The Student Recreation Center, among the biggest ASUO-funded departments at the University, has overspent its budget every year since it opened in 1999 and the ASUO hasn’t even noticed.
If the rec center is unable to generate more revenue from student fees, it will have to cut services or risk running a deficit of roughly $133,000 this year. The rec center, which sees about 3,500 patrons every weekday, is expected to have a representative appear at Wednesday’s Student Senate meeting to request more than $120,000 from the Student Senate’s surplus funds, said Senate Vice President Jonathan Rosenberg. With this money, the rec center could bandage the bleeding of its budget for this year, but it may not solve its continual budget shortfalls.
The Senate Special Request form filed by Physical Activity and Recreation Services associate director Jen de-Vries asks for $122,184 from the Senate surplus to be used to fund an Oregon University System mandated “capitalized equipment” reserve fund. The rec center is in the third year of a five-year plan to put money in the fund, according to the surplus request.
For the 2006-07 school year, the rec center faces a $133,000 deficit if services are not cut, de-Vries said. Although the Programs Finance Committee allocation of $1,080,243 – an 11.7 percent increase over the current budget – seems like a large amount of money, it is not enough to cover basic operating costs. De-Vries predicts that without a larger budget, the deficit will grow to $247,770 next year.
What may not be clear 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.

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, PARS Director Dennis 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 is now $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, the University administration said that 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 around 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 is now 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. 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 turfs, 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, this is the first year the PFC has been notified that the rec center is running a deficit and 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.” The rec center might also have a problem next year because in addition to having to maintain the state-mandated capital equipment reserve, it may be combined with the budget of Rec Sports, which would change how the fees are allocated, de-Vries said.
Because the rec center generates some academic credits, it receives a small amount of money from the state’s general fund, Munroe said. Munroe told the Student Senate and the Emerald that the rec center can not turn to the state General Fund for additional help because a state statute prevents auxiliary services receiving general fund money. This could not be verified because University General Counsel Melinda Grier was unavailable and representatives from Oregon University System did not return phone calls by press time. Although design plans for an expansion of the rec center were completed in 2004, no construction will begin until there is funding available, de-Vries said. This would require students voting to fund an expansion. Munroe and de-Vries said the best idea they have heard for saving the rec center was Sen. Jacob Daniels’ suggestion of having students vote on a ballot measure to increase funding.
“We feel terrible about the notion that in order to make the rec center’s budget whole, student groups would have to be cut and the ballot measure that Sen. Daniels suggested would permit the current PFC process to play out,” Munroe said. “Then in the spring, the ballot measure would be a special one-time allocation that would provide the funding for the future that the rec center needs, now that we no longer have this pool of money we’ve been using to backfill.”
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three main issues led to the rec center’s debt
1) When planning began, no one expected the operating expenses to be so high. Planners only had experience with academic buildings, and didn’t fully understand what it would take to run a rec center.
2) When the facility was first built, no one realized that the University wouldn’t be able to fund all utilities like it does for other academic buildings. In result, the rec center has to pay $73,000 per year.
3) The number of students who used the facility was far higher than predicted, and more use resulted in a higher cost of maintenance.
Source: PARS Director Dennis Munroe
student recreation center: where does the money go?
For the 2007-08 school year, the Programs Finance Committee allocated the rec center:
$789,833 to pay wages for non-stipend employees.
$350,225 of this would go to pay student workers.
$ 61,800 was allocated to go toward “miscellaneous services and supplies,” which is described as “operating equipment expense” on the budget proposal.
$73,000 per year goes to the building’s utilities, per an agreement with the University, which pays the remaining balance of utility costs.
The rec center spent $450,000 to help build the outdoor tennis courts that opened in fall of 2005.
rec center budget by the years
The Student Recreation Center has been funded through the Programs Finance Committee process since the 2002-03 school year. In that time, the rec center has run in the red every year, dipping into an equipment reserve fund to make up the difference between real operating costs and what the PFC allocates. These are the budgets for each year the rec center has gone through the PFC:
2002-03: $537,428
2003-04: $697,147
2004-05: $792,217
2005-06: $904,086
2006-07: $966,858
The 2007-08 PFC budget recommendation, which will go before the Student Senate in March is $1,080,243.