Having already completed its pre-scheduled payment for 2013, the Wilfrid Laurier University Students’ Union (WLUSU) was recently able to make an additional $75,000 payment on its debt to the university.
Their debt in total reached a point of approximately $6.8 million at of the end of April 2012.
“The fact that we were able to do an additional $75,000, it feels great and just knowing that we’re working towards building our relationship with the university in terms of the financials is always a good thing and we’re looking to continue doing more things like that,” said WLUSU president Annie Constantinescu.
WLUSU’s agreement with the university allocated for them to pay $75,000 for the 2012-2013 year and $150,000 for each year after. The recent payment was outside of this agreement.
“What happened was that our initial agreement with the university was a very conservative one, just because we wanted to make sure we were secure in being able to budget for it,” Constantinescu explained.
For Jim Butler, the vice-president of finance at WLU, the additional payment was “not entirely unexpected.”
“We set forth a minimum payment and if they were able to pay more, then they should pay more,” he said.
The point of the debt repayment schedule is not to eliminate the debt, but to reduce it to under a $5 million level.
According to the loan agreement between WLUSU and the university, the Students’ Union is not allowed to exceed a borrowing amount of $5 million, which includes loans from the university, as well as external loans that are guaranteed by the school.
However, the 2012 auditor’s report of WLUSU, released last winter, found that WLUSU was borrowing in excess of this amount, owing a debt load of $4,250,156 to the university and $2.4 million in external loans, secured by the university with a $3 million guarantee.
The money, according to Roly Webster, COO of WLUSU, was spent on a variety of capital projects, such as renovations.
“We basically had built the house, but hadn’t got the mortgage,” he said.
“It all went to the needs of our students. We just weren’t proactive in securing the funding.”
WLUSU imposed a number of cost-cutting and saving measures in order to finance the extra payment. For example, board members will not be attending a conference held in Alberta this year that they have in the past. A new health and dental plan contract has been negotiated and a new food supplier has been brought in for Wilf’s.
“Really, what we want to do, is make that debt go away. We’ll always look for opportunities to speed up that … schedule and make additional payments,” said Webster.
Both WLUSU and the university emphasized that the debt repayment shouldn’t have a negative impact on students.
“Our interest is to make sure that the students’ union is strong and viable, we have no interest in it being hurt by the repayment plan, so we wanted to make sure that they repayment plan would be one that was doable for WLUSU. We wanted to make sure that there was some discipline around it and we’re satisfied that there is,” Butler explained.
Incurring more debt to provide student services is no longer a viable option for WLUSU. Funding will have to be secured in advance of any new initiatives.
“We’ve been very diligent in our budgeting process to ensure that what we budgeted for is what we’ll be needing,” assured Constantinescu.
Webster continued, “I can guarantee you they will not be adding to its debt. That’s our commitment to the board. So we have a commitment to the board that without funding, we will not be taking on capital projects.”