Tufts Community Union (TCU) Treasurer Evan Dreifuss wants, quite literally, to invest in the future of the student body.
The treasury puts around $500,000 a year in low-yield certificates of deposit that generate revenue for on-campus programming. This is the surplus money brought in by the yearly activities fee, currently at $258, that each student pays.
But Dreifuss feels that at least some of the money would be better placed in brokerage firms. The current return on the funds is around 4.7 percent, and he is confident that with the switch, it could be between 7.5 and 10 percent.
"Although we did earn over $6,000 in our CDs last fiscal year, I am certain that had we been allowed to plunge into the equity and fixed-income markets ... our returns would have been substantially higher," he said in a report to the TCU Senate last month.
Dreifuss first brought this idea to the attention of the administration last year, where he failed to get the support of Associate Treasurer Darleen Karp.
Brokerage firms require certain documents from investors, and Karp declined to give them to Dreifuss because she feels that the treasury should continue to use CDs, which represent the safer option.
"These are student activities funds [that] are collected from the students to pay for activities that occur during the year," she said. "These are working capital funds - they're not investment funds - so we wouldn't want to take any risks at all with this money."
Economics Lecturer Christopher McHugh agreed that CDs are the more secure choice, but that they are not as profitable as investments in brokerage firms.
"CDs are good savings - they're secure," he said. "You're going to get an okay rate of interest, but it's not going to be a really high rate of return."
While the university prefers to play it safe, Dreifuss said that the Senate should have more autonomy. Because the body already has discretion over where to spend the money, he said that this should extend to leeway over where it is invested.
"I felt like this was really a swipe at the students," he said. "If the university is going to entrust us with the responsibility of allocating this money, [we should] manage it at our own discretion."
And while there is some risk inherent in this strategy, McHugh said that risk is often an inherent component of profitability.
"You're not going to jump into a class of asset that gives you a significantly higher rate of return unless you take a lot of risk," he said.
Dreifuss said that these risks could be all but eliminated by entrusting the money to trained professionals who often deal with universities.
Heading into the last academic year, he said that he had a tentative agreement with Morgan Stanley, and that he had indicated to the firm that the Senate wanted to guarantee that the investments would accumulate money.
"I made it very clear that we were not in a position that we could take any losses," he said. "I had it all set up; I had all the paperwork filled out."
The documentation from Karp would have been the final step.
While he has not made any formal petitions to university officials since last year, he resurrected the issue in the Senate report last month, and he is still confident that the plan would succeed if it gets university approval.
It is still unclear whether this support will be forthcoming, however. Dean of Student Affairs Bruce Reitman said that while he is not very familiar with the specific details of Dreifuss' strategy, he understands Karp's reservations.
"I guess I could understand the hesitation to have the money invested in a risky vehicle," he said.
Also, he said that because all students have to contribute to the student activities fund, it could be problematic for the university to endorse the plan if some members of the community are uncomfortable with taking the risk.
"I think there might some ethical issues that could arise if that money can be treated in a speculative way," he said.
Rob Silverblatt contributed reporting to this article.
