Oppose the Student Assembly’s Student Run Grocery Store Plan

Vice President of Finance Matthew Stefanko ’16 and Arts and Sciences Representative Emma Johnston ’16 have proposed to the Student Assembly (SA) Resolution 65, titled “Developing and funding a student-run grocery store.”

This resolution’s abstract describes its intent as the following:

“This resolution takes $400,000 from the Students Help Students Grant and uses it to develop a student-run grocery store that aims to increase food literacy, decrease food insecurity, and provide easier access to groceries in Anabel Taylor Hall.”

Due to the numerous inadequacies in the proposal (link to text), opposition to it and the student-run grocery store (SRGS) has united students from across the political spectrum and from varied student interest groups. Given the large amount of money involved, the source of this money, and the lack of detail regarding its spending, this resolution should be voted down or tabled for further review.

The following are four major flaws with Resolution 65 (R.65):

1) To fund the student-run grocery store, R.65 raids the Students Helping Students (SHS) fund of $400,000, which is 25% of the fund’s principal.

2) There is no proposed process or metric by which financial need will be assessed in regards to the SRGS’s food scholarships.

3) R.65 cites a non-statistical study as the justification for the SRGS.

4) Viable alternatives to addressing food insecurity issues exist, but have not been examined.

1) To fund the student-run grocery store, R.65 raids the Students Helping Students (SHS) fund of $400,000, which is 25% of the fund’s principal.

Only $75,000, or less than 20%, of this $400,000 is going directly to food subsidies. The rest is going towards capital costs and start-up costs.

SHS is an emergency financial aid fund which the SA developed in 1985 in order to provide immediate grants to students in the cases of “family crises or unexpected crisis.” R.65 indicates that the principal of SHS stands now at $1.6 million and generates annual interest of $75,000. The resolution states that over the past six years the average withdrawal has been $16,596.24. The fund also projected to spend $30,000 per year in summer internship grants (according to R.65, though other sources dispute this figure), producing an average yearly payout of $46,596.24. According to R.65, the 25% reduction in the fund’s principal will decrease yearly interested earned to $60,000, thus providing enough to make its expected obligations.

R.65 also cites the “the [SA’s] right…to make changes annually in the Students Helping Students Financial Aid Fund categories that are offered to Cornell University undergraduate students” as stipulated in a 1989 SA resolution.

However, the proposed breakdown of costs indicates only $75,000 will go to a “subsidy fund” whereas $275,000 will go to “renovation,” $25,000 to “start-up costs,” $5,000 to “summer employment,” and $20,000* to “initial programming.” The resolution does not provide a detailed breakdown of costs and does not explain what these general phrases, like start-up costs, refer to.

Of the $400,000 removed from SHS, $325,000 is going towards capital costs, not towards addressing the issue of food insecurity. Since the SRGS is to be set up as a 501(c)(3) (tax exempt non-profit), there will be no financial return on these investments as a normal grocery store would intend to achieve. Furthermore, these costs, once actually committed, are sunk costs, meaning they cannot be fully gained back in the case that the SRGS closes for whatever reason. Normal businesses operate under a profit motive and are operated by those willing to risk their own capital or take out loans to undertake such capital investments because they desire to earn a return on them.

The point here is not to argue that the store should be run for-profit, but to raise the question of whether or not it will be a yearly money-loser, in which case it will require further external funding from SHS or elsewhere. Most non-profits require continuous external funding to remain financially afloat. If the SRGS intends to remain self-sustaining, the SA should provide a business plan that demonstrates how it plans to do so.

(*The text of R.65 indicates this figure is $400,000. Assuming this is an error and that the expenses must sum up to $400,000, it is likely that the expected initial programming cost is in fact $20,000.)

2) There is no proposed process or metric by which financial need will be assessed in regards to the SRGS’s food scholarships.

The 18.75% of the $400,000 taken from SHS to establish the SRGS’s food subsidy fund will be used to subsidize the costs of the foods to students suffering from food insecurity. R.65 does not include any discussion of the proposed metrics, formulas, checklists, or process by which financial aid will be assessed and subsidies delivered.

For example, one might guess that a student receiving 50% financial aid (i.e. he/she only pays 50% of tuition) need only pay 50% of the market rate for foods sold in the SRGS.

However, all R.65 has to state about this most crucial element of the SRGS is the following: “the Financial Aid Review Committee [FARC] will be responsible, in conjunction with the executive board of the student-run grocery store, for the development, oversight, and allocation of the subsidy fund to food insecure students.”

There is also no indication of whether students must apply for this subsidy, or “food scholarship” as it is also called, or if students, upon receiving their financial aid packets, will also be notified of their SRGS subsidy qualification.

If FARC and SRGS executive board members instead assess each student’s application on a case-by-case basis, what is the expected efficiency of this method? A student in need of food immediately cannot wait weeks for these students and administrators to assemble and review potentially hundreds of applications.

Finally, the resolution was never voted on by FARC before being formally submitted to the SA.

3) R.65 cites a non-statistical study as the justification for the SRGS.

R. 65 reads: “3% (Very Often), 5% (Often), and 14% (Occasionally) of undergraduates ‘have skipped meals or not had enough to eat because of financial constraints’ in the currents academic year, indicating food security.” The statistics refer to a recent campus PULSE survey.

However, drawing conclusions from this survey is not statistically sound. Answering the survey’s questions was voluntary, introducing self-selection bias into the data. Furthermore, there is no mention in R.65 of how many students answered the survey’s questions, a figure which must be of a certain size so as to draw statistically significant conclusions about the entire student body.

A statistically sound study would require a random sample of students large enough from which to perform actual statistical analysis.

This point is not intended to negate the presence of food insecurity on campus, but simply raises the question of why an actual statistical study was not conducted when $400,000 of emergency financial aid funds are at stake.

In the case that these three percentages are actually lower, or even if they are truly higher, there are still several alternatives to addressing this issue which the SA, as far as we know, have not considered.

4) Viable alternatives to addressing food insecurity issues exist, but have not been examined.

There are several more cost-effective methods to address the issue of food insecurity. Two such alternatives include subsidized meal swipes and/or Big Red Bucks (BRBs) and grocery allowances to be spent at existing local locations. These two proposals do not require capital costs in excess of $300,000, and therefore will reach more students and more students’ needs.

In fact, the $400,000 taken from SHS would be put to better use if created into a student health fee fund, as it would fully pay the fee for over 1,000 students. The $350 students saved from not paying the student health fee could then be used to purchase food.

In sum, there is ample reason to be highly concerned about the SRGS proposal. Attend the Student Assembly meeting today (4/23) in Clark 701 to learn more about the proposal.