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Financial Sustainability

Provincial budget includes pension framework

By Craig Leroux, Senior Communications Officer

With the provincial legislature back in session, the Government of Ontario has reintroduced its 2014 budget, including provisions that set the stage for allowing single-employer pension plans (SEPP), like the Queen’s Pension Plan (QPP), to transfer to a jointly sponsored pension plan (JSPP). This would allow plans like the QPP to take advantage of a JSPP’s existing exemption from solvency funding.

Caroline Davis, Vice-Principal, Finance & Administration

“When a pension deficit is calculated on a solvency basis, the assumption is that the employer closes its doors and the plan is wound up immediately,” says Caroline Davis. “Since there is little danger that Queen’s will close, it makes sense to fund the plan based on the less onerous going concern basis, or the assumption that the employer and the plan continue to operate. Transferring to a JSPP that already has a solvency exemption is one option for obtaining a permanent solvency exemption.”

As of Aug. 31, 2013 the Queen’s Pension Plan (QPP) had a deficit on a going concern basis of $164 million and $292 million on a solvency basis. Queen’s is currently paying more than $14 million in annual special going concern payments, but has been operating with a temporary exemption from the solvency test. That exemption will expire when the next valuation is filed.

“Our next valuation will be completed with an effective date of Aug. 31, 2014. Until that’s completed we won’t know exactly what the size of the pension plan’s deficit is,” says Vice-Principal Davis. “Based on the 2013 numbers the university would have to make an additional $22 million in special deficit payments, beginning in 2015, but the actual numbers could be lower based on solid investment returns over the past year.”

While the government recently created an option for universities to defer solvency payments for a further three years, that deferral would require the entire solvency deficit to be funded over the following seven years, instead of 10 if no deferral is taken.

“It’s a little like not paying your mortgage. It has the potential for even larger payments compressed into a shorter period of time.” says Vice-Principal Davis. “The best option for the university and pension plan members is to find a way to obtain a permanent solvency exemption.”

The 2014 provincial budget, if passed, would give the government the regulatory authority to prescribe the conditions under which a transfer to a JSPP can happen. It would enable one of the options the university is considering: merging the QPP with the Colleges of Applied Arts and Technology (CAAT) pension plan, the solvency-exempt JSPP for the province’s college sector. Queen’s is also participating in a process with the Council of Ontario Universities and the Ontario Confederation of University Faculty Associations that is examining the creation of a new JSPP for the university sector.

The Gazette recently interviewed Vice-Principal Davis about the solvency deficit. More information is available on the pension plan’s webpage.

Queen's to reduce peak electricity use

By Craig Leroux, Senior Communications Officer

This summer, Queen’s is once again participating in an electricity peak demand management program, as part of our commitment to financial and environmental sustainability. The program will involve the shutdown of air conditioning systems in a number of campus buildings on roughly 10 afternoons over the course of the summer.

“Programs like this one are common across the province in both the public and private sectors, and our participation can potentially save the university $1 million on its electricity bill, while supporting a sustainable energy system,” says Alan Harrison, Provost and Vice-Principal (Academic).

Air conditioner shutdowns will occur between noon and 6 pm and affect 16 campus buildings. The shutdowns will occur on days in July, August and early September when provincial electricity demand is at its highest. Building occupants will notice temperature increases, but where possible Physical Plant Services (PPS) will mitigate this effect by cooling buildings before the shutdown. PPS will issue weekly notices to inform building occupants of the timing of the shutdowns.

“Health and safety is always a priority and PPS will closely monitor building temperatures,” says Caroline Davis, Vice-Principal (Finance and Administration). “They will also work with Event Services to minimize the effects on conferences being held on campus.”

About 45 per cent of the university’s $11.5 million yearly electricity bill is a charge called the “global adjustment,” which is calculated based on Queen’s share of the total provincial electricity demand during the five peak hours from the previous year. Queen’s efforts last summer saved the university $500,000. This summer the program is being expanded and will also involve feeding energy back into the grid from the university’s cogeneration facility.

Created in 2005, the global adjustment offsets the costs of renewable power generation and provides an incentive for large electricity users to cut their usage during provincial peaks. This reduces or delays the need to purchase electricity or increase power generation capacity in the province, both of which carry financial and environmental costs.

More information about the program, including which buildings will be affected, is available on the sustainability website. Anybody with questions about the program may contact FIXIT at ext. 77301, 613-533-6757 or by email.

Dealing with the deficit

With the university now planning for the impact of additional special payments to the Queen’s Pension Plan in 2015, Senior Communications Officer Craig Leroux spoke with Vice-Principal (Finance and Administration) Caroline Davis for an update on the plan’s solvency deficit.

