Experts say universities should be more transparent with surplus accounts
Student Government Association President Asher Lisec gets questions continually about where students' dining money goes when they don't use their meal cards.
The answer lies not only in dining facility expenses but also in a housing and dining surplus account that has almost doubled since July 1, 2003. It held $44.5 million as of March 31.
Students might think they're paying cost for their food and living expenses, but Ball State University puts some of their room and board money into what amounts to a savings account that pays for future dining and residence hall buildings and maintenance of current ones.
In order to build up this much money in a surplus account, the Office of Housing and Residence Life budgets with the idea that students will not spend all of their meal plan money. Last year they didn't. In fact, $6.1 million - or 30 percent - of students' board fees went unspent.
Although this practice is common across the country, it raises an issue students and business experts question. The issue is called transparency, and it means being open and honest about business practices - in this case, where students' money is going.
Lisec had no idea where the money was going. Former SGA President Steve Geraci knew some details but didn't think other students would.
"Students don't know and would be appalled to find out how much there is and then where it's going," he said.
One student who did know about the account was Robert Zbikowski, issues and facilities director for Residence Hall Association. He said most students probably don't know this is where their money goes, and most probably don't care.
Although $6.1 million was forfeited last year, only $4.5 million ended up in the surplus account. Jon Lewis, director of campus dining services, said there is no link between the two numbers, and some forfeited money goes to pay for expenses while the rest goes into the surplus account.
The university refers to the forfeited money as the "missed meal factor," but students don't seem to be aware of how that money is spent. This type of closed financial process goes against what experts believe institutions of higher education should be practicing.
Campus Strategies is a management consulting firm for the business side of higher education. President Larry Goldstein said surplus accounts must be carefully planned and institutions must be as transparent as possible about them.
"I think institutions have an obligation because of the concerns regarding what it costs to operate an institution and what students have to pay," he said.
Ronald Duska, The American College's Charles Lamont Post Chair of Ethics and the Professions, said he didn't see why universities would want to keep surplus accounts secret. However, at the same time, he didn't think the schools should have to trumpet that information around.
The surplus account is controlled by Ball State's Office of Business Affairs, and both housing and dining contribute to it. At the end of the year, when expenses are subtracted from revenues, the money left over goes into this account.
In the past two years, the university has used money in the reserve account for things like roof and window replacement at Scheidler Apartments. The account has also funded roof and masonry repairs for Lafollette Complex.
After knowing they are paying for more than the cost of food and expenses, students might be tempted to make sure they spend all of their meal card money, but that won't help.
"If there's not that much forfeited money we'd have to charge the students more so that we could put that money in the surplus," Lewis said.
Elizabet Poore, assistant director of operations for Residence Halls Dining Service, said Ball State knows the average person eats between 11 and 13 meals a week, so that's all the university charges for. If every student ate every meal, the price would have to go up by about $1,200 per student, she said.
Lewis said having students contribute to the account is fair because everyone sees the results of prior students putting money into the account before them.
"I'll tell any student that wants to hear it that the excess revenue over expenses goes to the surplus fund for future needs," he said. "That could be emergency, that could be building, that could be a number of things."
While transparency might not exist now, Lewis said dining service is working on preparing some language for its Web site that would explain the process.
"We're going to try to explain it more, and my goal is to be visible at student meetings more," he said.
Alan Hargrave, director of Housing and Residence Life, said he thinks most students recognize they help keep the facilities operating. State law bans using state money or tuition for anything but academic buildings. For this reason, Hargrave said there are limited ways to get money for housing and dining. If the university doesn't collect money on a regular basis, the university would have to borrow money to pay for repairs.
"I would think most students would see that as positive because it's cheaper in the long run," he said.
However, all of this doesn't really explain why the surplus account has almost doubled in the past two years.
Hargrave said the account has grown so much because of the university's plans for buildings like East Residence Hall and renovations like Woodworth Complex. The reserve took a hit after major renovations to the Studebaker, Noyer and Woodworth complexes, he said.
"We were doing something almost every year of a major category that was requiring a large sum of money," he said. "It got down low, then it's been building back up as planned."
Goldstein said a campus he worked for a few years ago charged extra fees to grow its reserve for the expansion of the residence halls.
While it might have been easy for someone to look at the financial documents and say the school was gouging students, instead, the school communicated with student government to explain why it needed the extra money.
Mona Milius, former president of the National Association of College and University Food Services and associate director of residence and dining at the University of Northern Iowa, said students should be informed about the "missed meal factor" and how that compares to other schools.
"I think to the extent that you can open up your budgeting system to the students that are asking questions about it, I think that's helpful," she said.