Internet Corporation for Assigned Names and Numbers
Staff Working Paper - FY00-01 Preliminary Budget
III. Budget Process for FY 2000-2001
IV. Budget Priorities for FY2000-2001
V. Preliminary Budget Schedule A and Notes for FY2000-2001
Schedule A - Staff Working Paper
- FY 2000-2001 Preliminary Budget
VI. Budget Issues for FY2000-2001
This staff paper has been prepared to provide background
materials for discussion of ICANN's next fiscal year budget at the public
forum and Board meetings that will be held in Cairo on March 9 and 10,
2000. These discussions are the first step in the Board's consideration
and adoption of a budget for the next fiscal year. A revised budget
process has been adopted by the Board for FY00-01 and is described in
Section III of this paper. The planned budget process will result in
a completed budget being submitted by the President for Board approval
not later than 45 days in advance of the beginning of the fiscal year
on July 1, 2000, as required by ICANN Bylaws Article XI, section 4.
Section VI of this staff paper asks a number of questions about ICANN
budget issues on which the public is invited to comment. An electronic
public comment forum on the budget is available on the ICANN website.
Fiscal year 2000-2001 will be the second full budget
year for the corporation and the first in which the preparation of the
budget is based on significant operating experience. During the startup
fiscal period from October, 1998, through June, 1999, the corporation
was supported primarily by donations. Total revenue for the eight months
was $708,000, with total expenses of $1,466,637. An operating loss of
$758,767 was carried forward to the current fiscal year. During the
summer of 1999, unsecured loans were obtained by the corporation in
the total amount of $1.025 million to offset the prior year loss and
provide additional working capital. Additional accounting detail on
the startup period is available at
(All dollar amounts in this staff paper are in U.S. Dollars.)
A budget for fiscal year 1999-2000 was developed
by the staff and posted for public comment in April, 1999. A revised
version was adopted by the Board at its Berlin meeting on May 27, 1999.
Following consideration of a mid-year financial report in February,
2000, the Board revised the FY99-00 budget to bring it in line with
current projections of revenue and expense. The revised budget projects
total revenue of $5.225 million, total expense and equipment acquisition
of $3.390 million, and a resulting contribution to prior year loss,
loan repayments and operating reserve of $1.835 million. See <http://www.icann.org/financials/budget-fy99-00-27may99.htm>
In July, 1999, the Board directed the President
to convene a Task Force on Funding (TFF) composed of representatives
of Domain Name and Address Registries and Registrars with the objective
of reviewing ICANN budgetary needs and making recommendations to the
Board. A final draft of the TFF report was published in October, 1999,
and its recommendations were adopted by the Board at its Los Angeles
meeting on November 4, 1999. See <http://www.icann.org/tff/tff.htm>.
In November, 1999, ICANN executed a series of agreements
with the United States Department of Commerce and with Network Solutions,
Inc. that provide, among other things, for specified payments to ICANN
from the NSI operated Registry for the .com, .net and .org domains,
and from NSI acting as a competitive Registrar in those same domains.
These payments are projected to reach a total amount in the current
year of $2.250 million. This amount is included in the schedule accompanying
the TFF report and in the revised budget for FY99-00. See <http://www.icann.org/nsi/nsi-agreements.htm>.
III. Budget Process for
Included in the October 1999 report of the Task
Force on Funding are the following two recommendations:
"The TFF believes that ICANN's budget process
needs to be improved in future iterations to give the entities providing
the funds -- the domain name and address registries and registrars --
a formal role in the budgeting process. The goal of the Task Force's
recommendations in this area is greater accountability, predictability,
participation, and transparency in the budgeting process.
" In addition to the entities directly contributing
the funds to ICANN's cost-recovery program, the rest of the ICANN community
must have a fair opportunity to review the proposed budget and participate
in the consensus-development process. The Task Force recommends that
ICANN require that the proposed annual budget be placed on the agenda
for at least one Public Forum prior to adoption."
As noted above, these recommendations have been
adopted by the Board and will be used to guide the staff in developing
the next fiscal year's budget. The following specific actions are planned:
- Review the financial report for the first six
months of this fiscal year and adopt a revised current year budget
that becomes the base for budget planning for next year. (This action
was completed by the Board at its February 10 meeting.)
- Convene the consultative group on the budget
process called for in the TFF Report, which was approved by the Board
in Los Angeles. (This action has commenced, with participation from
the Name and Address Registries and Registrars.)
- Prepare a staff document on budget priorities
and proposed revisions from this fiscal year to next, and review it
with the consultative group, the Board, and with the public in Cairo.
(This staff paper is the first of a series of papers that will underlie
the budget process and is being posted for public comment in advance
of the Cairo meeting.)
