Following its strongest financial year since coming close to
bankruptcy and being bailed out by the chancellor in the mid-1990s,
the Associated Students of UCLA ““ which provides a wide
variety of non-academic services to UCLA students ““ is facing
two major financial challenges this year.
A temporary, five-year $43.50 increase in the student union fee,
approved after the bail-out, expired last year. Additionally, the
Association will spend more than $700,000 a year to pay 80
newly-unionized employees who previously received their paychecks
from a temp agency.
Though the association had been planning for the return to a low
$7.50 student union fee, ASUCLA Executive Director Pat Eastman said
the hiring of the workers was relatively unexpected and after some
revisions to account for the hirings, 2002-2003 budget projections
predict ASUCLA’s net income will be just over one-fifth of
what it was in 2001-2002.
Services provided by ASUCLA are extensive. The association
subsidizes undergraduate and graduate student governments. It
oversees Student Media. It sells everything from Cooperage Texas
burgers to computers and textbooks and provides meeting room space
to student groups and offers free coffee during finals and tenth
weeks.
Despite the challenges ahead and a rocky recent history,
management and student members of ASUCLA’s Board of Directors
have confidence in ASUCLA’s long-term financial health,
saying the association will continue to be able to provide the
services they currently do.
Over the next few years ASUCLA will find ways to maximize worker
efficiency and will get more output for the additional $730,000 in
costs, Eastman said.
“This is going to be the toughest year, but … it’s
going to get better,” she said.
When asked if she had confidence ASUCLA would remain financially
solvent the next few years, Eastman said,
“Absolutely.”
“I think we’re on very solid ground,” she
said.
Offering evidence that ASUCLA will remain solvent, Eastman
pointed out that the association has a $5 million cash reserve
““ and is on schedule to have an $8 million reserve in five
years. Additionally, capital improvements in restaurants and the
student union are scheduled to occur, she said.
“We’re in the best position we’ve been in in
10, 15 years ““ maybe not 15, but ten,” she said.
Steve Olsen, vice chancellor of budget and finance, who provides
administrative perspective in shaping ASUCLA financial policy, said
the association has done relatively well recovering financially,
but had concerns with the 2002-2003 budget.
Olsen chairs the Joint Operating Committee, which was created to
advise the administration on ASUCLA finances after former
Chancellor Charles Young bailed out the association following the
near-bankruptcy. As a stipulation of the bail-out, the chancellor
must approve ASUCLA’s budget until loans are paid off.
Chancellor Albert Carnesale has not yet approved this year’s
budget.
Saying he is bringing up his concerns now to stave off the
possibility of another bail-out in the future, Olsen noted that
ASUCLA’s budgeted income for 2002-2003 is .7 percent higher
than gross sales, compared to 3.3 percent last year. In raw
figures, that means ASUCLA’s net income was more than $2.3
million last year and will be about $475,000 this year.
The forecasts for the next five years show all income levels
less than 1 percent higher than gross sales. Olsen believes ASUCLA
should strive for at least a 1 percent figure, to help develop
reserves in case of financial disruptions.
There’s a level of risk associated with low net revenue
levels, Olsen said. If something adversely affected ASUCLA sales,
“they could quickly go negative. They could get into an
actual loss situation,” he said.
Olsen mentioned weaknesses in computer sales in recent years and
said BearWear apparel sales are always volatile.
Eastman, though, pointed out that the difference between a 1
percent income to sales figure and a .7 percent figure isn’t
tremendous ““Â a 1 percent figure would bring in about
$670,000 in net income, compared to $475,000 with a .7 figure.
The difference is “significant, but not millions,”
Eastman said.
Finding a way to cut costs and boost net revenues is not an easy
task, and some have already felt the pain of ASUCLA preparing for a
challenging financial year. The Undergraduate Students Association,
for example, will have about $30,000 less in ASUCLA funds than it
had last year. As a result, both USAC officers and student groups
funded by USAC will have smaller budgets.
Student members of the board of directors said working with the
additional costs of newly-hired workers will be a challenge, but
they believe the budget is sound overall and ASUCLA’s
financial solvency is not in jeopardy with current net revenue
projections.
When asked if she was concerned about the association’s
finances, Marie Parkes, a chemistry graduate student who is the
chair of the board of director’s finance committee, said,
“Am I concerned, yes, because I’m the chair of the
finance committee. But I don’t think that you need to be
worried about the possibility of UCLA having to take over any of
the services ASUCLA currently provides.”
Larry Rubin, a graduate representative who also sits on the
finance committee, said the association is cautious when preparing
budgets.
Revenue figures can be worse than predicted, but “can also
be a hell of a lot better,” he said.