Student funding to be halved in UA debt ‘crisis’

Review Committee to probe crisis causes

The Undergraduate Association 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 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 in the fall. “I believe it will be best to wait for the appropriate communications to happen,” he wrote in an email to The Tech.

Summer allocations for student group spending have been capped at $308 per group, according to an email from UA Finboard chair Jitesh Maiyuran ’18. With 107 student groups applying for summer funding, this comes to a total of around $33,000, down from the $66,708 originally planned for.

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.”

Independent Review Committee

Davis created an Independent Review Committee on Financial Affairs to “investigate what happened, how the UA manages its money, and make recommendations for changes” in a final report. 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.

As chair, Liu will not hold a vote, nor will she be permitted to “make recommendations for the committee in relation to its purpose.”

“This committee shall have access to all records of the UA. All members of the UA must fully comply with a request for information from this committee,” Davis wrote in the committee proposal.

Members of the committee will be chosen by Davis “in collaboration with interested members of Council.” The proposal originally specified that Davis would select members “in consultation” with interested Councilors; the wording was later changed at the request of Council members.

The committee’s work will be kept under strict secrecy: Davis’s proposal stipulates that “No person or organization may request or be provided information from this committee, unless the committee as a whole decides that it is necessary to carry out its duties.”

The proposed membership will also be kept secret until approved by the UA Council.

Budgeting Mistakes

Davis acknowledged that this 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.

Ryan McDermott ’15, UA Treasurer for the 2015-2016 academic year, declined to comment on potential causes of the overestimated account balance. “I wish to provide any and all information possible” to the Independent Review Committee, he said in an email to The Tech.

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.

The rationale behind over-allocating is that it allows Finboard to approve more funding requests; rather than deny groups funding, they assume that groups will spend less than they are allotted.

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.

“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.”

Anonymous over 7 years ago

The Tech should reach out to the Student Activities Office. This may have been an accounting error on their part; it wouldn't be the first time.

mitinsider over 7 years ago

With all the administrators at MIT, none of them saw this overspending? Doesn't central administration monitor this type of thing? Too busy with more important things. So us students will make due with less? As usual. Has anyone looked into unused funding somewhere else in central administration? Who works for who?