Over the past five years, the Wilfrid Laurier University Students’ Union has reduced its debt from $6.8 million to $5.6 million.
In 2010, Wilfrid Laurier University and the Students’ Union came to a five-year agreement to provide the Union with a line of credit for $5 million in total debt and obligations. This was an increase from the existing line, which was $3 million.
In 2013, the Students’ Union’s debt was declared at $6,567,498. After multiple lump sum payments, they have brought it down by almost $1.2 million.
“The reason we’re in debt isn’t necessarily improper management, it’s that we wanted to create a few capital projects that really gave back to students,” said Olivia Matthews, president and CEO of the Students’ Union.
In previous years, loans were taken out with the university and a financial institution to create more space for students through capital projects, including 24-Hour Lounge renovations, Terrace expansion — which had a price tag of $1,480,541 — and building the Brantford Students’ Centre. Â
“It was more decisions that were made in the past to affect the long term future of students and provide them with a study space and the opportunities that they need,” said Joanna Sadgrove, vice-president of finance and administration with the Students’ Union.
While debt is money borrowed, deficit is when losses exceeded profit. WLUSU has debt, but does not run a deficit because it uses a zero-based budgeting process, meaning it breaks even.
“We’re a non-for-profit, we don’t make money off of students,” said Matthews.
In 2013, Michael Onabolu, president and CEO for the Students’ Union, said they would not increasefees for students to make up the debt.
A debt repayment plan is also set up when loans are taken out. It is revised every five years to adjust for interest rates.
In 2010, a five-year moratorium was implemented which freezes spending on capital projects. Sadgrove said WLUSU is currently in its third year and will not fund capital projects through its operating budget, however last year the Union began renovations on Turret Nightclub.
At the Board of Governors meeting in September, the Students’ Union was approved for a renewal of the line of credit effective June 24, 2015 and the “comprehensive loan,” effective Sept. 1, 2015.
The Union was also administered $800,000 in operating advances, which is a short-term advance for maintenance.
The Union plans a full repayment on this balance in the fiscal 2015-16 year.
“This agreement addresses the renewal of the line of credit and loan agreements with WLUSU as well as facilitates WLUSU’s return to financial stability to remedy the default,” the board’s meeting agenda package read. “It aims to protect the university from further financial obligations.”
“[It’s] a way to properly financially manage over the next couple of years,” explained Matthews.
During the budgeting process, plans are made for how much debt WLUSU will pay for the fiscal year which runs from May to April.
The remaining funds are allocated to the operating budget, which is approved at the May board of directors meeting.
“There is a solid plan in place to eliminate the debt in years to come,” said Matthews.