Indirect fee could cost student groups thousands
The Black Cultural Affairs Board (BCAB) was planning on holding multiple events for Black History Month this coming February, but was surprised when they found out that a new fee for student groups could alter their budget and possibly prevent the events from happening.
In one of many possibilities, the BCAB would have to make up as much as 12 percent, or $6,400, of their annual $54,000 budget because of a Portland State tax on student groups.
Called indirect fees, the tax may be used to pay for costs like building maintenance, salaries for human resources employees and the filing of paperwork and is made of costs that cannot be directly charged to a student group. The indirect fees cannot be charged directly because the nature of the costs makes it impossible to determine exactly how high a group’s expenses are.
Student groups have never paid indirect costs at PSU, but an Oregon University System mandate has forced Portland State to implement a policy to recover these costs.
Other campus organizations, like Auxiliary Services, Extended Studies, and each of the university’s separate colleges, already pay a 12 percent overhead administrative fee. The fee increased for this fiscal year, from 10 percent to 12 percent, to compensate for drastic budget cuts across the university.
While one student group may need to have one form per month filed for miscellaneous work in the group, another group might need to file two. Or, one group might use more electricity or heat than another. Both groups may pay a percentage of their budget to make up for the costs of the work.
The policy mandated by OUS last year said that auxiliary enterprises should be self-supporting and generate enough revenue to cover not only direct expenses, but indirect costs as well. The only other campus organization that will be affected beyond student groups is the athletic department.
A committee was established after the announcement to handle how indirect costs will be charged to student groups and athletics. Dean of Students Wendy Endress said there are various options of how the indirect fee could be charged – from the 12 percent overhead charge to an increase in the incidental student activity fee.
Raising the student fee to compensate for the unset indirect cost is a definite possibility, according to Endress, but she said it is too early to speculate on which options the committee will decide on.
It is also possible that a set percentage of a group’s total budget might be charged, like the $6,400 from the BCAB student group’s budget, or by reducing the total amount that each student group is allocated. Budget director and committee member Michael Fung said that in light of dwindling resources to the university, some of the costs must be shifted to students.
With implementation plans up in the air, groups on campus like the BCAB are unsure about how the indirect fee will directly affect their budgets for the next year.
”We’re already looking at close to zero dollars at the end of the year,” BCAB President Nadia Ali said. “It’s kind of hard working with whatever we have already. Hopefully, we’ll be able to work around this.”
A policy about how the fee will be charged must be in effect by the start of the next fiscal year at the latest. Student groups will prepare to start their budget process in December for the next fiscal year.
The Indirect Costs Committee is attempting to come up with a policy as soon as possible, but Fung said they are not rushing to complete it before the student group budgeting process begins so that the committee can continue to understand how the indirect fee will affect student groups. He said it is the duty of student representatives on the committee to inform student groups of the ramifications of the policy change.
”It will take longer (than December),” Fung said. “We’re dealing with more than just the student groups. That’s why they have representation on the committee.”
There are two student seats on the committee, only one of which is filled by Student Body President Courtney Morse. Endress, who sits on the committee, said Morse has not appointed a second student to the committee.
The athletic department is discussing ways in which they will deal with the costs, according to Molly Moore, associate athletic director.
”We don’t know to what degree we will be affected yet,” Moore said. “We’ll have to discover new revenue streams or reduce costs elsewhere. We’ll find a way to work with it.”
Until today, the BCAB was not informed of the indirect fee discussion. Ali said the group’s adviser informed her she should look into ways to cover the cost when doing next year’s budget.
The vice-president of the BCAP, Edassa Argo, said there should have been an effort to inform student groups about these fees, because it will directly affect all of them in one way or another.
”If we don’t know then other student groups won’t know,” Argo said.
Auxiliary programs typically aims to recover nearly $4 million of its $31 million budget in indirect costs, according to Susan Dodd, chair of the Indirect Costs Committee. Usually indirect costs amount to around 20 percent of the budget.
For any business enterprise – and PSU can be considered one – it is a common practice to take administrative charges and calculate a certain percentage to compensate in the budget, Fung said.
If a group or organization on campus wants to save money on administrative charges, paying its employees yearly instead of monthly and therefore cutting down on business costs, the group will unlikely be charged less in indirect fees once the fee decision for that group has been decided, Fung said.
Endress said it would be up to student government and the Student Fee Committee to bring their proposal to PSU President Dan Bernstine, who will make the decision to raise the student fee.
ASPSU is officially against increasing costs to students, and a public meeting will be held Nov. 17 for students to express their opinions on the matter.
