Pensions, Salary Freezes, Board of Trustees, 30 April 2010

By Cathy Christie (QUFA President) and Paul Young (QUFA Vice President) on behalf of the QUFA Executive

Principal Woolf announced at the 30 April 2010 Board of Trustees meeting that the current budgetary 2009-2010 deficit has been reduced to $2.6M and the Board extended the timeline for balancing the budget.

The current budgetary 2009-2010 deficit has been reduced to $2.6M from the originally projected $8.3M (previously adjusted down to $4.3M). The latest deficit reduction largely represents end-of-year funding from the provincial government. This is good news, although Queen’s employees paid a high price for the overall budgetary reduction strategy, in the form of a poor salary settlement to the Queen’s University Staff Association (QUSA), loss of Contract Academic Staff (Adjuncts) from many departments, and service reductions.

QUFA is pleased to see that the Board of Trustees has finally agreed with us to extend the timeline for balancing the budget by an additional 2 years, thus allowing 5 years for the process to be complete. This is an obvious solution for some of the problems associated with their previously announced, unrealistic, and self-imposed choice to impose a balanced budget within 3 years, which was damaging our institution. We hope that the additional time will allow for a more careful and inclusive appraisal of choices and we presume that it will also provide time for a more complete academic review.

In addressing the source(s) of the budgetary problem, Principal Woolf previously blamed academic staff salaries for the deficits while ignoring the fact that this budget line has been declining as a proportion of the total budget. He now focuses his financial criticism and his vision of solutions on two issues: salary freezes for non-unionized public-sector employees and the unfunded pension liabilities. First, he points to the recent announcement by the Government of Ontario that wages for non-unionized public-sector employees will be frozen to reduce costs. The Principal appears to have interpreted this as encompassing all public institutions, including universities, and he appears ready to apply the freeze here at Queen’s. If the Principal extends this position to the unionized groups on campus, he will be curtailing collective bargaining before it begins. Such a move makes it difficult to reach equitable negotiated settlements. This position is regrettable in the absence of any legislation requiring such measures and will only lead to further deterioration of morale in the workplace.

The Principal’s second focus is to return to the Queen’s Pension Plan and its unfunded liabilities as a major issue. Queen’s is currently paying additional sums of about $6M per year in deficit and solvency payments out of the operating budget to support the plan. These payments are mandated by pension legislation and are designed to protect the plan into the future. The major components of the pension plan deficit stem from reduced investment performance and the belated recognition of increased longevity for our retirees.

Queen’s employee groups have been in joint discussions with the Administration regarding changes to the plan for approximately 5 years. These discussions have been mostly amicable, and we have substantial verbal agreement on many issues to resolve the unfunded liability. On the other hand, the discussions have also been delayed, sometimes for long periods, while the Board of Trustees maneuvered to try to change the Pension Committee constitution, most notably by removing QUFA’s right to a veto on any changes to the pension. QUFA has made it clear that there will be no changes to the plan until the constitutional issue is settled. The employee groups presented our suggestions for the constitution about 1 year ago, but the Board has yet to respond as promised.

The current investment climate is markedly improved relative to 2008, and many of the proposed changes for which we have verbal agreement would have had a direct impact on the unfunded liabilities as measured today if they had been adopted and implemented in a timely fashion. These changes could have been completed years ago and would have been of major benefit to the status of the plan now. Pension plans have 50- or 60-year time horizons. A short-term slump in investment markets should not be used to shout ”crisis” and then to try to restructure on that basis. The Administration and the Board have to set their priorities carefully to bring this pension fund issue to a mutually acceptable solution.

QUFA Members should also be aware that, at their recent meeting, the Board approved two more capital projects that are not fully funded: classroom renovations at the Faculty of Law with a starting price tag $1M (of which only $480,000 has been secured), and the Performing Arts Centre with a starting price tag of $63M (with an $8.3M shortfall).

While these projects will benefit the Queen’s community, they appear to violate the Major Capital Project Business Case Approval Process (Appendix P, page 122) approved at the October 2009 Board of Trustees Meeting. The minutes from this meeting read:

“The Principal confirmed that the process … was designed to ensure that work would not proceed on capital projects, and money would not be spent, unless and until the Board had determined what was needed, that funding had been obtained and that, once built, the costs of operation of the building could be met.”

This policy apparently had a short life with the announcement of the incompletely funded expansion of the Business School at the last board meeting, and the approval of the Performing Arts Centre and Faculty of Law classroom development project (also incompletely funded) at this one.

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This entry was posted in Budget/Crisis, Collective Bargaining, Fair Employment. Bookmark the permalink.

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