Rethinking the Student Activity Fee and the Carry-Forward Account

BY SCOTT HABER

In nearly every walk of life, running a surplus is commendable. Spending less than was budgeted demonstrates thrift, excellent planning, and strong leadership. And yet, many at Washington University are deeply frustrated with the more than $300,000 in surplus funds currently held in the carry-forward account of Student Union’s (SU) Treasury. This money, taken from the activity fee that every undergraduate student at the university pays, is currently collecting .15 percent interest and doing little else. These surplus funds actually represent a persistent failure of SU to uphold its own mission statement and a serious disservice to the undergraduate student body.

One of SU’s purposes, as defined in its constitution, is “allocating the student activity fee to unique and engaging activities, programs, and initiatives.” By failing to allocate more than $300,000 in 2013, as well as roughly $100,000 each year since 2008, SU has failed to uphold its constitutional obligations. The explicit purpose of the student activity fee is to fund various student groups, events, and activities on campus. Any other use for this money represents a mishandling of student funds by SU. The money in the carry-forward account could be put to better use if it were placed into Treasury’s appeals account or into the General Budget for the following year. An amendment to SU’s constitution to this effect would ensure that any future carry-forward funds would not be misused.

According to a September 2013 Student Life article, half of the 2013 surplus will be spent on the salary for a business coordinator and other SU offices. This leaves 6 percent of SU’s total budget of roughly $2.5 million in the carry-forward account. These unallocated funds were paid to SU by students who expected to receive benefits in the form of funding to student groups and activities on campus. It seems reasonable that money students have given to SU on a yearly basis be spent on that yearly basis, or that these funds are quickly and fairly spent the following year on student groups or events. This has not happened.

While SU leaders and representatives have stated that much of the money in the carry-forward account is actually from groups that did not spend all of their allocated funds, this position is not a valid defense of the organization’s failure to provide funding to student groups. According to the aforementioned Student Life article, only 6 percent of groups on campus were significantly under-budget during the 2012-2013 school year. Thus, the carry-forward account does not demonstrate an over-budgeting, but a misallocation, of funds.

Supporting the idea that SU is misallocating funds, not over-budgeting them, are two key facts: first, that SU has consistently over-budgeted by roughly $100,000 over recent years; and second, that tuition, and the student activities fee, has increased dramatically. To this first point, according to a 2011 Student Life article, every year since 2008 has yielded a budget surplus. In fact, 2011 yielded another $300,000 surplus in the carry-forward account, with half of those funds originating from surpluses over the three years prior.

Yet, over this same time period tuition increased from $36,200 to $44,100, yielding an increase in the student activities fee from $362 to $441. This indicates that even as the activities fee increased, the budget surplus remained roughly the same each year. In other words, during the same time period that the student activities fee increased by 22 percent, the budget surpluses produced by student groups remained relatively flat. It logically follows that most student groups readily accepted additional funds offered by SU (and that misallocation of funds is actually the primary contributor to the funds in the carry-forward account.) The history of the carry forward account therefore indicates a repeated and deliberate failure by SU to efficiently utilize student activity fee funds.

This situation is also unfair to outgoing seniors. If money is carried forward every year, then outgoing seniors always lose out on some of their activity fund. While they may have benefited from this effect as freshman, because tuition has increased every year they will end up paying more into the system than they will be able to take out. The graduating class of 2010, for example, would have been unable to benefit from more than $300,000 worth of student activity fees that they had paid for and had a reasonable expectation of benefiting from.

The actual budgeting and appeals process by SU clearly indicates that student groups would all like more funding than they are currently receiving. Effectively, each group submits a request for funding to SU and then all requests are then reduced by the same flat percentage. While there are a finite amount of funds and every group cannot get everything that it wants, the fact that every single group on campus receives fewer funds than they requested indicates that student groups would use more funds if they were available.

Obviously this system skews the incentives for student groups to be honest about how much funding they need, but it still indicates that they want more funding. Even if student groups were intentionally padding their budgets, this indicates that they would otherwise be receiving less money than they felt was necessary to operate their groups. Student groups’ dishonesty about their needs does not excuse SU from failing to uphold its constitutional duty to allocate the student activities fee to student activities.

The Treasury appeals process also presents further evidence that student groups could utilize additional funding if it were available. Treasury representatives reduce any amount a student group appeals for by some percentage or degree for the sake of fairness or cost-per-student, or even refuse to fund an appeal. Members of Treasury may even automatically reduce the amount of funds that many groups have appealed for, before they’ve even heard what the group has to say. These Treasury members argue that this creates a more equitable distribution of student funds in terms of cost-per-student in relation to the activity fund. In reality, reduced funding from Treasury often means that students are unable to host events or have a much more difficult time doing so. For example, when Treasury funded KWUR for $5,000 less than their requested appeal amount for KWUR Week last month, citing a high cost-per-student, KWUR had to take alumni donations they had saved for supporting radio broadcasts and use them to ensure that artists did not have to sleep on students’ couches. This places an undue burden on students and reflects poorly on Washington University.

It is ridiculous that groups could have funding requests reduced by $1000 (or even greater amounts, as is often the case) when there is a combined $300,000-$400,000 in unallocated appeals and carry-forward account funds. While Treasury cannot, and ought not, grant every appeal, available funds should be spent on student groups. Students pay the activity fee with the expectation that they can use those funds for groups, clubs, intramural teams, and professional societies. SU has no grounds to hold a significant percentage of these funds and not spend them for that purpose.

If SU wants to uphold its constitutional obligations to students, then they must reform how it handles the carry-forward account. To this end, there are two policy options available: reducing the student activities fee to reduce the budget surplus or reforming where money from the carry-forward goes each year. The evidence suggests that student groups want more funds. Therefore, the second policy option seems like the more reasonable course of action. Two possible methods of reforming the carry-forward account would be to have funds from previous years immediately transferred into the next years appeals account, or to have these funds rolled over into the following year’s general budget allocation for student groups. In either case, an amendment to the SU constitution could easily be enacted to implement the new policy.

Placing surplus funds into next year’s appeals account would allow any group to appeal for additional funds for events. The additional funds from the carry-forward account would give Treasury more flexibility in allocating money to student appeals, and would create a better overall allocation of funds; underfunded groups could appeal and be funded at a higher level. However, appealing to Treasury is a rigorous process and there is no guarantee that a student group will receive any money at all. Moreover, Treasury tends to favor certain types of appeals over others (e.g. campus speakers over competition groups), which would mean that certain groups may receive a disproportionate amount of additional funding. Thus, these funds may not be reallocated fairly.

A second solution would be to transfer any surplus funds back into the general budget allocation for the following year. This would allow SU to fund the general budgets of student groups at a higher proportion of these groups’ requested amount than they would have otherwise. While certain groups may continue to be overfunded, it would mean that SU could take misallocated money from previous years and immediately put this money to better use by giving additional funding to student groups that would benefit from more funds.

In either case, surplus student activity fees would go to student groups that could use the funds, instead of sitting in a useless carry-forward account and accruing interest. These two solutions present a better allocation of funds than the present one. In both cases, student activity fees are being returned to the students for their benefit in a timely manner. At the very least, these solutions would represent an attempt by SU to uphold its mission statement and more effectively serve the student body.