Editor’s note: This article was initially published in The Daily Gazette, Swarthmore’s online, daily newspaper founded in Fall 1996. As of Fall 2018, the DG has merged with The Phoenix. See the about page to read more about the DG.
The Student Budget Committee (SBC) is planning on moving its residual surplus funds from Swarthmore’s capital expenditures account into a fossil-free quasi-endowment, according to SBC Chair Roman Shemakov ‘20. The proposal, which still needs to be approved by the entire committee, would move the surpluses that SBC has accumulated over the years into a divested fund that three members of Swarthmore’s Board of Managers set up in 2015 with the investment management firm BlackRock.
Shemakov noted that in the current system, SBC’s end-of-year surpluses are deposited into the capital expenditures account, where they often sit without being utilized.
“[The capital expenditures account], most years, is spent on things like buying TVs or things around campus. [It] sits in an account by itself, and it gets withdrawn very rarely,” he said. “In the grand scheme of things, we’re losing money because of inflation.”
He noted that the endowment idea isn’t an original one, as other clubs on campus have set up their own endowments through the Business Office.
“The Business Office suggested this as an option they have for organizations on campus that has not been utilized in the past very often. Groups like Peaslee have their own endowments, so this would be a similar concept,” he said.
Unlike a typical endowment, the fund would be a quasi-endowment, which means that the money is retractable. So, if high-cost items come up, the necessary funding can more easily be pulled from the endowment. The existing fossil-free fund, which currently has $100,000 in it, is not the only divested fund that BlackRock manages.
“It’s something that BlackRock set up around 2013. Their first investor was Pitzer College, and Pitzer was the first college in California to divest their [sic] funds,” Shemakov said. “The entire point is that they want socially-conscious investors to put money into something that they believe in.”
Shemakov pointed out that the fund also appeals to socially-conscious investors who care about other issues as well.
“It’s not just fossil free, it’s also governance based, meaning that they don’t invest funds in companies that operate in non-democratic regimes,” he said.
While continued budget surpluses pushed SBC towards finding a solution, Shemakov emphasized that last year’s referendum on divestment also played a role.
“We had a referendum last year on divesting funds, and we voted for it, but nothing really came out of it,” he said. “So, this is a step to follow that decision by the student body to divest.”
In addition to a move towards a quasi-endowment, SBC also plans on pursuing policies to encourage student groups to spend more money, one of which was the recent SEPTA Pass program.
“Right now, of the almost $400,000 allocated during Spring Budgeting, only $70,000 has been spent. So over $300,000 is just sitting there,” he said.
However, Shemakov noted the difficulty in forcing groups to spend money, and said that should the large surpluses continue, SBC would take a look at reducing the student activities fee, a $398 fee students pay in addition to tuition.
“People shouldn’t be paying money that doesn’t get used,” he said.
Assistant VP of Finance Alice Turbiville wrote in an email to The Daily Gazette that with respect to the student activities fee, SBC is independent of the Business Office.
“The budgeting for the student activity fee is managed by SBC and so, it would be up to SBC whether [returns from the endowment] reduce the student activity fees or whether it expands budgets for activities,” she wrote.
Once SBC approves the proposal, it will get sent to the Business Office for final approval. For now, while the fossil-free fund option remains the most feasible option, Shemakov also indicated there is potential for funds to eventually be managed by student groups on campus.
“It would be interesting, but it’s a lot more complicated. Also, how do you make sure that students don’t invest all the money in Bitcoin?” he said.
Featured image courtesy of natctr.org.
