SBC’s Capital Reserve Fund is at Stake: What Does This Mean?

This spring semester, the college administration notified the Student Budgeting Committee (SBC) that they are considering making changes to their ability to access the Capital Reserve Fund — essentially the backup funding source for SBC — which could impact SBC’s ability to circulate all the funds allocated for student activities. Uncertainty around how this policy change will impact funding for student activities moving forward is causing concern among some club members and representatives as they work to prepare budgets for the 2022-23 academic year. 

SBC is an institutional committee of Swarthmore’s student government. It is run by a chair and eight associates who work with the student government organization and office of student engagement to provide funding for chartered clubs at the college, funding that comes out of the student activities fund. SBC provides funding for clubs in two different ways. The first is through spring budgeting: clubs who wish to solicit funds from SBC firstly meet with SBC members to propose a budget for the upcoming academic year, and then they are allocated the amount of money SBC deems appropriate for the club. 

One SBC associate member, Powell Sheagren ’22, spoke in an interview with The Phoenix about how Spring Budgeting is going this semester. 

“It’s just dense. It’s fifteen minutes per club, and they’re just rolling through… it’s cool and it’s good to see what clubs expect to spend, and it’s [going to be] an interesting year because we didn’t do Spring Budgeting last year,” said Sheagren.

Not all clubs receive the exact amount they ask for at spring budgeting, usually because SBC doesn’t have enough funding to provide everything every club requests.

“Half the clubs we expect to budget have sent their forms in, and the amount they’ve asked for is more than our yearly budget, so we’ve been pretty aggressive in taking those numbers down because we don’t want to start off with allocating our entire budget,” said Sheagren. 

Another reason that SBC doesn’t allocate their entire budget during Spring Budgeting is to have money leftover throughout the academic year for supplemental funding requests — the second process through which campus clubs can request funding. 

Clubs can apply for supplemental funding from SBC at any point in the academic year, and they typically use this money for events not included in their spring budgeting proposal. 

SBC chair Kyle Lee ’22, spoke about SBC funding and supplemental funding for clubs in an interview with The Phoenix. 

“What we try to do is to get around half to two-thirds of all the budget allocations on spring budgets and the rest of the third is kind of discretionary spending for one off events that people didn’t really plan out a year in advance,” said Lee. 

Club treasurers have generally found spring budgeting more convenient than supplemental funding. 

“As a treasurer, I found spring budgeting easier because there was more guidance in filling out all the forms while supplemental was more do-it-yourself,” said Erin Kelly, treasurer of SAME, Swarthmore Association for Marginalized Students in Economics. 

Lee and Sheagren, however, agreed that supplemental funding was more convenient for SBC because the time between the money being allocated and spent was shorter, so the funding was more accurate. 

Each year, the funds for SBC are drawn out of the student activities fund. The student activities fund is created and replenished by the $400 fee students are required to pay as part of their yearly tuition. The fund typically begins with a balance of approximately $640,000, and SBC tries to spend the entirety of the fund each year.

“It’s an SBC goal to go through as much as possible because that’s students’ money that has to be spent so we want to make sure it all gets put into circulation,” said Powell. 

Lee also spoke about SBC’s emphasis to hit the $640,000 budget goal and the challenges of effectively allocating SBC funds. One of the main challenges he identified was that there is no way to pinpoint exactly how much money clubs will spend throughout the year, so the funds allocated are typically more than what ends up being spent. 

“We’ve consistently seen people only spend around 60-80% of their budget we allocate. The problem with that is once we allocate money to clubs we can’t un-allocate money to clubs, so if we give people their full budget and they spend 80% of their budget, at the end of the year only 80% of the student activities fund will be spent and that’s 20% of the fund locked up,” said Lee. 

One of the tricks SBC uses to hit its budget goal is to actually allocate over $640,000. 

“The way we’ve alleviated that is by assuming clubs are going to spend around 80% of their allocated funds and we are going to run over the $640,000 in funds by allocating an extra $100,000 give or take. So year-to-year we allocate around $740,000 and we see people spend about 640,000,” said Lee. 

The reason that SBC is able to allocate more money than the student activities fund is because of the Capital Reserve Fund. 

Each year, any leftover money in the student activities fund gets rolled over into another account called the capital reserve fund. This account provides SBC a safety net to allocate over $640,000 because they can dip into this reserve if clubs spend over 80% of their budget in a given year. Before this year, Lee reported that the capital reserve fund had about three-quarters of a million dollars. 

