Statement relating to questions on Union finances

I want to clear up some issues concerning the matter of the finances of the University of Limerick Students’ Union Services Ltd (ULSU Services) which have arisen over the past few days

I would rather have had full facts and audit complete before having made this statement, but my hand has been forced on the matter and I do not want misinformation and panic to distract from the real issues facing students.

ULSU Services is a wholly owned subsidiary of ULSU. The company is ultimately owned by the transient student body of the University of Limerick.

Over the past number of years ULSU Services has been trading poorly. In April of this year the company was restructured and positions were made redundant. An overall Commercial Manager was appointed. Summer is a traditionally slow trading season for ULSU Services and 2 of the 4 operations are closed for the summer months to reflect the trading realities. This summer, business on the campus was slow due to a reconfiguration of foreign language course offerings. This has been felt by all campus companies and ULSU Services is no different.

During the period where ULSU sought a new accountant following the departure of the Secretaty General the sabbatical officers were left to manage cashflow. This is not a function that transient officers are or should ordinarily be asked to undertake. Once a suitable candidate was found to fill the role of Group Accountant and he had begun work, he sought a meeting with me and the General Manager to advise a spending freeze. We could not agree to a blanket spending freeze, but did agree that only previously authorised and essential expenditures would be spent.

In July, in the absence of the physical ability to have a meeting of the Executive I contacted all members of the Executive with the following email.

Dear Exec,

Please note that anything contained in this email is not for discussion or information outside of those addressed until such time as I have spoken with all stakeholders and informed you otherwise.

I'm sorry to be the bearer of bad news, but there is a financial situation that has arisen through extraordinary expenditures throughout this year (5 figure recruitment costs being just one) as well as a poor trading year in the services company.

Our new Group Accountant Barry started on Monday and requested to meet with me and the new General Manager Philip this afternoon. There is currently €106,000 in Union Group bank accounts which will not meet requirements (mainly of the services company) until capitation is received and the trading season begins again.

As it stands the services company is eating into the Union's cash. This has been halted to an extent with the arrival of a Commercial Manager who has visibly transformed the operation and is keeping a close eye on all costs, however the costs of the commercial operations for the summer months have and continue to exceed the income.

The 2 substantive items I would like you to consider and revert to me on (by 1pm on Tuesday) are:

·        To cover capital items (minibus and radio station fit-out) I am requesting that I be authorised to apply for medium term loans of 3-5 years (should leasing not be available) not exceeding €70,000.

·        To cover on-going expenditure, such as salaries I am requesting that I be authorised to access the Union reserve and transfer this to the current account and to increase the overdraft available to us from €50,000 to €100,000.

Please be re-assured that all expenditure is under review as a result of this afternoon's meeting, but that we will endeavour to continue to operate more efficiently within the resources available.

These measures are temporary until capitation is paid by the University during the first week of October. I will be requesting a revised accounting procedure to ensure that a future Exec isn't receiving a similar email in a number of years.

Please accept my sincere apologies that this situation has arisen. In a break from past practices this information will be made available publicly as soon as all stakeholders have been consulted with. I believe in transparency above all and intend to outline the situation to all members of the Union at the earliest opportunity, but would remind you again not discuss this outside of the recipients of this email until that time.

I would ask you all to include your understanding of ULSU Services in the Handover Document for your position.

Gach dea-ghuí

Derek

The Sabbatical Team also met and agreed the measures following clarifications and discussion of concern.

All staff members were made aware of the financial situation in an email on the 3^rd of August, which they became free to discuss with anyone they so wished on the 4^th of August. It outlined that this is not a long term issue for ULSU, but for ULSU Services which is being addressed by the new management at the company. This email also outlined that management accounts, once prepared and approved would be published and made freely available. This remains the intention.

The matter which has led to the necessity of a statement concerning whether €60,000 in underspent administrative charges through Clubs and Societies was utilised is a moot point. Clubs and Societies have this available to them. All money held in bank accounts of the Students’ Union belongs to students and as the head of the Union I, along with the Executive, must ensure it is utilised for the ultimate benefit of students.

To ensure staff continued to be paid and that on-going expenses could be met I recommended the actions above. In the end, due to prudent financial management of the reserve it was not necessary to extend the overdraft.

At 30 September 2010, the date of the last audited accounts ULSU held reserves for clubs and societies nominal codes (cost centres/expenditure lines) of €158,740. This information was and continues to be available to anyone who wishes to call to the Union to view accounts. That figure was an increase of €21,742 on the previous year and includes vehicle and safety net reserves. It forms part of the Union reserve. I do regret that some members of the Executive felt that this was an oversight in forming a decision, for me the best interest of the student body dictated that as a Union we must be unified for the benefit of students.

The simplest decision in requesting to access the reserve was that reserves are held for “a rainy day” and at the time of recommendation there were storm clouds gathering. The money belongs to the students and the recommendation was made on my belief that it was in the best interest of students.

The issue that most concerns me is whether ownership of ULSU Services continues to be in the best interest of the student experience. There is no doubting that as a standalone commercial entity with the sole aim of making profit that some of the operations of ULSU Services would have ceased, however at the moment it is the view of the Board (and the Executive which was briefed on the financial situation at ULSU services following the 2010 Audit and controls the Board) to continue providing the service.

I am wholly in support of Clubs and Societies in this matter and recovering any monies owed to ULSU by ULSU Services over a sustainable period for both entities is a priority of mine. Attempts to recover loans to ULSU Services over the last number of years in a condensed period have led to an unsustainable circle whereby the sustainability of the company has been threatened. Loans will have to be recovered over a longer period and it is vitally important that students utilise the shops at Cappavilla, Dromroe and the Courtyard as well as Uni-Cycle to ensure the natural balance whereby ULSU Service is a net contributor, not only on paper, but in cashflow to ULSU is returned to.

Any claims to the effect that ULSU is engaged in financial mismanagement are unfounded; and I reiterate that I am fully committed to recovering the loans from ULSU Services.

Once audited accounts at the ULSU Services are complete and have been approved by the Board I will make all members aware of the situation as I had committed at the end of July. However without full knowledge I do not intend to engage in guesswork.

If there are any further queries relating to the above I will make myself available to discuss them with anyone who wishes to arrange to meet with me over the coming days.