Student group funding to be halved during UA debt ‘crisis’

Council was given incorrect information when writing last year’s budget

The UA has “run through its money” and has gone into debt. In the coming year, it will be forced to reduce its budget—much of which currently funds student groups—by approximately half.

UA President Matthew J. Davis ’16 broke the news to the undergraduate student body in a June 24 email, revealing that the UA has spent through its reserves and will end the fiscal year with a liability of $52,255.22 on its Umbrella account.

After collecting its annual $315,000 allowance from the Institute in July, the organization will be able to pay off its debt and budget about $263,000 for the upcoming academic year. Approximately one third of the UA’s revenue comes from funds raised through the MIT Student Life Fee; most of the remainder is provided by the Institute.

Davis wrote that the $263,000 available to the UA this year will be “$4000 less than our total budget for just the Fall semester last year.”

Student group funding awarded through the UA Finance Board will likely decrease by at least half during what Davis is calling a “crisis.”

Davis declined to comment on whether student groups will see across-the-board funding cuts or if Finboard will prioritize certain student groups or expense types. “I believe it will be best to wait for the appropriate communications to happen,” he wrote in an email to The Tech.

UA Treasurer and Finboard co-chair Alekhya Reddy ’16 wrote in a later email that Finboard will likely cap each group’s summer allocation at $308 and defer requests to pay for capital expenses until the fall. It remains uncertain what changes will be made to Finboard’s allocation procedures beginning next semester.

“We no longer have a surplus or reserve to draw upon this year, and it will have to be built back up over the next few years,” Davis wrote in his email to undergraduates. “Even if we used our entire budget to fund our student groups, we would only be able to give them just over half of what they spent last year.”

Budgeting Mistakes

Davis acknowledged that the crisis was likely brought on by poor management of UA resources.

“It is no secret that the UA has utilized terrible budgeting and monetary practices for the past few years,” he wrote in his email to the UA Council.

Emphasizing the need to correct these errors, he wrote that “this is the first year that we are following the budget creation process outlined in the Constitution.”

As for what happened last year: Council had expected that the UA would start with about $393,000 in the Umbrella account and $85,000 in the Reserve account.

In fact, they had overestimated the amount in the Umbrella account by more than $300,000. The account began with just $84,000.

“We do not yet know the answer as to why this was the case,” Davis wrote of the overestimate.

The UA had planned to draw a total of $206,370.92 from its accounts last year. Based on the flawed estimates, this would have left them with positive accounts at the end of the year.

Finboard Overallocation

Finboard budgeted $351,785.24 for student groups last year. Expecting that groups would spend about half of what they were awarded, they allocated $688,362.47—an amount in excess of the UA’s account balance by any estimate.

This “over-allocation percentage” of 48.8% proved to be too low: student groups ended up spending 61.2% of their allocated funds, or $69,336.76 more than was budgeted.

“The difference between the estimated money available and the actual money available, the actual spending of the UA, and the actual spending of the student groups, versus our budgeted numbers, led to our deficit of -$52,255.22,” Davis wrote, referring to the debt.

Moving Forward

Anticipating that financial difficulties were on the horizon for the UA, and responding to student concerns brought up after it was revealed that President Shruti Sharma ’15 had funded a Lil B lecture without the UA Council’s approval, Davis campaigned on improving financial practices at the UA.

In the wake of this crisis, Davis has asked Reddy to revise Finboard allocations which were originally to be announced on June 22.

Davis also plans to create an Independent Review Committee to “investigate what happened, how the UA manages its money, and make recommendations for changes.” UA Vice President Sophia Liu ’17 will chair the committee, which will be composed of two faculty members, two staff members, as well as two students not otherwise involved with the UA.

“It is my present belief that many of these problems arose, because there were not enough critical eyes asking tough questions of the Principal Officers at the time,” Davis wrote.

After Davis began his term early following Sharma’s resignation late last semester, he reinstated the Resource Development and Alumni Affairs committees. He hopes that the Resource Development committee will “find new funding that will boost our income in the Spring, while rebuilding our reserves, so that we contain most of the hardship for students to the Fall semester.” The Alumni Affairs committee will work on building long-term relationships with alumni.

At the last UA Council meeting, Davis had also finalized members for a Special Budgetary Committee to “produce a better, more accurate budget for the Fall Semester.”

“It has also been our intention to establish a joint Council-Exec Committee on Government Accountability, so that there are more Councillors that have full access to the operational information of the UA, such as our funds,” Davis wrote. “Having these additional people checking and ensuring that officers and committee chairs are both properly performing their duties, as well as making sure the information they convey is accurate, will make it difficult for future governments to misrepresent, either intentionally or mistakenly, information.”

Freedom over 6 years ago

Okay. It should be zero.

Anonymous over 6 years ago

How about we stop funding niche groups that only benefit certain subsections of the population? Your organization shouldn't be getting money if it doesn't benefit everyone.

Alan C over 6 years ago

I don't belong to any of those student groups, but I'll admit, it's important to the well-being and life quality of the students to offer the types of groups that get funding from the UA. This news is unfortunate.

Pete over 6 years ago

The headline is a scare tactic. You have read down into the details to learn that for some reason the groups were given budgets that were almost double what they were expected to spend for some reason? That means that in the fall, they should just award the actual numbers to the groups and not artificially double the award for some reason. This will mean groups end up with a cut, but more like a 20 cut, which should be managable. Stop that other pracice and most all of the problems are handled.

Freedom over 6 years ago

3- Only statists and communists reflexively approve the funding of interest groups that the administration likes.