A new feature on QUFA FORUM! A regular update on media news relevant to post-secondary education.
QUEEN’S STRAPPED FOR CASH: PRINCIPAL
Posted By IAN ELLIOT
April 24, 2009
Queen’s University is still in dire financial straits, and the picture is not getting any better. In his third update on the economic situation of the school — the last one before handing over the reins of the school to incoming principal Daniel Woolf this summer — principal Tom Williams said layoffs are an option unless costs can be reduced.
“I regret to say that I see nothing that would suggest the tough times we have been experiencing over the past year will improve,” Williams told a standing-room-only crowd in the conference room of the Policy Studies building yesterday afternoon. The university is getting less money than it used to get from the provincial government, its investment and endowment funds have fallen off the same cliff as the rest of the world’s financial markets, and the school faces a projected $33-million deficit by 2011, despite a campus- wide series of spending freezes and budget rollbacks.
The university is trying to achieve a balanced budget and, as Williams observed, “we still aren’t there.” “There is still a need to make more cuts.” The financial crunch is not unique to Queen’s. Other Ontario universities are being buffeted by the same economic winds and have instituted their own rounds of hiring freezes, wage rollbacks and program cuts. Williams said the cuts and freezes implemented at Queen’s so far were not enough.
Among the proposals he has made are to shut the university down for an additional five days a year, which would save $400,000 a day, equivalent to a 2% drop in faculty salaries, and an early-retirement program. The latter is still being discussed with the unions representing faculty and support staff, but the idea of giving unpaid “Queen’s Days” has stalled, and he expressed frustration at that. “Personally, I’m disappointed at the pace of our progress,” he said. “If we are unable to achieve agreements with employee groups that have the effect of reducing the wage bill, I predict that starting in 2010-2011, layoffs will be unavoidable, and working conditions will inevitably deteriorate.”
He said that the school’s goal was to lower its costs while preserving academic quality, and if that meant shuffling the curriculum and moving more towards electronic delivery of some course material, it would be considered.
“While we must adapt to a constrained fiscal environment, our bigger challenge is how we will adapt in an academic milieu to academic challenges and developments that could see our traditional position as a leader in Canadian post-secondary education challenged,” he said. He also said until financial markets improve, the university’s nest egg of endowments and investments would continue to under- perform.
The school’s endowments are down $152 million, or 24%, in the last year, while money from its investments are down $51 million, or nearly 30%. Compounding the problem, with governments, companies and individuals facing the same meltdown of their investments, Williams said the university can expect little outside relief until the economic climate improves.
Article ID# 1537844
Time to stop all the building. While you are at it, stop the street party. Tighten up your expectations of student conduct and enforce it so Queens can regain it’s reputation as a leading university. There is too much of universities and colleges taking in more and more students (that they aren’t equipped to teach) in order to handle their budget shortfalls. It is a viscious circle.
Post #1 By barney38
What a joke!!! As a former Queen’s employee with inside information I can tell you that they mismanage their Alumni funding and spend excessive amounts of money like its a bottomless pit. They truly would be in the red if their Alumni actually knew how their donations are being wasted. It makes me sick when this goes on while Queen’s blames employee wages etc. The problem is Queen’s is not held accountable by a third party, therefore they can frivously waste money (+40 million) while blaming the people that are actually holding the University together. To all Queen’s employees, time to hold the University accountable and ask for transparency before you give a single inch!
Post #2 By voort, 1 hour ago
Why is Dalton cutting funding to Queen’s? Perhaps John Gerresten could answer that question.
Post #3 By bullblaster
Queen’s needs to stop buying and building they way they have been and maybe divest some property. They haven’t even started building yet on the JK Tett site..that’ll cost millions…Not sure what they’re doing with the old women’s pen. site..but they bought that not too long ago….
Ontario urging universities to pool pension assets in attempt to ease crisis
By JANET MCFARLAND AND ELIZABETH CHURCH
From The Globe and Mail. April 23, 2009
In an effort to ease a pension-funding crisis, the Ontario government is urging the province’s universities to merge more than $13-billion in pension assets, a move that could cut costs and provide them with extra investment clout.
Industry sources said the province’s two largest public-sector pension plans – Ontario Teachers Pension Plan and Ontario Municipal Employees Retirement System (OMERS) – would like to manage the new pool of funds, which could greatly boost their size and investment power. But universities could also create their own separate organization to do it.
University officials say they are talking about such a merger. “The government is strongly encouraging us to take a hard look at options that would involve us pooling our assets,” said Paul Genest, chief executive officer of the Council of Ontario Universities. “We are in an active and close dialogue with government on the way forward.”
The move comes as universities across the country search for ways to cope with investment losses and face the prospect of putting a growing portion of their budgets into their pension plans when campus budgets already are being squeezed.
In Ontario, 15 universities have some form of defined benefit plan, which guarantees retirement income. However, the university plans have taken large hits in the past year as financial markets collapsed. The Council of Ontario Universities estimates pension requirements could eat up about 7 per cent of university budgets in coming years, with some facing much steeper demands.
Darcy McNeill, spokesman for Ontario Finance Minister Dwight Duncan, said the province has talked with the universities about merging pension plans, but that there is no move to compel them to act. “We are encouraging them,” Mr. McNeill said yesterday. “We believe there are advantages to scale, so we would point that out.”
A provincial report last November recommended creating large pension plans because they spread risk over a larger population, have more predictable returns and are less volatile.
