Senate talks about the financial structure of the college and more!
This week’s Public Senate Meeting was joined by Vice President and Treasurer Lorraine Arvin and Associate Treasurer and Controller Robert Tust who gave an overview of the Reed’s financial structure. Arvin spoke while Tust shared a prepared slideshow containing graphics and a summary of how the college’s finances are set up.
Reed College is a non-profit organization that is set up to “ensure long-term financial security.” The college is set up on a “Long Range Model” which is a five year financial plan. This Long Range Model, and every aspect of the college’s finances, is intended for the college to break even. Deficit budgets are largely avoided unless there are extenuating circumstances such as the COVID-19 pandemic. The college, according to Arvin, has approximately $100 million long-term debt. The debt payments are structured similarly to a mortgage with low interest.
The operating budget of the college includes all salaries, benefits, and wages of everyone employed by the college. About 70% of the operating budget expenditures are staff salaries and budgets, with the rest going to other expenditures such as “Capital Renewal and Debt Services” and “Student Wages.” Student wages for the last two fiscal years were $2.75 million and $2.96 million respectively.
The operating budget by major program shows the amount of money allocated to certain aspects of the college in fiscal year 2020. Categories shown included broad terms such as “Academic” services, which totalled to about $43,000. “Student Financial Aid” for fiscal year 2021 totalled about $30 million, going to about 55% of students in the form of need based grants. A new program in fiscal year 2021 was “Reed hardship grants.” These grants were given to 80 students to “address financial challenges due specifically to COVID-19.”
Another part of the Operating Budget is “Auxiliary Services.” This part of the budget funds all residential buildings, the board plan program, as well as the bookstore. Like the rest of the budget, the Auxiliary Services work to break even every year.
Arvin then explained the structure of Reed’s endowment. The endowment’s purpose is “to provide long term continuous support” for the college. Money in the endowment comes from investments, earnings, and contributions. According to Arvin, most colleges and universities calculate a spending rate that fluctuates with the market and inflation. Reed’s spending rate is calculated at 5% of the endowment. Certain contributions go directly into the endowment, while others are restricted by the donor to specific projects and departments. In this case, only that program can access the funds and use them under the restrictions provided by the donor.
Lastly, Arvin spoke about student body fees. Fees collected and distributed by the college, such as tuition, are subject to the same regulations as all other funds collected by the college. These requirements include maintaining documentation, collecting and reporting payments, and ensuring all data security laws are followed. Failure to comply with all laws and regulations could result in loss of federal funding, which includes Federal Work Study, Pell grants, and all other government subsidized loans. Along with the removal of federal funding, the college would be fined substantially. Being a student-run body that receives funding from the college, Senate has to follow certain protocols and “adhere to the Senate bylaws.” To do so, Senate partners with the Business Office and documents all financial records.
Committee reports had few updates this week. The majority of the reports were senators outlining their various summer projects and what they hope to continue working on next year. Student Body Vice President Alondra Loza had a meeting with the Student Committee on Diversity (SCOD). The committee hopes to set up a podcast to talk about different projects students are doing around campus to promote and ensure diversity. Loza hopes the podcast will shed light on the amazing things people are doing around campus to work towards diversity. Sexual Health, Advocacy, & Relationship Education (SHARE), according to Loza, will comment and contribute on the bylaw review currently happening on the Bylaws Committee. Loza is optimistic about future contributions SHARE will make to the bylaws.
Student Body President Aziz Ouedraogo relayed Senator Margot Becker’s committee reports for her. Becker explained the process the Bylaw Committee is going through. Phase 1 of the process is going through the existing bylaws and grammatically reviewing them, making sure they all make sense and can be read clearly. Phase 2 consists of actually making changes to the bylaws. This includes adding any necessary bylaws and removing outdated ones. In this phase, other groups such as SHARE will join the conversation. The committee’s changes to the bylaws will remain confidential until all of them are complete.