Editorial | Financial mismanagement

While United States lawmakers spent much of this year embroiled in a federal debt crisis, Penn’s Student Activities Council — which handles funding for undergraduate student groups — was implicated in a debt crisis of its own.

Because of years of SAC’s financial mismanagement, its reserve fund — which covers student groups’ debt — reached a dangerously low level last year. Standing at just $103,837 last semester, the fund had declined 75 percent from 2008 to 2010. It was in such a dire situation that SAC temporarily prohibited new student groups from receiving recognition and funding.

Acknowledging the need to correct its mistakes, SAC decided Wednesday to absolve student groups of all debt they had incurred in the past and institute stricter repayment rules for those in debt in the future. The new repayment policy contains a system by which groups that go over their budgets will be allocated correspondingly less money for the next semester — an effective and long-overdue way to make groups accountable for their spending.

But it absolutely should not have taken SAC so long to act. The reserve fund’s decline was evident for years; it decreased by half from 2008 to 2009, but that year’s SAC executive board did very little to address the issue. There were no penalties for groups who went into debt — which might explain why 40 groups out of a total of about 300 were in debt last year. SAC merely wrote up repayment contracts for groups in debt, but these contracts failed to get them to actually repay. Because of this extreme lack of oversight on SAC’s part and because there were no measures of accountability in place, student groups had little reason to mind their debt.

One drawback of SAC’s new repayment plan is that it will penalize future leaders of student groups for the transgressions of their predecessors. But there needs to be organizational accountability. Under the new plan, groups may be forced to undergo periods of austerity to avoid going into debt, but the alternative — that no one is accountable and there are no consequences — is untenable.

Resetting student groups’ debt allows them and SAC to start afresh. But this occasion must be the only time the debt is absolved. These groups are dealing with substantial sums of money; their financial actions have significant consequences. Going forward, each student group must take responsibility for its debt, and SAC must enforce appropriate oversight over the repayment process. The reserve fund is in too perilous a position for them not to.

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