AMS budgets for another loss in operating fund

Board of Directors will decide whether to increase AMS specific fee

John Manning, AMS vice-president (operations), says the AMS tries to strike a balance between breaking even and offering quality services.
John Manning, AMS vice-president (operations), says the AMS tries to strike a balance between breaking even and offering quality services.
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The AMS may need to increase its annual student fee if it wants to stop running a loss, said Vice-President (Operations) John Manning.

The AMS’ funding hasn’t kept up with its growth over the past couple years, Manning said, resulting in shortfalls like this year’s projected $108,627 loss in the operating fund. This is the second year in a row that fund has posted a loss of more than $100,000.

Last year, the loss was projected at $110,000 and came in at $131,000, Manning said.

“The impact is essentially the same this year as last year,” Manning said. “The major difference is this year we’re trying to find a solution to address the funding shortage.”

The AMS specific fee, which funds the majority of the AMS’ operations, hasn’t gone up since 2004 apart from increases due to inflation.

This year, the fee was $54.62. The yearly increases are thanks to the consumser price index (CPI), which stands at about two per cent per year. Manning said the most direct way to solve the funding shortage would be to raise the AMS specific fee.

“The AMS Board of Directors has a specific fee committee which will be meeting all year and then coming up with a recommendation as to whether or not that fee should increase,” Manning said, adding that he thinks a fee increase by $5 or $6 is likely.

“The level of programming that the AMS provides has increased quite substantially over the last three or four years, and all of this programming, in my opinion, is very valuable to students,” he said. “If we want to keep all of these great things that we’re doing, we need to raise the funding.” At a Board of Directors meeting Sept. 20, Manning presented the board with four solutions: make a one-time transfer from a reserve fund called the advantage fund; raise health and dental fees for one year; transfer money from last year’s health and dental plan, which had a surplus of $84,000; or take a loss in the operating fund.

“The board’s decision was to accept the loss in the operating fund in that it is a transparent way to look at the operations of this year,” Manning said.

The balance of the operating fund is about $700,000, Manning said, and is the AMS’ initial reserve.

“It absorbs the surplus or deficit from year to year. So this year there will be a slight loss taken in that fund,” he said.

Manning said the AMS has reserves so the level of programming doesn’t change drastically from year to year if the corporation posts a loss.

He said the AMS typically gains or loses about $200,000 every year, which isn’t a huge amount in terms of the bigger picture.

“Certainly it’s a higher loss than we would like to take,” he said.

The services expenditure this year is projected at $5.7 million, AMS assembly expenditure at $771,401 and expenditure for other operations—which includes the AMS general office—is budgeted at $2.1 million.

The overall expenditure for the operating fund is projected at $8.5 million.

AMS services are projected to lose almost $34,000 this year—an improvement from last year’s $96,855 loss.

CFRC, The AMS Pub Services and The AMS Merchandise Services are all projected to lose more than $25,000 each.

“We try as hard as we can to have services balance out to zero,” Manning said.

He said wage increases and higher rent and administration costs in the JDUC have affected the projections, but each service has its own reasons.

“We try to strike a balance between making the service break even and providing a good value service,” Manning said.

For example, he said, the AMS tries to keep the fee for the Tricolour Express as low as possible.

He said the budget is just a projection, and the services could end up making money.

Manning said operating at a substantial loss for two years in a row isn’t the best option.

“The funding model for the AMS does need some adjustment,” he said.

The board also indicated at Thursday’s meeting that it would like to look at the heath and dental fund surplus later in the year.

Because the AMS acts as its own insurance company and uses a consulting company to predict costs incurred by their health and dental plan, it takes the financial risk or reward that would otherwise be assumed by an outside insurance company.

“We’re able to keep the overhead cost of the plan down, which allows us to offer a very low-cost plan with very substantial benefits on it,” Manning said.

Last year, the health and dental plan ran a surplus of $84,000, which Manning said is within normal range.

“The model we run allows us to keep the excess money within the AMS and therefore within the student community,” he said.

Over a number of years the plan has run at a surplus and as a result there is quite a bit of money in the health and dental fund, Manning said.

At the end of last year, the health and dental fund had $1,121,083.

“So far it’s proved to be a good model, and now we’re in … the very enviable situation where we have additional money,” he said.

This year’s health and dental fee went down $5 per student.

“We want the health and dental fund to come as close to breaking even on a yearly basis as possible, so when we did our planning over the summer and projections for the year, we came to the conclusion that we could likely lower the fees.”

The board discussed the possibility of moving the surplus from last year’s health and dental into a secondary reserve fund called the advantage fund, which was set up in 1998 to save money for this year’s sesquicentennial celebration and to act as a secondary reserve and investment fund for the AMS.

Last year the advantage fund ended at $135,301, and the AMS also has significant investments, Manning said.

This year the AMS is spending $45,000 from the fund on the sesquicentennial.

“Now that we’re at the sesquicentennial and there’s still money in the fund, because it has done quite well, it’s a reserve,” Manning said, adding that additional reserve money could prove useful when the AMS begins to move some of its services—including Destinations, Common Ground and Tricolour Outfitters—into the Queen’s Centre after Phase 1 of construction, scheduled to be completed in 2009.

“My prediction is that with the move to the Queen’s Centre, there may be additional costs incurred by the AMS, and so that would be the logical place to turn for money to get over the bump, so to speak.”

In the red

The AMS has projected a loss of $33,967 for services in 2007-08. Common Ground, Destinations, the P&CC and the Yearbook & Convocation Services are all expected to have net surpluses of at least $10,000, but a number of services are projected to lose the AMS money.

  • CFRC—$28,441
  • Queen’s Student Constables—$1,144
  • Queen’s TV—$2,815
  • The AMS Pub Services—$31,568
  • Walkhome— $19,858
  • The AMS Merchandise Services— $79,205

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