By Mark Lynch
The Students’ Union are still in talks with the University over the students’ contribution to the construction of the Sports Centre, as they claim that the University are, from this year, charging each student €100 more than they should be.
Last year, SIN revealed that an interest rate was being applied to the students’ contribution towards the construction of the Sports Centre and redevelopment of Áras na Mac Léinn, without the Student’s Union having ever agreed to it. After a referendum in 2003, the Students’ Union agreed that each student would pay €100 every year, encompassed within the €224 student levy, to go towards repaying the cost of the construction of the Sports Centre and the redevelopment of Áras na Mac Léinn. That €100 yearly contribution to those construction costs from each student has been collected by the University since 2007, amassing over €17 million over that period. The Students’ Union are now citing documents referring to that figure of €17 million as the total amount students would pay for these construction costs, meaning the collection of €100 from each student should cease. Students’ Union President, Clare Austick, says, “There are references in certain documents relating to the cost of the Sports Centre that say students would pay €17 million. From this point now, the part we agreed to pay, the €17 million, is already collected”. The Students’ Union say that the only reason students are still being charged the €100 each every year is because the University applied a 5% interest rate to this student contribution. While the University maintain that this interest rate was standard practice with this kind of deal, Ms. Austick insists it was never an agreed term of the arrangement. “Students didn’t agree to it, students didn’t know an interest rate was being applied, it wasn’t mentioned in the motion that was passed (in 2003) and previous Students’ Union Presidents don’t remember it being mentioned either”.
Director of Management Accounting for NUI Galway, John Gaffney, says the University’s position is that this is “absolutely standard practice”. He explains why it was brought in; “This (the construction cost) was being paid in advance. The building was coming first and the money was coming subsequently. Effectively, the University was bankrolling the building by paying the money up front. There’s a risk that goes with this as well and a cost that goes with that risk”. He adds, “The basis for the interest rate was that money was being borrowed on future income due to come in. The interest rate was to recognise the cost of that money and bringing that money forward, over a period of time”. On top of this, he says the University doesn’t recognise the figure of €17 million as ever having been agreed, “I have never seen a documentation that says €17 million was what the students were going to pay”. The referendum that was passed in 2003 makes no mention of an exact amount students were due to pay, with the University keen to highlight two particular conditions that were explicitly included in said referendum. Those conditions are that the added fee to the student levy, to cover these costs, will not exceed €100 per year and that this added fee will be payable for a period no longer than 18 years. Mr. Gaffney continued, “If that figure of €17 million was concrete, it would have been in the referendum”.
The student levy for this academic year will still be €224, although the Students’ Union claim it should be €124, as €17 million has already been collected and what’s left is only the disputed interest rate. The Executive Committee have met with Mr. Gaffney and the NUI Galway Bursar, Sharon Bailey, to continue discussions into the matter. Clare Austick has revealed to SIN that the Bursar offered to lower the interest rate from 5% to 1.704%. This would reduce the amount of years that students would pay the €100. Ms. Austick, however, has said she won’t be accepting any reduction in the interest rate and will only agree to a complete dismissal of it. “Our position is that there definitely wasn’t an interest rate agreed. Even if it’s a smaller percentage interest rate, it’s still an interest rate”. Sharon Bailey has informed SIN of the reasoning behind the lower figure of 1.704%, “Based on representations made by the Students’ Union President in 2019 regarding the 5%, the Bursar proposed to amend the rate going forward. The lower rate reflects market conditions and is a better representation of the current cost of borrowing”. John Gaffney believes “5% wouldn’t have been unreasonable at the time (of the referendum)”, however acknowledges that the markets have changed.
The Students’ Union are eager to make students aware of this matter and have included a breakdown of the €224 student levy in the Students’ Union Diary for this year, which makes reference to the €100 student contribution to the Sports Centre construction cost. If the student payment period of 18 years is realised in full, students will continue to pay this €100 until 2025. However, the Bursar has told SIN that, “The debt on the Sports Centre is about €9m outstanding today. Based on current estimates, this debt will be fully paid by 2023. The University will continue to collect all outstanding debts on the construction of the Sports Centre”. This €9 million is due to be paid in full by students, with that €100 each, for as long as it takes. The Students’ Union President is hopeful they can prevent this, as talks continue into the academic year.