Spending on the rise over the years
On March 20th and 21st student are being asked to go to the polls to vote in a new NUGSS executive for 2017/2018. While they are at the polls, they will also be asked about increasing student fee's by $6.50 to cover the Thirsty Moose Pub deficit which in June 2016, according to audited report by KPMG, was ($38,565). NUGSS spending that year increased by 11% to the tune of $129,972 from $1,048,686 to $1,176,658. This is not new; the Moose has for years been a failing business, unable to sustain itself on its own.
Students are being asked to give more money to NUGSS to help alleviate the deficit of the Moose. However, in the year 2015/2016 the spending of NUGSS appears to have gone up. Expenses for the pub went up by $16,195, which is only a 3% increase from $410,291 to $426,486. One of the biggest increases was in the line item called "Insurance," that went up by 52% or $17,665. Other increases were: "Bank charges and interest" which increase by 29% or $2015; "Office and general" which increased by 52% to $7,273. However, not all items increased. The line item "Equipment" decreased by 95% it went from $1,072 to $48.
This year 2016/2017 NUGSS has been focused on reducing costs, however at the EGM they stated that even this year they will still be running deficits. It is likely the deficits will be covered by other funds. The financial statements for this year will not be available till after June 2017. Only time will tell whether spending went down this year or if costs are still sky high. CFUR reached out to NUGSS for comment and clarity on the increases of various line items, and this is what NUGSS they had to say.
NUGSS Response
Comments by Duncan Malkinson, General Manager of NUGSS:
Quote: "I just wanted to put the disclaimer out there that if the intent is to demonstrate the fragile financial state of the Thirsty Moose Pub, or NUGSS generally, you should find ample evidence in the historical statements that demonstrate that. The purpose of the referendum as the Board of Directors ordered me, through a combination of fee increases and price increases, to find a way for the Thirsty Moose to stay under the management of NUGSS, so that students could make the decision on whether or not to keep the Thirsty Moose as is.
If the referendum question is endorsed by the student body, the Board has mentioned that it will either; if yes, ask me to continue to build a business plan to improve financial performance in the Moose and across all NUGSS’ businesses; or if no, have myself identify leasing options or keep the pub closed come September.
There some are strong arguments for the Thirsty Moose to be attempted to be leased. Financial Liability to the society would decrease, a lot of existing effort by NUGSS staff to ensure the operation of the commercial side of NUGSS, with 40 employees and all the obligations to maintain that come along with that.
Since coming to my role, I’ve noted the importance of focus on financial analysis and saw some areas that were particular vulnerabilities for the society. This led me to recommend that the society hires a bookkeeper to ensure that NUGSS was keeping up to its financial obligations in a timely way and that I’d have enough time to scrutinize current vulnerabilities and do some financial planning.
So generally, you’ll see some variances between the years because some of the items were coded differently, and I came into my role four months before the end of the fiscal year end, which made it hard to find what expenses from the previous months were. Regardless, I’ll try my best here to answer these questions.
Also, these statements are consolidated. They mix certain expense accounts into broader categories to allow people to see what matters are like generally. The consolidation is work that KPMG performs, not I, so it is a little challenging to see what the exact components of each of the increases or decreases are."
[Original questions about KPMG audited report for 2015/2016 sent by CFUR]
NUGSS General
1. NUGSS had an 11% increase in spending this year from 2015 to the tune of $129,972. Revenue only increase by .037% or %38,685. What factors contributed to the increase in spending?
Quote: "As mentioned at the AGM in November, some of the components of the increase in expenses are Health and Dental remittances being higher than normal [39,356] because of the preservation of plan benefits; high expenses in the pub [16195][ ranging from minimum wage increases to high repairs and maintenance expenses, increased food and liquor costs]; in degrees [16856] [increased labour and food purchases because of the rollout of some different food plans]; and in Wages and Benefits [24043] which are discussed a little further down."
2. What expenses are under the line item "Committees"? This line item had a 60% increase or $8,175 what factors contributed to this increase?
Quote: "This is an account that KPMG Consolidates. It’s made up of three accounts:
- Acct #5050 Student Handbook expense- $11,409.08 (PY- $5,236.88)
Because BCFS, who provides these services to NUGSS, made the decision to go ahead with the organization of these services solely in BC, there were some price increases on the components. 14-15 was the last year that the BCFS benefited from the Canadian Federation of Students' scale, and 15-16 these services were organized solely in BC; driving expenses up.
- Acct #5068 Board Social event expense- $97.12 (PY- $0)-
- Acct #5234 Orientation expense- $1,905.33 (PY- $0) This difference was because the purchase of Jars and Stickers for orientation were put into this account, as opposed to office supplies or some similar account."
3. The line item "Wages and benefits" also increase by 16% or $24,043 what factors contributed to this and were more staff hired this year?
