The Arizona Desert Lamp

Unsettling metaphor of the day

Posted in Uncategorized by Evan Lisull on 27 April 2009

From Joel Valdez, senior VP for business affairs, on the latest bond issue from the UA:

“Anytime you sell bonds you incur debt; it is just like a mortgage on your house,” Valdez said via phone on Sunday.

And we haven’t any problems with mortgages recently, now have we? The bonds, coincidentally, are being sold by CitiGroup Global Markets, an organization that might know a thing or two about the problems of incurring debt.

The UA is in a slightly better condition. After all, the school only has to implement a “Dormitory Construction Bond Retirement Fee” on its students, make sure it lasts into perpetuity, and smile with a shovel for the press conference.

Advertisements

Nothing so permanent as a temporary fee

Posted in Campus, Politics by Evan Lisull on 11 February 2009

Fight the Fee (protest)Take, for example, the “Recreation Bond Retirement Fee,”

In 1985, the students of The University of Arizona voted to assess themselves a $25 per-semester fee for the construction of a Student Recreation Center. This fee came into effect in Fall 1990. Although this fee is mandatory, it will cease once the bonds have been retired, therefore it is not a user fee.

Yet students were still paying the fee by 2005, when the vote was held to renew the fee for the current expansion. Part of the reason? A failure to secure outside funding:

In 1985, students voted to pay a $25-per-semester fee beginning as soon as the Student Recreation Center opened in 1991.

These student fees would pay for two-thirds, or $10 million, plus any acquired debts of the $15 million facility. The remaining $5 million would be paid by gifts collected by the University of Arizona Alumni Association’s Century 2 campaign.

But the money from the Alumni Association “was never realized,” according to Saundra Taylor, vice president of student affairs. The Century 2 campaign produced only about $200,000 for the Student Recreation Center. Alumni Association fund-raising campaigners could not be reached. The association said the fund raising “ended years ago.”

“They did not receive the money, you nitwit!” And while the 1985 archives of the Wildcat aren’t online, it’s not hard to imagine administrators and/or student officials cheerfully saying, “Don’t worry! We’re only paying part of the tab.” Of course, by the time the class of 1995 was left holding the stick, those ’85ers had moved on to bigger and better things.

By this point, the money was already being used in a manner not anticipated when the fee was initially approved:

As of fall 1994, $6.65 million had been collected from student fees. Of this, about $1.4 million per year pays the year’s bond debt payment.

But the student fees generate an extra $300,000 per year that is not used for the debt payments.

Every year, these marginal revenue costs have been used to pay for the operational costs of the building, Remedi said. Since 1991, about $1.25 million of the student fee money has been used for operational costs.

At current rates, the Student Recreation Center student fees would be continued until 2011 when the bond debt is paid off.

. . .

Taylor said there is no other way to pay for the operation costs of the SRC.

But according to Remedi, operational costs “are not the student’s problem.”

“The fee was only supposed to cover bond debt; operation of the Rec Center is not our problem, it is the administrator’s problem. Students will agree to pay the full $15 million, but the university needs to allow students to be fiscally responsible,” he said. “If we invest the marginal revenues, we can stop paying fees earlier and the university can finish paying until 2011 without continuing to collect fees.”

Yet before 2011 could arrive and cast the fee away, the Rec Center had its eyes on bigger and better things, and an expansion of the fee was approved in 2005. While the campus recreation director Juliette Moore asserted in a recent Wildcat article that, “the fees will expire in 2011 for the existing Rec Center bond payments,” the article from 2005 hints at a far longer duration:

After the existing bonds are paid off in 2011, students will continue shelling out $25-per-semester until 2041, Moore said.

Yet even more than this, I was particularly struck by this quote:

“Students made a decision for the future Wildcats who will be coming to the University of Arizona,” Moore said.

Time to apply Edmund Burke, discussing the state as:

“. . . a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born. Each contract of each particular state is but a clause in the great primeval contract of eternal society.”

In the college governance setting, the alumni are ‘dead’ and the pre-freshmen are ‘the yet unborn.’ One might naively argue that the ’05 students really were acting in the best interests of our class. One might also argue that these students were voting on something that in no way impacted them (even the freshman would have paid the fee through their tenure, as it was not scheduled to expire until 2011), on something that sounded nice in theory; a vote in support of an idea, a vote that would never have to put its money where its ballot was.

Once these fees get voted upon, they become entrenched. Like incumbents in Washington, or stains on a shirt, they tend to stay, impossible to vote out.

Image courtesy of Flickr user Andrea F