Board unhappy with deficit budget
Queen's Board of Trustees has reluctantly approved a 2009-2010 deficit budget.
After extensive debate at its May 2 meeting, the board authorized a $360-million operating budget, which carries a $8.3-million deficit.
“It's bad financial management for us to live beyond our means, and we must take the tough steps to address this,” said Board Chair Bill Young.
Steep declines in university investments due to the global economic crisis, reduced government funding as a proportion of the operating budget, and increasing compensation pressures led the university to create a three year plan to get expenses to meet revenues. The budget includes the first round of cuts towards a 3-year 15% budget cut to academic and administrative units.
“This is the first time in recent memory that the university is actually budgeting for a deficit,” said Bruce Mitchell, acting board finance committee chair.
The projected deficit in 2010-2011 is $14.6-million; in 2011-2012, it's $8.4-million. The accumulated deficit by 2011-2012 is projected to be $33-million, which Board Chair Young calls "unacceptable."
The board's finance committee will be meeting intensely with university management over the summer to adjust the deficit projections for Years 2 and 3.
“I think we need to ask the administration to go back to the drawing board,” said Mr. Young. “We've got a lot of work ahead of us.”
Several trustees voiced distress about the financial situation, saying that the university needs to address spiraling compensation costs that comprise more than 70 per cent of the operating budget, and that the university can't wait until union contracts expire.
“We need to throw traditional principles about pay out the door, because the options are so brutal,” said Trustee David Pattenden.
Principal Tom Williams told the board that discussions about a proposed early retirement program are continuing with the Queen's University Faculty Association (QUFA). QUFA has rejected a proposal to close down the university for a few unpaid days over the year, which could save $400,000 each day.
“I'm concerned by statements of the faculty association that they don't understand the nature of the problem,” said Principal Williams. “It worries me because the clock continues to tick.”
For more information on the university's financial situation, visit www.queensu.ca/principal/financialupdate.html
For more news from the Board of Trustees and University Council meetings, see the May 11 Queen's Gazette.