An outsider attempting to understand ARMA’s fees and finances as revealed by its own publications would conclude that it’s fair to at least ask questions.
In its May 2005 newsletter ARMA indicates that it spent a total of $643,802.40 on collection and processing e-waste from February 1 to March 31, 2005. As the “exploding TV” chart indicates, only 47 per cent of ARMA e-waste expenditures are on collection and processing: the balance goes to administration and related tasks. Using this cost split we can calculate the total ARMA system cost (collection, processing and administration) from February 1 to March 31, 2005 to be $1,369,792. ARMA claims that it will collect $8 million in advance disposal surcharges (ADS) in 2005 or about $666,667 a month (see ARMA June bulletin). Based on this, for February and March 2005 it collected a total of $1.3 million in ADS. Subtract what it collected in ADS from what it spent and that puts ARMA’s e-waste program in the red for $36,459 for those two months.
But we know that ARMA started collecting electronics in October 2004, yet only started charging the ADS on February 1, 2005. That’s four months without any revenue. This suggests that at the start of ADS collection program on February 1, the organization could have been in a financial hole much deeper than $36,000. In the simplest of terms, a monthly loss of $36,000 is a very conservative number.
This raises two questions:
1) Using ARMA’s own numbers it’s reasonable to think the organization was running a deficit by March 31, 2005 — one that was likely getting much worse as the influx of e-waste increased. Was this the motivation in April for ARMA to redefine certain electronic products wastes (i.e., to generate higher revenues to cover shortfalls)? The organization claims not, but the math suggests such questions are not outlandish;
2) Since ARMA wasn’t collecting fees until February 2005, it’s fair to ask how the collection and processing of electronics collected between October 2004 and February 2005 was funded. ARMA also administers a tire stewardship program which has run huge surpluses. In fact, we’re told the organization had $26 million in held investments in 2003. Was the cost of e-waste recycling between October 2004 and February 2005 paid for using monies from the tire fee surplus? Perhaps not, but if this was the case, Alberta tire consumers have cross-subsidized the collection and recycling of electronics. That would be a case of a fee being levied for one thing and used for another, which would make it a tax, which ARMA has no constitutional authority to levy.
ARMA states that, “ARMA is fully aware of the Eurig decision and conducts program reviews to confirm that the fees charged are reasonable relative to the cost of the services provided.” We would like to see the results of its program review in the context of our deciphering of ARMA’s reporting on the levying and spending of consumers’ electronics ADS monies.
In the interest of fairness, this magazine will offer ARMA this page in the next edition (October/November) to answer our questions and offer readers an explanation.
Total $ paid to processors and collectors $643,802.4047%
Total system cost$1,369,792.34
Annual revenue collection$8,000,000.00
Revenue Feb 01-March 31, 2005$1,333,333.33