Administrative Fee to be charged for privately-owned fraternities

As a result of a recent audit, the Office of Residential and Dining Services will issue an administrative fee of 5% for handling the money charged by organizations for privately-owned Greek national fraternity housing. The affected fraternities include Alpha Sigma Phi, Beta Theta Pi, Chi Phi, Kappa Sigma, Lodge, Phi Sigma Kappa, and Sigma Phi Epsilon. The fee will go into effect for the Fall 2019 semester.

“The Office of Audit and Advisory Services perform periodic internal audits of University departments on a rotating basis,” said Malcom McDaniel, Assistant Director of Fraternity and Sorority Life. “This year, The Office of Residence Life was selected for audit.” As a result, the audit recommended that Stevens should charge a fee to privately-owned Greek fraternities for billing support.

The administrative fee would go towards offsetting the expense taken on by Stevens. “Staff members from at least six University departments are involved in the assignment, billing, collection, and payment remittance process for housing and dining charges,” said McDaniel. “It is not Stevens’ intention to profit from this fee.”

McDaniel sees a slight bill increase for members of privately-owned Greek organizations; however, individual students will not be billed for the fee. “The administrative fee will be charged to the Greek organizations and it will be up to each organization to assess the fee to members as it sees fit,” said McDaniel.

Leaders of affected Greek organizations are working through solutions to the administrative fee. “We have discussed this fee with our Alumni board who own our property and they have discussed a couple different options on how to handle it,” said Jacob Schozer, President of Sigma Phi Epsilon. Sigma Phi Epsilon is one of the seven fraternities affected by the administrative fee.

As for how the audit was performed, each year, an audit plan is created and approved by the Audit Committee of the Board of Trustees. The Office of Audit and Advisory Services then carries out the planned audit. This year, the Office of Residential and Dining Services was audited. The audit aimed to determine how effective and efficient the Office of Residential and Dining Services is operating. “This particular audit focused on health and safety procedures, billing and collections, and internal financial reporting,” according to Dorothy Pearlman, Director of Audit and Advisory Services.

According to Pearlman, the results of the audit recommended that the Office of Residential Life and Dining Services “works with the private Greek national fraternities to implement an administrative fee [that] reflect[s] the cost of time and effort and system support [for] the billing and collection.” The amount handled by the Office of Residential and Dining Services for privately-owned Greek fraternity houses totaled $1.7 million for Stevens’ 2018 Fiscal Year.

The audit recommended that an administrative fee of 5-10%, approximately $85,000 to $170,000 would be reasonable. According to Pearlman, the 5% rate was determined based upon the rate credit card companies charge for billing and collection services. “The billing and collection service provided to the National fraternities represents work that is not reimbursed by a vendor,” said Pearlman.

From this report, two options were recommended for the fee: $500 per person or 5% of the total cost. “I brought these recommendations to the impacted chapters, and the members felt that the 5% option seemed more reasonable,” said McDaniel. This administrative fee is currently the proposed amount that will take effect for the Fall 2019 semester.