ASUCLA follows path to solvency

Tuesday, October 20, 1998

ASUCLA follows path to solvency

FINANCES:Association promises not to borrow from emergency
fund

By Neal Narahara

Daily Bruin Contributor

After years of struggle aimed towards financial recovery, the
Associated Students of UCLA (ASUCLA) finally has something to show
for it – sort of.

ASUCLA Executive Director Patricia Eastman sent a letter last
week informing the university that the students’ association is
formally withdrawing its ability to borrow money on its emergency
line of credit.

This letter states that ASUCLA forgoes any right to take out any
loans from the "Emergency Advance " line of credit from the
university.

"(The letter) is a symbolic gesture to the university that we’re
healthy and strong, "Friedman said. "We’re on our feet now. "

ASUCLA’s board of directors never voted on the action. It was
solely a management decision.

The "Emergency Advance " of $1.5 million in 1996 allowed ASUCLA
to meet its operating costs, at a time when the association was in
serious financial straits. This is only one of several loan
agreements that ASUCLA has reached with the university in the past
few years.

The Emergency Advance is one specific provision of such an
agreement between ASUCLA and the university.

The Emergency Advance line of credit could only be drawn upon if
the association’s balance dropped low enough to keep it from paying
for everyday operations.

According to ASUCLA officials, the student association is in
improved financial shape – so much so that they feel it is
unnecessary to keep the line of credit.

"This is a concrete indicator that we are on track with our
recovery, " Eastman said.

In the letter, Eastman cited the fact that the association has
already paid back this particular loan, in addition to $43,000 in
interest, a year ahead of schedule as a reason for "withdrawing
(the) opportunity to utilize the Emergency Advance. "

This is not to say, however, that ASUCLA has paid off all of the
money it owes.

$200,000 is still owed to the university from money borrowed for
the renovation and expansion of Ackerman Union.

Despite the improved financial outlook of the students’
association, and its letter of reassurance to the university, no
changes have been made to any existing agreements with the
university.

Under the 1996 "Advance Agreement " between ASUCLA and the
university, the association agreed to oversight by university
officials in exchange for loans to keep the association going.

This agreement requires that ASUCLA submit a yearly budget as
well as a five-year forecast to the chancellor for approval.

This agreement is effective until ASUCLA pays off all the loans
and interest to the university in approximately 25 years.

Despite the amount of money owed the university by the
association, their two entities are a "partnership, " according to
James Friedman, a graduate member of ASUCLA’s board of
directors.

"ASUCLA has the largest student store and association in the
country. It couldn’t have been done without university assistance,
" Friedman said.

When ASUCLA was on the brink of bankruptcy in 1995, the
university was not obligated to bail it out of its problems.

In fact, on many other college campuses, the university runs the
enterprises that the students’ association runs at UCLA.

"We want to show a sign of good faith to the university, " said
Richard Delia, Chief Financial Officer of ASUCLA.

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