Poor communication intensifies ASUCLA crisis
By Patrick Kerkstra
Daily Bruin Staff
The seeds of the associated students’ current financial and
organization crisis were planted long before the 1994-95 fiscal
year began.
Outside factors such as the Northridge quake, a weak California
economy and declining tourism rates at UCLA have all dealt serious
blows to the financial well-being of the association.
But in addition to the financial problems plaguing the
association, reports of a communication breakdown between the board
and career employees have also surfaced.
The student majority board wields ultimate control of the
organization, but evidence exists that crucial financial
predictions were never released to the board by Executive Director
Jason Reed or his staff.
A former association employee said that year-end projections are
usually compiled in October, using results from the first few
months of the financial year. And documentation confirms that the
students’ store predicted a loss exceeding $500,000 in early
October.
Independent sources said that other areas of the organization,
including the food service division, compiled similar
predictions.
In October, potential year-end losses exceeded $1 million,
according to several well-placed individuals.
However, association management never revealed the projections
to the board of directors.
Tim Beasley, graduate student and board chairman, recently
conceded that top career association employees knew about the
prediction and did not tell the board.
"The projections existed. They existed and we should have been
told about them immediately," Beasley said.
However, association management was not comfortable with the
accuracy of the figures, graduate board member Karol Dean said in a
March interview.
Beasley argued that the board was capable of understanding that
the projections were estimates.
"We’re mature enough to say ‘It’s preliminary work, but it does
look discouraging, so let’s get to work,’" Beasley said.
Graduate board member Peary Brug, although not acknowledging
that the projections existed, said that earlier warning could have
prevented some of the losses.
"Obviously the sooner we would have known about a major loss,
the sooner we could have known about things and the sooner we could
have dealt with it," Brug said.
Executive Director Jason Reed denied knowledge of any year-end
projections in October.
While confronting these problems, board members have faced a
mounting financial crisis further compounded by future construction
expenses and past debts.
On May 26, 1994, the board of directors approved the 1994-95
association budget which predicted several hundred thousand dollars
in profit. In retrospect, some of this year’s board members
expressed considerable regret in what now seems to be a highly
over-optimistic budget.
"Last year’s budget had a lot of inflation, and I feel that the
projections were based on assumptions that were just unrealistic,"
said Tamara Carr, undergraduate and vice chair of the board.
"I don’t think the earthquake, or the full impact of seismic
construction was taken into account, as it should have been. There
were the riots, and the depreciation that’s going on in Westwood.
How can we possibly expect to be running better in some departments
then we had been last year?" Carr said.
Althought the students’ association made $140,000 last year,
early reports indicated that this year’s results would be
dramatically different.
On Sept. 30, Reed told the board that the association was
already $158,000 below budget for the first quarter of the
year.
As losses continued to rise, board members grew increasingly
skeptical of the 1994-95 budget, and concerned about the direction
of the association.
"The pressure not to reduce expectations may be high, but we’d
like to encourage departments to be realistic," said Dave
Lowenstein, an administrative representative at the January board
meeting.
Similar sentiments were echoed by other board members at the
January meeting.
"I would hate to leave next year’s board with a budget like this
one," Carr said.
Despite the skepticism, usual efforts to revise the
association’s budget in the winter months were not done this
year.
"With all the turmoil of this year, the consultant, etc., a
budget revision got caught in kind of an undercurrent and was
overshadowed," Carr said.
However, one board member said association management indicated
a revision wasn’t necessary.
"There was resistance to the idea of revising the budget, and we
were always told that things were going to be rosier the next
month," Beasley said.
The board was not aware of any major potential losses until Reed
said the association would likely lose $1.8 million, on Feb. 4.
Most board members said they were surprised by the extent of the
damage.
"One reason we were in such shock was that we had been told
things were looking slightly better, and all of a sudden the bottom
fell out," Beasley said.
The Kibel Green consulting firm was quickly hired after the
board realized the severity of the loss and rumors of early
projections reached the board.
The firm’s purpose was to review the organization’s efficiency,
and suggest measures to reverse the downward financial trends.
Included among cost saving efforts and price increases were
substantial proposals for structural changes.
"The current organization operating structure and lack of
certain modern technology causes employees and operation to be less
efficient and effective," wrote Kibel Green in its primary
report.
The board recently formed a special executive committee to exert
continuing influence and presence in the coming months, in addition
to hiring the turnaround consultant, Alpha Partners.