TREASURER’S REPORT

By: Paul “Pablo” A. Martinez, National LULAC Treasurer
September 26, 2018

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 LEAGUE OF UNITED LATIN AMERICAN CITIZENS
Office of National Treasurer

Paul “Pablo” A. Martinez

National LULAC Treasurer

September 26, 2018

Re: Treasurer’s Reports

Dear National LULAC Board of Directors, National Executive Committee and LULAC
Membership:

The following is a breakdown of the League’s financial report and status. As reported and
mentioned in my last report, both National President, Domingo Garcia and I pledged to the entire
membership our commitment to transparency. We desire to advise all concerned how the League’s
money is being spent.
SUMMARY
I would like to thank our Chief Financial Officer, Ms. Lisa Smith for provided me with the several
financial reports covering both the LULAC National Organization (LNO) and the LULAC
National Institute (LNI). As previously reported, both organizations operate their fiscal years on
the calendar year (January through December). Both organizations have operating accounts with
Wells Fargo Bank and hold investment savings with Morgan Stanley.
Ms. Smith and I have communicated frequently. We in the process of working with Wells Fargo
to update the signature change and authority. She has been sending me status reports monthly on
activities and transactions on both entities.

FINANCIAL REPORTS
The following are the Financial Reports submitted by Ms. Lisa Smith, Chief Financial Officers for
National LULAC National Organization and LULAC National Institute:

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LULAC NATIONAL ORGANIZATION

FINANCIAL REPORT
EIN (74-6090399)
August 26, 2016

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LULAC National Organization (LNO):
LNO Statement of Revenue as of August 31, 2018:

Analysis:
The LULAC CEO Sindy Benavides and CFO Lisa Smith continue to implement a budget austerity
plan and paying the essential obligations and liabilities. The total LNO revenue to date (January
2018 to present) has been a total of $480,718.52. For the month of July, the only revenue collected
was for the total of ($23,486.13). This was a pledge or contribution that was rescinded by

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WalMart. They claim they never committed to sponsorship of the Gala. As of August 31, 2018,
the League has spent$499,096.06. This leaves a balance of $31,169.55 remaining if the
unencumbered revenue of what has thus far been collected or raised. For the month of August
2018, a total of $32,721.40 was the actual amount of expenses incurred and paid.

LNO Balance Sheet as of August 31, 2018:

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Analysis:
This report provides both assets and liabilities as if August 31, 2018. This report delivers line item
budget categories. This offers information on LNO cash (assets) on hand. The line item 10000 is
the operating bank account with Wells Fargo. The account had a total $138,038.22. Line Item
10015 is a saving or investment account with Morgan Stanley. This has a total of $125,586.24.
Line Item 10020 is the payroll bank account with Wells Fargo bank. This account has a balance
of $1,602.50. Please keep in mind this account is a clearing account for payroll transactions only.
Funds are transferred to this account every 15 days to cover the payroll liability. This being
factored in to the combined total cash or cash equivalent assets of $260,226.96.
The second categories such as, 10058 and 12001 represent organizations or individuals that owe
LNO. Line item 10058 is the account tracking the amount owed by LULAC Institute-Convention
to LNO for the membership staff time worked during convention. The amount is $3,529.71. Line
item 12001 is the account tracking amounts owed by outstanding Legislative Gala sponsors. Below
please find detail listing of outstanding accounts receivables as of July 31, 2018 were $66,000.00.
The balance in that column as of August 31, 2018 is $36,000. This was due to WalMart denying
that they ever made a commitment for a sponsor for the Gala or any activity. The remaining
$36,000 remains and needs to be collected. The following is the breakdown on funds that need to
be collected:
o LULAC Veterans Affairs Committee - $1,000
o Google, Ins.- $25,000
o WalMart- ($30,000)
o T-Mobile- $10,000
o Total $36,000

