[ALAC] ALAC Statement on Reserve Fund

Tue Nov 28 20:41:26 UTC 2017

Hi,
First, I do agree with Alan and Sebatien it should be at least one year of
opex. But also I understand the reserve fund will be used for extraordinary
issues, not foreseen right now, and the actual opex is coming from regular
incomes, and it seems it will be so at least for FY19 (and FY20). So the
reserve can be replenished over an ammount of time. Sources for this
replenishment, other than gTLD auctions, can be the actual interest paid to
the different funds ICANN have, and a inclusion of certain ammounts in the
budget.

Lastly, a point not mentioned in the draft is the need for ICANN to be
cautious with its expenses. The original fund covered a year of opex, and
it was expected to decrease due to the IANA transtion, but in fact the
ammount of depletion of the reserve is larger than the ammount shown for
IANA transtion, so it seems it is covering not only extraordinary events
(The IANA transition), but also regular costs. Altough the incomes seems to
be flattening, the budget is increasing, that is particularly true with PTI
and IANA budgets, where the actual draft increases the FY19 in almost 10%
over FY18

Thanks

Ricardo

2017-11-28 15:23 GMT-05:00 Judith Hellerstein <judith at jhellerstein.com>:

> Hi Alan and Sebastien,
>
> Thank you for posting this comment and I look forward to the discussion.
> I too agree that the ALAC needs to strongly support having an adequate
> reserve fund, however, I think we should identify more than 2 sources for
> funds as the Auction proceeds is a one time possibility and the problems
> with the reserves need something that is a more concrete and longer term
> option.  I would like to see more suggestions for sources of funding.  I
> would also prefer that we switch around the order of the sources of
> possible funds to put Auction Proceeds as the last item and a levy on any
> future new GTLDs as the first item on the list.  Also I was a bit confused
> by your statement in that Auction Proceeds is the surplus from the last
> round of gtlds but in this sentence it looks to be a different item.
>
> Best,
>
> Judith
>
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> On 11/28/2017 2:26 PM, Alan Greenberg wrote:
>
>> See https://community.icann.org/pages/viewpage.action?pageId=71602968.
>>
>> Sebastien identified a number of important issues related to the reserve
>> fund, following discussion with him, I have drafted the following short
>> statement (also posted to the Wiki). As the PC closes on Thursday, and I
>> believe it is essential that we make a strong statement, I would like to
>> discuss this on the ALAC call in a few hours.
>>
>> Alan
>>
>> ----------------
>>
>> The ALAC strongly supports having the Reserve Fund at the level of 12
>> months expenses, and higher if there is a practical way of achieving that
>> without unduly impacting ICANN's ability to provide necessary services,
>> ensure the current and ongoing security, stability and resiliency of the
>> DNS, and adequately support its ACs and SOs.
>>
>> Since the Reserve Fund level is clearly tightly coupled to the level of
>> ICANN operational expenses, any discussion of the reserve should have
>> included a recent history and projection of ICANN operational expenses
>> along with the employee/contractor levels and the Reserve Fund levels over
>> the same period.
>>
>> At whatever level the Reserve Fund target is set, ICANN must publish a
>> plan on how and when this will be achieved. Given that the proposed target
>> level(s) are significantly above the current Reserve Fund level, and it is
>> unrealistic to believe that we will sustain or exceed this year's
>> return-to-reserve of $5m, ICANN should expeditiously investigate
>> alternative methods of building the reserve to ensure ICANN's future
>> stability. Sources such as the Auction Proceeds, the surplus from the last
>> round of new gTLD, or a levy on any future new gTLD fees should be
>> considered.
>>
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>>
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