Various capital projects in recent years have contributed to the reasoning as to why the Wilfrid Laurier University Students’ Union has incurred a debt load of $4,250,156 in loans and a line of credit from the university. In addition, WLUSU has another $2,415,051 in loans from external institutions that are guaranteed by the university.
In total, as of April 30, 2012, WLUSU has a net debt of $6,567,498.
Including the guarantee given by the university, there is a cap of $5 million that the university placed on the Students’ Union, which Jim Butler, the vice president of finance at Laurier confirmed WLUSU has exceeded.
“We take on capital projects and the capital projects we finance them through debt financing,” explained Michael Onabolu, the president and CEO of WLUSU.
“Things like the Terrace expansion… like club space, the foot patrol space, the 2-4 Lounge, and renovations to space and study space to students.”
“Every project that we do is to benefit students obviously,” he added.
In 2010, the Students’ Union announced that the Terrace expansion that was occurring that year was over budget and resulted in a $1,480,541 price tag. In that same year, the WLUSU board approved a bailout for the ailing William’s café on the Brantford campus, which incurred a deficit of $655,398 at the time of the decision.
Furthermore, the construction of the new Foot Patrol office — which saw the price triple than what was originally projected — and renovations to the 2-4 Lounge were made in the 2011-12 academic year. During that same year, WLUSU made a decision to drop the management of the Terrace food court and the C-Spot, which became International News.
“It just comes down to the presidents, right? If there is a president that has a capital project they would like to see go through, there’s different funds that they can access for that project,” continued Onabolu. “I would guess, because it’s not something that I have done, that’s the mindset that these past presidents have had.”
According to the WLUSU financial statements from 2009 to 2012, WLUSU has, in addition to paying off some other loans, taken on more loans and debt as the years progressed.
In 2011, however, the financial statement noted that WLU forgave WLUSU $243,104 on a previous loan, effective Aug. 1, 2011. That same year, WLUSU took out another $2-million loan from the university.
WLUSU makes monthly payments on whatever debt they incur each year.
“It’s just the line of credit that’s put them over the $5 million,” said Butler, noting that WLUSU has been consistent with their monthly payments on their loans and notes payable. “All of those three things [loans, the line of credit and the university’s guarantee on external loans] can’t exceed $5 million and that’s what has gotten them in trouble.”
Butler confirmed Tuesday that the university and Students’ Union are in a discussion to address this debt situation.
“We’re working with WLUSU on a means by which they would pay it all back,” he said, adding that one of the things they are working on is a timeline for WLUSU to do so.
“That’s what’s being worked out and we need to brief our board [of governors] about that, but we’re getting into some specific stuff which I can’t talk about,” Butler added. “To be clear about that, we’re not talking about reducing it to zero, we’re talking about reducing it back down to $5 million.”
While the situation has been heavily discussed, Butler asserted that the situation is “not severe, like some other universities.”
“They’re taking it very seriously which is giving me some comfort,” he said. “But there is an agreement, in terms of these loans, in terms of discipline around it — that’s what we’re exercising.”
Unlike previous years, the 2012 financial statements were not released and approved by the WLUSU board until second semester. While the report was made public at the time of the annual general meeting, or the WLUSU election night, WLUSU director Matt Casselman noted there “weren’t any surprises.”
“The final report was meant to come out last semester,” he shared. “That made things a little bit difficult, but upon receiving that information, there weren’t any surprises. We were told of the situation prior to that report being released. It’s not like we were unaware of what was happening.”
Onabolu noted that because of this situation there is a going to be a different attitude the Students’ Union is going to take in terms of capital projects. Instead, advocacy will continue to be large aspect of WLUSU’s mandate.
“The mindset of ‘if the university is not going to do, we’ll do it,’ that has to change,” asserted Onabolu. “If the university isn’t creating more study space for students on campus, it’s our job to advocate for more study space rather than trying to create it ourselves.”
While Onabolu couldn’t speak to any of the specifics of what WLUSU plans on doing to decrease this debt. He did note that from his perspective increasing student fees is not an option.
“That information is confidential, but what is happening is that we have a number of different plans to mitigate that debt and ensure that something like this doesn’t happen again in the future,” he said.
When asked if WLUSU is concerned about this situation, Onabolu replied by saying, “No, we’re not concerned… it really just means that we need to tighten our belts a bit, we need to do better in terms of efficiency, in terms of ‘where can we make trims’, just a leaner operation.”