After this year, however, there is a chance the capital reserve fund will run out and that the SBC will lose its safety net. 

This year, the capital reserve fund was depleted at a much higher rate than usual. The main reason for this is because SBC allocated funds throughout the academic year on the assumption that each student paid the usual $400 for student activities. Students this year, however, only paid $200 each. 

“We went into this year assuming that because everyone was back [from COVID-19] we were all paying the $400 student activities fee. Apparently this year it was $200, and I was not aware of that. We thought we would have $640,000 in the student activities fund. There was only $305,000. Now, because we assumed there was $640,000, that means we allocated planning people would spend $640,000,” said Lee. 

Powell added that SBC felt blindsided by the realization that there was not as much money in the student activities fund as had been assumed.

“Nobody told us. Kyle walked in two or three weeks ago and was ‘like guys I have tea.’ And that was the first time he heard of it, that was the first time we learned of it, and if we had known this maybe we would’ve had a different perception. As it was, it was all kind of a bummer,” said Sheagren.

Since SBC only had half of their normal budget but was allocating money under the assumption that they had their full budget, SBC had to dip heavily into the capital reserve fund to meet all of the budgets they passed. This heavily depleted the capital reserve fund. Lee reported that he thought the reserve fund would have over $350,000; but instead, they are ending the year with only a bit over $100,000.

On top of it being depleted, Jim Terhune, vice president of student affairs, and others in the administration informed SBC that they are considering ending the roll over between the student activities fund and the capital reserve fund, which would leave the future of the capital reserve fund unclear. 

The announcement that the roll over could be ending has caused major problems for SBC because of the potential ending of SBC’s ability to draw from the capital reserve fund as a back-up. 

“If there is no capital reserve fund because it’s being depleted, and there’s no future source of money that can go into the capital reserve fund because they’re ending roll over from the student activities fund, that means we won’t have that safety net that allows us to take the risk of allocating more than the student activities fund. We can’t confidently allocate more than $640,000, and if we allocate $640,000 and people spend only 80% of that, we are back to where we started of there being $100,000 left over,” said Lee. 

Lee is also wondering where the extra money from the student activities fund would go without the capital reserve fund. 

“I’m not sure what the implications of that are but I suspect that if we have a $640,000 fund and we only spend $620,000 of that, $20,000 doesn’t get rolled into a reserve that we can tap if we go over our budget. It just disappears or goes into an account that students can’t control anymore,” said Lee. 

In an email to The Phoenix, Rebecca Weintraub-Barth, the director of student activities, said that at this point there is a meeting scheduled between OSE, SBC, and the Finance Administration Office next week to figure out the details of what will happen with SBC’s budget. 

She also added that she would have more information after the meeting. 

Still, many students have concerns about how these changes may impact funding for club activities during the 2022-23 academic year. 

The problems and changes that SBC has been dealing with this year and going into next year with spring budgeting have contributed to the impression around campus that they are running out of money. 

“My club at the beginning of the year wanted an end-of-the-year banquet, and SBC withheld the funding for the time being and said we could ask for supplemental funding later. But we heard that they weren’t giving out more funding because of whatever issue was going on, so it’s not possible for us to have an end of the year banquet anymore,” said Kelly. 

Lee, though, is not concerned yet about SBC’s funding abilities. 

“When you hear we are running out of funding, that means two things: one, that’s a good thing because that means all the students are getting their value out of the fund, and second, we are at the point in the year where we have to taper spending and a lot of big-ticket purchases will have to get moved onto next year,” he said. 

Sheagren also added that SBC is still providing clubs with money for this academic year. 

“We’re still managing supplemental funds. I’m not going to say we’re out, but we’re not going to approve anything that’s a large budget event you want to throw at the end of the semester because hopefully you’ve already requested funds for it,” he said. 

There are, however, some rumblings of concern amongst SBC members about what is going to happen if the capital reserve fund finally runs out. 

“Every year SBC goes over, that’s going to reduce the capital reserve fund, which is going to reduce the amount of the risk we can take aggressively trying to reach $640,000. That’s the context of why it might seem that we are cracking down on spending, because we’re kind of concerned the money is all going to go away and people will be left holding the bag and people won’t be able to get reimbursed because there’s no money left,” said Lee.