In April 2021, NUI Galway students passed a referendum to rescind the existing €224 student levy and to replace it with a new €140 student levy.
The main changes to the levy were the removal of a €100 Sports Centre Levy, a reduction in funding for the Student Project Fund and the Áras na Mac Léinn Fund, and an increase in funding for the Students’ Union; Student Health Unit; Clubs; Societies; FlirtFM, and a new allocation to fund the CÉIM Peer Learning Programme.
The referendum was the culmination of several years work by successive SU Executive Committees who had repeatedly raised concerns with the University about the €100 allocation to the construction costs of the University Sports Centre.
The referendum provoked a strong reaction by the University. The University claimed that the removal of the Sports Centre Levy would create a €5.5m debt which would have to be funded from other sources. Several members of university staff (including members of the University Management Team) attended a series of information sessions where the Sports Centre Debt was defended, and the University Press Office was recruited to promote a “No” vote in the referendum. Despite all of this, students voted in favour of the referendum and the new €140 levy will be collected from September 2021.
| Old Student Levy | New Student Levy | Variance | ||
| Societies | €19.28 | €25.00 | €5.72 | 30% |
| Clubs | €19.28 | €25.00 | €5.72 | 30% |
| Students’ Union | €25.14 | €40.00 | €14.86 | 59% |
| Health Unit | €18.46 | €22.00 | €3.54 | 19% |
| Áras na Mac Léinn | €17.23 | €3.00 | -€14.23 | -83% |
| Flirt FM | €4.92 | €6.00 | €1.08 | 22% |
| Projects Fund | €19.69 | €5.00 | -€14.69 | -75% |
| Sports Centre | €100.00 | €0.00 | -€100.00 | -100% |
| CÉIM | €0.00 | €14.00 | €14.00 | |
| Total | €224.00 | €140.00 | -€84.00 | -38% |
To look at the Sports Centre Debt, we need to start at the beginning!
In 2003 students voted to introduce a €100 Sports Centre Levy to contribute to the construction costs of a new University Sports Centre and renovation of Áras na Mac Léinn. The levy was first collected in September 2007 and in the fourteen years up to September 2021 has yielded €20.9m.
Prior to the actual construction of the Sports Centre and the renovation of Áras na Mac Léinn, the total cost to be covered by the levy was expected to be €15.7m. This figure was set out in various updates on the Infrastructural Development Programme 2005/10 presented to the University’s Finance Resource Committee. Funding was also secured from the Galway University Foundation which included a €8.5m grant from Atlantic Philanthropies. An update on the Infrastructural Development Programme in March 2009 (after the Sports Centre had been completed) outlined the total amount to be covered by the levy at €17m.
Although the €20.9m paid by students clearly covers the €17m that was required by the levy, the University has a different view. Due to an interest rate applied by the University (see below) which was not agreed by students, as well as some peculiar changes to funding and expenditure figures a decade after the Sports Centre opened, the total amount to be covered by the sports centre levy (according to statements issued by the University) range from €22.87m in 2014, to €28.2m in October 2018. The University’s method of presenting what will be paid by the levy is to record costs and deduct other income, which leaves a balance, or deficit, as the amount to be covered by the Levy. Unlike the Infrastructural Development Programme updates which outlined fixed amounts, this method means the deficit changes when changes are made to the costs or other income figures. This is covered later in the document.
The latest statement issued by the University in February 2021 outlines the total deficit to be covered by the levy at €26.63m.
The Sports Centre Levy was to pay a portion of the Sports Centre constructions costs and Áras na Mac Léinn renovation costs. The University paid the costs upfront and relied on the annual levy to repay what it had spent. It was an arrangement that suited everybody – the Sports Centre was open for business only one year after students actually started to pay the levy, and the construction company was paid. The University also had a excellent facility to attract students and the Sports Centre operator (Kingfisher) also paid the entire running costs of the Sports Centre, as well as paying an annual fee to the University.
