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Salient. Victoria University Student Newspaper. Volume. 34, Number 9. 1971

The State of the Union

page break

The State of the Union

Summary of student association finances

(1)extra-ordinary items such as "Steed", "Focus" and "Arts Festival" excluded from 1970 accounts
(2)"Cappicade" profits now subsidize Publications Board Activities

At the recent Annual General Meeting of the Association the matter of a fee increase was deferred to a Special General Meeting to be held in the second term. This was understandable, as the number of people attending the A.G.M. was unrepresentative of the general student body. It was commented that the information presented, purporting to justify the fee increase recommendations, was inadequate. Further information is now available and is presented in the following article.

V.U.W.S.A. has built up a fairly sound financial base. However about 1969 capital commitments were made which have recently caused the executive some embarrassment. The executive has never planned its financial commitments nor has it had an investment programme providing cash for capital expenditures when necessary. This year the executive had to sell $10,000 worth of Wellington City Council stock, at a loss, to realize $5000 which a previous executive agreed to loan to the Rugby Club. This has forced us to act; a new investment programme has been implemented to provide cash when it is needed for approved capital developments benefiting students. Hopefully this new investment plan will lake care of all long term financial commitments. (However, as mentioned later, the Ski Club loan is giving some difficulties.)

The Association's current (operating) financial position is less secure. The bulk of the operating income comes from a $5 allocation of the present $19 Students' Association fee. Other sources of income are commissions on magazines and life insurance, and interest on investments. Above are the Association budgets for the years 1970-1974. This year the budgeted income is $29000 out of which expenditure of $34000 has to be financed, i.e. there will be a current operating deficit of approximately $5000. Reference to the above budgets discloses few areas of expenditure that are controllable. Those expenditures that are "controllable" are heavily influenced by politics. These can be classified as club grants and national body levies. I propose to look at them in detail.

Club Grants

This year the budget includes $4000 for Cultural Clubs and $5800 for Sports Clubs. If Arts Festival and Tournament costs are added to club grants, a total of $15000 (or half the Association Budget) is, used to subsidize club activities. The actual amount is $5300 to Cultural Clubs (92 cents per student) and $9500 to Sports Clubs ($1.63 per student). This is far too much. It is obvious that many clubs do not require subsidies (grants) but apply for them all the same. The powerful clubs such as the Rugby and Cricket or Visual Arts Clubs get a large proportion of the grant funds - not necessarily through need but because they control powerful positions on the councils supervising grants. With respect to Cultural Affairs, the Visual Arts have received more money than political or religious clubs because the Cultural Affairs Officer wanted it that way.

Reducing grants will force clubs to be more enterprising in raising finance. Clubs may also be forced to raise their own subscriptions. Some sports clubs have been particularly well treated by this Association with respect to long term development finance. Development loans approved and paid over have been made to the Ski Club ($8250) and the Rugby Club ($5000). Approval on principle has been given to loan the Cricket, Hockey and Soccer Clubs $6000 for a joint pavilion in Kelburn Park.

The Ski Club has experienced considerable difficulty in fulfilling the terms of its loan. Both capital and interest payments have had to be deferred or waived. The Ski Club's continuing poor financial position has worsened through inadequate planning and too carefree an attitude to the financial responsibilities involved in maintaining the security of the loan monies. Unless the club lakes drastic measures to ensure the loan's security the executive may be forced to close the club to cut its losses. I hope the other sports clubs which have received long term finance for capital developments can fulfill their loan terms: while the executive does not wish to become tough with recipients of loan monies it has a duty to students and to the clubs to ensure funds are wisely used and the security for the loan is maintained.

With respect to Cultural Clubs; it is only in the last two years that Cultural Clubs have received bigger grants. This is principally due to the efforts of the past Cultural Affairs Officer, Graeme Nesbitt. Graeme had the personality and conviction to gain huge increases in Cultural Club grants. Whether past actions in this area are good or bad is unimportant because the grants have already been made. However with the increasing number of Cultural Clubs there is going to be an increased demand for funds (grants) to subsidize activities.

These clubs would seem to have a stronger case for subsidies than Sports Clubs: their membership is constantly changing and there is not the same financial commitment that is found amongst Sports Club members; however there are exceptions. The rather carefree financial attitude evident in many Cultural Clubs is reflected in their financial records. Occasionally these get so bad that revenues, expenditures, assets and liabilities just cannot be traced. The recent action involving the disaffiliation of the Drama Club is a good example of financial negligence.

The Drama Club was probably the biggest Cultural Club affiliated to the Students' Association. However when their Treasurer resigned after only two months in office no great effort was made to find a replacement. When I tried to prepare annual accounts for the club it became obvious that not all the $5000 funds available to the club could be traced; the financial records available were just inadequate. The executive could only disaffiliate the club and freeze its bank account. This was done on the supposition that an entirely new club would be formed which would then apply for affiliation to V.U.W.S.A. If this "new" Drama Society formed an acceptable alternative to the previous Drama Club, men it would be admitted as a new club. This is not an extreme case. Club accounts generally are a mess. This year clubs will be adopting a standardized accounted system - the financial responsibilities entailed may force clubs to take a more responsible attitude to financial records and accounting for funds.