The provinces might also dangle a carrot before Ontario universities to win their support for a merger, sources say. The schools want relief from a regulation that requires pension plans to hold enough assets to cover their obligations if they go out of business. Universities argue they should be exempt from the rule, and the government could link a merger of assets to that reform.
Max Blouw, president of Wilfrid Laurier University in Waterloo, said he has heard that the province might link such relief to a pension merger, but that no explicit pressure is being put on universities to join the program.
He said it might be difficult for universities to agree to common pension-fund management, but he would be more interested if he knew there would be a significant cost savings in the fees paid to manage the assets.
“That would certainly be something that I would find attractive and I suspect most universities would find attractive,” he said. “We’d have to balance that against performance, and I’d like to see the historical patterns.”
Mr. Genest said the interests of plan members would have to be considered.
In an interview this week, OMERS chief executive officer Michael Nobrega said his fund would definitely seek to manage university pension money. He said it is also possible a new pension organization could be created to manage the money, but argued even a $13-billion pension fund would not be large enough to make the kind of major investments in real estate and infrastructure that far bigger funds like OMERS or Teachers can do.
Teachers spokeswoman Deborah Allen said a university pension pool is the kind of money Teachers is seeking to manage, but would not confirm whether the fund is in talks to do so.
New legislation to broaden the plan’s mandate lists university pension plans and endowment plans as the type of assets the fund would be allowed to manage.
U of T students seek to block flat-tuition fees
By ELIZABETH CHURCH
The Globe and Mail. April 22, 2009
Students at the University of Toronto will be in court tomorrow in a bid to halt the introduction of a flat tuition fee for incoming arts and science undergraduates at its downtown campus this September.
The university’s Students’ Union and the leader of the Arts and Science Students’ Union will ask the Ontario Superior Court for an injunction to stop the new fee structure from going ahead.
The proposal, which would be phased in over three years, would require new full-time students in the university’s largest faculty to pay the same tuition, rather than the current practice of charging by course.
A proposal passed earlier this month would limit the change next year to new students taking four courses instead of five. Under the new system, they would pay the same tuition as undergraduates with a full course load, an increase of about $1,000.
The new policy, which still requires final approvals, would be broadened in two years to apply to students taking three courses. The university expects that once it is fully implemented, the new policy will bring in an extra $9-million to $15-million in tuition fees.
Colum Grove-White, president of the Arts and Science Students’ Union, said his group will argue that the meeting of the university’s Faculty of Arts and Science Council, where changes were made to the original fee proposal, was conducted improperly.
If the injunction request is granted, he hopes it will stop the fee plan from being considered at a meeting of the university’s business board next week. More time is needed, he said, to review the changes introduced at the council meeting.
“It was obvious that the faculty of arts and science community wanted to review such an important matter more carefully,” he said. “This is such a controversial issue. You can’t bend the rules.”
A spokeswoman for the university declined to comment, saying the matter is before the courts.
OMERS chief calls for pension consolidation
By KAREN MAZURKEWICH
From The FINANCIAL POST APRIL 20, 2009
It is a call for pension consolidation. In a keynote address delivered Monday, Michael Nobrega, president and chief executive of the Ontario Municipal Employees Retirement System (OMERS), is calling for the creation of “super-funds” comparable in size to the Ontario Teachers’ Pension Plan.
In a speech delivered at the Conference Board of Canada’s “Summit on the Future of Pension: From Crisis to Sustainability,” Mr. Nobrega argues that the Ontario pension industry is highly fragmented into many thousands of small plans ranging from big banks and insurance companies with pension fund assets up to $6-billion to universities with assets under $1-billion.
Mr. Nobrega argued that these funds “cannot afford to deliver the quality and depth of governance, investment skills and risk management expertise their members need and deserve.”
Last month, in its budget the Ontario government introduced new legislation that would allow smaller pension plans and institutional investors in the public sector the right to hand over their portfolios and the responsibility of administering pensions to Ontario Teachers’ Pension Fund.
Mr. Nobrega did not mince words when he told the audience that the government should mandate through legislation of private and public sector funds to create more such “super-funds.” He argued that OMERS must be one of those funds because it was an industry leader in the area of infrastructure investing.
Mr. Nobrega’s pitch sounded like more of a plea to government. But, despite the fact the fund saw its assets slip from $51.5-billion in 2007 to $43.5-billion in 2008, representing a 15.3% return, he made a solid case.
OMERS, he argued, “led the renaissance in the nuclear industry in this province… invested in the bricks and mortar of our healthcare infrastructure, (and) we are currently invested in the Windsor/Detroit border crossing where one of the largest infrastructure programs must take place in order to produce hundreds of thousands of jobs.”
In sort, OMERS has paid its dues, he said.
Mr. Nobrega said in his speech the reason he planted a stake in the ground was that every sizeable pension organization believes it should be the consolidator, but that the only way it would work is for the industry find a solution with the government.
If Ontario allows the big pension plans in the province to become an umbrella for small pension plans, it would be accepting the recommendations made by the Ontario Expert Commission on Pensions Report (otherwise known as the Arthurs’ Report), released in November which suggested the cumulative effect of handing over the reins of small funds to larger plans would mean lower investment fees, better in-house investment expertise, and the ability to spread investment risk through diversification.
Alberta and B.C. — through The Alberta Pensions Administration Corp. and British Columbia Investment Management Corp. — have already consolidated some of their plans.
Provided by Gillian Barlow