Craig Leroux: When we spoke in November, the Queen’s Pension Plan’s (QPP) solvency deficit was $459 million. Where does it stand now?

Caroline Davis: First of all, it is important to understand that a solvency deficit means that, if the plan were closed up today, it would not have enough money to immediately pay all the benefits owed to plan members. The QPP also has a going concern deficit, which means that even if the plan operates indefinitely, additional money is required to cover those benefits. The government requires the university to make special payments into the plan to pay down both deficits.

As of Aug. 31, 2013 the QPP’s going concern deficit was $164 million and its solvency deficit was $292 million. It is good news that the solvency deficit has gone down from $459 million in 2012, but many factors, including interest rates and the value of the plan’s investments, can make the deficits go up or down in the future.

CL: What do these deficits mean for plan members and the university?

CD: For the university, these deficits will mean additional special payments beginning in 2015, amounting to an additional annual expense of $22 million, which is 6.5 per cent of our salary base. This will have a significant impact on the university’s operating budget.

For plan members, it is in everyone’s interest to ensure that the pension plan is adequately funded, so it is there for us over the long term.

CL: What are the options for dealing with these additional payments?

CD: Provost Alan Harrison is currently leading the 2015-16 budget process which asks all units to plan for the impacts of these additional payments on their budgets.

The only way to avoid additional solvency payments entirely would be to transfer to a jointly sponsored pension plan (JSPP) with a permanent exemption from funding solvency deficits. That’s an option that we’ve been discussing, but it will require legislative changes from the government and the consent of bargaining units. In any event, the benefits that plan members have already earned are protected by law.

CL: Are there specific JSPPs being considered?

CD: The Council of Ontario Universities is looking at creating a JSPP for the Ontario university sector, and that’s going to be a lengthy process. CAAT, the pension plan for Ontario’s colleges has approached Queen’s and other universities with a proposal to merge with their plan. CAAT already has a permanent solvency exemption, shared governance between employers and employees, and is fully funded on a going concern basis.

CL: Where can plan members get more information?

CD: The pension website has detailed information about the QPP, and anyone with questions about the deficit or their particular pension situation can contact Bob Weisnagel, Director, Pensions & Insurance, by email or by phone at ext. 74184.

Pension solvency a concern in 2015-16 budget planning

By Craig Leroux, Senior Communications Officer

The 2015-16 budget planning process is now underway, beginning with the shared service units over the summer and then with the faculties and schools in the fall. This year, both shared service and academic units will need to plan for additional pension payments as a result of the solvency deficit in the Queen’s pension plan and the need for additional going concern payments.

Provost Alan Harrison

As it stands, the university is required to begin paying down the $292 million solvency deficit over a period of 10 years, beginning in 2015. Current estimates pin the additional pension expense to the university at $22 million annually. This will bring the total University pension expense to $62M annually.

This year’s budget planning guidelines ask shared services to prepare their budget submissions under two scenarios: one involving no additional funding to offset the additional pension payments, and another that provides funding to completely offset the payments.

“The purpose of the two scenarios is to solicit the information required to determine the potential impact of the additional pension payments, and there is no presumption that either scenario will be applied to any unit,” says Alan Harrison, Provost and Vice-Principal (Academic), who is responsible for the university’s budget. “While we must ensure the shared services have the resources required to meet the needs of the university, we must also ensure our financial sustainability by allowing as much revenue growth as possible to flow to the faculties and schools in support of continued revenue growth and diversification.”

The university faces a number of financial challenges in addition to the pension solvency deficit, including static or declining government grants and a $242 million deferred maintenance backlog, making revenue growth and diversification, as well as cost containment, priorities for the university. Provost Harrison says that the university is committed to balancing its budgets.

“The approved 2014-15 budget is balanced, but only after a drawdown from cash reserves. Since some of this drawdown will fund ongoing expenses, the budget isn’t yet structurally balanced,” says Harrison. “The university is committed to achieving a structurally balanced budget to help ensure our financial sustainability so that we can continue to protect and advance our academic mission.”

You can read more about the 2015-16 budget process in a report to the university community from the Provost, in his role as chair of the Provost’s Advisory Committee on the Budget.

Read more about the Budget on the Provost's website

Read an earlier Q&A with Caroline Davis on the pension solvency deficit 

Board in brief

Highlights from the May 2-3, 2014 meeting of the Board of Trustees

Welcome from the chair

Chair Barb Palk welcomed new student leaders: Rector Mike Young, Alma Mater Society (AMS) President Allison Williams, and Society of Graduate and Professional Students (SGPS) President Kevin Wiener to the meeting. She noted that, on the recommendation of the Governance and Nominating Committee, the Board had approved the annual confirmation of the chair, vice-chairs and appointments to committees and other bodies during the closed session.

