NEWS RELEASE, 6/24/96
UC Berkeley moves to stem losses of student-run bookstore and provide needed services
|Q&A: The ASUC Bookstore Issue||
Berkeley -- The University of California at Berkeley today (6/24) took action to halt the extraordinary financial deterioration of the insolvent student-run bookstore and initiated a rescue plan so students will have access to books for the fall semester that begins Aug. 20.
"We have taken this action to address three critical issues -- to immediately stop the ASUC's enormous financial losses, to free student government to focus on student needs and to make certain the resources needed for our academic mission are available," said Horace Mitchell, vice chancellor for business and administrative services.
The store, operated by the Associated Students of the University of California in a campus-owned facility, has lost more than $700,000 since the beginning of the fiscal year, including a record loss of $248,000 in the month of May. This comes on top of $671,500 that an independent audit said the store lost in 1995.
Because it is the chancellor's responsibility to ensure the fiscal soundness of the student store, the campus today withdrew the ASUC's authorization to provide commercial services on campus.
To replace these services, the campus staff will establish and manage a self-supporting auxiliary enterprise to provide textbooks and other essential services, said Mitchell.
The student-managed store has been financially troubled for years and campus staff have attempted to assist student leaders and their professional managers time and again, said Mitchell.
"In recent months, with the situation deteriorating rapidly, we have redoubled our efforts to work with the student leadership and their executive director. While they have accepted the campus's financial support, they remain uncooperative in addressing fundamental management issues," he said.
Mitchell said the campus is prepared to offer employment to many of the ASUC's career and student employees, is inviting student participation in oversight issues and will guarantee funds to support student programs.
"This action affects only the ASUC's failing business operation. It leaves intact and in fact strengthens the ASUC's primary role -- the independent administration of student government," said Mitchell. To allow the ASUC's business losses to continue, he said, could threaten the viability of student government in the future.
In a letter delivered to ASUC leaders today, Mitchell said, "We do not take lightly the action of removing the business delegation. While we wish the situation were different, it is not and we are left with no choice. We respect the ASUC and recognize its history and continuing contributions to this campus. However the chronic inability to manage the business operations demonstrates that significant changes must be made."
Each year between $600,000 and $700,000 in funds from student fees are earmarked especially to support student groups and student government. This money is completely apart and independent of the ASUC's business operations.
Mitchell said the university will "work with the ASUC student leaders to develop a continuous source of revenue in addition to mandatory student fee funds to support student programs."
The ASUC was authorized by the chancellor to manage the bookstore under a Statement of Understanding. That authorization, however, required the business be run in a financially sound manner, which the ASUC has been unable to accomplish. "Their extremely dire financial picture speaks for itself," said Mitchell.
On May 8, with debts mounting and its bank-issued line of credit severely limited because of its perilous condition, the university agreed to one last-ditch measure -- a temporary loan to the ASUC of $1.2 million in funds and $800,000 in delayed payment of existing debt to the campus.
Earlier this month, the store's executive director told campus officials that without an additional $800,000 in cash, the store could be forced to close before the fall semester begins.
"I am hopeful that ASUC leaders will work with us in a smooth transition to assure that students are able to get the books they need on time. This is clearly in the best interest of the students and of the campus," said Mitchell.
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