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Queen's University
 

FAQs

Frequently Asked Questions

Queen’s is projecting revenue growth, does that mean the university is in sound financial shape?

Growing revenues is only part of the picture. The university faces a number of financial pressures, including static or declining government grants, a $292-million pension solvency deficit and a $242-million deferred maintenance backlog. Revenue growth is required to cover increasing costs, to ensure a structurally balanced budget, and, as it stands, the university will be required to begin paying down its pension solvency deficit in 2015-16. The additional pension payments are projected to be roughly $22 million annually for 10 years. These many challenges mean that Queen’s must both increase and diversify its revenue, while carefully containing costs, to ensure it continues to advance its academic mission and ensure its financial sustainability.

Why must the university begin making special solvency payments in 2015-16?

In the wake of the global financial crisis, Queen’s, along with many other universities across the province, was given temporary relief from solvency payments by the Ontario government. That relief will expire in 2015 and, as things stand, the university will be required to begin making special solvency payments. The only way to avoid making any pension solvency payments at all is to move to a jointly sponsored pension plan in which the requirement to make solvency payments is waived.  Discussions of this option are ongoing.

How will the solvency payments impact the university?

Through the 2015-16 budget process, which is now underway, the university will plan for how it will pay the additional pension payments in 2015-16 and the subsequent two years. The process begins with shared service units preparing their budget submissions over the summer, and then turns to the faculties and schools in the fall.

What are the budget scenarios for the shared service units?

The shared services are being asked to prepare their budget submissions according to two scenarios, one which provides no additional funding to cover the additional pension payments, and one which provides funding to completely offset the additional pension payments. The purpose of these scenarios is to solicit the information required to assess the potential impact of the additional pension payments on the shared service units and there is no presumption that either of these particular scenarios will be applied to any shared service unit.  In addition for both of the two scenarios the final year of the planning cycle includes a base budget increase of 4%.

To the extent that any shared service unit receives any funding in support of the additional pension payments, that cost will be borne by faculties and schools, which will also have additional pension payments to make themselves. While we must ensure the shared services have the resources required to meet the needs of the university, we must also ensure that as much revenue growth as possible is allowed to flow to the faculties and schools in support of program development for further revenue growth and diversification.

Hasn’t the government offered further solvency relief to universities? Will you take advantage of that?

We do have the option of requesting a deferral of the special solvency payments for three years, but it is important to understand that, should we do so, and should our request be granted, the total cost will simply be payable over the remaining seven years.  The only way we could avoid having to make solvency special payments completely would be to move to a jointly sponsored pension plan in which the requirement to make such payments is waived, but there would still be an need for a solvency test, and thereby, an expectation of payments to the plan in lieu of solvency special payments.  Discussions of this option are in process.
   

Kingston, Ontario, Canada. K7L 3N6. 613.533.2000