ASUCLA suffers heavy loss, incoming funds low

Published: Wednesday, February 1, 1995

Association struggles to pay debt, funding for Ackerman Union expansion project

By Patrick Kerkstra

Five hundred and eighty thousand dollars worth of sweatshirts, coffee, Treehouse food and other merchandise that's how much preliminary reports show the Associated Students of UCLA (ASUCLA) to be under its projected income for December.

This report comes on the heels of a disappointing November performance when the association found itself $314,000 below its expected sales income.

Association officials now concede that the organization is not financially healthy and is likely to lose money, said Jason Reed, students association director.

In addition, most officials reported that no scenarios were likely to reverse the association's current performance, said Karol Dean, co-chair of the board's finance committee said.

"We were unable to come up with any concrete remedies to help within this fiscal year," she said.

The association, which handles money matters for all student services and eateries on campus, found their current financial difficulties compounded by a $1.6 million loss in the 1992-1993 school year, in addition to the costs of the Ackerman Union expansion.

Association policy requires that the group's $1.6 million loss be paid back over four years, making this year's payment $359,000. In addition, the association wants to pay the $20 million bill for Ackerman's expansion with association revenues over 27 years.

However, if the present trend continues, the association will face extreme hardships in paying for the current debt and the construction bill together .

"The impact of this (inability to pay back the debt) could be huge," Dean said.

"Let's say ASUCLA ends up in a situation where they can't pay back their debt, and let's say somehow students are successful (in fighting an additional fee) and don't let student fees pay for (the expansion). ASUCLA could become insolvent, and could become bankrupt. The effect of that could be the university taking over ASUCLA."

During Friday's meeting, other board members repeatedly asked that in light of current budget conditions, future association budget predictions be more conservative.

"The pressure to not reduce expectations may be high, but we'd like to encourage departments to be realistic," said board member Dave Lowenstein.

"I would hate to leave next year's board with a budget like this one," Tamara Carr, undergraduate representative said.

Last year, the board raised questions about the wisdom of embarking on an expensive expansion project given the association's financial instability.

"About a year ago, before the earthquake, we were ready to go with (the Ackerman expansion), but because ASUCLA had a very rough financial time the last couple of years, there was some concern about whether we could really afford it," Dean said.

Just before the earthquake, Reed and his staff projected low revenues for the next five years and suggested that the association withdraw from the planned expansion and retrofitting projects, Dean said.

But the board and association management reconsidered their decision immediately after the Northridge Quake.

"Jason and his staff felt that there was no way we could continue to delay these projects because of the eminence of the risk," Dean said.

However, board members questioned the prudence of that action.

"All that had changed was the earthquake, our financial earthquake obviously hadn't changed," Dean continued.

Although it was possible to retrofit Kerckhoff and Ackerman without building the expansion, the association determined that it would be less efficient and more expensive to do them both separately.

The association benefits from doing all its construction work at one time, officials said.