In 13500, 15000 and15080 these are other assets and property that the League either owns or has
in deposit. This is the furniture and other tangible property. The other is a security deposit for
leasehold. This provided the combined total of $1,440.21. Once we combine cash, receivables and
other assets, total assets equal $301,196.88.
In categories 20000 to 20655 are expenses and liabilities or debts owed and outstanding for LNO.
This includes amounts owed to LULAC Institute for employee leasing to support the Legislative
Gala during 2015-$35,435.56 and 2016-$29,678.74. Other amounts include staff deductions that
will be reduced next month. The last category is the Morgan Stanley line of credit. The line of
credit through Morgan Stanley is secured with the investment or savings account that LNO has
with that institution. This amount accrued is less than 25% percent threshold that credit bureaus
encourage individuals and business to maintain for good or excellent credit rating.
Finally, the beginning net assets of $180,435.01 and the net profit as of August 31, 2018 of
$31,623.46 gives a combined balance of $212,058.47. If you combine both Liability and Assets
the total is $301,196.88.

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LNO Statement of Revenue and Expenditures-2018 Organization Operating Budget from
August 1-August 31, 2018:

Analysis:
As mentioned in the summary above, the LNO operates on a calendar year. The proposed 2018
budget from January 1, 2018 to December 31, 2018 was for the total of $596,189.49. This proposed
budget projected operations and administrative costs based on previous years. As of August 31,
2018, 24% of this proposed budget is remaining, which represents $449,096.06 in expenditures to
date. This budget will be reduced to coincide with the actual revenue collected year-to-date.

Audit:
An audit was conducted by Peña, Briones, McDaniel and Company out of El Paso, TX. The
independent audit was conducted on both the LNO and LNI. It covered calendar year 2017. The
report provided an outline of duties and responsibilities of both parties. In this case, the
Management and Auditor. As a result, LNO received a clean audit as reflected in the statement
below:

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“In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of League of United Latin American Citizens-National Office as of
December 31, 2017 and 2016, and the changes in its net assets and its cash flow for the years then
ended in accordance with accounting principles generally accepted in the United States of
America”.
Mr. Pena stressed to the board the importance of continuing the following best practices:
o Increase Membership to generate additional revenue
o Increase sponsorship for Legislative Gala
o Continue to keep the following expenditures under control
▪ Board Travel
▪ Gala Cost
▪ Credit card spending
▪ Adhere to the procurement policy to ensure the best prices for products and
services
The main problem recently has been the lack of funding. Credit cards are only issued to key staff
members; i.e., the CEO and CFO. The CEO has the internal controls and make final approval on
purchases and LNO has been following the adopted procurement policy with set internal controls.
990 Filing for LNO:
Mr. Rene D. Peña, CPA principal of Peña, Briones, McDaniel’s and Co., P.C. recently filed the
990 Tax Returns for Non-profit corporations. The LNO is a tax-exempt organization pursuant to
sections 501(c)(4) of the United States Internal Revenue Code (EIN 74-6090399). The total
contributions for 2017 were $941,502 and $798,941 for 2016. The total expenses listed for 2017
were $753,135. The 2016 expense were $856,437. Missing a number for 2017 Requires both
numbers for 2017 and 2016. Please review the 990,
We anticipate that this report will be available on the Guidestar website that provides information
on non-profit organizations operating in the United States of America.
Recommendations:
The biggest concern and challenge for the League is the ability to generate funds, payoff amounts
owed to LULAC Institute for previous years and rebuild cash reserves. For us to finish out this
year, we will need to generate $125,000 to ensure we have the appropriate amount of cash available
for the first quarter of the 2019 and to maintain the balance in the Morgan Stanley investment
account. year. We have on hand $312,748.20. This means that if we fail to raise funds, we will
continue to exhaust our savings
The goal and challenge for the League is to raise a million dollars in the next six (6) months. If
this can be achieved, this will place us in a much better financial position. If we can raise at least
¼ of this goal in three (3) months we can meet our needed obligations.
We need to create partnerships as we did in the past. If the LNO or LNI create community
partnerships with our corporate alliances, this will create grant opportunities that can fund

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positions and outreach monies. LNO has one full-time employee, the benefits paid for this one
employee is minimal. Contracts will save LNI from having to pay benefit packages, payroll
deductions and are consistent with exit planning when grant funding ends.

