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<div>Dear Undergraduates,<br>
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I hope all is well.<br>
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I must warn you that this email will be long and full of numbers; however, it concerns how your money has been spent, and some consequences for the upcoming year. There are parts of it that may be confusing - over the next few days, we will be posting graphics
on our <a href="https://www.facebook.com/undergraduateassociation">Facebook</a> page and
<a href="https://twitter.com/TheMITUA">Twitter</a> feed breaking down everything below, how it will affect students, and what we are doing moving forward.<br>
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The fiscal year for 2014-2015 ends on June 30, 2015. For every student group, this means that their finances from the previous year must be resolved by this date. The UA is no different - prior to this time, working with the SAO, we tally up the income and
expenses from the previous year, and determine our monetary situation moving forward into the next year. On Friday, while we resolved the numbers from last year, we encountered the difficult knowledge that the Undergraduate Association has run through its
money, and will end the fiscal year with a total balance of -$52,255.22 .<br>
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To understand how we got here, it is important to start with our approved budgets for the <a href="https://docs.google.com/spreadsheets/d/1Vv9IOCEPD504MO5zEjYRRswbN8o4zTid0mawN0zADmU/edit?usp=sharing" style="color:rgb(17,85,204)" target="_blank">Fall</a> and <a href="https://docs.google.com/spreadsheets/d/1WJstxovqqIX6pAehBkOlrfJwGMkALDcHU_GoQ94E6k4/edit?usp=sharing" style="color:rgb(17,85,204)" target="_blank">Spring</a> semesters
(these budgets can be accessed by clicking on either Fall or Spring). In these budgets, it was assumed that the starting balance of the UA at the beginning of the Fall 2014 semester was $392,878 in the Umbrella (one of two surplus accounts) account, and $85,060
in the Reserve account, for a total surplus of $477,938; however, in reality, the total funds available were $84,000 in the Umbrella account, and $85,060 in the Reserve account, for a total surplus of $169,060. So, the estimate for the Umbrella account was
off by a significant amount. We do not yet know the answer as to why this was the case.<br>
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With these false estimates in mind, the UA budgeted to withdraw $102,748.02 from the Umbrella/Reserve accounts in the Fall, and $103,622.90 from the Umbrella/Reserve accounts in the Spring. This would be a total draw of $206,370.92 from our surplus, which was
already over the total amount that actually existed.<br>
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In the meantime, the budget called for the Financial Board to budget $176,509.54 in the Fall semester, and $175,275.70 in the Spring semester, for spending on student groups. However, the budget also called for an "over-allocation percentage"; this is an amount
for the Financial Board to allocate to student groups over the budgeted amount, in order to ensure that student groups spent the amount budgeted. This "over-allocation percentage" was estimated to be 48.8%; or, student groups would spend 48.8% of the money
they were allocated. Accordingly, the budget called for the Fall allocation to be $362,626 , and the Spring allocation to be $360,091.16 . Unfortunately, the actual percentage of allocated money spent by student groups was 61.2%. Financial Board allocated
a total of $688,362.47 for the entire fiscal year, just under the total amount they could have allocated - with the larger spending by student groups, the total spent was $421,122, while the total we budgeted for was $351,785.24. This meant that student groups
spent $69,336.76 over the budgeted amount.<br>
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The difference between the estimated money available and the actual money available, the actual spending of the UA, and the actual spending of the student groups, versus our budgeted numbers, led to our deficit of -$52,255.22. <br>
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What this means, is that when the UA takes in its revenue in July ($315,406), we will have to pay off this deficit, leaving us with a total of $263,150.78 to spend for the 2015-2016 academic year. For reference, this is $4000 less than our total budget for
just the Fall semester last year. This money has to be used to fund undergraduate student groups, as well as keep the operations of the UA going. The reality of the situation also means, that we no longer have a surplus or reserve to draw upon this year, and
it will have to be built back up over the next few years. Student groups, as well as the UA, will take significant cuts to their funding this year.<br>
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In the immediate, short-term, the summer allocations for student groups were due to be delivered to Council (our oversight/legislative branch) on Monday, June 22, 2015 (two days ago). I asked our Treasurer, and our Financial Board chair, to delay announcing
these allocations until Monday, June 29, 2015, while they revise the funding amounts for each category, and also stop using the over-allocation percentage for the present allocation. At the very least, it can be expected that allocations to student groups
will be halved this term as compared to last year, as our budget has been halved. Even if we used our entire budget to fund our student groups, we would only be able to give them just over half of what they spent last year - and even less than half of what
they were allocated. These cuts will be communicated to student groups in more depth by the Financial Board.<br>
