Principle 4: Ensuring Financial Stability
The House Dining system currently relies on an annual subsidy of over $600,000, which is a drag on the dining system as a whole. Beyond limiting the quality and service of House Dining itself, the subsidy limits Campus Dining's ability to perform maintenance and renovation and constrains improvement to the system.
For 20 years, House Dining has faced annual deficits that have swung from $300,000 to as high as $750,000. This year, Campus Dining will subsidize House Dining by more than $600,000. For the host of reasons outlined above, Campus Dining would recommend a new plan even if the system were financially stable, but as MIT strives to adjust to the new financial reality, House Dining must be self-sustaining.
SOURCE: Campus Dining
Two thirds of House Dining residents chose their dorm because it had a dining hall, while 20 percent of students who live in other dorms want the option to eat some of their meals in residential dining. Moreover, when undergraduates are surveyed, they ask for a House Dining system that resembles offerings at MIT’s peer institutions--with breakfast during the week, brunch on weekends, an all-you-care-to-eat option, and other services . For the 2009-2010 academic year, the Office of Financial Aid calculated a board rate of $4,560 for all students, yet House Dining receives only $600 in guaranteed support per year from residents. This support is simply not sufficient to sustain a system that satisfies community needs.
The subsidy now equals fully one-third of the House Dining budget. A second consequence of the annual deficit is a progressive weakening Campus Dining and Residential Life in ways that may not be obvious to the community but that have significant repercussions:
It limits maintenance and renovation:
Campus Dining spans the Institute and includes catering, retail operations, House Dining, and the cook-for-yourself communities. With the heavy subsidy it demands, however, House Dining places a debilitating drag on the rest of the system. Revenue from the MIT’s retail operations must go to cover House Dining operations, for instance, rather than being reinvested in campus facilities and improvements to the Campus Dining as a whole. Over the past seven years, Campus Dining has subsidized operational costs for House Dining by total of $3.6 million--funds could have been used, for example, to renovate the Next House kitchens, a project with an estimated cost of $2.8 million.
The House Dining subsidy affects maintenance and renovation in two ways. First, the dining system lacks a reserve fund for the capital expenditures related to infrastructure. Best practices for the industry suggest that, at a minimum, 5 percent of annual net revenue be set aside for reinvestment in facilities, and Campus Dining is unable to meet even that low standard.
Second, the Campus Dining annual budget allocates $100,000 for equipment and repairs--and this amount is barely adequate. Currently, the true annual maintenance costs for House Dining have been covered only through growth in the entire dining system. Because maintenance and renovation are occurring at minimal levels, the House Dining facilities are at risk of significant degradation.
It constrains improvement:
Apart from limiting Campus Dining’s ability simply to maintain what is currently in place, the operational subsidy constrains efforts to make additions and improvements. A new plan would give Campus Dining the ability to work with residents to enhance dining halls, experiment with new services and offerings, and otherwise upgrade the system.