GUSA approves fee reform, awaits December referendum

As expected, the Georgetown University Student Association overwhelmingly approved Student Activities Fee Endowment reform on Sunday. The reform, which proposes an increased student activities fee, will face an online referendum from December 7 to December 9.

The reforms will be adopted if at least 2,000 students vote and a majority of voters support the bill. It’s unclear if the vote minimum will be difficult to reach; GUSA executive elections routinely surpass 2,000 votes, but this year’s GUSA Senate elections only received 2,150 total votes.

If passed, SAFE reform will also allocate the entirety of the student activities fee to student activities. Currently, half of the fee is allocated to a student activities endowment.

21 Comments on “GUSA approves fee reform, awaits December referendum

  1. Dilemma: I oppose SAFE reform. Should I vote against it, or not vote at all?
    Given that most of GUSA is united behind it, I’m going to assume the vote will end up majority in favor. And given that this comes right at the end of classes, when students are busy with final projects, I’m not projecting stellar turnout.

    I’m going to sit this one out and urge like-minded students to do the same.

  2. It will take two minutes to vote. And it will be two of the most important minutes you will spend doing anything this semester. With a few clicks of the mouse, student activities can be revolutionized on this campus. Student life will flourish with an influx of money which will put us in the same league as our peer institutions and which will allow students to exercise their amazing creativity and fulfill their potential as students, members of the University community, and human beings.

    I’ve yet to see a good argument as to why SAFE Reform shouldn’t pass. Even more, I don’t think I will ever find a reason which will legitimate not voting at all. If you are not in favor of the referendum, vote no. If you have faith in your fellow students and want students to be able to spend all of their own money to enrich the campus community, vote yes.

  3. BULLSHIT.

    Vote no.

    Doug, do not fall in the trap of indifference.

  4. “And it will be two of the most important minutes you will spend doing anything this semester” Guess what, helping you out with law school app’s is not the most important things i will do this semester. for that quoted comment you can really go fuck yourself

    regards,
    the useless georgetown community

  5. Doug,

    Out of curiosity, why do you oppose SAFE Reform? Do you oppose allocating 100% of the $50 you pay each semester towards student activities, or do you oppose paying an additional $12.50 per semester? I honestly can’t understand opposing the first issue, since otherwise your half your money goes to waste, and as to the second, the modest increase would result in a huge and sustainable income pot for student life on campus.

    I mean, think about it this way — how much would you pay for a ticket to see, say, Kanye, perform on campus? (Or, if you don’t like him, insert another performer you’re wild about). $10? $20? $50? By approving SAFE Reform, you’re essentially doing the same thing — except in addition to GPB being able to get Kanye for free (instead of the widely-panned Coolio), you’re also doubling the amount for student life activities, which translates into a much more vibrant campus atmosphere.

    Can you really say that the $12.50 a semester you save by opposing SAFE Reform — the equivalent of a few beers at a bar one night — is worth it?

  6. Just for the record, I am not a GUSA Senator or in the executive, and nothing about GUSA will be going on my resume. This is important, and that’s why people who care are supporting it. If it were just about resume building, they would all be sitting around doing nothing, not making honest and worthwhile attempts to improve student life.

  7. Typical,
    I’m opposing SAFE reform because I consider it foolishly short-sighted of GUSA to not invest for future funding today simply because the last few years have had bad returns. Anyone but GUSA will tell you that the last few years are not representative of returns to investment as a whole. So when I hear “the fund hasn’t been growing as quickly as expected,” I have to wonder why GUSA thinks the fund has to meet goals set during an economic expansion over one of the worst (if not the absolute worst) economic periods since the Great Depression in order to be considered effective.

    If GUSA just wanted to raise the fee, fine. I’m not sure that’s the best option, but I’d be okay with it. But failing to responsibly fund future student activities because GUSA seems to have about a good a grasp of economics as it does running a successful election process is simply irresponsible, and I’ll do what I can to stop it, whether that means voting or not.

  8. @ @Doug,

    I formed my response before seeing your comment, and I know it mostly addresses your concern, but just to make absolutely clear: my opposition is not to the raising of the fee. Now, I do think GUSA’s efforts would be better directed at reforming the structure of student activity money rather than its level, but any hesitation I have about the fee increase does not come from my unwillingness to pay.