- Prepare a draft budget for next year based on
the results of the interactions with the public and with the consultative
group, and review it with the Board in April.
- Publish the proposed FY00-01 budget on the ICANN
Web site in April for a 30 day public comment period.
- Adopt the budget at either the May or June Board
meeting, depending on the outcome of public comment and other consultations.
IV. Budget Priorities for
IV.1 Review of current year
The May 1999 budget for FY99-00, the current fiscal
year, established the following goals and related resource commitments:
- completion of ICANN organizational arrangements,
such as the seating of the permanent members of the Board of Directors
and recruiting of a permanent President and Chief Executive Officer.
- completion of contractual arrangements with registry-administrators
- continuing accreditation of registrars for the
.com, .net and .org domains
- study, recommendations and implementation of
policy decisions concerning domain names, trademarks and the related
provisions of the WIPO study
- study, recommendations and implementation of
policy decisions concerning expansion of the Top Level Domain (TLD)
- study, recommendations and implementation of
updated arrangements for Internet root servers.
- review and adoption, after public comment and
possible revision, of recommendations received from ICANN Support
Organizations and Advisory Committees
At midyear, the following progress toward these
goals has been made:
- Nine Directors selected by Supporting Organizations
were seated in November. An At Large Membership implementation project
has been created and will have begun accepting applications for At
Large Membership by the time of the Cairo meeting. The Board has set
an agenda item for the Cairo meeting to take additional policy actions
on At Large Membership and elections. The Board has established a
Search Committee for a permanent President and Chief Executive Officer.
- The Board has completed agreements with Network
Solutions covering its operation of the registry for .com, .net and
.org, and its accreditation as a competitive registrar for the same
domains. The ICANN staff is in discussions with operators of the IP
Address Registries and with operators of ccTLD Registries/Registrars
on agreements with those organizations.
- ICANN continues an active accreditation program
for .com, .net and .org, with more than 100 companies having successfully
completed the accreditation process.
- Following adoption of a Uniform Dispute Resolution
policy in August, 1999, ICANN has implemented a program that currently
has three providers of dispute services and more than one-hundred
disputes currently in process before panels convened under the ICANN
UDRP policy and procedures.
- A Working Group of the ICANN Domain Name Supporting
Organization (DNSO) has produced a status report and recommendations
on gTLD issues for the DNSO Names Council to consider in the near
future. The ICANN Board has scheduled a study session on gTLD issues
at its forthcoming Cairo Board meeting.
- The ICANN Root Server System Advisory Committee
has met several times and made recommendations to the Board on technical
improvements to the architecture of the root server system. These
recommendations are supported by the operators of the thirteen root
servers and are in the process of implementation. ICANN staff, the
root operators and the U.S. Department of Commerce are working together
to establish a work schedule and timeline for policy, administrative
and technical changes to the root server system to meet the objectives
established by the U.S. Government in the DNS White Paper.
- Significant actions taken by ICANN Supporting
Organizations and Advisory Committees include:
- The DNSO Names Council, following study of
a referral to it by the ICANN Board of recommendations contained
in the WIPO report on trademarks and domain names, recommended
to the Board the adoption of principles related to a uniform dispute
resolution policy. It has under further study other portions of
the WIPO report dealing with famous names and gTLD expansion.
- The Address Council has been organized under
the terms of the ASO Memorandum of Understanding and intends to
hold its first face to face meeting in May 2000.
- The Protocol Council has been organized under
the terms of the PSO Memorandum of Understanding and does not
currently have a face to face meeting scheduled.
- The Independent Review Advisory Committee
has completed its work and the ICANN Board is expected to implement
its recommendations at the Cairo meeting.
- The Audit Committee has completed work on
an Audit Committee charter and recommended its adoption by the
Board at the Cairo meeting.
- The Reconsideration Committee has met several
times to consider requests for reconsideration of Board actions
and forwarded recommendations on the disposition of a number of
requests to the Board. The substance of the recommendations and
the related Board actions are documented in the minutes of several
Board meetings which are posted on the ICANN Web site.
- The Government Advisory Committee has met
several times and recently forwarded to the Board a document concerning
Principles for Delegation and Administration of ccTLDs. The Board
will consider the GAC Principles as part of its Cairo agenda item
dealing with ccTLD issues.
- Following a recommendation of its original
Membership Advisory Committee, which has completed work and been
disbanded, an At Large Membership Implementation Task Force is
in the process of being formed and will advise the staff and Board
on remaining issues concerning the structure of At Large Membership,
elections, voting, outreach, etc.
