USAC president proposes to create endowment from surplus funds
By Jillian Beck
Dec. 4, 2012 10:48 a.m.
The undergraduate student government president is proposing to create an endowment with $100,000 of the council’s surplus to address unstable surplus from year to year.
At its meeting tonight, the Undergraduate Students Association Council will discuss President David Bocarsly’s proposal to use $100,000 of this year’s $308,000 estimated surplus – remaining funds from the previous council that are carried over – to start the endowment with the UCLA Foundation.
Through an endowment, money is invested with the intention of yearly returns onto the original amount, which generates more money in the long run.
USAC would not spend the initial investment of $100,000 placed in the endowment.
After seeing the relatively high amount of surplus that spilled over from last year – the fourth highest in the last 10 years – Bocarsly said he thought to propose the idea to council.
“Rather than putting that huge amount of money into programming that is abnormal, (with the endowment we would be spreading) it out over all those years,” Bocarsly said. “We are going to invest in the long term.”
Bocarsly sent out an email to USAC officers Sunday night, explaining his proposal.
According to Bocarsly’s proposal, the UCLA Foundation will run the endowment at no cost and will guarantee a 5 percent return each year, he said.
Over the summer, Bocarsly said he had been in preliminary talks with Steve Gamer, the executive director of the UCLA Foundation, about a possible endowment.
The UCLA Foundation manages and invests contributions to the university, according to its website.
The UCLA Investment Company manages all endowments that the UCLA Foundation holds, under the foundation’s oversight, Gamer said in an email statement. He added in the email that there is no fee to establish the USAC endowment.
Under Bocarsly’s proposal, $150,000 of the surplus would be split up annually among the USAC programming funds and the capital contingency fund, which provides money for supplies like computers in Kerckhoff offices. A portion of the remaining funds would be spent on programs the council deems necessary, and then the rest would be put into the endowment, Bocarsly said.
The amount of money the endowment makes would be given to USAC through Student Government Accounting, Bocarsly said. For instance, a $100,000 endowment would collect an additional $5,000 under a 5 percent return rate.
The money would then essentially be tacked onto the surplus for that year, Bocarsly added.
The council has complete discretion over how surplus is spent. In the past, the money has gone toward programs including Night Powell and textbook scholarships. This year, it partially funded Bruin Bash and is expected to supplement the annual JazzReggae Festival. After USAC determines how much of surplus funds it will spend, the money is distributed among the programming funds and capital contingency fund.
Roy Champawat, the director of the UCLA Student Union who acts as a financial adviser for the council, said the endowment would help to stabilize the inconsistent surplus from year to year. In past years, surplus has gone from almost $520,000 in 2009-10 to about $273,000 last year.
“The beauty of (the endowment proposal) mechanism is that it would address the part (of surplus) that’s bad, why we shouldn’t rely on it: because it’s unstable,” Champawat said.
If high surpluses do arise, the council would be able to know how much it would have for programming allocations and then could take the additional money and put it into the endowment, he added.
“I believe most people would characterize the volatility as the damaging part (of the surplus problem),” Champawat said. “And this speaks substantially to volatility.”
Bocarsly’s endowment proposal, however, was met with hesitation from some USAC officials.
Originally, the council set today as an internal deadline to decide how to allocate surplus so USAC Finance Committee Chair Cynthia Jasso could open up the application for the capital contingency fund the first week of winter quarter.
But Jasso replied to Bocarsly’s email on Sunday, expressing concern about the rapid timeline of the discussion. Bocarsly then opted to postpone the vote to the beginning of winter quarter at this time and use today’s meeting to discuss the proposal further.
At a meeting of the Funding Study Group, a committee that reviews and recommends finance-related bylaw or guideline changes, Jasso and Community Service Commissioner Anees Hasnain said they would like the council to take student input into consideration.
“We should ask the student body if this is something they would agree with,” Hasnain said at the meeting. “These are student fees. We are no higher, no better and not much smarter than the average student.”
The council will discuss the proposal and plans to decide when it will vote on whether or not to go forward with the endowment at its meeting today.
USAC meetings are held in Kerckhoff 417 at 7 p.m. and are open to the public.
