The Student Recreation Center, among the biggest student government-funded departments at the University, has overspent its budget every year since it opened in 1999 and until winter term of last year, the ASUO hadn’t even noticed.
In the 2006-07 school year, rec center officials appeared before the Student Senate several times to request funding to help plug a projected $133,000 deficit. At the various meetings, officials said if the rec center was unable to generate more revenue from student fees, it would have to cut services or risk increasing its deficit.
In April, the Student Senate allocated $118,705 from an “over-realized” account to help fill the hole.
The problem came to light in January, when rec center officials appeared before the Programs Finance Committee, which allocates money from student fees to student groups, departments and contracted services, to discuss its budget for the 2007-08 school year.
At the time, Jen de-Vries, then the associate director for Physical Activity and Recreation Services, said the rec center faced a $133,000 shortfall that threatened services.
Although the PFC allocation of $1,080,243 – an 11.7 percent increase over the current budget – seemed like a large amount of money, it was not enough to cover basic operating costs. De-Vries predicted that without a larger budget, the deficit would grow to $247,770 at the end of the 2007-08 school year.
The $118,705 the Student Senate eventually allocated came from an account that had been growing for years and was made of extra incidental fee money left over when more students enrolled than projected. The money given to the rec center was only a fraction of $835,734 allocated to various departments and programs though a process of requests and meetings that lasted more than a term.
In theory, the allocation could drastically reduce the deficit the rec center had projected. An additional $72,000 from the same account was approved to help fill the rec center’s Oregon University System-mandated equipment reserve fund.
According to Emerald archives, in asking for money to help fill the deficit, Richard Pryor, who was then the chairman of the Student Recreation Center Advisory Board, promised that if the Senate helped pay the debt, the rec center would “not be in debt, ever again, from now on.”
What was not clear at the time, and what may still be a question, is how it is possible for one of the biggest departments on campus to run a deficit for several years without it coming to the attention of the ASUO.
A combination of poor operating cost predictions, higher than expected use and the failure of management to bring the true budget problems to light led the rec center to its current situation. In February, PARS Director Dennis Munroe and Associate Director de-Vries, who is no longer with the rec center, sat down with the Emerald to explain the situation.
Students build the rec
The history of the rec center dates back to 1995, when students realized that the recreation facilities on campus were sorely lacking, Munroe said.
The few pieces of exercise equipment available, as well as a pool and gym, were hosted in Esslinger Hall along with academic classes intended to prepare students to teach courses such as health and physical education.
“Students would go to community fitness clubs to avoid coming to what we had,” Munroe said. “You can probably picture locker rooms with cement floors and wire baskets that smelled like dirty socks and weight rooms that smelled like sweat, with dingy lighting, and that’s what students had to come to.
“Many students visited other campuses and talked to their friends who are students at other campuses and realized that most major universities nowadays have a very nice facility dedicated to student recreation,” Munroe said. “The students here asked, ‘Why not us?’”
In 1995, University students voted to pass a bond measure to build a new rec center, de-Vries said.
Under the terms of the bond, students would pay a flat fee of $15.25 per student per term that would pay off $10 million – half of the construction cost – over a 30-year term. This fee is separate from the incidental fee. Students began paying it when construction began in 1997 and it will remain fixed at $15.25 until 2027. The remaining construction costs came from a $45 per term building fee that is paid by every full-time student at Oregon University System institutions. This money is set aside by OUS and used for capital construction projects, Munroe said.
Students also voted on a second bond measure to take $7.75 per student per term out of the incidental fee to pay the rec center’s operating costs. This fee was also instated in 1997. Munroe said this fee was “the best guess at that time” of what it would cost to operate the rec center. This fee has slowly grown over the years and in February, was $21.50 per student per term, de-Vries said. An estimated $4 extra per student per term used solely to pay the rec center’s operating costs would balance the budget, de-Vries said.
Operating the building
Although the $7.75 per term was intended to help maintain the rec center and pay for operating costs, several unexpected problems arose. Operating costs were higher than planned, far more students used the building than predicted, and there was also no plan in place to create a building reserves fund, which would go toward major construction and maintenance costs, such as roof and floor repairs, Munroe said.
“We decided to build this cool building, but there wasn’t a plan put in place to protect that investment by (building) reserves,” Munroe said. Another problem arose over the question of whether the building was used more for academics or recreation. Because the previous services were located in a building intended for academic use and hosting academic programs, the University had paid all maintenance and utility fees. Munroe said that while it was assumed that the rec center would continue to be supported as an academic building, things did not turn out that way.
Munroe said that in 2001, University administration said while the new building did generate academic credit through its physical education courses, it was largely auxiliary and would have to pay some of its own utilities. The administration agreed to let the rec center pay a flat rate of $73,000 per year (funded by the incidental fee) for utilities and the University pays the difference.
“Pre-construction and during construction, there wasn’t a discussion about maintaining the new building that students were now putting $20 million worth of student fees into constructing,” Munroe said. “I don’t think it was anyone’s fault because something like this had never existed on this campus.”
Munroe said that during the time of planning and construction, no one hired people with experience with campus recreation facilities, so the projected costs were left up to the best guess of “mostly academic” people.
In the 2001-02 school year, President Dave Frohnmayer and the University’s legal counsel determined that the rec center should go through the programs finance committee’s process for the money that funnels from the incidental fee, Munroe said. All of the rec center’s budget is paid through either student fees or from revenue generated from fees paid by non-students for use of the facilities.
“An operational budget for a building that was set by a ballot measure by one group of students could not be binding for future generations of students,” Munroe said. When students originally began paying the $7.75 operating fee, the money that was collected before the building actually opened was set aside to be used to equip and operate the building.
Depleting reserves
After the rec center opened and the costs of operation were higher than expected, rec center officials dipped into the equipment/operations reserve account to pay the extra costs. E-mails sent to de-Vries aroun
d the time indicate that money was collected from the $7.75 building operations fee, so it made sense to dip into the fund for that purpose, she said.
As the budget allocation in subsequent years was lower than requested, the equipment reserve account was depleted more and more. The operating fund originally had about $800,000 and in February was down to around $400,000, de-Vries said.
It is necessary to keep some money in this fund for emergency costs and also to meet a state mandate to have a “capital equipment reserve” to be used to replace equipment on an ongoing five-year cycle, de-Vries said. This is the account to which the $72,000 from the Student Senate was allocated. The state mandate, which took effect in 2003-04, was never in the planning process when the building opened and when rec center administration began dipping into the original operating fund to pay basic operating costs, de-Vries said.
Maintaining equipment is one of the biggest expenses at the rec center, de-Vries said. Another big expense is maintaining the artificial turf fields, one of which was installed during the initial construction phase and another, which used to be in Autzen Stadium, and was installed by the Athletic Department. The rec center paid only the costs of installing lighting.
Although the rec center has received significant increases from PFC every year, it has never received enough to get it out of the red, Munroe said. However, 2007 – when the PFC determined budgets for the 2007-08 school year – was the first year the PFC had been notified that the rec center was running a deficit, compensating for it by dipping into the operating fund.
“As we’ve consulted with the ASUO finance coordinator and the PFC every year, we’ve been advised that ‘this is the amount that we believe we can fund for you for an increase over the previous year. Don’t even bother us with anything more,’” Munroe said. “We have taken that at face value and presented our budget each year based on what we are advised we have some hope of having approved, rather than presenting to the PFC what it takes to operate this rec center. The difference is what has eroded the fund.”
This is an updated version of a story that originally ran on Feb. 7, 2007.