Abhishek Shetty: Ackerman’s aesthetic renovations should not be priority given projected losses

Amid million-dollar losses, increasing labor costs and faltering book sales, you wouldn’t expect Associated Students UCLA to be spending money on renovating bathroom tiles to aesthetically match the outside flooring. But that’s exactly what the association has planned in the future.

ASUCLA announced at the beginning of fall quarter that it expected its Services and Enterprises entity to lose more than $1.2 million in the 2017-2018 fiscal year. This came just after the organization had suffered more than $800,000 in losses in the 2016-2017 year.

At the same time, though, the association has been pursuing large-scale renovations. It renovated tiles on Ackerman Union’s first floor over the past few months and plans to bring in additional furniture later this year as part of a multimillion dollar project to renovate Ackerman Union. ASUCLA Executive Director Robert Williams said these changes were motivated by student representatives on the ASUCLA board of directors wanting to transform the first-floor space into all-day use space for students to study instead of just eat.

ASUCLA is currently buoyed by its cash reserve of about $12 million, which Roy Champawat, director of the Student Union, said was the amount of cash ASUCLA maintains in its bank account. It strives to keep above a certain minimum amount. However, there’s every chance the association’s losses could persist and even increase, especially with Los Angeles’ minimum wage set to rise over the next few years, potentially impacting the association’s cash reserves.

ASUCLA needs to be more frugal in how it spends its money on maintenance projects. Deferring capital projects with low returns on investment and cutting out nonessential renovations that won’t necessarily increase footfall within its facilities could stop the association from financially bleeding out in the future.

Since November, ASUCLA has been renovating the first-floor dining space in Ackerman Union, which includes bringing in new chairs, booths, planters for separation purposes, tables and additional power plugs. The vinyl flooring in the area was changed to porcelain ceramic tiles, Champawat said.

This kind of project can seem puzzling in the face of the association’s losses, but the current state of the association’s finances allows it to engage in such projects. ASUCLA has a negative income, but still sees increasing cash in its bank account because of its accounting and appreciation, Williams said.

In other words, because ASUCLA has substantial cash reserves, the association isn’t delaying repair projects or maintenance at the moment. In fact, Champawat said ASUCLA plans to pursue other basic maintenance projects, such as renovating the surface of the patio near Wolfgang Puck Express and the interior of the second floor of Ackerman Union and Kerckhoff. Williams added ASUCLA invests in maintenance at a higher rate than other facilities of the same size and type, and said the average costs for maintenance projects is a little less than $2 million per year.

But ASUCLA’s financial hurdles aren’t going anywhere. Its losses for the 2017-2018 fiscal year were mainly pinned on Los Angeles’ increasing minimum wage and decreasing textbook sales. The association projected that just the Los Angeles minimum wage increase to $12 would add nearly $700,000 in expenses for the fiscal year. Considering that the minimum wage will rise to $15 by 2021, the association is only going to be seeing additional labor costs in the future.

Williams said last year that the rise of online textbook sales was one of the reasons behind the decrease in the UCLA Store’s textbook sales. And the impact of the online textbook market is unlikely to go away. In fact, some textbook industry figures, such as David Anderson, executive director of higher education for the Association of American Publishers, believe that the online market might make universities’ hard-copy textbook markets obsolete.

As such, it is likely that factors responsible for losses this year will only get worse in the future. There have also been discussions around increasing the student association fee, Champawat said.

“If that kind of request comes to the student body, it certainly would be after the board and the management had sought every other solution that it could identify,” Champawat added.

Raising student fees isn’t inevitable, however. ASUCLA could avoid getting to that point by cutting down on some of the maintenance projects it undertakes. Projects dealing with urgent needs such as leakages should still be prioritized, but those that aren’t pressing – retiling the floor, for example – should be put on hold if the association’s finances are unstable.

Granted, it may seem maintenance projects are necessary to increase the number of people using association facilities. Champawat said renovated dining spaces can result in higher sales, and Williams said in his experience, one of the mistakes student unions make is to not maintain their facilities.

And yes, it is essential for the association to maintain the general upkeep of the facilities it owns. But projects like retiling the first-floor bathrooms are not urgent. ASUCLA wanted to ensure the restroom had some aesthetic relationship to the dining room space changes, Champawat said. Such superficial changes are unlikely to have a major impact on the patronage of association-owned facilities. These types of projects can be cut out if ASUCLA’s finances continue on their current trajectory.

Otherwise, we might just be faced with the prospect of a referendum on a fee increase to fund matching tiles – and it’s hard to imagine students will care about aesthetics then.