The ASUC Senate could face a $50,000 deficit at the end of the year, according to most recent projections — a funding gap that might force the student government to freeze funding for student groups in the future.
When the senate depletes the roughly $1.6 million in funds that it collects from student fees, it relies on a Carry Forward Fund, which holds about $400,000 in reserves, according to ASUC Finance Officer Amir Chini.
Though the ASUC Senate has drawn money from its Carry Forward Fund for years, it was not running a deficit because the amount of funds being drawn was replaced by funds from the ASUC Auxiliary’s business operations, according to ASUC Attorney General Hinh Tran. However, because the Auxiliary has not made significant profits for several years, according to Tran, funds taken from the Carry Forward account have not been replaced. ASUC officials are classifying this unsustainable spending as the deficit.
At the meeting Wednesday night, Tran warned senators that they should begin explaining to their constituencies that the levels of funding they now receive might be in jeopardy because of the deficit.
“We’ve reached a critical threshold where we have to take action now, or very soon or the Senate will deplete the Carry Forward Fund, and we’ll have to cut funding to student groups,” Tran said at the meeting.
The ASUC bylaws mandate that the senate operate a balanced budget. If revenues and spending are not balanced, the ASUC Judicial Council has the power to freeze senate spending.
To deal with the deficit, senators discussed the possibility of creating a student fee referendum for the spring 2013 ballot that would increase the amount students pay each semester to support the ASUC.
Student Action Senator Mihir Deo, a member of the senate’s financial committee, said a fee increase might be necessary to accommodate robust student life.
“When we’re in Finance Committee, we realize the urgency of certain groups who need that money,” Deo said.
Alternatively, CalSERVE Senator Nolan Pack suggested that the senate might have to cap the number of student groups it funds every semester.
Senators also emphasized the importance of long-term financial stability and avoiding the precedent of operating with an unbalanced budget.
“We need short-term policies to address this issue right now,” Cooperative Movement Senator Jorge Pacheco said. “We need to make sure the Association never goes down the path of structural deficit ever again.”
Tran said his goal was to address the impending deficit crisis in the next year, which Chini emphasized could easily turn out to be larger or smaller than projected. Any surplus funding that student groups have at the end of the year would be returned to the senate’s contingency fund, shrinking the deficit. Alternately, student groups could request more funding than they were allocated in spring budgeting, causing the deficit to grow.
According to Executive Vice President Justin Sayarath, an ad hoc committee will be appointed soon to address the projected budget deficit.
Jeremy Gordon covers student government. Contact him at [email protected].