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Bruinaphi makes a good point about positive vs. negative reinforcement (well, the chapter advisor on one of my advisory boards would agree!). I think points systems definitely work, if they're implemented properly.
The problem w/ the fine system that you have in place now is that your fines are too low. Start out by fining them $25 for missing the first event, and move up from there.
Initiation should be a $100 fine whether it's the first event they've missed or not. This is, of course, only if it's an unexcused absence.
Something else to consider is if they have too many unexcused absences, they can't attend the formal.
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