Auxiliary Funds
At Washburn University, the auxiliary operations include housing and the Memorial Union operations of the student center, the bookstore, dining services, vending, concessions, and the iCard system. It is the goal of all the auxiliary operations to serve the needs of the campus while recovering all costs associated with the operations by charging for the services provided.
Typically, because of the expectation of operating in a self-sustaining manner, auxiliary operations receive no public tax funds. However, in 1997, President Farley received Board approval to subsidize the auxiliary enterprises at Washburn by having the University pay for the auxiliary employee fringe benefits through property taxes collected for the Employee Benefit Contribution Fund. These property taxes are no longer collected, having been replaced with the county-wide retail sales tax. The provision for employee benefits was accepted in lieu of raising student fees, eliminating overhead charges, or increasing operating margins.
Give them an inch, they take the mile
The argument was made at the time that the auxiliary enterprises could pay for their own operating costs, but that funds were inadequate to pay for capital maintenance and or facility replacement. So employee benefit reimbursement was instituted as a remedy for this funding shortfall. Now, in 2005, the auxiliary operations at Washburn University are subsidized with the following:
1. Increased Student Fees
In FY98, tuition was $100 an hour, with a student activity fee of $25 per semester. In FY05, tuition was $150 per hour, with a student activity fee of $31 per hour. WIth the increased enrollment, student fees funding Memorial Union operations have grown from $145,662 in FY99 to $250,000 in FY04.
2. Elimination of overhead charges
In FY98, the auxiliary operations contributed $91,923 of their revenues to the university's educational funds to pay for their share of administrative costs, such as personnel, accounting, computing, and general administration. In FY02 this practice was discontinued and the auxiliary operations now receive administrative support at no charge.
3. Increase gross revenues
Bookstore sales have increased from $2.27 million in FY98 to $3.02 million in FY04. Food service revenues have more than doubled over this same time period. Housing revenues have increased over $1 million. Surplus operating revenues held in reserve funds (pdf) have declined significantly. But it still costs money to make money. However, the trend over the past four fiscal years shows gross margins increasing from 51.3% to 53.8% in food services and from 25.3% to 29% in the bookstore.
4. Employee benefit reimbursement
In FY99, employee benefit reimbursement for auxiliary operations cost the university $209,711. In FY04, this subsidy costs the general and educational funds $392,721.
5. Capital improvements paid by educational funds
Keep in mind that the employee benefit reimbursement was to provide the auxiliary operations the ability to fund their own capital projects. A review of funds available for the auxiliary operations in the Building Construction Fund, where these excess funds are typically accumulated, indicate that in spite of the additional subsidies from the general and educational funds, the auxiliary operations are either still not generating adequate funds to fund their capital projects or are simply overexpending the funds that are available.
Purpose FY99 Balance FY04 Balance MU Cap Funds $213,310 $ 0 Housing $ 15,331 $( 5,918) LLC $ 0 $(406,069) Washburn Terrace Apt $207,348 $ 144,791 A review of the capital budgets for the past five years indicates that auxiliary capital projects are being funded with the 3 mill tax revenues rather than their own operating surpluses. Over $500,000 in equipment and capital improvements have been approved for the Memorial Union and over $660,000 of capital funds have been approved for residential living.