One percent indirect cost proposed

The Indirect Cost Committee has settled on a recommendation for a 1 percent indirect cost to student groups that will be submitted to Portland State administrators this week.

The 1 percent indirect cost would rise by 1 percent each year and cap at 5 percent during the 2011-12 school year. The 1 percent indirect cost is significantly less than the figures previously discussed by the committee of administrators, faculty, staff and students, which went as high as 12 percent.

The 1 percent indirect cost is a charge that would make students pay for administrative operations used by student groups (such as filling out paperwork and drafting checks) in departments like human resources and the business office. Student groups were allocated $9,697,052 for the 2006-07 school year, and if a 1 percent indirect cost had been in place, PSU would have taken in close to $96,000 to pay for the administrative operations.

Next year, the 1 percent indirect cost will either be taken from each budget of the nearly 100 PSU student groups or will be charged directly to students through a 1 percent increase in the student incidental fee. A 1 percent fee would cost each student almost $5 more each year if the student incidental fee does not increase next year.

The $167 per term student incidental fee, which funds all of the student groups including student government, athletics and the Vanguard, is already set to rise by $9 next year to cover a decrease in enrollment. The incidental fee was increased by $30 per term, or 17 percent, from the 2005-06 year to the 2006-07 year.

The 2007-08 fee could increase to $221 per term, depending on how much the Student Fee Committee allocates to each student group. Student groups requested a total of $11.8 million for the 2007-08 school year, over $2 million more than the 2006-07 year.

All Portland State self-supported departments, such as housing operator Auxiliary Services or the School of Extended Studies, currently pay a 12 percent indirect cost of their entire budget for the same administrative services.

Last year, the Oregon University System mandated that PSU put itself in line with the six other OUS universities that currently charge the fee. Portland State previously did not charge an indirect cost fee to student groups. Oregon State University charges a 3 percent indirect cost to student groups and Western Oregon University charges 6.6 percent.

“The fact that we got 1 percent is a huge victory for student groups,” said Courtney Morse, student body president and committee member.

Associated Students of Portland State University, the PSU student government, had previously advocated for a .01 percent fee, but now officially endorses the 1 percent fee that they say it is not ideal.

“This philosophy of taxing student activities for these overhead costs is fundamentally flawed,” an ASPSU letter to administrators reads.

The letter says that the graduating 1 percent fee is a good cooperation between PSU and students interests: “The ASPSU, in its mission to advocate for students agrees that this is a reasonable percentage that shows cooperation amongst the committee and meets the requirements set forth by the Oregon University System.”

The incidental fee committee’s recommendation will be given to Lindsay Desrochers, vice president of Finance and Administration, to review. It is not necessary for OUS to approve the proposal.

Indirect cost committee Chair Susan Dodd said the 1 percent fee was decided after input from students showed students do not want higher fees. Dodd said the resources used by student groups use up much more than the 1 percent would cover, and said that until the state of Oregon stops charging more for students to attend college, the fee should remain low.

“There are too many fees on students’ backs in the state of Oregon,” Dodd said. “If we ever get to a place some years down the line where the state will decide to fund us, we can get back to realistic accounting procedures.”

In two studies done this year, Dodd said the budget office determined that PSU could support the 5 percent cap. She said the fee is lower than was previously determined because the committee decided not to charge students for certain indirect costs, such as paying for building deterioration and heating costs.

The Student Fee Committee will decide how to implement the fee in the next few weeks, but Chair Madeline Enos said she thinks it will most likely be charged to the student fee to avoid confusion. If next year’s fee stayed at $167 per term, the fee would increase by $1.67 per term with the 1 percent charge.

The Indirect Cost Committee has been meeting for nearly a year after the OUS mandate was released.

The policy reads: “It is OUS policy that auxiliary enterprise activities be self-supporting, generating sufficient operating revenues to cover operating expenses, including direct expenses and the allocable portion of indirect costs borne by other units of the university.”