Whig Standard: Funding gap looms large: Pensions at Queen’s (17 August 2010)

By: ROB TRIPP, THE WHIG-STANDARD, 17 August 2010

An unfunded liability in the Queen’s University pension fund could balloon to $240 million by next year, according to projections in a university budget report.

It represents a fivefold increase in the liability in a four-year period and it comes at a time when the university’s employee groups say administrators have cut them out of talks to address the problem.

University officials are scrambling to come up with a plan to deal with the funding gap, blamed on the global recession that began to bite in 2008.

The school is required by the province to keep the pension fund solvent.

An unfunded liability essentially means that the fund could not pay its obligations if the sponsor, in this case Queen’s, suddenly went out of business.

“It’s inconceivable that universities would go out of business,” Caroline Davis, vice-principal of finance at Queen’s, said in an interview Monday.

Davis noted that the pension fund rules are designed primarily to protect workers in private firms.

Talks have been underway for several years between university administrators and three employee groups — the faculty association, the staff association and the Canadian Union of Public Employees — to deal with the pension fund’s woes.

“Following the May 2010 Board of Trustees meeting, Principal Daniel Woolf unilaterally suspended pension negotiations with the employee groups, declared that ‘all deals are off,’ and set up a new working group composed only of people drawn from the Board of Trustees and senior administration…” states a joint bulletin released Monday by the employee groups.

Davis said the school put the talks on hold while it reviewed measures being announced by the provincial government that would permit universities to take more time to address funding gaps.

“We’re committed to working with the employee groups,” Davis said, though she added that administrators are not yet ready to resume the talks.

Queen’s isn’t alone in its struggle with its pension fund. Several other universities face funding gaps and the government recently announced that it would extend deadlines requiring universities to address the gaps.

The plan does not include new money, Davis said.

The employee groups at Queen’s warn that the school only qualifies for provincial relief if it comes up with a plan that includes consultation with workers.

“The employee groups remain ready to resume pension negotiations,” the joint bulletin states. “The ball is in the administration’s court.”

The employee groups say heads of departments in the Faculty of Arts and Science have been instructed by administrators to budget for a 2.5% cut in their 2011-12 budgets and perhaps another 2.5% in cuts if the university is required to boost its annual pension contributions.

The cuts come at a time when the university continues to hike tuitions between 4% and 8% per year.

A first-year undergraduate student in an Arts and Science program will pay $5,226 this year. A first-year commerce student will pay more than $12,123 this year, and a first-year student in medicine will pay $18,228.

Queen’s has an operating budget of nearly $400 million this year with a projected deficit of $3.8 million. The deficit is forecast to rise above $26 million next year and top $35 million by 2012.

rtripp@thewhig.com

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