In an unexpected reversal of fortune, the Associated Students of
UCLA is projecting a net income of several hundred thousand dollars
after previously budgeting a loss for the current fiscal year.
Due mostly to streamlined inventory procedure and increased
sales in specific departments, ASUCLA expects to net $557,000 when
the fiscal year winds down at the end of this month.
The association operates most of the on-campus restaurants and
campus stores, and also runs Ackerman Union.
The development contrasts starkly with the association’s
financial picture a few months ago, when consistent losses prompted
the board of directors to revise its budget in April.
At the beginning of the academic year, ASUCLA had estimated a
$475,000 net income after posting a $2.3 million net gain in
2001-2002. The disparity between the two figures is largely due to
the hiring of 100 unionized food service workers in the summer of
2002, which put an approximate $730,000 dent into the
association’s projected net gains for the following year.
ASUCLA’s financial direction took a bleak turn at the
beginning of 2003, with losses totalling $338,000 for the first
three months of the year. Finance Director Rich Delia said at that
point, war with Iraq was on the horizon, and ASUCLA was already
coping with a struggling economy and lower undergraduate
enrollment.
This prompted the association to revise its projected net income
for the year from a gain of $475,000 to a loss of $33,000.
But a year-end inventory assessment found that shrinkage ““
the loss of store product due to factors like theft, breakage and
expiration ““ was better than estimated, with $300,000 more
product accounted for than originally expected.
Management officials attributed much of the decrease in
shrinkage to beefed-up security procedures, such as the presence of
a security officer in BookZone, the implementation of additional
security cameras and better control over high-priced items in the
textbook store.
“We knew the results were going to be better, but we
didn’t know it was going to be this much better,” Delia
said.
In addition, the association moved its product distribution
center from its Pico Rivera location to campus, increasing the
amount of oversight management could have over its product
stock.
The computer store in Ackerman Union also made a sizeable
contribution to the association’s projected net income,
garnering $120,000 more than the expected budgeted
contribution.
Delia said a rising interest in new lines of Apple computers and
academic department purchases significantly boosted sales in this
department. But state budget cuts to the University of California
to the tune of $300 million could hamper the consistency of
computer sales, as departments have had to scale back their
expenses to accommodate the anticipated reduction.
Catering for the Food Services Division also performed better
than expected by more than $80,000, half of which came from
concessions sold at the Los Angeles Times Festival of Books held in
May.
The financial turnaround has prompted the board of directors to
revisit its proposed student fee increases. Currently, students pay
an annual $7.50 to the association for the upkeep of Ackerman
Union, accounting for $289,000 of the $1.518 million cost of
operation. Revenues from the other two operations ““ food
service and retail ““ make up the difference.
The board has proposed a student fee increase of $20 to support
the Student Union Strategic Initiative, a plan to expand the
services in the union with increased programming and upgraded
facilities, including an on-campus pub.
The board is also proposing another fee of $24 to increase the
“financial viability” of the association, so that it
can weather poor economic periods and also implement its Food
Service Master Plan, designed to expand and upgrade many of the
on-campus eateries.
Though ASUCLA’s recent financial success has prompted the
board to revisit its fee proposals ““Â they were drafted
when the financial outlook was poor ““ board members maintain
that the fees are necessary to ensure the financial health of the
association.
“We really believe we need these fees to continue serving
students,” said Marie Parkes, outgoing chairwoman of the
board’s finance committee.
Parkes went on to say if the sales and concessions prosperity
continue, the board would revisit the fee to ensure that it was
still necessary for the association to remain stable.
Both Parkes and Delia said the shaky standing of other ASUCLA
businesses ““Â including the BookZone, Universal CityWalk
Spirit Store and Health Sciences Store ““ have maintained the
association’s need for caution as they approach next
year’s budget.
“With the store and restaurants, one division in each is
carrying the loss, which is scary,” Parkes said, referring to
the computer store and catering compensating for other
businesses’ losses.
But Delia said many of the association’s improvements this
year “were not flukes,” and that he estimates ASUCLA
will be able to bring about $350,000 from this year’s
estimated net gain into next year’s budget.