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It is here that I would like to take a moment and talk about student group funding. It is unavoidable that the summer allocations will take the full brunt of this present circumstance - we have to be prudent, and plan for the worst scenario. However, I want
to relay a few things. First, funding our student groups as much as possible is our top priority. We will be doing everything possible to cut operating expenses and initiatives to the bare minimum - and there will be some pain associated with that. In the
meantime, we will be doing everything possible to find additional sources of funding to minimize the cuts to student groups. This leads me to my second point. It is presently near the end of June - which means that the beginning of the Fall semester is still
two months away. We will be spending these two months doing everything possible to raise money and reduce the cuts for the Fall allocations cycle. <span style="font-size:12.8000001907349px">At the end of last year, we also established a Resource Development
committee, whose sole focus is finding new sources of funding. It is our hope that their efforts will further help alleviate the cuts over time. </span><span style="font-size:12.8000001907349px">Third, however, you should plan for cuts, and actively seek to
find funding through other means. We will assist you as much as possible in this process, and help student groups find funding outside of the UA. </span></div>
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Moving forward, our concern is understanding what happened and why. This situation, while unfortunate and difficult, provides our organization the impetus and the necessity to reform, and take a hard, honest look at the way we operate. While it may be painful,
it is absolutely necessary to know what we do poorly so that we can improve. Our goal, is not to only prevent this from happening in the future, but to establish a solid foundation of best practices around budgetary and monetary management, so that the UA
not only recovers but thrives in the future. In order to ensure that we take as insightful and honest a look as possible, and in the belief that there are questions that need to be answered sooner rather than later, we will initiate the process of establishing
an Independent Review Committee that will investigate what happened, how the UA manages its money, and make recommendations for changes. This committee will be comprised of two faculty, two staff and two students, and will be led by our Vice President, Sophia
Liu. The two students will be chosen from outside of the organization through the Nominations Committee, led by our Chief of Staff, Githui Maina. The membership and operational procedures of this committee will be presented to Council by July 15, 2015, and
voted on in the first Fall meeting in September.<br>
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Additionally, this is the first year that we are following the budget creation process outlined in the Constitution. Part of this involves a Special Budgetary Committee, made up of members of both the Executive as well as Council. It is our present belief that
many of these problems arose, because there were not enough critical eyes asking tough questions of the Principal Officers at the time. It is our hope, that this group will do so, and produce a better, more accurate budget for the Fall Semester. It has also
been our intention to establish a joint Council-Exec Committee on Government Accountability, so that there are more Councillors that have full access to the operational information of the UA, such as our funds. Having these additional people checking and ensuring
that officers and committee chairs are both properly performing their duties, as well as making sure the information they convey is accurate, will make it difficult for future governments to misrepresent, either intentionally or mistakenly, information.</div>
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If you have any suggestions or comments on how we should proceed, or ideas for funding, I ask you to share them
<a href="https://docs.google.com/forms/d/1FfkYz8F9R6DThZvhSwJg9xOneOFjg1mmy45EOGHVhx0/viewform?usp=send_form" target="_blank">
here</a>. We will review these and discuss them at length as we determine our plans moving forward.<br>
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Finally, I would like to end by saying that this crisis presents an opportunity for reflection, as well as a constructive effort towards building a stronger, better organization for the future. The UA is the student government of the world's premier scientific
and technological institution - and we deserve no less than the very best from our government. The present situation will cause pain for everyone, but it is my hope, that it provides a wake-up call that we need to create the changes that are necessary, and
make the organization that we all dream it should be.</div>
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<a href="https://docs.google.com/document/d/1iYAkXcn2SvpAQRldwSKb7QryJAFUPvelypwp4Fe0xUE/edit?usp=sharing">Here</a> is a copy of an email that was sent to Council, which is very similar to this email, however, it has a few more technical details. I invite you
to read it at your convenience.</div>
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Thank you very much for your time.</div>
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Sincerely,</div>
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Matthew Davis</div>
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Class of 2016</div>
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Massachusetts Institute of Technology</div>
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P.S. To the seniors on this list, you will be removed soon.</div>
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