  9. Doug, it’s not just the past returns that have been an issue, it’s the entire fund itself. Just do the math.

    Right now, there’s something like $1.9m in the student activities fee endowment. Let’s call it an even $2m to simplify things. Currently, we put invest half of the money raised by the fee, or about $350,000, into the fund a year. The original intent was not to draw down from the endowment until it hit $10m (at which point the original fee would be discontinued)

    You can run the math on a simple compound interest calculator, like the one found here: http://www.moneychimp.com/calculator/compound_interest_calculator.htm

    At a 3% interest rate, it would take about 15-16 years to hit $10m. At a 5% interest rate, it would take about 13. At a 7% interest rate, it would still take 11 years. So we’re talking about the earliest this money could be touched would be 2021, or maybe even as late as 2027.

    Then, even when you hit that $10m barrier, what do you get? Even at a 5% drawdown of the endowment per year, that’s just $500,000. To account for inflation, we’d probably have to reinvest a portion of that, so that the actual drawdown might only be 3%, or $300,000.

    What’s $300-500,000 going to be worth in the 2020s? I have no idea, but probably a lot less than it is now. Considering that our peer schools already fund their student activities in the $800k-$1m range — in today’s money — $500,000 in 10-15 years is going to woefully inadequate. It would probably be far less than the amount we currently allocate today, in real dollars.

    Far from failing to responsibly fund future student activities, this guarantees it — it raises the fee in line with yearly inflation. The SAFE Reform referendum also says nothing about the current endowment level. That $2m is going to stay where it is, until the students decide otherwise.

  10. To simplify even further:

    Currently, we spend $50 per year per student on student activities. $50 a year per student goes to a fund that won’t mature for 10-15 years, or longer. That’s an additional $350,000 for 10-15 years that could otherwise be spent. Afterward, the fund is supposed to disburse around $300,000-$500,000/year additional per year, while cutting the fee. So you get, at most, $500,000 a year for student activities fee under the current plan in 15 years. The $500,000 is not inflation adjusted, either — so we could be talking more like $300,000 or $100,000. The current fee level has already decreased by about $100,000 this decade.

    GUSA’s proposal is to spend 100% of that fee, or $100 per student, per year. That’s an additional $350,000 per year. The fee hike raising the fee fro $100 to $125 raises an additional $175,000, and from $125 to $150 in two years an additional $350,000. Thus, we would be allocating around $1.05m per year by 2013 and this would be tied to inflation, so it’s always going to equal the equivalent real dollar amount.

    $1.05m vs. $300,000 a year? I think the choice is easy.

  11. Simple math can help us here. I’m going to be doing some very, very basic, back-of-the-envelope calculations.

    First, and this part is crucial, the student activities fee endowment is saved in shares of the University endowment (see ATalbot’s comment here: http://georgetownvoice.com/2010/10/21/gusa-announces-student-activity-fee-reform/ ). Over an average of the past 5 years, the university endowment has performed about 6% above S&P 500 (http://explore.georgetown.edu/news/?ID=48322). For the sake of both giving you the benefit of the doubt, and making the calculations easier, I’m going to grossly oversimplify and assume any and all market performance is wiped out by inflation (again, I’m just looking for a very very rough estimate. In actuality, we usually see positive real economic growth most years, but that would even come out more in my favor). This means the student activities fee endowment returns 6% in *real dollars.*

    Second, I wouldn’t propose drawing from the endowment itself, but drawing off the accrued interest/dividend, keeping the (real, inflation-adjusted) size of the endowment growing (or at least constant). Yes, this will take some time. Some of our peer universities have been building their endowments for literally centuries, but most have been building them for at least several decades. So yes, it wouldn’t surprise me if the endowment’s contribution is somewhat small after only 11 years. Just as Jesuits think in centuries, I think even a 1-decade time frame is too short here. But it’s definitely conceivable that in 20-30 years, we can see that endowment providing funding that will greatly expand the offerings of student activities. You’re right, it’s not going to happen overnight.

    Third, you’re absolutely correct in pointing out that other universities have larger endowments contributing substantially more to their student activity funding. The answer here however, is not to throw up our hands and say “oh well, guess we’ll never catch up.” Instead we should be asking how we can, over the long term, raise the level of funding to be on par with our peer schools. And I’ll give you a hint: a $10m endowment will get us a lot closer than a $0 one (or $2m for that matter).*

    *Yes, I know you’re not proposing touching the current level of the endowment. But GUSA definitely hasn’t ruled it out, has been talking about reallocating it, and I simply don’t trust them on this matter given how short-sighted they seem on the issue at hand.

