Following the money–where MSF gets it, what it spends it on

Before we go back to how New Yorker small business training providers can expect their costs to go up, it’s time to take a look at the Motorcycle Safety Foundation’s finances:

Where MSF gets its money

Up until MSF began what Kawasaki trustee Roger Hagie described as “a march to take over state programs”, the manufacturers’ dues supported MSF. In 1998, for example, the manufacturer dues totaled $1,842,842 or almost 84% of MSF’s income and program service revenue brought in 16%—and none of that was borne by Joe the Motorcyclist through fees paid to the state on motorcycle registration and an motorcycle license.

The manufacturers benefited from that public image of generosity and public service—and even now MSF press releases include the names of all the manufacturer members at the bottom of every communiqué.

If anything could give justification for the complete control the manufacturers exerted over MSF it would’ve been that golden rule—“Them that pays the gold gets to make the rules.”

What a difference ten years and four state programs make: In 2007, manufacturer dues amounted to just 28% ($3,305,368) and program services amounted to 67% ($7,929,816) of MSF’s revenue ($11,809,185). And “rider training” accounted for all but 1% of that program revenue.

MSF’s revenues have gone up then about 500% in ten years with the vast bulk of that money coming from administering state programs. And that comes from all the Joe the Motorcyclist in those states. And remember, two of those states have seen their fees jump 150% after MSF took over–and two states had the price of the training course double.

Iow. Joe the Motorcyclist in four states now bear 66% of the expenses for MSF but the manufacturers still have 100% of control over what MSF does and how it spends that 500% increase in spending.

So let’s see what bang Four State Joe is getting for his buck:

How MSF has spent that 500% increase in revenue

Let’s go over some of those expenses. A few entries ago, I showed the change in legal fees. In 1998 MSF paid less than $18,000 in 1998 to almost $750,000 in 2007.

Iow, the motorcyclists in four states paid almost $495,000 so MSF could try to pressure Oregon into setting up a separate state program that would give the driver’s license-waiver to Harley-Davidson dealerships and prevent TEAM Oregon’s curriculum from spreading to other states. But Joe didn’t have a say in that.

According to Charity Navigator’s 2008 annual CEO compensation study, the average CEO of a nonprofit in the Pacific Western region earns $135,922. In 1998, the President of MIC/SVIA/MSF, Tim Buche, earned—with benefits—$168,430–iow, he already earned more than the average non-profit CEO earned ten years later. In 2007 he earned $312,412—almost twice as much as he earned in 1998. The greatest increases in Buche’s salary followed the acquisition of a state program. As a result, Four State Joe, who certainly hasn’t seen his salary double and may not even have a job now—underwrites Buch’s lifestyle in a million-dollar home with a 3-car garage in the front and a pool in the back on a hilltop in an upscale area of Yorba Linda.

In 1998, MSF claimed it had 22 employees and $375,283 was claimed in “Other salaries and wages” (not including the officers such as Buche). In 2007, with four state programs and the Discovery program, it claimed it had 36 employees and spent $1,279,293 for on the same category of salaries.

Of those 36 employees, 17 can be accounted for from the latest MSF Contact List. Add in Ray Ochs who  was left off of it for an unknown reason and that brings it up to 18. However, only three of those employees are listed with responsibilities for state programs.

Iow, Four State Joe is paying $844,333 for three employees that actually have anything to do with running state programs.

It’s not clear what category employees in the states that run the program for MSF such as PA state coordinator Dave Surgenor and NM’s program manager David Smith and staff employed directly in those states fit in . It could be in the above or “contracted personnel” below—or in some other category of wages—there are many:

In 1998, MSF spent $377,637 on “contracted personnel” and another $5,700 on “Outside Consultants” and $16,439 for “temporary help”. In 1998, MSF had hired several people, including Ray Ochs and Al Hydeman, to help develop the Basic RiderCourse and their wages fell in the first two categories.

In 2003, it was no longer developing curriculum but it did have three state programs under it’s administration, and it spent $511,549 on Contract Personnel, $10,605 for Outside Consultants and $1,114,065 on temporary help. Contract Personnel are those hired for projects such as someone like Dan Petterson who has been hired on more than one occasion by MSF (though not necessarily in that particular year).

Instructors who get their paychecks through MSF fall in the Temporary Help is the category. Four State Joe, then is getting the full bang for his buck there.

In 2007, MSF spent $628,189 for Contracted Personnel, $127,534 for Outside Consultants and $1,866,862 for temporary help. The 2007 990s also included a new category—RiderCoach Site Coordinators who were paid $406,590.

MSF does not pay instructors in the CA program except at sites it operates itself such as the Discovery Project, a co-funded project by NHTSA. That federal agency is obligated to pay almost half a million for that project. How much of the money spent in the categories above and below for expenses directly related to  the Discovery Project site is unknown.

In 1998, MSF spent $10,068 on insurance. By 2007, it spent $254,656 for liability insurance and another $25,119 in worker’s compensation (don’t you wonder why this expense is there? I do.) Four State Joe paid almost $168,073 of the liability insurance costs.