Quote: "No more or extra NUGSS staff were hired this year compared to 13/14. If you’re referring to the last fiscal year [15/16] The answer would be yes, there were extra staff hired in September, as our front desk person moved into an education program, and NUGSS struggled to keep the 9-4 front desk business hours on a reliable basis. Because of this, two people were hired to fill the front desk position, where the total hours would be split, and the previous front desk person continued to fill the role of Ombudsperson while front desk persons were trained. I don’t believe these changes were expected to greatly impact the budget.
On the other hand, given that there was no Food and Beverage Manager in the Moose for over half a year, some of the duties expected of that position fell on NUGSS staff, so some hourly employees needed to come in on weekends to do some pub tasks, and keep up with the traffic that the Ombudsperson normally sees, as the front desk staff were not able to fill that role yet. There were some vacation payouts that had built up over previous years as well, but they had a minimal impact on this.
As well, there was a servers' minimum wage increase that took place in the fall of 2015 and another in the fall of 2016. This is important to consider because an adjustment made by KPMG after the audit for 26,096.87, was “to adjust Payroll Taxes payable for April, May and June payments that were made in July.” A portion of these remittances are related to TMP/Degrees wages, which would help explain why the TMP wages were down $19,557 from 2015 and NUGSS wages were up $24,042; an overall increase in $4,485 for the Society as a whole."
Thirsty Moose Specifically
1. A 52%, $17,665, increase in the line item "Insurance" was noted this year what was the cause of this increase?
Quote: "Insurance expenses generally increased for the Society from 2014/2015, but part of the increase that you see is that some more Insurance expense was assigned to the Thirsty Moose, instead of the NUGSS society as a whole, as management felt that more fairly reflected the costs of the Thirsty Moose, rather than the Society.
In 14/15, a portion of the NUSC Insurance was reallocated by KPMG to the general insurance account, and in 15/16, this reallocation wasn’t made.
Looking back to 13/14, the total insurance was $50,112, so the 15/16 amounts seem to be more in line with 13/14 than 14/15."
2. A 29%, $2015, increase in the line item "Bank charges and interest" was also noted this year what was the cause of this increase?
Quote: "Bank Charges and Interest had some Moneris (Debit Terminal) charges from the other degrees locations rolled into the moose. Normally they’re separated out, but challenges with the changeover from the previous manager to myself made it more difficult to separate them across all the revenue centers.
An adjustment by KPMG [6201.96] made at year end reallocated a lot of these debit terminal charges to this category."
3. A 52%, $7,273, increase in the line item "Office and general" was also noted this year what was the cause of this increase?
Quote: "Components of this account are:
Liquor Licenses: $2405.00
Business Licenses: $1148.00
Praxair: $6876.07
Hosting and Meetings: $3486.46 this account had some expenses for programming and catering expenses coded to it that would be more accurately recorded on other areas for the pub.
The Moose had some big breakdowns in 2015/2016 that caused staff to have to contract out to have fixed. As well, there was a leak noticed in one of our compressed lines rather late, causing us to order more compressed gas than normal for a period."
4. A 95%, ($1,024), decrease, in the line item "Equipment" was also noted this year what was the cause of this decrease?
Quote: "This is because a greater focus was placed on repair and maintenance over the year."
Were these increases taken into consideration before deciding to move forward on a referendum on increasing student fees?
Quote: "Generally speaking, the increases seen from year to year have fluctuated as the Moose has existed. For example, Insurance expenses changed from $46,768 in 2009 to $22,403 in 2010. The consistent piece that is very obvious, however, is the poor performance of the Moose. What’s been obvious since coming into my current role, is that many of the societies resources are poured in to ensuring the operation of the Moose. It drives professional (accounting, bookkeeping, insurance, payroll) costs up and takes a significant portion of the General Society wage expenses to run. As I’ve mentioned to my bosses and the Students in attendance at the AGM, poor performances outlined here demonstrate that the society is overstretching itself to be doing anything very well at all.
But to answer your question, the increases seen last year were taken into consideration, as the Board of Directors, in an attempt to be conservative in its fiscal estimates given the fragile state of the cash flows of the society, and with a focus on break even at the end of the year included the increases seen last year in their budgeted estimates for this year. The budgeted amounts for the Moose provided a basis for the revenue needed for students to be able to decide on whether the Moose should stay under the management of NUGSS so that NUGSS can continue to find a more sustainable operating model that reduces the financial drain on the society as a whole."
Referendum question
It is clear that the Moose is a huge part of campus culture. Students utilize the Moose often to let off steam and relax. It is also clear that the Moose is an economic drag on the organization. The question students need to ask themselves in this upcoming referendum is simply should NUGSS continue to run a pub. Historically they have not been able to make it a successful business. However, the opposite position might state that to make a pub work in a location like UNBC you almost need it to be run by a non-profit like NUGSS.
Regardless of where you stand the question will be posed to you on March 20th and 21st. For more information go to CFUR.ca.
**Update NUGSS Audit Financial Report 2015/2016** https://nugss.unbc.ca/wp-content/uploads/2016/11/2016-final.pdf
By Grant Bachand, News Director of CFUR Radio, Twitter @grantbachand
