A decision 18 months ago to take money from Union reserves may have lasting repercussions for club finances. The reserves are now far below the amount needed to keep the organisation running should a traumatic event occur, leading to the risk of "belt tightening" this year.
In the spring of 2006 ICU Council approved £384,000 for the Beit redevelopment project, while it was apparently not in full possession of all the facts, nor understanding the consequences of its actions. The committee left ICU with just £215,000 in its reserve fund to cover emergency expenditure in the event of a major catastrophe or large cut in subvention from the College.
According to a paper by current DPFS Chris Larvin this expenditure "should never have been authorised", as it has left ICU with no means to cover its legal responsibilities in the event of an expensive unforeseen circumstance, such as a major fire in the bars. In that instance staff costs would have to be paid even with the bars having no income.
It is estimated that the reserves should sit around £1m, making them £600,000 adrift with more building work planned. The reserve would generally be topped up year-on-year through an operating surplus, but this is not happening quickly due once again to the redevelopment. Much of the extra money Miss Misbahuddin claimed to have sourced from College for the first phase was in fact a loan, not a donation: around £1m is being paid back over five years. Profits from trading are also unable to help with the reserve deficit, having been wiped out due to the costs of last year's restructuring. Indeed, part of the money for the new awning for the quad came from the executive committee's reserve fund rather than trading.
The auditors, ICU officers and College are now asking serious questions about how ICU has found itself in such a predicament. It appears to be the result of an ill-informed Council having the wool pulled over their eyes. In the sixth meeting of ICU Council during 2005-2006 ICU President Sameena Misbahuddin sought approval to spend £384k on the Union redevelopment, taking money from the Union's general reserve. The request was not presented as a separate item but buried in a report, allowing it to slip by with less scrutiny than would normally be expected. Council allowed the money to be taken from the reserve after reassurances from the President, being told that £215k would remain. Live! journalists questioned the wisdom of depleting the reserves at the time, but were told by the President that they were there for big projects such as the redevelopment and were wasted just sitting there.
It seems that for most of the 2005-2006 session Council was not properly informed of the Union's financial activities, with the masterplan being vigorously forced through.
With the finances in such a shambles the redevelopment looks to be even more of an expensive and lengthy proposition than it first appeared. Indeed, College seem likely to continue withholding extra money because of the mess, putting the next phase on indefinite hold.
Both the current President and DPFS have made it clear that no immediate cuts are planned, but the Union will have to make cost savings from somewhere. Failing that, Stephen Brown may have to use the skills he learnt last year as RAG chair and take some collecting tins to the Blue Cube.