There is a divisive item proposed by the Senate in the Activity & Service (A&S) budget for the 2018-19 fiscal year that would allocate $1.375 million to create what’s known as an endowment.
This endowment, if passed, would be taken and entrusted with off-campus financial institutions to invest with the intention of generating substantial returns in the future.
However, there’s an issue with this: Administration says it breaks USF statutes.
Danielle McDonald, the dean of students, said the act of investing money collected through A&S fees, a student fee, in an outside financial institution breaks USF6.028. This statute states that “All Activity and Service Fees shall be maintained in university accounts.”
McDonald also said this would break the investment policy approved by the USF Board of Trustees. A section of this policy states that only the university Chief Financial Officer (CFO) (Nick Trivunovich) and the Treasurer (Fell Stubbs) “are authorized to manage the financial assets of the university invested as short-term funds or long-term funds.”
“We won’t approve a budget that violates policies or regulations,” McDonald said. “We’ve been pretty transparent. The legal counsel, the CFO, have all met with Student Government (SG) leadership that are in support of this endowment. I’ve met with them several times, gone to the endowment meetings, gone to ASRC (Activity & Service Recommendation Committee)meetings, and have been pretty up front and clear on that. Even if they approve it all, it couldn’t happen.”
Yousef Afifi, the chairman of the endowment ad hoc committee, has a different take on this.
“We had been told by the university administration that it is illegal to put A&S fees — or student fees is what was told to me — in an outside financial institution,” Afifi said. “They said that was against the law and I said ‘OK, I doubt that.’”
Afifi said he doubts this because USF administration holds its surplus money from every year, which generally come from student tuition according to him, in outside accounts.
“We quickly came to the realization that (administration telling them it was against statutes) was something to get us to stop trying,” Afifi said. “Then we realized to ourselves — not only will we stop trying, we will divert that to other route which was to put A&S fees into the endowment.”
Afifi said he maintains that he wants to work with USF administration rather than to be adversarial.
“I never came into office wanting to go head to head with anyone,” Afifi said. “On the contrary, I wanted to work with them, I wanted to collaborate with them, but I was expecting them to give me a certain level of recognition in terms of recognizing that I am an elected member of representatives. They haven’t done that so far.”
Jake Massa, a senator who opposes the endowment, said those in support of it are trying to formalize it before it exists.
“What seems to be going around Student Government is that the administration is wholeheartedly against it,” Massa said. “They don’t think it’s something SG should be doing. So they (senators for the endowment) have definitely been trying to set it up so that there’s more legitimacy on their part.
“They made a new committee for an endowment that doesn’t exist and that we had voted on two weeks ago.”
The question remains though: Why create the endowment in the first place? The answer to that is financial trouble, according to Aladdin Hiba, chairman of ARSC and a supporter of the endowment.
Hiba said the expenses of A&S funded entities have gone up close to 15-20 percent over the last two years. These entities include departments like the Marshall Student Center (MSC), Campus Recreation and the Center for Student Involvement (CSI), as well as student organizations. At the same time, the A&S fee amount charged to students has remained stagnant.
“It’s impossible for us to sustain a budget that skyrockets so quickly without having an increased source of revenue,” Hiba said.
Moneer Kheireddine, student body president, said he has yet to determine whether he fully supports the endowment.
“In my role as student body president, my goal is to always try and work toward initiatives that are in the best interest of my student body,” Kheireddine said. “So, I haven’t made a clear cut opinion on what I view of this yet. There’s not an easy way to say it, it is a large number. There’s a large amount of money going toward this.”
Aside from this endowment breaking statutes, there are other concerns related to the types of investments that would be made with the endowment money.
One phrase that was brought up during the planning of this aspect was “socially responsible investments.”
This may bring flashbacks of the divestment referendum that was on the SG ballot last year which urged the USF Foundation, a private entity, to divest their own investments from companies that may not be considered morally upstanding by some. These can include the private-prison system, fossil fuels and war industries.