Respectfully Submitted,

Paul “Pablo” A. Martinez

National LULAC Treasurer

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2019-PROPOSED BUDGET-LNO

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LULAC NATIONAL INSTITUTE (LNI)

FINANCIAL REPORT
EIN (52-2072106)

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LULAC National Institute (LNI):
LNI Statement of Revenues and Expenditures from August 1, to August 31, 2018:

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Analysis:
As mentioned above in the LNO Report both the LULAC CEO Sindy Benavides and CFO Lisa
Smith continue to implement a budget austerity plan and paying the essential obligations and
liabilities. The total LNI revenue recorded to date (January 2018 to present) has been a total of
$2,307,434.67. For the month of August, the only revenue collected was for the total of
$110,125,78. These are proceeds from donations, programs and revenues from other fundraisers
such as, conferences, etc. As of August 31, 2018, the Institute has encumbered $2,290,068.94. This
leaves a projected net profit of $17,365.73 remaining in unencumbered revenue of what has thus
far been collected or raised. For the month of August 2018, a total of $279,178.83 was the actual
amount of expenses encumbered. This places that revenue source in the red of ($169,053.05).

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LNI Balance Sheet as of August 31, 2018:

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Analysis:

This report provides both assets and liabilities as of August 31, 2018. This report provides line
item budget categories. This provides information on LNI cash (assets) on hand. The line item
10000 is the operating account with Wells Fargo Business Banking Account had a total
$73,620.20. Line Item 10015 is a saving or investment account with Morgan Stanley. This has a
total of $311,716.50. Line Item 10020 represents the balance available in the payroll account. The
other line items such as, 10005, 10010 and 10040 are restricted cash accounts for projects, such as
the Convention Fund, Democracy Project and Women’s Commission. Nevertheless, these are
projects belong to the Institute and therefore considered part of LNI assets. In line item 10056, this
amount of $1,842.94 represent the available petty cash. The total combined cash and cash
equivalent assets are $684,063.38.
The second category of 14000 represent an investment market account with Morgan Stanley for
the sum of $4,541.35. The third categories such as, the 12000 series are account receivables. These
are monies owed to LNI and outstanding invoices. This total is for $693,514.87. The fourth
categories of 10057, 10058, 19000 and 29000 are transfer accounts that disburse funds owed to
other entities or program within the League. The remaining amount is $7,487.64. The fifth
categories 13500, 13510 and 13520 represent security deposits that are pre-paid may be returned
to the League in the event of relocation, etc. These are for a total $52,305.97, which represent extra
income that is either restricted or allocated to other projects. In the sixth categories line
items15000, 15010, 15040 and 15080 represent furniture and other tangible property for the total
of $2,181,800.09. The combined total assets are $3,623,713.30.
In categories 20000 to 20655 are expenses and liabilities or debts owed and unpaid for Institute.
This includes staff payroll deductions and amounts owed to LNO. The line of credit through
Morgan Stanley is secured with the investment or savings account that Institute has with that
institution. This amount accrued unlike LNO is over the than 25% percent threshold that credit
bureaus encourage individuals and business to maintain for good or excellent credit rating.
Under the deferred revenue item 23000, for the sum of $300,000.00, this a Comcast partnership
project grant with the Institute. These are restricted funds for the sole purpose of that activity. This
will remain in that category and will later be adjusted to the proper revenue account at the
appropriate time.
Finally, the beginning net assets of $3,205,563.35 and the current year change in assets as of
August 31, 2018 of $17,365.73 gives a combined balance of $3,222,929.08. If you combine both
Liability and Net Assets the total is $3,623.713.30.

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LNI Statement of Expenditures-2018 Operating Budget:

Analysis:
As mentioned in the summary above, the LNI operates on a calendar year. The proposed 2018
budget from January 1, 2018 to December 31, 2018 was for the total of $3486,063.99. This
proposed budget projected operations and administrative costs based on previous years. As of
August 31, 2018, 34,31% of this proposed budget is remaining, which represents $2,290,068.94
in expenditures to date. The remaining balance of the proposed budget of unencumbered funds to
fulfill budget obligations are $1,195,955.05. Please keep in mind this budget will be reduced to
closer to actual amounts for expenses as well as revenues.

