Comments on: GUSA Roundup: The Eleven election meeting Mon, 09 Nov 2015 02:04:23 +0000 hourly 1 By: AZ Short Sale: Advantages for the Homeowner, Investor, And Bank | Stop Home Foreclosure Sun, 18 Oct 2009 16:37:30 +0000 […] GUSA Roundup: The Eleven election meeting Tags: Credit Rating, Defaulted Property, Reserve Funds […]

By: Matt Wagner Sun, 18 Oct 2009 08:39:10 +0000 It’s nice to read the vox even from Jordan and find this issue still simmering in people’s minds.

It’s also kind of nice, to put it simply, to see my name and my comments and efforts from the past two years totally vanished from the conversation. Maybe a fresh start and Nick’s effective but different style will help.

I don’t know if I’m going back to GUSA, in other news. These guys seem to have a pretty good handle on things, as it seems.

By: Matt Stoller Wed, 14 Oct 2009 20:01:18 +0000 Assuming a 2% annual rate of return (equivalent to a high-yield savings account, at least in the current situation) and a $310,000 annual addition, it would take between NINETEEN and TWENTY years to break the $10m barrier from a $1.8m starting point.

That is to say, to keep this policy is to say we are going to be giving away half the money we take in, until 2028-29. Even with a 4% yearly interest expectation, that’s still 15 years (2024).

Unless Georgetown wants to inject several million dollars to the endowment in its current fundraising drive (which, if it’s aiming to raise $1b, from what I’ve read, $3-5m wouldn’t be that huge), we need to rethink the current policy.

By: Lillian Kaiser Wed, 14 Oct 2009 19:27:20 +0000 I’m sorry I simplified the issue.

As I understand it (mostly from ECD’s presentation), Fitz Lufkin has his facts right: there are two different kinds of reserves. One is the endowment that half of the Student Activities Fee gets put into every year. That endowment, as Jeff Reger said, was created so that its revenues could eventually take the place of the Student Activities Fee. The original plan was to start siphoning off the interest to pay for student activities when the endowment hit $10 million. It’s just over $1 million right now, so that plan may be altered. I think it was Talbot who implied during the Senate meeting that the plan for that fund has failed and it’s time to think of something else.

The other type of reserve is kept by individual funding groups like SAC in case something goes majorly over budget. All in all, those funding groups have over $700,000 in interest-free accounts, but SAC’s reserve is the biggest. The concern is that that money is not being used for anything – not helping students, and not even earning interest. But SAC says it needs a safety net, and there have been times when it needed to dip into its reserves in the past.

I’m sure we’ll be hearing a lot more on this later.

By: Matt Stoller Wed, 14 Oct 2009 19:25:11 +0000 Fitz and Danny are correct.

The Student Activities Fee collects some $620,000 or so ($100/person per year). Since 2001 when the fund was established, half of that is set aside in an ‘endowment’. The endowment is currently around $1.8mil, when it should’ve been around $10mil by now, and self-financing from the interest.

Clearly something has gone wrong. When I was on the Senate, we were trying to find out where the rest of the money had gone, where the interest was being deposited, etc. I hope Nick works out those issues.

Clearly it’s not making sense to keep putting away half the money, effectively doubling the capability of funding, for a self-sustaining endowment if such an endowment isn’t going to be achieved for the next 10 or 20 years (and by then costs will have risen more than inflation, making the money worth less).

– – –

The separate issue is the money that some advisory boards have been allocated but not spent and have placed in a separate reserve account. GUSA uncovered about $800,000 spread amongst the various funding boards — this is in addition to the $1.8m currently.

SAC had the largest with about $250,000 (now around $200k or so). They claim they need it in case of catastrophic funding failure and need to cover liabilities. I fail to see how an event insurance policy couldn’t do this — indeed, $250k worth of insurance would probably only cost something around $10,000/year or slightly more. That could free up all the current reserves with little cost to the student body.

By: Danny Gustafson Wed, 14 Oct 2009 18:27:20 +0000 This information about the SAC reserves is simply incorrect. SAC is indeed holding money aside to create an endowment, but it is not held in their reserves- it is in a separate account. SAC claims that the reserves are for unexpected costs that can occur at the end of the year, such as equipment being broken or reported lost.

While I agree with them that keeping a small amount of money should absolutely be kept for unexpected expenses, keeping $200,000 is rather excessive.

By: Fitz Lufkin Wed, 14 Oct 2009 18:25:26 +0000 Mr. Reger, you are incorrect. There are two issues here:

Half of the student activities fee is supposedly put into an endowment for Student Activities, which has shown no results, to my knowledge.

SAC’s reserves are held because SAC wants to hold them. It’s as simple as that.

Also, things are off to a good start on funding reform. It’s high time that this detrimental system be put to rest.

By: Jeff Reger Wed, 14 Oct 2009 16:37:48 +0000 The reason for establishing the large SAC reserve, according to the intent of the GUSA members who originally started the stash, was to eliminate the $50 Student Activities Fee–essentially by creating a student activities endowment.

It seems that institutional memory failed both SAC and GUSA. So we have a massive SAC surplus fund, and yet the student activities fee continues.

By: ATalbot Wed, 14 Oct 2009 15:45:13 +0000 As love triangles go, one could hope to do no better than Chris and Sam. Here’s looking forward to a productive and efficient year filled with informed Senate action.