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ASUCLA looks to revamp operations amid falling income

By Stephen Stewart

March 6, 2014 1:26 a.m.

Associated Students UCLA continues to reevaluate its services as a changing economy has caused its net income to drop in recent years.

Between 2010 and 2013, ASUCLA’s net income dropped from more than $800,000 to less than $100,000. As of January, ASUCLA is now running a deficit of $183,000 for the current fiscal year, but has a cash reserve of more than $11 million.

“We’ve lasted this long,” said Rich Delia, ASUCLA’s chief financial officer. “We have $10-11 million in the bank and we have the financial wherewithal. But some of these challenges aren’t cyclical.”

ASUCLA is a multimillion dollar nonprofit organization that aims to serve UCLA’s student population. The association oversees the Undergraduate Students Association Council, the Graduate Students Association, Student Media and a services and enterprises division, which includes UCLA merchandising and campus food services.

Students pay the association $60 per year as part of their student fees. The rest of the union’s services are funded through the entity’s commercial operations, such as restaurants throughout campus and the UCLA store.

Last year, ASUCLA took in about $2.5 million in total student fees equivalent to about 3.7 percent of its total revenue. This amount has been enough to turn the entity’s net income positive several times over the past few years.

As the economy changes, however, the culture of ASUCLA is shifting to focus on meeting its financial obligations.

“It used to be 20 years ago, if a space opened up, we would turn it into a student lounge,” Delia said. “Now we look at that space as (potential) income first.”

ASUCLA’s student store focuses primarily on three lines of retail: apparel, computers and books. Two of these industries – computers and books – are changing largely because of technology, and ASUCLA faces the challenge of adapting to the changes like any other retailer, Delia said.

Amazon.com, the textbook retail giant, is a large competitor as more and more students buy their books online and not through the bookstore, said Bob Williams, executive director of ASUCLA.

“We try to make prices as low as possible (for textbooks), but when students don’t buy from us, what can we do?” he said.

As for computers, the student store is still selling the same number of computers – but in the form of tablets, which have a much lower profit margin than laptops, Williams said.

Another major portion of the association’s profits come from the restaurants it operates across campus. In the past several years, the restaurant segment has generated increasing revenue, despite certain parts of the division like Lu Valle Commons being more profitable than others.

ASUCLA used to oversee many more campus organizations, but over time many services were taken over by the university itself.

When UCLA was founded in 1919 – then known as the Southern Branch of the University of California – the UC Board of Regents considered the university’s role to be only to manage the campus’ academics, libraries and faculties. Anything else would be left to the students to implement, said Jason Reed, the executive director of ASUCLA from 1981 to 1995.

Because of this limited scope, ASUCLA was created the same year as UCLA and initially not only sold textbooks and food, but also encompassed a wide variety of services like athletics, housing and parking. For example, while John Wooden was at UCLA as a basketball coach, he was also an ASUCLA employee.

Over time though, many services, like parking and athletics, were taken over by the university, leaving ASUCLA comprised of only its core four entities.

A pivotal moment for ASUCLA came from a resolution that the regents passed in 1972 that named all UC student union associations as official entities of the university system, which would make ASUCLA directly accountable to UCLA, not students.

In response, two years later ASUCLA and the UC signed a “Statement of Understanding” that preserved the independent nature of ASUCLA yet made ASUCLA financially accountable to the university.

“(The statement) allowed ASUCLA to continue in the same manner … with higher accountability to the university,” Reed said. “Before it, (ASUCLA) had no accountability to the university.”

ASUCLA fees were set at $7.50 per year in the early 1990s, but declining finances caused ASUCLA to raise the student fee to $51 in 1997, said Patricia Eastman, who was executive director of ASUCLA from 1996 to 2003.

“We tried to make (the fee) as low as we could to get us through the crisis,” Eastman said. “The plan was to roll it back as the organization got more (stable) financial footing.”

The fee was reduced back to $7.50 in 2002 near the end of Eastman’s tenure, but ASUCLA fees have slowly crept up to $60 since 2006.

Many student unions across the country are funded solely by student fees, such as the University of North Carolina at Charlotte, where students pay around $200 per year, said Jerry Mann, who was director of UCLA’s student union and student support services from 1995 to 2008. Mann is currently the executive director of the Cone University Center and the Student Union at the University of North Carolina at Charlotte.

“ASUCLA has a very small fee compared to many other schools,” Mann said. “There are things I can do here (at UNC) because I operate in a fee environment that ASUCLA can’t do.”

The reason for the higher fee at UNC is that the operation of the bookstore and eateries are outsourced to other companies. The UNC union receives rent from these outside companies, as opposed to ASUCLA, which still operates its own bookstore and many of its own eateries, Mann said.

“I still think ASUCLA’s self-operation is the best bargain for students,” Mann said. “It works really well when the economy is booming.”

In response to decreasing net income, ASUCLA is looking to capitalize upon other forms of revenue, reduce its staff and lease out more of its space, Delia said.

Some of the ways ASUCLA wants to find new streams of income is by maximizing sales from its online store and increasing licensing of the UCLA brand – especially internationally.

The association also continues to upgrade its food facilities and diversify its licensing business.

ASUCLA is increasingly looking at how to monetize space in the union by bringing in outside companies that students want to see in the union, such as Jamba Juice and Wolfgang Puck, Delia said.

“When things are good, its easier to turn space into a student lounge,” Williams said. “When things get tougher, the (Board of Directors) has to make tough choices, such as rent out space to services students like.”

One alternative method ASUCLA could take is raising student fees. While that alternative is not completely out of the question, ASUCLA has other options it is considering first, Delia said.

“We’ve had many tough periods of history and what’s coming along won’t be anywhere as tough,” Williams said.

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