UBC’s Students' Union Okanagan (UBCSUO) convened its board of directors today at 6:30 p.m. to decide how to move forward following revelations of mismanaged funds and conflicts of interest exposed by a recent Ubyssey investigation.
The agenda for the meeting included only one business item: “Be it resolved that the board meeting move in camera to discuss employment contract and external review.”
“In camera” means the public is barred from those discussions. According to UBCSUO President Blake Edwards, the meeting is part of the board’s move towards addressing transparency and accountability issues that led to the union’s unprecedented deficit spending in 2015 and 2016.
UBCSUO’s deficits unusually large, although not financially ruinous, says GM
In 2015, UBC’s Students' Union Okanagan spent almost $1.6 million — a 70 per cent jump from 2013. During the same time, the union’s revenue decreased by eight per cent, going from $1.4 million to $1.3 million. The result was a deficit of $308,000.
But the union’s overspending continued and it ran another larger deficit in 2016, this time of $319,000. The deficits were not reported by the union anywhere in meeting minutes, nor were they addressed at annual general meetings (AGMs). The 2016 AGM didn’t even reach a quorum of 50 students — the minimum required to vote on bylaw changes.
The deficits also break UBCSUO’s bylaws, which prevent operating at a deficit. Each deficit was equal to approximately 23 per cent of annual revenue in the year incurred, a significant percentage compared to the occasional minor deficits run by the average student union.
“We’re not in financial hardship of any kind — the UBCSUO is quite fiscally strong,” said UBCSUO general manager Bob Drunkemolle in a January 18 phone interview. “But yes, when you’re taking on big initiatives that the executive weren’t used to … that can add up very quickly.”
Drunkemolle blamed most of the deficits on new initiatives, and called it a learning experience for a young student union whose campus is only 12 years old. He pointed to consistently over-budget blockbuster events like Frosh and Recess, overseen by VP Services Layne Richardson, as taking a significant share of the budget.
“We are definitely getting to the point where the executive [is] far better at budgeting for large events and concerts,” he said.
Drunkemolle said he’s been preparing manuals and other transition material to ensure fiscal responsibility in the future. He said the union’s next audited financial statements for their fiscal year end in 2017 will not include a deficit.
Drunkemolle’s confidence is not shared by everyone. UBCSUO’s Thursday meeting included voting on whether or not to conduct an “external review,” which Edwards said will likely be a “multi-faceted process similar to what the AMS conducts for governance, staff and businesses, but that’s something we [as a board] have to figure out if we choose to do this.”
An external review could also function as a forensic audit. For example, when Kwantlen’s Student Association was hit by a far-reaching scandal of nepotism, cronyism and mismanaged student funds, they hired accounting firm PricewaterhouseCoopers (PwC) in 2006 to investigate.
The Thursday meeting’s agenda also included reference to an “employee contract.”
UBCSUO employee wages double in three years largely due to general manager contract
“Wages and Employee Benefits” was the largest category of expenses for the UBCSUO in 2015 and 2016 — as they are at most student unions. But at the UBCSUO, wages more than doubled from 2013 to 2016, going from $190,000 in 2013 to $422,370 in 2016. This makes them approximately one quarter of UBCSUO’s 2016 expenses.
In January, The Ubyssey asked Drunkemolle about these significant wage increases at a time of steep deficit spending. He said they were caused by two employees being added and two updates to the collective bargaining agreements (CBA) being signed with the union’s BC Government and Service Employees’ Union (BCGEU) since 2013.
This is far from the whole story. Additional employees were not the main cause of wages doubling, nor were BCGEU CBA increases.
Edwards confirmed that the UBCSUO still pays four full-time BCGEU staff under the Wages and Employee Benefits line item as it did in 2013. Drunkemolle himself is the only other full-time employee who is paid by under this line item.
The UBCSUO does employ other staff to manage their businesses, but their wages are paid out of those respective businesses’ budgets.
Based on the public CBA between the UBCSUO and the BCGEU, the union’s four office employees were paid about $210,000 in 2016. That leaves another $210,000 unaccounted for — almost all of which is a new expense since 2013.
When confronted about this on Wednesday, April 5, Drunkemolle said he hadn’t told The Ubyssey anything about his contract because he was not a union employee, so his agreement was negotiated privately.
“It’s none of your business,” said Drunkemolle. “If I do release that [salary information], it will be with the board’s confirmation first, of course.”
However, student unions in BC are governed by the BC Societies Act. This act was updated in 2016 and now requires disclosure of any employee salaries that are $75,000 or more in the annual audit. Either way, Drunkemolle’s salary will have to be public soon.
Drunkemolle suggested that there is language in the Societies Act that allows for union bylaws to supersede the act with regards to disclosure of salaries. This language does not exist. He said he had been advised by the union’s lawyer to continue keeping his salary private.
The Ubyssey asked the same question of Edwards and he gave a much different response, citing the same lawyer as Drunkemolle.
“I consulted our lawyer and he said that we will have to disclose salaries of $75,000 or more in this year’s audit,” said Edwards.
Former UBCSUO executives confirmed that the general manager’s wages were $75,000 when he began the job. That means Drunkemolle’s wages more than doubled over three years. It’s unclear if these increases will continue annually as they have since 2013.
While he would not confirm details about his contract, Drunkemolle said that it was the UBCSUO student union executive who signed off on any changes to it. He also said it was the union who approached him with the contract changes, not the other way around.
Edwards would not confirm contract details either. He said he and his board had not approved any increases to Drunkemolle’s salary in his year, meaning they had to have happened under Rocky Kim and Tom Macauley’s presidencies.
These wage increases are comparatively high for a student union in BC, especially for one with only an 8,000 student population and a $1.3 million annual budget.
UBCSUO Vice President of Finance and Operations Daman Bual did not respond to a request clarification about the incomplete numbers Drunkemolle had provided.
When asked if the UBCSUO’s Thursday meeting was to discuss Drunkemolle’s “employee contract,” Edwards said he could not comment on details that would be discussed in camera.
—With files from Cameron Welch and Laura Sciarpelletti