However, the University was not content with having a revenue generating asset largely funded by students. The term “self funded borrowing” was used to describe how the University funded the element of costs to be covered by the Levy, and recouped those costs from the levy. The University effectively lent money to itself. It also applied a 5% interest rate which it decided was reasonable because 5% was the rate charged by the European Central Bank at the time. But the European Central Bank was not involved in the Sports Centre. There were no banks involved. The University decided it would be a lender (to itself) and further decided that it was on the same par as the ECB!
This created a situation where students are effectively repaying a loan that the University borrowed from itself with an interest rate compared to the European Central Bank. The total expected interest generated by a 5% interest rate was €8.4m.
The University lent the money to itself, charged itself a commercial interest rate, and then expected students to pay for the fantasy and to accept it without question.
And that’s how the University created the Sports Centre Debt. The so called “debt” is the result of an internal accounting exercise. The outstanding amount is interest that the University wants to charge students for the pleasure of paying for a Sports Centre that generates an annual income for the University.
And don’t forget – students still have to pay to use the Sports Centre!
The University claims that the interest pays for the “opportunity cost” incurred by paying for the construction and renovation costs upfront. An opportunity cost is incurred when something is given up in favour of something else. It could be argued that the University incurred an opportunity cost because it used money from its reserves and investments to fund the Sports Centre. This would be an acceptable argument if the University did not own the Sports Centre, which is now a university asset and revenue generator.
There was no opportunity cost in funding the costs of the Sports Centre. It was a simple choice –
- Pay upfront costs and be repaid by annual Levy for a valuable revenue generating asset
- Maintain reserves and investments.
Either choice benefits the University, so there is no cost whatsoever.
Good question! The first place we should look for clarification about additional charges such as interest and any debt that has to be repaid is the loan agreement that is surely in place.
But there is no agreement or contract. Nothing even close! There is no record of any agreement, negotiation or discussion, and there never has been. This is not disputed by the University.
The University has peddled the line that there is “an implied contract”, but there is no such thing as an implied contract! It’s insulting to think that anybody would believe in such a silly notion.
What the University clings to as justification for charging students millions of euro in interest is that “self funded borrowing” was referenced at meetings of Finance Resources Committee several years after students had voted in the referendum. That’s what resulted in an €8.4m interest bill. In an update to FRC in April 2021, the University Bursar disputed the Students’ Union’s claim that the interest rate was never agreed by saying:
“The SU President is a member of FRC and has collective responsibility for decisions made at those meetings”.
Interestingly, the SU President was not present at the meeting of FRC in September 2007 which included an “Explanation of Self-Funded Loan Computations”. It’s worth noting that only four members of FRC were in attendance at that particular meeting.
In an effort to bolster the ludicrous argument that a lack of objection can be interpreted as consent, the University has claimed that annual statements were issued to the Students’ Union outlining the amounts collected and the interest applied. However, the first statement was only received in October 2014. Subsequent statements were issued in February 2017, October 2018 and February 2021.
The statements include a Funding column which represents “the contributions by the University and the Foundation as agreed at the commencement of the project”, and an Expenditure column which “represents the sum of the invoices/charges posted to the Sports Centre account”. The difference between the two is the amount to be paid by the Levy.
In the October 2014 and February 2017 statements, the Funding figure was €6m and the Expenditure column was €21.9m, which leaves a difference of €15.9m to be paid by the Levy.
However, in October 2018 a reconciliation of the account was provided which outlined the removal of NUI Galway funding in 2008/2009 and also in 2009/2010. The amounts were €1,052,000 and €1,057,789 respectively, totalling €2.1m. The removal of the funding had the effect of increasing the deficit which in turn increased the interest due. All in all, the reconciliation statement provided in October 2018, detailing changes applied to the period 2008-2010 had the net effect of increasing the Sports Centre Debt by €5.4m to €27.2m. The most sickening part of that increase is the additional interest as a result of the withdrawal of funding. Because the withdrawal of funding resulted in a higher deficit, interest was re-calculated, resulting in an extra €2.8m in interest.