Students voted overwhelmingly in favor of this referendum, but it was later thrown out by the SG Supreme Court.
“There are certain things we don’t want to invest in,” Afifi said. “That’s a conscious decision that the committee members made. That’s not to say divestment is our intention.”
Hiba said that although these socially responsible investments are important, they are not the reason the endowment is being proposed.
“The key component of the endowment is a financial one rather than a humanitarian one,” Hiba said. “It’s that we’re running out of money and we need to have some way not spending more money than we have.”
In a Senate meeting on March 27, however, Afifi said that “Islamic financing” was an important principle in which the money could be invested.
“… I have a phone call scheduled with a potential new provider for our endowment that bases their allocations and investment portfolio management on a very unique principle based on Islamic financing, which was something we deemed necessary in terms of providing a better middle ground between our socially responsible investments opportunities which have very low yield or the very tactical approach to have a very high yield …,” Afifi said.
Aida Vazquez-Soto, a senator who opposes the idea of the endowment, said that based on this statement, she is concerned that this endowment will be used as a way to enact the political beliefs of those who are spearheading it.
Another item proposed in the budget was sweeping cuts to those departments that are wholly or partially funded by A&S fees. These include the MSC, Campus Recreation and CSI among others.
“We did realistically run out of money, I’m not going to dispute that, but there’s a couple things involved,” Vazquez-Soto said. “We ran out of money — that tells me we didn’t have the ability to fund an endowment. The other thing is, we were told you can make it with a 5 percent cut, or a 10 percent cut, as long as you’re not funding insane little projects.”
According to Hiba, Campus Recreation’s budget would be going from $3.37 million during the 2017-2018 fiscal year to $3.26 million for the 2018-19 year, the MSC would go from $2.82 million to $2.12 million and CSI would go from $2.08 million to $1.778 million.
“They (Campus Rec and the MSC) are going to be faced with some difficult choices,” Hiba said. “The MSC, compared to last year, will have a 5.38 percent cut to their entire budget, so they’re going to have to figure out how to make that work within their budget.”
Hiba said CSI was one of the hardest hit departments in the proposed budget, because SG felt they overspent on some of their programs like Bulls Night Out.
However, ASRC did manage to fit $132,480 in the budget to pay senators next year as they do not get paid currently. This amount would most likely be used to pay for a certain amount of credit hours per senator, but this detail has not been finalized.
Massa said it is selfish on the part of ASRC to propose senator pay while also cutting the department budgets.
With all of this coming to light around the same time, it’s easy to assume that these cuts are being proposed to help fund this endowment. Afifi said that’s not the case.
“The endowment has $2 million requested to it initially and that was a number I was comfortable with, it was a number that made sense to optimally issue returns and I ended up settling for $1.375 million which was a 32 percent cut off the top,” Afifi said. “The endowment got a cut that was almost more substantial than almost any line item that was funded in all of ASRC.
“So, to say we made cuts (to the departments) to fund the endowment is asinine. By that same principle, you could say that I made cuts to the endowment to fund other things.”
Vazquez-Soto said she looks at it differently though.
“He’s been going on and on and on about that 32 percent, but the thing is the endowment didn’t exist before this budget,” Vazquez-Soto said. “That is not a 32 percent cut. That is $1.375 million of new initiatives.”
The endowment money is said to come from some remaining unallocated cash and a senior gift account that Senate voted to repeal, according to Hiba. For the 2017-18 year, ASRC allocated 252,000 for the senior gift.
It does seem that Senate has chosen to do little outreach with students to determine if this is a popular idea.
“We are a student government and we’ve all been elected by students and we’re representatives of the students, and by being elected, we make decisions on behalf of students,” Hiba said.
Kheireddine said that even though SG is comprised of elected officials, their power is vested through the student body.
“They (senators) need to internalize and ask that question: ‘Do I believe that the majority of the student body would be in favor of this,’” Kheireddine said.