National Bodies

These are NZUSA, NZUAC, and NZUSU, NZUSA and its various affiliates levy this Association approximately $1.20 per enrolled student to subsidize their activities. If the fee is not increased Victoria will not be able to meet national body levies and internal commitments - something will have to give. This $1.20 is deducted from the $5 at present allocated from the Association fee. National body levies and club grants take $3.75 of this $5 allocation. This leaves $1.25 ($6500) per student plus any sundry income to pay for administration costs - no wonder the Association will make a big loss this year.

For the $7000 paid to NZUSA and its affiliates some worthwhile services are provided: insurance: participation in the NZUSA life insurance scheme brings two benefits. Firstly there is the social welfare benefit of providing a necessary service for students. Secondly there is a monetary benefit in the form of commissions on life policies approved. These commissions will be worth at least $200 to Victoria this year.

travel: this service reaps no monetary gain for Victoria. It is purely a service for students administered by the national student body. There is no reason why Victoria couldn't run a similar scheme on its own.

political: NZUSA can put forward a national student opinion on topical issues. Such an opinion will probably carry more weight than opinions from individual Students' Associations. However it is questionable whether the political points won so far justify the expenditure in getting them.

Personally I would rather see Victoria withdraw from NZUSA. However with the present student apathy on campus at Victoria it is better we stay in NZUSA and have some political opinions, than withdraw and have none at all.

Association Budget

The budget at the head of this page summarizes the Association's Income and Expenditure for the years 1970-1974. 1970 and 1971 incomes are based on the $5 per student allocations from the fee. The years 1972-1974 are based on this allocation being increased to $8 per student, an increase of $3 per student. This with the increases recommended below will raise the Association fee to $25 per student. Please note the budget has been drawn up to equate income with expenditure over a five year period. Thus in 1974 the fee must be increased again. The "total" column (last column) summarizes the five year period.

Little can be said regarding the various items except that provision has been made for a full time accountant/business manager. This person' job will be to oversee the financial activities of the Association. This is at present done by the Treasurer. However it has now become too great and time consuming. Provision is also made for extra staffing (typists etc.) in future years. At present the Association office is understaffed, or will be by early 1972. Honoraria have also been revised in line with what I believe to be the responsibilities involved. Because of the increasing administrative workload provision has been made for honoraria to be' paid to an increased executive. Admittedly no policy has been made in the above areas but it has been necessary to make the above assumptions when drawing up the budget.

It is also necessary to consider the other funds which receive an allocation from the fee:

union building fund. At present $7 is allocated from the fee. By the end of 1972 the original union building will be debt free and this allocation will finance loan repayments on the extensions. After this loan has been paid off in the last 1970's all the allocation will be paid into a fund to build a new Union building in Wai-te-ata Road some time in the early 1980's.

Inflation in the building sector means that cost projections made three years ago are now understated. An increased association fee will pay off the extensions sooner and provide more funds in the same period of time for the new Union building. At the end of 1974 projections for future years can be made with greater certainty than at present.

However indications are that the $1 increase (to $8) necessary to combat inflation over the next three years (1972-1974) will be inadequate by 1975. Thus this allocation must again be increased.

union maintenance fund: This is allocated $5 from the fee. From figures supplied by the managing secretary of the Union this portion will soon be inadequate.

The Union has reached a point where funds barely page break cover expenditure and operation costs - revenues are exhausted. It will have to be allocated enough funds
1972 1973 1974 Total
Association's 1/2 share of projected costs 29000 32000 38000 99000
Surplus/(deficit) if $5 allocation (1800) (6500) (8300)
Surplus/(deficit) if $7 allocation i.e. $2 increase 11600 10200 (6100) 15700

to allow it to meet its current commitments and build up some reserves.

If the Union's allocation is increased, reasonable reserves against contingencies will be accumulated. This will enable the Union allocation to be held stable at $7 per student, at least until the end of 1974. Figures indicate a rise again in 1975 or 1976.

Although the University matches the Association portion of the maintenance fund the University also pays supervisory salaries and other maintenance and administrative costs entirely out of university funds. Thus in reality the Students' Association pays about 1/3 of the total costs of running the Union.

Salient account: the accounts of the Publications Board indicate that "Cappicade" profits will
  • General account
  • building fund
  • maintenance fund
  • trust account
  • Salient account

effectively subsidize the Board's operations until 1974. The general fee revision in 1974 will then examine the $1 allocation to Publications Board and probably increase it. Thus, for the moment, no increase is recommended.

Trust account: The Union Extension Trust account presently receives $1 from the fee for capital development/improvements to the Union. These have taken the form of 35mm projectors and improvements to the Memorial Theatre and Gymnasium. Recently a loan was made to the graduates club. The Trust is in a healthy financial position and does not need further funds over and above the present levy.

This summary and the budgets provided are the basis for my recommending a fee increase.

Present fee recommended fee increase
5 8 3
7 8 1
5 7 2
1 1
1 1
If these recommendations are not approved the following action must be contemplated:
(1)decrease club grants
(2)withdrawal from NZUSA

Richard Greenfield B.C.A.