Largest shortfall in years due to increase in HR and commission spending, decreased sales revenue

The UTSU has inherited a hefty $400,000 deficit, the largest in years.

“There’s a few items in our analysis of last year’s deficit that seem to have caused this,” said Ryan Gomes, UTSU vice-president internal & services, when asked for the reasons behind the deficit. “Some of our increased expenses last year included large increases in Human Resources spending and commission spending, coupled with decreased revenue from TTC sales (which also meant reduced expenses).” According to Gomes, the total deficit was actually around $380,000, which translates to between $420,000 and $450,000 when depreciation is factored in.

A major chunk of the deficit came from the costs incurred by launching the Student Commons; while these costs were temporary, the UTSU may still need to fund the building for at least a couple of years to get it started.

Governing Council, the highest governing body at U of T, approved a final agreement in February 2015 for the Student Commons, a project intended to create more student space. Students have been paying a levy for the project since 2008, and the building is forecast to open in 2017.

In spite of the large shortfall, Gomes hopes to turn this shortfall into a surplus by the end of the year.

At a July 3 meeting of the UTSU’s Budget Committee, Adnan Najmi, UTSU financial coordinator, suggested putting subsidies into the Student Commons budget of an amount between $150,000 and $300,000 a year from reserves and the operating budget, a financial move that could mean a temporary loss for the operating budget.

Gomes said that some of the increased spending, such as on human resources, were a one-time unique cost that the UTSU won’t have to face this year, and that he hopes to end the year with a surplus. “I also will be working to ensure that commissions don’t overspend and that we continue to examine the budget to find ways that would ensure we finish the year with some sort of a surplus. A surplus would help to lessen the blow of the past year, and also help to put the union on the path towards long term financial stability” he stated.

Najmi believes that it might be wiser to prioritize a balanced budget for the time being, especially given the expenditures needed to finance the running of the Student Commons building. According to Najmi, the membership revenue has not been able to counterbalance the costs due to the leveling of enrollment on the St George Campus. Najmi said that aiming for a huge surplus would mean having to cut down on services and campaigns, which could harm current student life. Instead, Najmi suggested keeping a cost-neutrality in this year’s operating budget with a contingency of five per cent of the budget, amounting to approximately $25,000 to $50,000.

Currently, the UTSU is in between steps three and four of the budget framework process. Step three includes sending a framework of priorities and projected expenses to the Board for approval. Step four involves decisions on large allocations made by the committee, once input has been received. “three of the four commissions are behind and still have to submit budget proposals to the board before they can proceed to the Budget Committee and step four” said Gomes.

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