1998’s Staff Development cost $26,575 but 2007’s Professional Development cost $160,468. Four State Joe paid $105,908.88 of that amount–but were those costs directly related to professionals who worked in or for their state programs? Unknown.

In 1998, computer and IT related expenses cost $47,043 and in 2007, they cost $194,442 of which Four State Joe paid $128,331.72. MSF is now selling the software that Four State Joe helped pay for to other states.

These are just a few of the costs that appear to have nothing to do with the training that happens in Joe the motorcyclist’s state. Even so, Four State Joe bears the brunt of the cost. But what does MSF claim it spends on running state programs?

State Program related expenses

It’s impossible to separate out what MSF spends on its for-profit sites in California or costs of running chief instructor training and so forth from what is directly related to state program management. However, it falls under the description of “Safety Program Services”. The IRS 990 form in 1998 used the same explanation as it does in 2007: “a) Program Services—the objective of the program services department is to provide administrative, financial, material and technical support for rider training programs.”

However since the 66% of funding Four State Joe supplies to MSF’s revenue is listed as coming from “Rider Training”, state expenses might fall under “d) Training Program—Objectives are to provide training, and educational and licensing materials for rider instructor courses and state licensing examiners.” Otoh, that may only reflect how much MSF spends on its on for-profit training courses. Either way, the amounts are eye-popping:

Under Part II, Line 43 Other Expenses there’s a line item “Safety Program Services”. In 1998 the 990 form lists this expense as $106,594. Or approximately the costs of the New Mexico state program.

In 2003, and administrating three states, the expense was $1,195,312

In 2004, after adding California–by far the largest state motorcycle program in the nation–the expense was listed as $1,471,446.

Or up only $276,134 dollars.

In 2007, MSF claimed program services cost $2,799.698.

Iow, without taking on any more states or dramatically expanding its operations in those states, it cost almost double what it cost three years before.

However, many of the administrative, material and technical support costs that are supposedly in “program services” are also listed as expenses on their own and may give us a hint of what running state programs (as well as its own for-profit sites) costs MSF.

The next categories didn’t exist in 1998 but in 2007 they cost:

“Safety Program Implementation” $25,017

“Range supplies” $124,582 (This applies only to three states and MSF’s own for-profit sites in California).

“Instructor supplies” $10,210 (ditto)

“Quality Assurance” $174,596 (this includes all four state programs)

“RiderCoach Preparation/Training” $182,928. According to the SMSA survey, in 2007, 247 instructors were trained between Pennsylvania, New Mexico and California and almost $50,000 for training was paid by the candidates themselves.

There’s another category “Training and Seminars” with an expense of $3,944—it’s unclear what all this category includes.

“Enrollment & Support Services” $58,832

“Training site rent/maintenance” $177,866 (however, the sites in Pennsylvania used to be free—unknown if they still are). Three State Joe is paying for 69 sites in PA, 10 in NM and 10 in WV. If MSF now has to pay for all sites in each of the three states, it pays an average of $1,9998.49 per site. Or, it could be what MSF pays for its own sites in California. Who knows?

Expenses that also include MSF’s own expenses to run #2 Jenner Street but also may include state program and its for-profit site expenses:

“Offsite storage” in 1998, this was listed specifically as “offsite media storage” and cost $1,552. In 2007, it cost $68,328

Office maintenance was the only category in which expenses dropped in ten years—even though there were more offices to maintain: in 1998, it was a broader category “repairs and maintenance” and cost $25,184. In 2007, it cost $19,313.

Office supplies cost $22,585. In 2007 they cost $38,793.

Iow, many of those expenses listed above fall into the description of what “Program Services” is supposed to cover—and yet there’s almost $3 million claimed for that.

Whether these expenses seem reasonable or not is for others to decide. Or what “Program Services” expenses are compared to the line-listed items.

More money in, more money spent

Still, there’s been an explosion of personnel and their salaries and wages with many costs doubling or even having exponential increases.

The net result is that Four State Joe is underwriting a lot that seem to have nothing to do with training in their state—and have a great deal to do with MSF pursuing an agenda to throttle any free market competition both in the USA and in the world.

The Golden Rule No Longer Applies

It should be pointed out that though Four State Joe pays 66% of the expenses for all of MSF’s expenses, he has 0%—zero percent—of the power to determine where that money is spent and the manufacturers who pay only 28% of the expenses have 100% control over the organization.

Explore posts in the same categories: Motorcycle Safety Foundation, State Motorcycle Safety Programs, Uncategorized

One Comment on “Following the money–where MSF gets it, what it spends it on”

  1. gymnast Says:

    A cynic might say that it takes big bucks for a big program to get potential customers minimally trained and ready to buy bikes and and to be ready to take their place in the traffic shooting gallery (or is that traffic stream?). However, I tend to think of myself as a realist, rather than a cynic, and I don’t think that the industry wants to miss out on the cash flow potential of repairing the damages to the newly sold motorcycle of all those newly licensed potential crashers. The MSF-MIC apparently wants it all, “from the squeal to the tail”.

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