The Tufts Community Union (TCU) Senate Treasury moved its surplus funds into a new interest-bearing bank account last week. The switch from Fleet Bank to Citizen's Bank is expected to dramatically increase the amount of money the Senate can provide the student organizations it supports.
Although it will take some time for the returns to accumulate, the growth of the surplus will provide more opportunities to student organizations. While the exact use won't be known for some time, it may go the Buffer Fund, which clubs can tap into to fund unexpected expenses not in their original budget. It could also be added to the "Capital Expenditure and New Group Funds," or used to end TCU deficit spending once and for all.
Senate Treasurer Michelle Shelton described the switch from Fleet Bank to Citizen's Bank of New England as a win-win move for both students and clubs. "In the long run this will be better for all students on campus," Shelton said. "Until switching to this new account there was no way to exactly know the surplus."
For the past few years, student groups have been allocated more money than they have actually needed to function, causing a surplus that accumulated at the end of the year. The excess funds sat dormant in a Tufts University account that did not earn interest until recently.
The lack of interest on the account, coupled with changes in customer service after BankBoston's merger with Fleet Bank in May, led the Senate, in conjunction with Office of Student Activities Budget Director Frank Nocito to begin looking for other ways to save more money.
The budget surplus is now contained in what is called a sweep account. Shelton explained that this invests the surplus into "low-risk money market accounts" overnight and provides a substantial 5.3 percent return. "5.3 percent is a lot when you are talking about a $65,000 surplus," said Shelton, who noted that the surplus will grow nearly $3,000 dollars a month just sitting in the bank.
Sweep accounts have become increasingly popular in recent years because they maximize returns for the account holder and give banks an advantage. "Sweeping" large amounts of money into money markets temporarily, as in the Senate account's case, allows banks to dip below their reserve requirements and increase their own profit. Assistant Treasurer Sarah Sandison said that money market investment is the best choice in managing the surplus because University regulations prohibit stock market or other risky investments.
Nocito added that this new banking situation will provide better service as well as high returns. "We will [now] have a greater percentage of money swept on a daily basis," he explained.
Students responded positively to the new arrangement, saying that they are excited to have more money poured into student activities and programming. "Anything that brings more money into clubs I am active in is good news to me," freshman Ben Hsu said.
The Senate's operating budget comes from the mandatory student activity fee set by the Board of Trustees, which is presently $168 dollars. The Treasury has a budget of about one million dollars each year, which the Allocations Board (ALBO) divvies out each year to the 160-plus student organizations. Student Organizations receive funding based upon proposed budgets, which tend to be relative to their size. The largest chunk of money, $160,000, goes to Concert Board, while the Leonard Carmichael Society and Hillel also receive substantial portions of the pie.
Sandison sees the funds as "money for every student in the school" and says that ALBO works to ensure every club gets a fair share.
Because clubs have already set their budgets for this year, the effects of the growing surplus may not be evident until at least next year when ALBO is able to increase the amount of money it allocates to each student organization.
