The Tufts Community Union (TCU) Senate lent strong support before the Thanksgiving break to a proposal by the TCU Treasury to establish a new endowment made up of surplus funds from student activities fees.
The formation of the endowment is contingent on approval by the administration.
The Senate adopted by a vote of 28-0 with one abstention an amendment to a Treasury bylaw, which now calls for a "surplus endowment" to exist alongside the student activities endowment created during the last academic year. Surplus funds from the previous and current fiscal years would be put into the endowment under the plan. The surplus derives from unspent portions of student activities fees.
Surplus funds from this year will be added to roughly $76,000 from the 2008-09 academic year as the principal of the proposed endowment, according to Allocations Board (ALBO) Chair Aaron Bartel, a sophomore. The total TCU surplus funds stand at $72,000 as of Sunday.
The interest earned on the endowment could be used to supplement the TCU budget in future years while leaving the original funds in the endowment untouched, said TCU Senator Sam Wallis, a junior.
"It maximizes the benefit of the surplus every year," Wallis said.
Bartel called the new endowment "a very common-sense thing to do."
"It's just a way to earn some interest on something that would otherwise sit in a bank account," Bartel said.
At the Senate meeting on Nov. 22, Bartel and Wallis outlined the terms of the proposal for the body. TCU Senator Nedghie Adrien, a junior, abstained from the vote because she came in late and did not have enough information, she said.
Like the student activities endowment, the surplus endowment would take TCU Senate funds and allow them to be invested in a similar fashion to the university's endowment, which currently stands at $1.14 billion.
"It's just like any other endowment, but the yield goes toward our account so we can budget with it," Bartel said.
Bartel hopes to meet with Vice President of Finance and Treasurer Thomas McGurty before the end of the semester. He stressed the tentative nature of the proposal, which must be approved by McGurty before the adoption of any plan.
Bartel said it remains to be seen whether the university will approve of the additional endowment. He wanted to obtain the Senate's approval before taking the proposal to McGurty.
The proposed surplus endowment and the student activities endowment, which the Senate established in January, would exist side by side but generate interest collectively. "We're viewing these two smaller endowments as a larger endowment," Wallis said.
As the Treasury and Senate plan their budget for the next academic year, the yield from the combined endowments "shall be used to supplement the Student Activities Fee during the budgeting period," according to the bylaw.
Bartel said the student activities endowment alone has already yielded gains. "We're able to budget $15,000 more because of [the endowment] established last year," he said.
The surplus endowment proposal has several key distinctions from the student activities endowment. Unlike that endowment, the principal of the new fund could be more easily withdrawn for use by the Senate in funding student activities. The roughly $300,000 principal of the student activities endowment cannot be withdrawn, according to Bartel.
According to the amended bylaw, a proposal to withdraw the surplus endowment funds can be authorized by a four-fifths majority vote of the entire Senate at any time during the year, though withdrawals can only occur at the end of the fiscal year.
"It allows for relatively easy access to the money," said Senator Dan Pasternack, a junior. Wallis, Bartel and Pasternack wrote the proposal.
Wallis was pleased with the Senate's understanding of and support for the new idea. "Especially when you get into issues of money, people sometimes get confused. I thought the Senate did a really great job," Wallis said.
Wallis said that there is a precedent for students trying to invest student activities money to yield returns that would supplement the budget. In 2007, then-TCU Treasurer Evan Dreifuss (LA '08) proposed investing yearly student activities fees into brokerage firms.
Dreifuss' proposal, which he raised before the formation of the student activities endowment, would have invested the funds from that year's student activities fee. The administration eventually rejected Dreifuss' proposal, according to Bartel.
Unlike Dreifuss's proposal, the surplus endowment would not draw from current TCU student activities funds, but instead would use interest generated from previous years' surpluses to augment the yearly budget.
Wallis said the surplus endowment would grow every year based on the amount of funds left over from the TCU budget.
--
This article was edited on 12/2/09 from its orignal print version for purposes of clarity.
