The Other Side of Student Fees

As a graduate student employee that has been actively engaged in contract negotiations with the University of Washington over the past several months, one of the most confusing aspects of the whole process has been the university’s position on student fees. One of our core bargaining demands is that academic student employees (ASEs) should not have to pay to be employed at the university. As negotiations have developed, we’ve heard a few different narratives from administration about why these fees are necessary. First is that fees pay for valuable student services, voted on by students, and therefore should not be waived for ASEs. My colleague and fellow UAW4121 member Andrea Canini has demonstrated why this is an inconsistent argument based on the university’s past actions. The second narrative is that the university has no money to cover these fees, which deserves further scrutiny, as the administration has been less than forthright about how the fees fit into their finances.

The university first told us they didn’t have any money during contract negotiations in March. It was made clear to us that these were challenging financial times for the university across the board, and that hard choices would have to be made by everyone. I was skeptical about this answer since the fees we are asking to be waived or remitted seemed small compared to UW’s nearly $7 billion dollar budget. Academic student employees currently pay $951 a year in fees, with 4,000 ASEs subjected to fee payment. This amounts to $3.8 million collected annually from ASEs. It was only recently that UW’s head of the Office of Budgeting and Planning, Sarah Hall, said that the Dental School’s $29 million deficit was a “small piece of the pie” of the University’s overall budget and did not create financial problems for the University. Moreover, I had read in the most recent UW financial report that between 2016–2017 UW had seen net revenue increases of around $200 million. There is even a revenue category simply labeled as “other” that saw an increase of seven million dollars, from $138 million to $145 million, plenty to cover the costs of our fees. As these numbers didn’t immediately scream financial crisis, UW administration told us that they would bring in the executive vice president of Finance and Administration, Jeff Scott, to better explain the university’s financial predicament.

In mid-April, Jeff Scott gave a presentation to the union’s bargaining committee, as well as over 100 rank and file members that showed up to negotiations. This presentation was similar to one presented to the board of regents in November (found on page 287 here) and provided valuable historical contextualization for the university’s current financial situation, particularly as it pertains to the post-2008 recession. We learned that in the wake of the financial crisis, UW strategically took advantage of a cheap housing and labor market to unroll massive building projects for both institutional and student purposes, a claim echoed in the board of regents meeting of April, 2010. These buildings would not only keep pace with a growing university, but also act as sound financial assets against which the university could improve its credit rating and increase its debt-spending capacity. However, as Mr. Scott explained to a packed room of union members, rising costs of land and labor in Seattle over the past eight years have reduced not only the profitability of each further building project, but also the amount of debt spending the university can engage in while retaining its currently strong credit rating.

This is where fees become so important. In order to keep their high credit rating, the university needs to be able to show that it has enough money to pay back the debt taken out from past building projects. Interestingly enough, this aspect of the fees was not mentioned in President Cauce and Provost Baldasty’s recent blog post. For example, the full definition of the Student & Activities Fee that we have to pay is “to recover expenses for: funding student activities and programs of their particular institution, or the payment of bonds heretofore or hereafter issued for, or other indebtedness incurred to pay, all or part of the cost of acquiring, constructing or installing any lands, buildings, or facilities.” The definition for the IMA Bond fee that we also have to pay is “used to pay debt service associated with the IMA building and associated recreational facilities.” What this means is that our fees go toward servicing the debt of the past, in order to secure the ability of the university to continue taking on future debt, which eventually must be paid off by, you guessed it, student fees. This aspect of debt servicing has been completely absent from the university’s narrative and deserves to be addressed.

As Mr. Scott explained, the success of the post-recession economic model was due to cheap labor costs, which meant workers had to settle for less just to survive. Now that wages have risen, albeit largely in line with the rising cost of living, this economic model is no longer as profitable as before. Despite all of this, there was little in Mr. Scott’s presentation to suggest that the $3.8 million in fees would cause any type of serious financial burden for the university. The concluding slide to his presentation (page 325 here) notes that, “2017 financial performance [is] significantly better than 2016. Debt capacity is slightly higher than expected. The current capital plan can be funded with little risk to the University’s access to capital, provided markets remain stable. Opportunities exist for alternative funding structures.” Mr. Scott’s presentation is just one instance in a series of mixed messaging from the university. When they speak to us they have no money, but when they speak to the board, finances are improving, and future spending poses little risk to the university’s access to capital.

For years now, the university administration has been touting their commitment to equity and inclusion on campus and has done some good work in raising the dialogue about this. However, over 82% of ASEs are rent burdened, meaning that we pay over 30% of our income in rent, which hurts underrepresented communities the most. Insisting that rent-burdened ASEs continue to pay fees, despite an inconsistent reasoning for their financial necessity, runs counter to any credible claim that the university administration is committed to improving equitable working conditions on campus.