Investing in the Future of the Faculty Assembly

by Billy Gunn, FA Treasurer

As the financial resources and obligations of the MiraCosta College Faculty Assembly have increased over the last several years, it became necessary to officially register as a unique nonprofit, tax-exempt organization. Most faculty unions are able to gain exempt status via affiliation with a larger labor union, like AFT, but as an independent union, we needed to establish our own tax ID and exempt status. In the fall of 2023, the FA worked with a CPA to complete the paperwork required of all exempt labor organizations -- see IRS section 501(c)(5) and section 23701(a) of the California Franchise Tax Board. Although we were previously operating under the umbrella of the District’s exempt status, this new arrangement gives the FA more fiscal autonomy and independence.

Perhaps the greatest benefit of our new status as an exempt organization is the ability to invest a portion of our substantial reserve funds. Previously, we did not have a mechanism for reporting interest income to the IRS, but now this can easily be accomplished through the mandatory annual filings associated with our new tax ID. Rather than keeping all the FA’s money in a basic savings account, we are now able to invest a portion of our reserve funds.

The FA Council has approved a conservative strategy to take advantage of unusually high CD rates. As of right now (Fall 2023), it is possible to purchase brokered CDs of various term lengths -- three months to three years -- at rates above 5%. An added benefit is that CDs are FDIC insured up to $250,000. In order to ensure that our reserve funds are accessible in case of emergency, we have implemented a laddering strategy by purchasing multiple CDs with varying maturity dates. This means that every three months we can easily access a portion of our investment, if necessary. We project that this approach will easily earn more than $20,000 over the next two years, assuming CD rates stay around 5%. These developments, along with our ever-increasing membership base, will ensure the long-term solvency and independence of the FA.