History of CGE’s financial position up to present (December 2018) and some background leading to the following recommendations by the 2018-2019 financial committee:
The members of CGE have a history of supporting the financial health of our labor union, notably deciding not to lower our dues in 2014 when our bargaining unit numbers increased. Since that time, CGE has accumulated a rainy-day fund that has been placed in a savings account with a minimal interest rate. This low interest is a cause of concern because it is lower than inflation and is not a prudent means of investing the members’ assets.
In 2018, CGE’s revenue sharply decreased because of the supreme court decision “Janus vs. AFSCME”. Therefore, the budget for 2018-2019 was reduced to minimize expenses and a finance committee was formed to consider the long-term financial health of CGE and to provide a periodic analysis of the budget.
The financial committee recommends the following guidelines:
Regarding annual budgets:
- It is important to have a balanced budget and to maintain the rainy-day fund (quickly accessible funds, such as those in our savings account) for a time of financial crisis. If the membership numbers drop below a certain threshold (see below), it will be crucial to have funds to balance the budget. In 2018-2019, we proposed a deficit budget because of “Janus vs AFSCME”, however our membership numbers remained high and our per-caps dues to AFT-OR decreased allowing us to finish the 2018 calendar year and 2019 fiscal year without using any reserve funds.
- In Fall 2018 the Longevity Committee revised the CCGEE contract Section 15 A. (in addition to other revisions) to read as follows: In the event that the revenue of CGE is interrupted by membership levels dropping below either 50% or 900 members consistently over 2 continuous years, or CGE operates with a budget deficit for 2 continuous years, a Longevity Committee must be formed within 2 months of the following fiscal year. A Longevity Committee may be called by either CGE or CCGEE at any time. The Longevity Committee will be composed of two Officers and two CCGEE representatives. The Longevity Committee is authorized to declare a financial emergency.
Regarding banking practices:
- CGE should bank at a local credit union despite the financial benefits of banking at a larger financial institution because of CGE’s commitment to supporting not-for-profit organizations, especially in our community.
- CGE should not obtain a credit card at this time as the benefits of a business credit card through the credit union are negligible. Our debit card serves essentially the same purpose and is insured against fraud.
- CGE should hold enough liquid assets in a savings or checking account that can pay for one year’s worth of day to day operations excluding the cost of paying any affiliation dues. This includes enough liquid assets to pay for bargaining, staffing, and office expenses for one year. In 2018, we estimated this amount to be $150,000.
- Extra assets should be placed in a low-risk investment program that invests CGE’s assets locally to protect the members’ assets and ensure the long-term health of CGE. This type of investment also supports local business and avoids investing in companies that do not espouse the values of our labor union (see 2019 Investment Proposal below).
- If the Executive Council or caucuses or another component of CGE proposes an investment option (such as buying properties), that entity should write up a proposal to submit to CGE Executive Council and the Steward Council and/or general membership. Approved proposals should then be amended to this Financial Plan and updated on the website.
[Long-Term Financial Plan approved by the CGE Executive Council June 2019]
2019 Investment Proposal
We, the finance committee, propose that CGE buy $200,000 worth of 1 year and $100,000 worth of 3 year certificate of deposit (CDs) with the local credit union (Oregon State Credit Union) during the Spring Term 2019. Additionally, $70,000 will be invested in socially responsible mutual funds. The finance committee is currently researching mutual fund options.
Why a combination of CDs and mutual funds?
Although credit union CDs may grow slower than another investment option (like mutual funds or CDs through brokerage accounts), they are secure and the funds will be invested locally. There are also no fees associated with these CDs.
At the Spring 2019 all member meeting and through a member-wide survey after the meeting, members were given the opportunity to choose among the following 3 investment options: 1) no investment, 2) invest in CDs, 3) invest in a combination of CDs and mutual funds. The majority of members (65%) supported investing in a combination of CDs and mutual funds.
How will the CDs work?
The money put into these CDs will stay there for 1 or 3 years. This time is agreed upon with the bank before purchase. There will be a penalty if the money is removed before that time. The benefit is that the bank pays higher interest in these CDs than our savings account, but they are just as safe. For the 1 year CD we get 1.75% back semi-annually ($3,500/year on the $200,000 investment for 1 year) and for the 3 year CD we get back 2.45% semi-annually ($2,450/year on the $100,000 for 3 years).
How will the mutual funds work?
Research is on-going.
What do we propose for the future?
If CGE is comfortable with this type of investment after the CDs mature, then similar CDs or those that take longer to mature (and thus give a higher rate of return) should be bought in 2021 and 2022.
