MIT to End Support Of Outside AccountsBy Jennifer Krishnan
Student groups will no longer be able to hold outside bank accounts beginning July 1, according to a decision by MIT Treasurer Allan S. Bufferd.
“There have been some difficulties” with student groups’ outside bank accounts, Bufferd said, “and the Institute is now prepared to provide the services provided by outside banks.”
Groups recognized by the Association of Student Activities, as well as MIT residence halls, have been allowed to maintain accounts at outside banks using MIT’s name and tax identification number since 1996. These groups are also entitled to accounts managed by the Student Activities Office.
The internal accounts include a wide range of services not provided by most banks. However, they require an officer of the Student Activities Office to sign all checks, a process which generally takes two to three business days. Student group officers cannot write checks on their own.
Laurie Ward of the Student Activities Finance Office said that currently 58 ASA groups, 12 residence halls, several hall floors, and several theme houses have outside bank accounts. Ward said all groups with outside bank accounts will be required to close those accounts and transfer the balances to their MIT accounts by July 1.
Decision made without students
“The decision was made in the last couple of weeks,” Bufferd said. “The question of opening bank accounts is vested in the [MIT] Treasurer ... but I consulted with the Chancellor, the dean’s office, and other interested parties.”
“It came as a surprise to all of us [students],” said Dormitory Council President Matthew S. Cain ’02.
“If MIT came to us and said, ‘Hi, we do not like these outside bank accounts. What do we need to do to make them usable to students?’ than would be one thing, but this seems a lot less friendly,” said Roger A. Ford ’02, chairman of the Lecture Series Committee.
Leaders of the Undergraduate Association, the Graduate Student Council, DormCon and the ASA were notified of the policy change via e-mail on Monday.
On Tuesday they met with several interested parties, including administrators at the Office of Residential Life and Student Life Programs and representatives of the Office of the Treasurer. Bufferd was not at the meeting.
The goal of the meeting was “to figure out how to tell the MIT community about this change,” Cain said. However, “that was not what the students wanted to do.
“We’re very frustrated by the lack of student involvement in this decision,” Cain said. This change “directly affects the 60 to 70 treasurers that deal with these accounts. It also affects the other club officers and all the people who buy things and have to get reimbursed.”
Bufferd and Ward said the change would make life easier for student groups.
Monitoring by RLSLP “will make sure there’s no chance for ... embezzlement. It affords [student groups] extra protection,” Ward said.
Timing of policy draws criticism
The timing of this decision leaves little opportunity for students to respond to or amend the policy, which worries many student leaders. “I’m worried about the timing,” Ford said. “Two months to comply is not a lot of time.”
Cain said that choosing the end of the school year for such a policy change was especially rough since most students were preoccupied with projects and upcoming final exams, and many students will be leaving the area for the summer.
“And they weren’t even planning to announce it yet,” Cain said. “It’s going to be a real mess trying to get this all straightened out.”
“I think the timing is hard for students,” Ward said. But “business is slower at the end of June,” making it a logical time to make the change from MIT’s perspective.
Reliability, options major issues
“I don’t agree with [the policy change],” Cain said. “Right now the internal accounts don’t have all the features, options, and convenience of the external accounts. They offer some services, and that’s why I’m glad they’re an option, but they shouldn’t be the only option.”
“It hurts the groups that deal with lots of cash on a weekly or monthly basis,” Ford said. “I think it would be difficult for LSC to operate without an outside bank account.”
“The removal of external bank accounts would be detrimental to student life and dormitory communities,” according to a DormCon statement, which passed unanimously.
“An outside bank account is really helpful to a dorm government,” said Jennifer C. Shih ’03, president of Burton-Conner House. “It allows us to quickly reimburse people and to easily write checks for large purchases.”
“There’s a big difference between having to go to the Student Center during business hours [and] walking down the hall to treasurer in your dorm,” Cain said.
“Most houses give a fair number of reimbursements,” he added. “[One dormitory] treasurer estimated that his house averaged about one check per day. That’s a lot of paperwork and hassle if you go through” the Office of Residential Life and Student Life Programs.
Infrastructure changes on the way
“The [tools] for free and easy access to conduct business as a student organization need to be there,” Bufferd said, adding that RLSLP would step up its services to provide “at least the same level of service” as outside banks.
Currently, someone from the Student Activities Office must countersign all checks written from internal accounts. “It is my understanding that that’s going to change,” Bufferd added.
At the Student Activities Finance Office, three to four people manage about 700 student group accounts. Ward said they were “looking at our staffing needs” and would probably soon be increasing their staff size, as well as improving their services.
For example, processing requests for reimbursement checks currently takes two to three days, but “we’re looking make it more responsive,” Ward said. She added that they were working to improve the online account access for student group accounts.
“They’re aware that their services can be improved, and we gave them some things to work on that they weren’t aware of,” Cain said. “I think they genuinely will try to bring service up to the level of outside banks, but I’m pretty sure it can’t happen by the first of July.”
Previous attempts failed
This is not the first time in recent history that MIT has implemented this policy restricting outside accounts. Between 1993 and 1996, student groups were forbidden from having outside bank accounts using MIT’s name and tax identification number.
At the time, there was only one account used by all the student organizations.
“It was a mess,” Ward said. “Some groups lost money” because payments made to them were misdirected, and charges were not recorded accurately.”
In 1996, what was then the office of Residence and Campus Activities lost approximately $140,000 due to accounting and computer errors over the course of three years.
Because of the Institute’s inability to deal with the the high volume of transactions, in 1996 student groups were once again allowed to have accounts with outside banks.
The current system, where each student organization has its own account, was piloted with a small group of organizations in 1998 and became a fully operational system the following year, Ward said.
Between 1993 and 1996, several student groups got waivers allowing them to keep their outside bank accounts, Cain said. Among these were LSC, Alpha Phi Omega, and The Tech.