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In an unexpected reversal of fortune, the Associated Students of UCLA is projecting a net income of several hundred thousand dollars after previously budgeting a loss for the current fiscal year.

Due mostly to streamlined inventory procedure and increased sales in specific departments, ASUCLA expects to net $557,000 when the fiscal year winds down at the end of this month.

The association operates most of the on-campus restaurants and campus stores, and also runs Ackerman Union.

The development contrasts starkly with the association’s financial picture a few months ago, when consistent losses prompted the board of directors to revise its budget in April.

At the beginning of the academic year, ASUCLA had estimated a $475,000 net income after posting a $2.3 million net gain in 2001-2002. The disparity between the two figures is largely due to the hiring of 100 unionized food service workers in the summer of 2002, which put an approximate $730,000 dent into the association’s projected net gains for the following year.

ASUCLA’s financial direction took a bleak turn at the beginning of 2003, with losses totalling $338,000 for the first three months of the year. Finance Director Rich Delia said at that point, war with Iraq was on the horizon, and ASUCLA was already coping with a struggling economy and lower undergraduate enrollment.

This prompted the association to revise its projected net income for the year from a gain of $475,000 to a loss of $33,000.

But a year-end inventory assessment found that shrinkage – the loss of store product due to factors like theft, breakage and expiration – was better than estimated, with $300,000 more product accounted for than originally expected.

Management officials attributed much of the decrease in shrinkage to beefed-up security procedures, such as the presence of a security officer in BookZone, the implementation of additional security cameras and better control over high-priced items in the textbook store.

“We knew the results were going to be better, but we didn’t know it was going to be this much better,” Delia said.

In addition, the association moved its product distribution center from its Pico Rivera location to campus, increasing the amount of oversight management could have over its product stock.

The computer store in Ackerman Union also made a sizeable contribution to the association’s projected net income, garnering $120,000 more than the expected budgeted contribution.

Delia said a rising interest in new lines of Apple computers and academic department purchases significantly boosted sales in this department. But state budget cuts to the University of California to the tune of $300 million could hamper the consistency of computer sales, as departments have had to scale back their expenses to accommodate the anticipated reduction.

Catering for the Food Services Division also performed better than expected by more than $80,000, half of which came from concessions sold at the Los Angeles Times Festival of Books held in May.

The financial turnaround has prompted the board of directors to revisit its proposed student fee increases. Currently, students pay an annual $7.50 to the association for the upkeep of Ackerman Union, accounting for $289,000 of the $1.518 million cost of operation. Revenues from the other two operations – food service and retail – make up the difference.

The board has proposed a student fee increase of $20 to support the Student Union Strategic Initiative, a plan to expand the services in the union with increased programming and upgraded facilities, including an on-campus pub.

The board is also proposing another fee of $24 to increase the “financial viability” of the association, so that it can weather poor economic periods and also implement its Food Service Master Plan, designed to expand and upgrade many of the on-campus eateries.

Though ASUCLA’s recent financial success has prompted the board to revisit its fee proposals – they were drafted when the financial outlook was poor – board members maintain that the fees are necessary to ensure the financial health of the association.

“We really believe we need these fees to continue serving students,” said Marie Parkes, outgoing chairwoman of the board’s finance committee.

Parkes went on to say if the sales and concessions prosperity continue, the board would revisit the fee to ensure that it was still necessary for the association to remain stable.

Both Parkes and Delia said the shaky standing of other ASUCLA businesses – including the BookZone, Universal CityWalk Spirit Store and Health Sciences Store – have maintained the association’s need for caution as they approach next year’s budget.

“With the store and restaurants, one division in each is carrying the loss, which is scary,” Parkes said, referring to the computer store and catering compensating for other businesses’ losses.

But Delia said many of the association’s improvements this year “were not flukes,” and that he estimates ASUCLA will be able to bring about $350,000 from this year’s estimated net gain into next year’s budget.