Undergraduate senators last night acted on the advice of the ASSU financial manager to prevent rapid losses to the funds that protect student groups when students request special fees refunds.

According to a refund review presented at last night’s meeting, the projected increase in student refund requests for special fees funding could cause a premature exhaustion of the undergraduate “buffer fund” intended to buoy student groups hit hard by students’ decisions to withdraw financial support from various groups.

To date, the buffer has provided unequivocal financial stability to student groups recovering financially from the aftershock of special fees refund request rates. Going forward, the fund will continue do so, but now with more stringent regulations.

Beginning this quarter, the buffer fund will guarantee special fees funding for student groups up to 10 percent after refunds. Any deviation above this will require a dollar-for-dollar reduction in the group’s overall budget by the amount of the refunds demanded by students in the first three weeks of the quarter.

Although the measure was added to the joint bylaws during a reform of special fees policy in 2004, its implementation is unprecedented — until now.

“There is a rule in the joint bylaws that essentially orders me to take the refund buffer and match it up against the refund rate,” said ASSU Financial Manager Matt McLaughlin. “This rule has never been implemented because there’s never been a need to.”

Looking at trends over the past five years, McLaughlin has projected that by the end of fiscal year 2010, $90,000 will be returned to students in refund requests, while the buffer fund only ensures up to $50,000.

According to the provision, losses in special fees funding over 10 percent as a result of rising refund rates will be collected from each student group’s reserve first and then by budget line item.

Since special fees policy reform several years ago, students have been requesting special fees refunds at a lower rate than the actual refund buffer, which has bolstered the fund since its creation. But based on McLaughlin’s projections of significant increases in the demand for student refunds, the buffer fund could be in trouble if adequate action is not taken to save it.

Without the buffer fund, McLaughlin argued that student group budgets would be “raided very quickly.” He expressed concern for the future protection of special fees funding to student groups if the buffer fund becomes depleted.

“Funding on student life would come to an absolute standstill, and there would be no extra bucket of cash to honor any refunds through the system without delving right into the funds,” he said.

McLaughlin pointed out that he was unaware of the provision until now, but, because of it, is convinced that the buffer fund can be salvaged. Failure to follow through on such a provision would cut short a fund intended to provide rescue support for groups hit hard by refund requests, he suggested.

In order to secure some additional impact cushioning for the expected backlash of student refund requests, which could dip into special fees funding for student groups, the ASSU already tacks on an additional 10 percent to the total special fees sum billed to each student. However, in some cases, this 10 percent has not been enough.

“The question is,” he said, “am I ringing the alarm bell too loud with this projection, or am I ringing it too softly?”

To date for winter quarter, there have already been 250 more refund requests than last quarter.

McLaughlin’s most recent data also suggests that certain special fees groups are being hit upward of 12 percent due to special fees refund requests — only 10 percent of which will be covered by the buffer fund. On average, each group could owe $900 a year to account for refund rates, with some student groups, such as Stanford Concert Network (SCN) and the KZSU radio station, in the upper bounds of this sum.

“We’re swallowing some hard pills,” said Senator Zack Warma ’11, also columns editor for The Daily, adding that enforcing the measure is a “responsible step.”

Still, McLaughlin’s implementation of the measure does not cap the ballooning costs of special fees, which have increased from $90 a quarter three years ago, to $119 a quarter for the current fiscal year.

Ryan Peacock, financial officer for the Graduate Student Council, has said the body will hold office hours to give advice to groups on how to combat refund rates.

“If people don’t want to give their money to [special fees groups] we shouldn’t be bankrupting the ASSU because of that,” Peacock said, adding that student groups need to leverage better public relations with the student body to guarantee funding and reduce refund requests.

In terms of future measures to prevent the damage of refunds rates to student groups’ budgets, Senator Alex Katz ‘12 offered the possibility of a constitutional amendment that would hold voters accountable to fund groups that they approve through the special fees ballot.

“If someone can vote in favor of that group, then they need to be held accountable for that vote,” Katz said.

In a feedback questionnaire that garnered 40 responses from financial officers for student groups, the Senate appropriations committee yielded an average numerical approval rating of 2.91 on a scale of one to five, which Senate Chair Varun Sivaram ’11 said might suggest “some measure of dissatisfaction.”

Dissatisfied groups may be reacting to the significantly lower funding rate, which has decreased from approximately 70 percent in previous years to 30 percent so far this year. However, the constructive criticism will be used to improve the funding process, which continues to be challenging through the economic downturn.