The AMS is only a few years away from repaying what was once millions of dollars in accumulated operational debt.
At the AMS’s last Annual General Meeting on October 23, 2018, Managing Director Keith Hester announced that the society had generated a $900,000 surplus over the past year.
With the society’s operational debt just years away from being fully repaid and generous surpluses forecasted for the future, the society may be able to eventually operate without annual student fees — or at least reduced ones.
Today, that surplus is used to pay the AMS’s operational debt, which sat at $1.9 million during the 2017/18 fiscal year according to VP Finance Kuol Akuechbeny.
That debt accumulates when the AMS operates on a deficit, when they spend more money than they receive from student fees or generate with their businesses, such as food outlets.
It’s different from the long-term debt the society took on to pay for the construction of the Nest, which now sits at $64 million. Each student pays an annual fee of $100 towards this loan, which will be paid in just under 20 years.
Akuechbeny doesn’t expect future surpluses to be quite as high as this year’s, but has still budgeted a surplus of $300,000 to $500,000 for 2019/20 and onward.
Under these estimates, the AMS will pay off its remaining $1 million of operational debt in “two, three years.”
Reduced fees, improved services on horizon
Once that operational debt is paid off, Akuechbeny said the surpluses will go towards enhancing student services.
“Basically, the long term goal for the AMS is to make the Nest sustainable and make this society run by itself without collecting student fees,” he said.
The AMS currently receives over $21 million in annual student fees that finance events, its business, student services and society administration.
Every student pays a $41.15 annual membership fee to join the society and separate fees finance AMS-run programs like the Financial Assistance Fund ($12.00), AMS Athletics and Intramurals ($21.00) and Sexual Assault Support Services Fund ($3.63).
Akuechbeny admitted that self-sufficiency is an ambitious target and he does not expect it to be realized for many years.
“It’s hard to predict [how long it will take] now, given that we have debt not only from financing the building but also from operational debt,” said Akuechbeny, “so when we have that covered, then we'll be able to properly assess and see how we need to do that moving forward.”
There is some concern that since its customers are predominantly UBC students, AMS businesses should not be run for profit, even if surpluses do end up funding student services. Business practices that focus on the bottom line could result in overcharging students.
But in the wake of this recent surplus, Akuechbeny is optimistic.
“So far its seems that we, the society, are on a good track with the mission and also goal to achieve that financial sustainability,” he said.
“I know it’s going to take a long time, but that's the overall goal of the society.”