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Audit:
An audit was conducted by Peña, Briones, McDaniel and Company out of El Paso, TX. The
independent audit was conducted on both the LNO and LNI. It covered calendar year2017. The
report provided an outline of duties and responsibilities of both parties. In this case, the
Management and Auditor. As a result, LULAC Institute received a clean audit as reflected in the
statement below:
“In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of League of United Latin American Citizens-National Office as of
December 31, 2017 and 2016, and the changes in its net assets and its cash flow for the years then
ended in accordance with accounting principles generally accepted in the United States of
America”.
Mr. Pena stressed to the board the importance of continuing the following best practices:
o Increase Program revenue to generate additional revenue
o Increase sponsorship for Major Events (Convention, Feria & Tech Summit)
o Continue to keep the following expenditures under control
▪ Board Travel
▪ Convention Cost
▪ Credit card spending
▪ Eliminate positions once the grant is completed
▪ Adhere to the procurement policy to ensure the best prices for products and
services

The main problem is, LNI has a lack of cash flow due to cost overruns from 2016 for Convention
underfunded events and failure to reduce staffing and other costs during 2017. Credit cards are
only issued to key staff members; i.e., the CEO and CFO. The CEO has the internal controls and
make final approval on purchases and Institute has been following the adopted procurement policy
with set internal controls.

990 Filing for LNO:

Mr. Rene D. Peña, CPA principal of Peña, Briones, McDaniel’s and Co., P.C. recently filed the
990 Tax Returns for Non-profit corporations. The LNI is a tax-exempt organization pursuant to
sections 501(c)(3) of the United States Internal Revenue Code (EIN 52-2072106). The total
contributions for 2017 were $4,775,075 and $4,387,018 for 2016. The total expenses listed for
2017 were $5,038,852. There was -$263,777 revenue less expenses. The 2016 expense were
$5,810,312. This reflects that there was a -$1,423,294 revenue less expenses.
We anticipate that this report will be available on the Guidestar
website that provides information on non-profit organizations operating in the United States of
America.

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Recommendations:
The biggest concern and challenge for the LNI is generate more cash flow. This entity has acted
as a fiscal agent and other programs benefit from LNI service, however, this limits LNI for any
cash or financial gain. It has been a clearinghouse for all with little or no benefits. We need to
develop a strategy for LNI to create a policy for charging a reasonable administrative service
charge for maintenance and contributions for internal and external audit when deemed necessary
and appropriate.
We need to create partnerships as we did in the past. If the LNO or LNI create community
partnerships with our corporate alliances, this will create grant opportunities that can fund
positions and outreach monies. However, the LNI like LNO should consider professional services
contracts as opposed to Full Time positions. Contracts will save LNI from having to pay benefit
packages, payroll deductions and are consistent with exit planning when grant funding ends.

I would like to acknowledge the hard work that the LNI and LNO Staff are doing to maintain the
League and the Institute. I desire to recognize both the Chief Financial Officer Ms. Lisa Smith and
our Chief Executive Officer, Ms. Sindy Benavides for their outstanding work and the internal
controls they have implemented. They are following the recommendations of the Audit and
adhering to Procurement Policy adopted by the LNI and LNO Boards of Directors. This will be a
good start on the road to success. Budget austerity plans are often necessary to assure financial
solvency.
We all need to roll up our sleeves and work on comprehensive plans to obtain funding for both
entities.

Respectfully Submitted,

Paul “Pablo” A. Martinez

National LULAC Treasurer

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2019-PROPOSED BUDGET- LNI

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 LULAC YOUTH ORGANIZATION
AND
LULAC NATIONAL INSTITUTE (LNI)

MISCELLANEOUS REPORTS
LULAC Youth, Women’s Commission and National Convention

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 MISCELLANEOUS REPORTS

National LULAC Youth Organization

Statement of Financial Income and Expense-January thru August 2018:

Statement of Financial Position- As of August 31, 2018

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 National LULAC Women’s Commission

Statement of Revenue and Expenditures-August 1-August 31, 2018:

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Balance Sheet- Women’s Commission- As of August 31, 2018:

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National Convention-Statement of Revenue and Expenditures- August 1-31, 2018

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