After months of deliberation, The University of Western Ontario’s operating and capital budget received a near-unanimous vote of recommendation at the Senate meeting on April 17 and now rests in the hands of the Board of Governors.
Senator Arzie Chant was the only dissenter on the decision to recommend approval of the 2009-10 budget to the board, which meets April 30.
Although the university administration stands behind its investment decisions of the past, Fred Longstaffe, Provost & Vice President (Academic), says the university has taken note of issues brought forward at town hall meetings and will re-evaluate how investment income is spent.
“We are not assuming any investment earning coming in to the operating budget for 2009-10 and 2010-11. One of the lessons people have been telling us that they want us to learn is not to rely on investment earnings as part of operating budgets in a way that supports people, even though this is something that has traditionally been done in the past,” says Longstaffe.
“We have to consider our way forward where we don’t rely on investment income for operating costs for people.”
The university is entering the third year of its four-year planning period and faces an expected investment income revenue loss of $46.25 million over the last three years of the four-year plan from non-endowed investments. As a result of this shortfall, many budgetary adjustments were made, including shelving construction and renovation projects, offering retirement incentives and increasing department and support unit initial budgetary reductions.
The university is maintaining graduate expansion as a top priority and is recommending the introduction of a Doctoral Supervision Internal Grant for 2009-10 to offset the initial increase in research costs to supervisors incurred with added doctoral students.
With the injection of $5.05 million in infrastructure funding from the provincial government expected to be complemented by additional funds from the federal government, and the recovery of $4.7 million in legal fees from a long-standing litigation, as well as changes in operating budget transfers, the initial budgetary reduction for faculties and support units decreased from an average of 5.5 per cent to 4.5 per cent, to be allocated differentially.
“We know different programs cost different amounts of money to deliver and that’s a difficult thing to try to factor in,” says Longstaffe. “Those faculties, Social Science, Education, Arts and Humanities, and Science, were the ones we felt were most hard-pressed in the coming year to deliver high-quality programs and therefore a place where we targeted some special attention this year.”
Helping to ease the crunch, 31 staff members accepted the retirement incentive program and the university expects to save about $300,000 in utilities due to a new pricing agreement on natural gas. Discussions between deans and faculty members about the modified phased retirement option remain ongoing.
However, the infusion of one-time funds and cost savings will not be enough to eliminate the need for layoffs, as the majority of the university’s expenditures are faculty and staff salaries, says Longstaffe.
“We are hopeful with some of the measures that have been taken … we can diminish the number of layoffs,” he says, adding over the long-term the university must make a bigger change to address the university’s growing expenditures overshadowing its expected revenue.
Overall, the university is projecting revenues of $526.4 million in 2009-10 and expenditures of $539.7 million, leaving the university with an in-year deficit of $13.3 million. This coming year, that shortfall will be made up from an operating reserve that is expected to be down to $2.5 million at the end of the four-year planning period.
Senator Wayne Dunn, a representative from the community and member of the Western Alumni Association, was impressed with how the university was handling the financial challenges faced by all organizations, including his own company.
“When I saw this budget and the effort that has been put into it, honestly I think it has been very good,” he says. “If everyone gives a little bit, we are going to be a lot better off.”
Mike Carroll, president of the University of Western Ontario Faculty Association and Senate observer, expressed concern about the budget, calling the market downturn a “cover up” for a university restructuring strategy.
“If you pass this budget you will be complicit in a process that will lead people to lose their jobs probably next month,” he says.
Faculty of Arts and Humanities Dean Donna Pennee cautioned senators against “finger pointing” because all publically funded institutions are facing similar financial woes.
“We are doing ourselves a major disservice when we point the finger,” she says, adding creating a division between administration and workers detracts from the pressing issue of increasing public funding.
Faculty of Social Science Dean Brian Timney adds the decisions that need to be made within faculties and supporting units following budget approval will not, and have not, been taken lightly.
“We had to look very closely at our operations and decide which things are essential and which things are not,” he says. “The last thing we would do is look at job loss.”
Budget highlights
· The university will continue to offer student financial support in spite of the current endowment situation, where values have dropped below the originally donated amounts. Faculties with chairs, professorships and fellowships supported by these endowments will be responsible for covering these shortfalls from their own budgets.
· Students can expect tuition fees to increase by an average rate of 4.5 per cent for first-year students and four per cent for upper-year students. Engineering, Dentistry and Law will increase by eight per cent for first-year students, and Media, Theory and Production and Medicine increase by four per cent.
· The university is fixing the Maintenance, Modernization, and Infrastructure transfer to the capital budget at the 2008-09 level of $10.25 million.
· The university is spending $2.05 million, to be allocated differentially to faculties, to maintain teaching capacity and program delivery. This will likely support part-time or limited-term faculty positions.