At their meeting last Tuesday, the MCSG Legislative Board passed a restructured financial code that alters how chartered student organizations are funded. The new plan, which is effective immediately, shifts the current funding system from detailed, itemized budgets to a system of block budgeting.
Under the previous budgeting process, organizations would plan events and estimate related costs one semester in advance, and submit that budget to the Financial Affairs Committee (FAC). Organizations could also request additional allocations throughout the semester or draw from their FlexiFund accounts, which can be used for various expenses.
In their budgets, organizations needed to be specific with their planned expenditures. According to FAC Chair Kate Hamilton ’13, organizations would often discover their plans for an event had evolved and did not match up with what was budgeted at the beginning of the year. Because of the regulations on how their funds could be spent, they would often choose to not have the event altogether.
“Often, [organizations] would say, we don’t want to do this event anymore, but we can’t reallocate [the funds] because it’s a pain, so we’re just not going to do it,” Hamilton said.
Organizations repeatedly not using all of their allocated funds and coming in under-budget created new problems of how to use the leftover funds. The existence of the Rollover a few years ago stemmed from this problem.
“The question was, how do we make it easier for organizations to budget well, but not have to do these micromanaging tasks that lead to all of this bureaucracy, and things like the excessive rollovers,” said Jeff Garcia ’14, Student Organizations Committee Chair.
Because the budgeting process was running fairly smoothly this year, according to Hamilton, the FAC was able to take time to explore organizations’ thoughts on the budgetary process. The conversations revealed a general desire for change among organization leaders.
“When things are running smoothly, we’re able to have a conversation about the process,” Hamilton said. “Things calmed down and allowed us to see there was this discontent. The impetus for this was the voiced discontent we’ve heard from organizations, and so we’re doing this for them, not for MCSG.”
The desire to shift away from itemized budgeting also reflected MCSG’s desire to spend less energy supervising and managing organizations’ budgets, freeing up time for them to dedicate to broader issues and advocacy throughout the school.
“It fits well with what we’ve been trying to do—better empower students to do what they can do best,” said MCSG President Patrick Snyder ’13. “It’s a good step which respects that they can make a decision about finances, and allows us to focus on other things instead of micromanaging.”
After having discussions with various organization leaders, Hamilton and Snyder drafted a proposed financial code which incorporated the block budgeting principles.
Instead of requiring organizations to itemize every individual expense, they will now be able to group costs for events into one of five categories: food, fees, materials, travel and other. Organizations will still have to break down their budget by specific events and provide descriptions for them, but they will have more autonomy over how they spend their own money, according to Garcia.
“They’re free to spend more or less on any category, because that money will continue in their account,” Garcia said.
The new financial code will now have organizations plan their budgets on a yearly basis instead of from semester to semester.
When Hamilton and Snyder initially introduced the bill, they included the shift to annual budgeting to allow organizations to plan for more of their long-term goals. Under a budget operating on a semester schedule, leftover funds from the fall semester could roll over into the spring, but funds allocated for the spring could not be used in the fall. The annual framework provides organizations flexibility to picture their events for the entire year.
“Yearly budgets allow for a broader view of the year, and organizations aren’t constricted to certain dates,” Hamilton said. “With yearly budgeting, organizations can use money they’ve been allocated in the spring for events in the fall, if they wish.”
The initial draft of the code, as proposed, included a shift to annual budgeting. However, during debate of the bill at last Tuesday’s meeting, Merita Bushi ’14 offered an amendment that would restore the semester framework and provide for a rollover of funds in between semesters.
During debate, proponents of semester-based budgeting cited a lack of consensus among organizations that annual budgeting was needed. In addition, some raised concerns about forcing this new system on organizations if they didn’t wish to use it. However, the amendment ultimately failed.
Another amendment introduced during the meeting gave the organizations the option of choosing their budgeting schedule. That amendment initially passed, and was briefly incorporated into the text of the bill. However, after more debate it was overturned, leaving the original language intact.
Hamilton opposed the amendment on the grounds that it would be more difficult to distribute further allocations due to the differences in budgets. In addition, it would likely be a more complex system, negating block budgeting’s goals of efficiency and streamlined processes.
“We had never thought [in advance] about doing this split system,” Hamilton said. “It would be a more complicated system to achieve the same thing … [and] would be unfair to organizations who choose to budget on semesters, because we would likely be cutting their budgets by a higher percentage to fit it all in.”
During the drafting of the new financial code, Hamilton and Snyder held feedback sessions with various organization leaders to educate them about the new budget process and hear any concerns they had. Most organizations, according to Hamilton, were receptive to the proposal.
“It’s a big transition, a big shift,” Snyder said. “There’s no need to worry, as we’re going to help them understand the changes so that it’s not a surprise to them.”
“This gives more flexibility,” said Zack Avre ’14, a MCSG Representative and co-chair of Mac Dems who has been involved in the organization’s budgeting in the past. “[The proposal] gives the opportunity to think about the mission for the whole year,” he said. “Now it’s not a myopic budget process, and [it] enhances the quality of programming for organizations.”
The previous financial code brought contention around what food MCSG would permit to be funded. Since many cultural organizations focused on one large event in the year aimed at sharing culture, as opposed to other organizations that planned for smaller, consistent events throughout, their budgets often reflected that difference.
Previously, the FAC had eliminated funding for food unless it served an educational or integral purpose. The language, which remains intact in the new code, only provides funding for food if it “adds an educational and/or substantial component to an event.” Despite the restriction on food funding, the regulations on organizations will be less stringent because of budgets no longer being individually itemized, a development believed to assist cultural organizations that are seeking funding.
“When we got rid of that, it was a really big deal,” Hamilton said. “When we said it was not integral, not educational, it kind of hurt. The different rules affected different organizations differently.”
“This will really benefit cultural organizations. They’ve felt sometimes attacked because they felt MCSG hasn’t quite understood why food is important to cultural organizations, and why they need them,” Garcia said.
The revised financial code took effect immediately after passage. According to Garcia, it was planned to pass this revision fairly early in the semester in order to allow for education before the next budgeting cycle.
There will not be many immediate effects as a result of the new plan. The distribution of additional allocations for the rest of the semester will be affected, but the most notable changes will be visible toward the end of the semester, as organizations budget for next year.