In January 2021, an explanation on the removal of the €2.1m funding noted:
These journal entries represent the reversal of previous entries funding the Sports Centre from the University Income & Expenditure account. The original plan to fund the Sports Centre did not envisage any financing directly from the Income & Expenditure Account. The two entries referenced above should never have been posted to the Sports Centre account in 2008/2009 and 2009/2010. The removal of the monies was simply correcting a posting made in error.
In a further twist to the tale, the interest rate was reduced by the current Bursar in March 2019. As was customary by this time, the SU President enquired about the Sports Centre Debt and the application of the 5% interest charge. The Bursar replied to outline a reduction in the interest rate from 5% to 1.704%. It is very interesting that the interest rate which was apparently agreed by FRC, and included in the terms of some sort of implied contract, could be changed by one person on a whim! The effect of reducing the interest rate took €1.57m off the so called Sports Centre Debt.
In correspondence with the SU Board of Trustees in July 2021, the University President referenced the decision to reduce the interest rate and noted:
“this change recognised that those interest rates had gone down and reduced the loan for the Sports Centre accordingly, discussed with and approved by the Chairman of the Finance and Funding Committee at the time, who was also there (God rest him) when that decision was first made many years ago”
The revelation that the role of FRC was circumvented by having the Chairman approve decisions involving €1.57m makes the whole tale curiouser and curiouser.
It’s no wonder that students chose to remove the Sports Centre Levy in April 2021. Instead of anybody asking about the Sports Centre Debt, we should ask why the University collected €20.9m for a €17m (maximum) cost, and continues to insist that a debt, made up of interest which was never agreed, is still payable.
Following the referendum to reduce the Student Levy, the Students’ Union reached out to University Management to discuss how the new levy could be a levy for all, and to offer cooperation on any future levy for something like a new student centre. The offer was rejected by the University on the basis of there being no trust (although it is unclear how any trust was lost, or on what side it was lost), and the University insisted that the Sports Centre Debt remained outstanding.
In June 2021, Finance Resource Committee reviewed the university draft budget for 2021-2022. The Bursar’s Briefing Note at that meeting outlined:
“During April 2021, Students voted in favour of a change to the student levy. This will result in a reduction of the levy from €224 per student per annum to €140. The new levy abolished the payment of €100 per student per year towards the construction cost of the sports centre leaving the University with an unfunded debt of €5.5M. The University previously allocated funds (€1.25M) to areas, which also received funding from the levy such as the Health Unit, the Student Project Fund, Clubs, Societies, USI and the Students Union. The budget as presented has reallocated the €1.25M towards clearing the sports centre debt. This will clear the debt in a timeframe a little longer than would have previously been expected. It is expected, that this matter will be discussed further at UMT and FRC.”
At the FRC meeting, four options were presented to the committee. All four completely removed funding from the Students’ Union and the Student Project Fund to go towards the remaining Sports Centre Debt. Despite objections by the SU President, FRC recommended that money previously allocated to the Student Project Fund and the Students’ Union would now be used to pay for the Sports Centre Debt.
Put another way, the University is now using money from the annual Student Contribution (statutory charge paid by students, or paid by the state on their behalf), which was previously used to fund student activities, to pay an interest charge which was never agreed on a loan that never existed.
It is unclear why student services were specifically targeted to pay the Sports Centre Debt. It seems rash and irresponsible to completely remove funding from the Students’ Union and the Student Project Fund to pay for a supposed shortfall elsewhere. If we are to believe that this debt on a capital project exists, why have no other alternatives been considered? Will this happen again? If there is an overrun on a library extension, will funding from clubs and societies be removed to pay for it?
The University could make the very straightforward decision to adjust their accounts and eliminate any further projected income it expects from the imaginary Sports Centre Debt. It might be suggested that such a decision is not possible, and that accounts have been audited, but it is entirely possible.