IV.2 Proposed Budget Priorities
Now that ICANN is working within an established
budget process, the priorities for each new budget period will likely
be a mix of items carried forward from the current year as well as new
matters. The following list for next year, prepared by the ICANN staff,
is non-exhaustive and is intended to serve as the basis for public comment.
It does not, at this time, necessarily reflect the views of the ICANN
Board, which will consider the list following public comment and in
accordance with the budget process described in section III above.
IV.2.A. General and
- Provide timely and responsive staff support to
the policy-making activities of the Board, its Supporting Organization
Councils and other advisory bodies as needed, including policy implementation,
preparation of legal agreements, etc.
- Meet operational commitments of service programs,
including IANA, root servers, registrar accreditation, membership,
- Conduct an active education and outreach program
that supports public participation in ICANN policy-making activities,
including public meetings, electronic forums, hardcopy publications,
- Carry out the general management and administrative
responsibilities of the corporation in an efficient and cost effective
IV.2.B. Specific Priorities
- Complete Board policy-making and related implementation
actions for gTLD registries and registrars.
- Complete Board policy-making and related implementation
actions on revisions to ICP-1 dealing with delegation and administration
- Complete implementation work on At Large Membership,
including Board policy actions taken in Cairo, first and second stage
- Complete the work plan for improvements to the
root server system and carry out necessary implementation steps.
- Complete work necessary to fulfill ICANN obligations
under the Department of Commerce/ICANN MOU/JPA transition agreement.
- Conduct scheduled program reviews for Supporting
Organizations and other advisory bodies and make any revisions to
ICANN organizational structure found necessary by the Board as a result
of the reviews.
- Complete staff recruiting for positions authorized
in the approved budget.
V. Preliminary FY2000-2001
Budget Schedule A and Notes
Budget Schedule A below contains a preliminary version
of a base budget for FY00-01. The numbers have been derived from the
revised budget for the current fiscal year, shown in the left hand column,
with adjustments to incorporate known year to year budget changes as
described in the Schedule A Notes below. Schedule A is not the planned
budget for next year; it is a projection of the revenue and expense
numbers for the next fiscal year if no changes are made to existing
plans and programs. In other words, it is the base from which changes
in programs that have budgetary effects, either increases or decreases,
may be discussed and possibly approved by the ICANN Board in the course
of the budget process.
Schedule A - Staff Working
Paper - FY00-01 Preliminary Budget
See Accompanying Explanatory
All Amounts in Thousands
of U.S. Dollars
FY99-00 Budget Approved
FY00-01 Preliminary Base
Budget Before Possible Program Changes
to Support Continuing Expenses
||Subtotal - Continuing Income
Time and Special Project Income
Staff - end of period
& Technical Services
& Public Meetings
Travel & Meetings
||Subtotal - Expense
||Capital Equipment Acquisition
||Total Expense & Equipment
||Surplus of Income over Expense
Balance - Beginning of Year
Income/Loss for Year
Payable - End of Year
Balance - End of Year
Notes to Budget Schedule A dated 3/6/00
Income. Pending further discussion with the Registry/Registrar Budget
Group (RRBG), the amounts and proportionate shares of income for continuing
expenses from among the three major income sources have been left unchanged
from this fiscal year to the next fiscal year. There is a decrease in
Special Project Grants because no grant information for next year is
available at this time. Contributions are projected to decline as a
result of ICANN's continuing income sources having been established
during the current fiscal year. The net of these changes is a year to
year decrease in income from $5.225 million to $4.825 million, or $400,000.
Expense. Overall expense, including equipment acquisition, is projected
to increase from $3.390 million to $3.830 million, or $440,000. The
increase is primarily the result of completing the recruiting of staff
to fill positions authorized in the budget. Additional detail on specific
expense line items is included below.
Operating surplus. The preliminary FY00-01 income and expense amounts
produce a surplus of $995,000 at June 30, 2001. This is a decline of
$840,000 from the comparable amount of $1.835 million in the current
Reserves. If the revised budget plan for the current fiscal year is
realized, ICANN will end the year with a surplus of income over expense
of $1.835 million. Uses of the surplus include the repayment of short
term loans in the amount of $1.025 million, and a contribution to the
operating reserve of $810,000. At the beginning of the year, the reserve
account had a negative balance of $759,000, so the net effect is that
at the end of the year there would be a small positive balance of $51,000
carried forward to the new budget. The preliminary base budget surplus
of $995,000 in the next fiscal year would increase the yearend operating
reserve balance to $1.046 million, or approximately one-third of a year's
operating expense. The Board has established a financial goal of creating
an operating reserve equal to one year's expenses, and doing so over
a period of several years through budgeted surpluses.
Detail on Expense Line Items.
