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27 November 2003
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Federation of Students 
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Fed Hall will fall next year
In one year Fed Hall will be in financial trouble. Part of the Fed Hall fee has been going to Fed Hall operations and when this fee ends after fall 2004, that subsidy will end. Also next year the agreement between Feds and the university over the pub will end. It will have to be renegotiated this year. We are often told by Feds that the Fed Hall fee goes to pay off the Fed Hall "mortgage." While the fee does go to paying off the loan to the university, increased enrolment has resulted in surplus fee revenue amounting to about $80,000. Federation Hall and its fee were approved by students in a two-part referendum in 1983. With the referendum approved, UW Board of Governors approved the $7.50 fee that students still pay and will pay until September 2004. The Feds and UW then negotiated the Fed Hall agreement, which covered the payment of $1.5 million cost of construction over a period of 20 years as well as the schedule of loan payments to the university. Last year the loan payments, at an assumed seven percent interest rate, were about $185,000 while the fee revenue was about $265,000. The difference has gone into revenue for Fed Hall subsidising its operations. This subsidy that has been growing over the years as enrolment has outpaced increasing loan payments. This means that without the subsidy Fed Hall may have only broken-even two of the last seven years and lost money in the rest. The separation of "general office" expenses and food service costs makes judging the pub's financial performance more complicated. So it might have lost money in all seven of those years. There is no clear restriction against the fee subsidising our large night club. The referendum was not clear about where the fee had to go and the Board of Governors minutes refer to the fee being for construction and maintenance. With the expiry of the Fed Hall agreement and the mediation agreement after the Fed's liquor lawsuit, significant changes are required in how the pub operates and the agreement that governs it. That Fed Hall has needed this extra revenue shows that it is not operating with a good business model. Feds secrecy combined with the subsidy has allowed the problem to get closer unbeknownst to students. Students now should be a part of finding a solution for Fed Hall business model that will allow it to break even more reliably. Feds must open up the financial and other information so that we can see what is going on and what can be changed. |