  12. In response to your second post, I’d simply point out that the extra dollars you’re creating don’t fall out of the sky, they come from students’ pockets. Asking “which is better, $305K or $1m?” is extremely misleading, as there’s no real economic profit at hand, the only issue is who the money belongs to (and again, I don’t object to raising the fee if the students feel this is the best way to allocate their resources).

    But in terms of actually generating new money, investment is the only way to go.

  13. Oppose SAFE Reform, Vote No.

    The only way SAFE reform will pass is if those who oppose it don’t vote. The proposal is not popular among the student body.

    A sustainable student activities fund was a smart idea when it was first enacted and remains so today. Returns have been weak the past few years, but-as was detailed above-they can hardly be considered representative.

    Club funding reform made sense, now GUSA is simply trying to pad their resumes by reforming the entire funding structure of the University.

    Vote No on SAFE Reform.

  14. @Vote No

    So what you’re saying is we should vote down something that helps the student body, just because it’s GUSA that’s doing it? And you mean to suggest that it’s GUSA that’s being short-sighted?

  15. Hi Doug,

    First, I enjoy the debate. Thanks for keeping it about the issues and not just lobbing ad hominems at GUSA and/or its members. Seriously, some of these commentors would be against the Hoya basketball team if GUSA supported it.

    Second, I understand your points. Minor quibble — as at least I understood from the report, most other schools student activity funding comes from student activity fees, not from endowments.

    Here’s the issue, though. It’s finding the right balance of current students’ needs and future students’ needs. For how long are we going to strangle current funding to favor the distant future — and is it worthwhile? Yes, if we kept throwing half our money into the endowment, eventually it would produce large returns — in, say, 30 years.

    In the intervening 30 years, however, we’d be at the same funding levels, and in fact, with inflation, it would keep shrinking away. For example, in 2001, when it was instituted, the fund gave $350,000 for student activities. That would be the equivalent today of ~$425,000; thus the real value has dropped by about 18%.

    What’s the ideal solution? Increase the student activities fee to get it to about $1.05m / year AND continue to invest in the endowment. That would raise the student activities fee to about $200/year, however, and keep it that way (with inflation-adjustments) for the next 30 years and beyond — I’m not sure many students would go for that.

    Even if we got the endowment up to $30m, a sensible 5% drawdown would still only garner $1.5m — and that some 30 years in the future, when $1.5m would be worth far less. I’d rather have students have access to $1.05m now and its equivalent real dollar value for the next 30 years, to build up strong clubs and a vibrant student life, rather than go from, say, $350,000 in financing to $3m overnight, 30 years from now.

  16. Doug, I think you are the first person to articulate an actual argumnt against SAFE reform. Honestly I disagreed with it too at first just because I saw no reason to pay more money. But when I talked to some ppl about how poorly clubs are currently funded and how far we are behind other schools, i changed my mind. We definitely need more money.

    As far as the endowment goes, thats a much trickier question. Although i think its a great idea in the long run, i hate the thought of paying into it for 4 years and not seeing any return on that $ (unless my kids go to Gtown. In that case, the endowment, would FINALLY be paying off by then)

    Props to whoever came up with the endowment in the first place, but its just not working. more money NOW. Im voting yes.

  17. One last point — to either Doug or anyone else.

    If you support the idea of an endowment growing our money for the future, but also want to support the student life on campus with much more money — note that we still have a $2m endowment. Any change to that would probably require the students’ approval, too.

    A $2m endowment @ 5% + 30 years = $8.6m. 50 years = $23m. 100 years = $263m.

    To preempt: it would be much larger if we kept pumping in $350k/year — but we’re talking about pumping in $10.5m of students’ money over thirty years that would’ve otherwise gone to student activities. I think this strikes a necessary balance.

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  19. I think to a certain extent you have to treat spending on student activities now as an investment in the future. For some student activities, spending $1 extra might increase future giving by more than $1.

    pulling on a different strand, I cant help think how much giving would go up were the university to make relatively cheap or even money saving improvements in facilities management (having a broken toilet for a month–> “hell no im not donating”) OCAF (clean house and burn the office to the ground?) WIFI (pretty soon our ethernet will be retro cool like a typewriter or telegraph)

  20. If you don’t want the reform to pass, DONT VOTE AT ALL!!!

    The convoluted way GUSA set up this referendum requires the 2,000 students participate, so even by voting \No\ you are supporting its passage.

    This measure effectively kills the Student Activities Endowment, which is the only sound plan to ensure steady funding for student activities in the future. At the same time, it will increase the student fee to $150. Knowing GUSA and SAC, I doubt much of the increase will even reach student groups anyway. DONT VOTE IN THIS REFERENDUM

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