Time to tighten our belts 

By Barbara Black

The university can only avoid a significant structural deficit if a combination of targeted cost saving measures and across-the-board economies are made, according to a financial report presented to Senate last week.

“We are spending more than we earn,” CFO Larry English said bluntly.

English expects a deficit for the financial year that ends this week of nearly $14 million. If the university were to take no action, the deficit next year would be at least $18 million, and $24 million in 2009-10, an accumulated deficit of $56 million. This kind of financing is not only imprudent, it’s no longer acceptable. The government is making deficit control a condition for further granting of funds. According to English, we could face the potential withholding of $25 million in government funds if we do not address the deficit situation.

The university’s overall operating budget is roughly $300 million. A plan developed by senior management proposes economies that would balance the budget next year. It includes increasing revenue, postponing or cancelling planned spending, and targeting reductions in expenditures.

Some relatively minor measures could add up to considerable savings. For example, if the university stops accepting tuition payment by credit card, it would save about $500,000 a year. Just lowering the room temperature by one degree and turning out unused lights would save about $200,000.
However, other savings will have to be made, including postponing or cancelling some hiring, rationalizing IT-related expenses and legal fees, and postponing more than $500,000 in renovations.

The budget plan also hinges on two-per-cent cuts by every sector, academic and administrative, although this does not mean that each and every unit of the university will be cut by two per cent. You can expect to hear more about these so-called parametric cuts in the weeks ahead.

We are not the only ones considering such measures. All the Quebec universities are in financial trouble to the tune of more than $400 million in combined accumulated deficits. According to government officials, we are led to believe that no increase in government funding is to be expected. In addition, tuition fees are still much lower than elsewhere in Canada.

While Concordia eliminated an accumulated deficit in the 1990s and has balanced its budget for a number of years, several factors are at play that explain our current situation. Some of the contributing factors to the deficit are non-recurrent, such as one-time severance packages, retroactive pay increases, and increased employee benefits costs that had not been sufficiently provided for, but other factors are structural, which English warned is particularly dangerous.

The government’s new funding formula, introduced in 2006-07, is weighted to Concordia’s disadvantage, reducing our operating funding by close to $13 million as compared to the previous formula, and enrolment growth has slowed. Salaries and employee benefits are climbing. In addition, the difference between what the university receives from the government for annual cost of living increases and the amount that we actually spend is over $6 million annually, compounding each year. In other words, before we spend one cent each year, we are short over $6 million. All these and other factors play into the possibility of a mounting deficit if nothing is done.

The Quebec government recently allowed universities to increase tuition for international students by about 10 per cent. Concordia is evaluating this possibility, while considering reinvesting 25 per cent of the increase in direct support for international students.

There is also a proposal from CREPUQ that tuition be “deregulated” in a number of disciplines for undergraduate international students, meaning that instead of remitting most of the tuition to the government, universities would be able to set and keep the fees.

To sum up, this budget plan will affect life at the university, but senior administrators are doing their utmost to protect the academic mission of the university and limit the direct impact on students, faculty and staff.

“Dealing with the deficit now allows us the flexibility to invest in our priorities in the future,” English concluded.


Concordia University