[2019 Investment Proposal supported by the general membership May 2019]
2019 Hardship Fund Proposal
We, the Steward Council, propose that CGE designate $20,000 for the Hardship Fund in the Winter Term 2019 to be used during the remainder of the 2019 fiscal year (ends June 30, 2019). This proposal gives background on the creation of the fund, instructions for administering and assessing its administration, and how fund amounts should be designated in future fiscal years.
CGE proposed the creation of a hardship fund last year (2018) in bargaining with OSU. We asked the university to put $50,000 into the fund to be available for members in the form of a one-time grant when they have general financial hardships. We did not win this proposal, but folx in our union have expressed interest in CGE starting its own union hardship fund and put a portion of our resources in the fund to accomplish the goal. This is not the first union hardship fund. Our classified workers union at OSU, SEIU 503, has a similar hardship fund already. Additionally, OSU may be more willing to contribute matching financial resources in the next round of bargaining (2020) if CGE has an operational program. A temporary Hardship Fund Committee composed of CGE stewards created this proposal.
The purpose would be to use dues dollars toward mutual aid efforts, which help lift up those struggling the most in our union. Not every grad worker gets paid the same; not everyone has the same cost of living; and many of our members are struggling to get through grad school due to multiple financial barriers and burdens they are experiencing. This hardship fund is an effort to increase equity within our union and our community. A resource guide will also be made available, in an attempt to provide more information about community resources.
Any OSU graduate student can apply for a hardship grant, regardless of whether they are a current CGE member or in the bargaining unit. For example, a part-time graduate student who is not currently a teaching or research assistant (and thus not in the bargaining unit) would still be eligible.
Funds are intended for non-recurring finances. This can include, but is not limited to, medical emergencies, legal services, housing deposits and evictions, housing maintenance, travel funds for a funeral, childcare costs, etc. Asterisks will be placed on announcements and the hardship fund application stating that if one doesn’t know whether or not their issue qualifies they are still encouraged to apply. Evidence for how the funds are spent will not be requested.
Procedure for Applying
A 1-page application will be posted to the CGE website and announced with our newsletters and an all member email. This application (included at the end of this proposal) will ask the graduate student to provide their name and contact info (to be redacted during the approval process) and a short description of the nature of their need. They will email this information to CGE staff, who will redact personal information and collect applications for the committee.
Procedure for Application Approval and Fund Disbursement
A 5-person committee composed of CGE members will be created to review applications. To increase fairness and limit bias, membership on the committee is anonymous, will rotate throughout the year, and members are required to have completed an implicit bias training. Additionally, names will be redacted from applications by CGE staff before review by the committee.
The committee will meet once a month to review applications. Following the CGE constitution, the committee will decide on applications to fund using consensus-based decision making. If consensus can not be reached, the committee shall revert to Robert’s Rules of Order at a three quarters (3/4) vote. For a committee of 5, this means that a simple majority (3 out of 5 people) can approve an application. Although the committee will meet once a month, if the situation requires expedited review, the committee can meet in person or online to review expedited applications. Approvals will not be approved on a first come, first serve basis. Information that is provided in the application will be used in an attempt to provide funds to those most in need.
Grants will be capped at $1,000 for members and associate members. Grants will be capped at $500 for non-members. The committee will attempt to evenly distribute the grants provided to grads across the budgeted period. For example, this first iteration of the fund has $20k budgeted for 4 months (March-June), so each month the committee could give 5 $1,000 grants, or grants totaling up to $3,000. If 0 requests are made in the first month, then the $20k budget would be redistributed across 3 months (6 grants each month or grants totaling up to $6,000) and so on. Applicants do not have to request the entire amount if it’s not needed and could receive multiple grants in a year, with an individual’s yearly cap being $1,000 for members and associate members and $500 for non-members. The committee will keep a detailed record and accounting of all funds distributed. This financial information will be made public and transparent for the Steward Council and CGE members.
Longevity of Fund
The initial amount designated for the fund is based on the surplus from the 2017/18 fiscal year ($21,805) and the financial security of the union under current membership levels (60%). During the summer of 2019, the budget committee should asses the profits from the 2018/19 fiscal year and the current financial situation of the union. If the budget committee and executive council feel that the financial situation of the union is secure and membership levels have not dropped below 50%, then profits from the 2018/19 fiscal year should be designated in the budget for the Hardship Fund. Committees overseeing CGE investments and fundraisers should considered designating all or a portion of profits for the Hardship Fund. In bargaining with OSU during the academic year 2019/20, a yearly matching of funds should be requested for the Hardship Fund.
After the budget committee and executive council have assessed the financial situation of the union and the procedures governing the Hardship Fund, they will submit before the final steward council meeting of spring term a summary recommendation for the steward council’s approval.
[Approved by the Steward Council February 2019]