Similar changes have already happened. The removal of €2.1m from what the University contributed to the Sports Centre happened almost a decade after the Sports Centre opened. That change in accounts was possible, as was the adjustment in extra interest charged to students as a result.
Similarly, the reduction in the interest rate effective September 2018 was decided in March 2019. This reclassified money already collected in September 2018, which would have been allocated in a budget approved the year before. The reduction in the interest rate also reduced the so called “debt” by €1.57m. Whatever mechanism was involved in reducing that expected income could easily be employed again.
The question is whether or not the University wants to make a change. The current management was not involved in the design of this mess, and it is unfortunate that they have to deal with it, but they have an opportunity to resolve this long running issue and to avoid a dispute arising between the University and the Students’ Union.
The Student Levy is the main source of funding for the Students’ Union. Before the referendum in April 2021, the levy contributed approximately €410,000. From 2021-2022, the contribution will increase to €650,000 (+€240,000).
It is important to note that the Student Levy is a payment that students have decided to make. No other college in the country needs a levy to pay for students’ union activities or clubs and societies. Since 1997, students in NUI Galway have paid a levy to subsidise student activity. Instead of acknowledging the generosity of students who pay a levy to assist in funding student services, the University has instead decided to remove the meagre funding it was providing to the Students’ Union.
The removal of funding for union activities by the University is a watershed moment. That funding came from the annual €3,000 Student Contribution. Every other institution in the country funds its students’ union, clubs, societies and all other student services from the Student Contribution.
The funding from the Student Contribution to students’ unions pays for core activities. Those activities include participation by union officers in various processes such as quality assurance, class representatives, student discipline, university governance requirements and general student representation. By removing funding, the University is choosing to abandon student representation. It is a disgusting tactic to cut funding for the representative body that advocates on behalf of students. To do so when the Students’ Union has exposed the shambolic nature of charging students interest on a made up loan is quite sinister.
The Students’ Union has already been in contact with the HEA and the Minister for Further and Higher Education, both of whom are concerned by the University’s short sighed and petty actions. Although we would rather focus on how we can welcome students back to NUI Galway, it seems some more time will have to be spent investigating how students’ money is being diverted to fund a fictitious loan.
Further updates will be added as they occur.
The Student Project Fund considers applications for Projects with a timeframe of up to three years and costing €5,000 or greater. Initiatives that substantially contribute to the realisation of the Student Project Fund Strategic Priorities are prioritised in the evaluation framework.
Under the €224 levy, students contributed €19.69 each and the University contributed €44.63 from the Student Contribution (annual €3,000 charge). The new €140 Student Levy reduces the levy contribution to €5.00 per student, a 27% reduction of the overall fund.
The Student Project Fund was a particular issue of concern to many students during the levy referendum. The Director of Sport & Physical Activity, Mike Heskin was quoted in the media as saying the Student Project Fund provided €1m for equipment over the past five years and that the new levy would set back sport at NUI Galway by at least 10 years. What was surprising in the levy referendum was the automatic assumption that the Student Project Fund would contribute so much money to clubs. Nobody doubts the importance of clubs or the vital role they play in student life, but then why is funding from the university so pitifully low? The increase alone from the new levy to clubs (€93,000) is actually higher than the amount contributed to clubs by the University. It’s no wonder the University is happy to deflect attention from its failure to fund sport and clubs, and have students focus on fighting for funds from the Student Project Fund
Following the levy referendum in April 2021, the University Bursar suggested that students no longer valued the Project Fund because they had voted in favour of the new levy. It’s a bit silly to isolate one element of the entire levy review and attribute everybody’s actions to that. It’s like saying anybody who uses a car does not value the environment!
The decision by FRC to remove the €500,000 contribution by the University to pay the fictional Sports Centre Debt is a further kick in the teeth to students. The Student Project Fund has funded a number of excellent projects over the years and the removal of university funding is significant.
The Students’ Union will fight for the reinstatement of funding for the Student Project Fund. The Students’ Union will also ensure complete transparency of the fund to allow all students, clubs and societies to see where funds are being spent.
