To the Queen's Community:
We last provided you with an update on the University's financial situation in May of this year. Now that the Fall is upon us and we are entering a period of critical decision-making, we want to bring you up-to-date on some of the factors influencing our continuously evolving financial picture.
Managing a $400-million annual operating budget can be challenging at the best of times, but two very large variables - pension issues and a public sector wage freeze - are increasing our problem. Since our May update, we have learned more about the potential impact of these two key variables, but we have also learned that we will not reach clarity on either of them for some time.
We mentioned in our last update that the Queen's pension plan has an unfunded deficit. The 2010-11 Budget Report shows an estimate of the special payments the university would have to make, based on certain assumptions about the future, amounting to a $38 million hit on the operating budget by 2012-13. This would be over 9% of our revenues - a serious cause for concern.
Queen's is not the only university with this problem, so the provincial government has responded with a new plan.
It should be made clear, however, that the province is not offering direct financial assistance. Instead, the province is allowing universities time to come up with clearly articulated plans to ensure their pension programs achieve long-term sustainability before the special payments kick in. We are now waiting for the province to issue new regulations on the precise details of the relief program. In the meantime, we are preparing to re-engage employee groups to discuss our go-forward options, but as we said before, employees will most likely see their contributions increase, their benefits decrease, or possibly a mix of both.
The other critical variable we are grappling with is the province's desire to see an across-the-board wage freeze for all public sector workers. Discussions among the government, employers and the unions did not go well this summer, as you may have gathered from media coverage. For its part, Queen's remains committed to its collective bargaining obligations and will address all compensation issues at the appropriate tables. In the end, our solutions must address our own needs and requirements - and paramount will be the need to balance our budget and make the university financially sustainable in the longer term.
The University's complex mix of revenue sources always makes budgeting challenging. Mixing public funding with tuition, service-based revenue and privately raised funds requires a long term view and a willingness to adapt as circumstances demand. Even while uncertainty around the pension and wage freeze issues persists, the administration will continue to prepare for the presentation of its budget forecasts and proposals to the University's Board of Trustees for next fiscal year's operating budget. As we move forward and the fiscal picture continues to evolve, we will keep you updated as we receive more information from government and as we continue to move through the budget development process.
Regardless of the decisions ultimately made by government, Queen's remains committed to managing its resources in a manner that will ensure its ability to thrive as a leading institution of higher learning.
Thank you again to faculty, staff and the students of Queen's for your continuing support and your valued contributions.
Should you have any questions or comments, please do not hesitate to email us at email@example.com.
Provost and Vice-Principal (Academic)
Vice-Principal (Finance and Administration)