(a) Staffing. The approved organization plan for
ICANN currently includes 13.3 full time equivalent positions. It is
Board policy that these positions are to be filled flexibly to meet
the needs of the corporation through a combination of full time and
part time employees, consultants, fellowships and other means as appropriate.
The preliminary budget for the next fiscal year assumes that all positions
are filled during the fiscal year. The staff position titles and their
status in February, 2000 is as follows:
|Vice President and
|Senior Policy Officer
|Chief Technical Officer
|Business and Finance
||Filled at 20% time
||Filled at 30% time
|Executive Asst to
(b) Personnel. This category includes all salary,
wage, benefit and consulting expenses. Staff are compensated on the
basis of competitive market conditions in Marina del Rey, California,
or wherever the position is geographically located if not at the headquarters
office. The Board approved salary ranges currently are set at the
|Officers of the Corporation
||$ 100,000 - 300,000
||40,000 - 120,000
|Technical and Administrative
||35,000 - 80,000
|Nonexempt administrative positions
||20,000 - 35,000
Assuming that the approved staff positions are
filled at the midpoint of existing ranges, total personnel costs are
projected at $1.476 million. This amount may vary up or down based
on actual recruiting experience in the course of the fiscal year.
(c) Professional & Technical Services. This
category includes agreements for legal services, public affairs and
education, and computer systems consulting. The projected amount of
$960,000 is a reduction from the current year, which results from
filling some of these requirements from inhouse staff.
(d) Board and Public Meetings. This category covers
expenses associated with the Board's quarterly public forums and face
to face meetings, as well as monthly teleconferences. Included are
travel, hotel, meeting room, technical and administrative support,
etc. The projected amount of $600,000 is for four meetings and is
a small increase from the current year to reflect rising travel costs
and the increase in the size of the Board from nine to nineteen members.
(e) Other Travel and Meetings. This category covers
staff travel in connection with job assignments, Director travel in
connection with outreach activities, as well as committee and other
scheduled meetings and events not included in the quarterly Board
meetings. The increase to $408,000 reflects the increase in activities
of Supporting Organization Councils, Board committees, and the filling
of vacant staff positions.
(f) Administration. This category includes costs
of operation of the headquarters office, purchased accounting and
administrative services, insurance, utilities, computer and office
systems, equipment depreciation and network connectivity. The reduction
to $336,000 reflects a shift in a number of expense items from purchased
to inhouse services.
(g) Special Projects. In the current year, the
Markle Foundation grant is supporting part of ICANN's At Large Membership
implementation costs in the amount of $200,000. At this time, no follow
on special project expenses have been planned. If continuing special
project expenses are incurred, it is expected that offsetting grant
income will be available to cover them.
VI. Budget Issues for FY2000-2001
The following issues, presented as questions, are
among those which the Board and staff will be considering in the development
of the budget for FY00-01. Public comment on these issues, and others
not listed, is encouraged.
Q. Does the preliminary budget properly support
achievement of the basic purposes of ICANN, which are stated in the
Articles of Incorporation as:
"... promoting the global public interest
in the operational stability of the Internet by (i) coordinating the
assignment of Internet technical parameters as needed to maintain
universal connectivity on the Internet; (ii) performing and overseeing
functions related to the coordination of the Internet Protocol ("IP")
address space; (iii) performing and overseeing functions related to
the coordination of the Internet domain name system ("DNS"),
including the development of policies for determining the circumstances
under which new top-level domains are added to the DNS root system;
(iv) overseeing operation of the authoritative Internet DNS root server
system; and (v) engaging in any other related lawful activity in furtherance
of items (i) through (iv)."
Q. Do the proposed general and specific budget priorities
for FY00-01 relate appropriately to the purposes of ICANN? Since much
of ICANN's ability to meet the stated priorities is based on staff resources,
is the projected staffing of 13.3 full time equivalent positions the
appropriate level of staff? For what reasons should the number of ICANN
staff positions be increased or decreased?
Q. Up to the present time,. it has been assumed
that ICANN's Supporting Organizations will conduct their activities
without financial support from the central budget, relying instead on
donated and volunteer services. Is this a reasonable assumption? If
the SO's are to receive financial support in the annual budget, what
means should be used to establish appropriate support levels and what
income sources should be used to cover the related expense?
Q. Up to the present time, the operation of the
thirteen Domain Name System root servers has been subsidized by the
organizations hosting the machines. Should this volunteer system be
continued in the future, or should some provision be made in the ICANN
budget for partial or full support of root server operating costs?
Q. Since ICANN's charter is a global one, the Board
has scheduled its quarterly meetings, including public forums, to rotate
among the five major geographic regions defined in the Bylaws. Should
this practice be continued? To what extent should webcasting and other
electronic means be considered an adequate substitute for face to face
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