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MIT Needs Outside Bank Accounts

MIT Treasurer Allan S. Bufferd told student government presidents Monday that beginning July 1, 2002, MIT student groups will be required to close their outside bank accounts. This move would bring all student accounting under the control of Residential Life and Student Life Programs. The decision came after a committee from the Treasurer’s office, devoid of student members, investigated the status of student group bank accounts.

In what has become a standard procedure at MIT, the administration attempted to gain the rubber stamp of student approval by requesting that student leaders gather student input as they explain the administration’s decision. The Tech believes that eliminating outside bank accounts is a measure MIT is simply unprepared to take, one that will greatly handicap student activities while not doing much to decrease MIT’s liabilities.

The reason student groups and residences acquired outside bank accounts in the first place was that both students and MIT staff realized years ago that the Institute could not provide student groups with the services of a real bank. It still cannot today. In the 24-hour-a-day, seven-day-a-week world of life at MIT, student groups need to be able to write checks at a moment’s notice -- on or off campus. RLSLP currently manages over 700 student group accounts. Taking on the responsibility for 105 outside accounts created specifically because they are active with frequent transactions will delay check processing intolerably. Currently, cutting a check the same day through RLSLP is not always possible. Such a system requires students to temporarily foot the bill for many purchases. This puts an undue burden on the leaders of student groups.

Prepayment is even trickier as not only RLSLP is involved with arranging purchase orders. The Purchasing Office is set up to deal with MIT departments directly, not student groups which much request Purchase Orders through RLSLP. Thus POs can take more than a week to process. It is unrealistic to expect student groups to function financially a full week in advance simply to overcome MIT’s shortcomings in accounting services.

Internal accounts are lacking in many other areas. For example, MIT accounts do not generate interest. Corporate checks like the ones used for student groups are accepted almost everywhere, whereas MIT purchase order agreements are not. Bank statements arrive with regularity, whereas the Athena interface with MIT’s financial records is not user-friendly. The fact is, short of running a fully functioning Bank of MIT, student groups are going to find themselves in a position where their everyday operations are made more difficult.

The Tech also worries that eliminating outside bank accounts gives MIT undue control over how student groups spend their money. If MIT does not approve of an event or expenditure -- even one which falls completely within Institute policies -- what is to stop RLSLP from holding a check or delaying approval?

The administration expects that the closure of outside accounts will decrease MIT’s liabilities concerning student group assets. Simply eliminating student group and residence outside accounts will not give MIT the security it wants, because MIT has been no more reliable. In 1996, what was then the office of Residence and Campus Activities somehow “lost” $140,000 of student group money by what the office called mismanagement and accounting errors. Furthermore, MIT required that Bufferd be listed as a financial signatory on all outside student group accounts. Managing student group accounts is a larger task than overseeing outside accounts, a task for which the Treasurer’s Office does not have the resources.

Clearly July 1 is not a feasible date for this transition. MIT will need to hire enough workers and provide sufficient office space to handle the immense increase in accounting personnel and paperwork. A new system needs to be developed and MIT must train student groups and employees in the new system.

The optimal solution does not require the elimination of student group accounts. The Treasurer’s Office, upon identifying this problem, should have engaged student group leaders in order to devise a workable solution. RLSLP, the Treasurer’s Office, and student group leaders could establish criteria that student groups must meet in order to maintain an outside account. Requiring quarterly reports or conducting an annual audit of student group finances could improve the administrations oversight ability while maintaining student groups’ operational efficacy that comes with the ability to manage a bank account.

The Tech must acknowledge that, along with other accounts, The Tech’s own problems with outside bank accounts likely contributed to Bufferd’s desire to shut them all down. The prospect of eliminating outside bank accounts affects the long-term goals of this organization, and The Tech plans to join other student groups who would be dramatically affected by this new policy in altering this decision.

Student leaders are trying to grapple with how to respond to Bufferd’s decision, which was flawed from the beginning in that it did not reflect any real student input and in that it makes student groups suffer while MIT’s student finance systems remain inadequate. However, it is not too late for Bufferd to undo the potential damage to student groups from closing outside bank accounts. If a new system is immediately implemented to give the same level of flexibility, convenience, and independence offered by outside banks, student group accounts could be brought into MIT with little impact on the day-to-day operation of student life.

However, The Tech does not believe that MIT has thoroughly planned for such drastic changes as are needed to do so, nor does The Tech believe that such changes could be successfully implemented by July 1. Student groups must make their voices heard to Bufferd and the rest of the administration, since MIT has neglected these voices once again. If outside bank accounts will indeed be brought within MIT, a viable Bank of MIT must indeed be made a reality.