Principal’s strategic update

Principal Daniel Woolf noted that the provincial budget contains some items of benefit to universities, including $250 million for the Ontario Research Fund and a framework for regulations to enable the conversion of single employer pension plans to a jointly sponsored pension plan. However, an election was called for June 12 after the NDP indicated they would not support the budget. The principal expressed his hope that whichever party wins the current election will continue with these initiatives.

The principal reported on his 2013-14 goals, including:

  • Financial sustainability – progress has been made on cost containment and revenue diversification and the university continues to explore options to address the solvency deficit in the pension plan.
  • Fundraising – $71.3 million was raised in 2013-14, a record for the university. Not included in that total are pledges totaling $15 million for Richardson Stadium revitalization.
  • Research prominence – Queen’s continues to perform well in attracting research funding, ranking 12th in Canada, while 21st in terms of faculty size.
  • Internationalization – an external review of the international portfolio has been completed. Increasing international undergraduate enrolment is a key priority and internationalization is one of the four strategic drivers in the strategic framework.
  • Student learning experience – Queen’s is expanding academic paths and credentials, including a partnership with St. Lawrence College. The Classroom Survey of Student Experience has shown significant improvement after blended course redesigns in Arts and Science courses. Queen’s was selected to provide nearly 20 per cent of all courses in the Ontario Online Initiative.

Principal Woolf presented the strategic framework dashboard and noted that the Board will receive regular updates at its meetings. He cautioned that many of the metrics will not change from meeting to meeting, such as some student satisfaction surveys, which are conducted every two or three years.

Provost’s operational report

In addition to his written report, Provost Alan Harrison confirmed that the Strategic Mandate Agreement has now been signed.

Campaign progress report

Tom Harris, Vice-Principal (Advancement), reported that Queen’s raised a record $71.3 million in 2013-14. The fundraising campaign to raise $25 million for Richardson Stadium continues, with pledges totaling $15 million from Stu and Kim Lang and the Richardson Foundation. Consultations with the Kingston community including local neighbours will occur as the campaign and project move forward.

Strategic research update

Steven Liss, Vice-Principal (Research), reported that:

  • Queen’s had a success rate of 72 per cent in the Natural Sciences and Engineering Research Council’s Discovery Grant program and 24 per cent in the Social Sciences and Humanities Research Council’s Insight Grant program, above the national average in both programs.
  • Five faculty members were celebrated through the university’s Prize for Excellence in Research.
  • Queen’s is finalizing submissions for the latest funding round of the Canadian Foundation for Innovation
  • The Government of Canada is expected to unveil its plans for the $1.5 billion Canada First Research Excellence Fund, as announced in the 2014 federal budget, in the summer or early fall

Report from Senate

Senator Iain Reeve updated trustees on Senate activities, including:

Faculty report

Kimberly Woodhouse, Dean of the Faculty of Engineering and Applied Science, provided an overview of the faculty. Its 10 undergraduate programs attract more than 5,000 applications annually for 680 spaces. She noted the faculty’s focus on experiential learning and highlighted its 91 per cent graduation rate, the highest of any Canadian engineering program. The faculty also offers a number of graduate programs and boasts several leading research centres. The faculty has a number of initiatives that foster innovation, including the Queen’s Innovation Connector and the Queen’s Summer Innovation Initiative.

Student reports

Rector Mike Young thanked former rector Nick Francis for his support during the transition period. He noted student concerns around growing enrolment targets, the funding of student services and access to the residence system.

AMS President Allison Williams introduced her fellow AMS executives: Philip Lloyd, Vice-President (University Affairs) and Justin Reekie, Vice-President (Operations). She suggested that the higher education sector is at a crossroads and there is an increasing focus on “training.” She noted that expanding credentials and an increasing focus on learning outcomes are already happening at Queen’s.
The AMS hopes to work with partners across the university around enrolment and the jump to a financially sustainable university.

SGPS President Kevin Wiener addressed a number of items, including his concern about adequate funding to student services in the face of increasing enrolment and the need to ensure Queen’s continues to provide a quality student experience.

Committee Motions and Reports

The Board approved:

  • the new Major Capital Projects Approval Policy and Process, on the recommendation of the Queen’s University Planning Committee, also endorsed by the Capital Assets and Finance Committee (CAFC)
  • the residence fees for 2014-15 and 2015-16, on the recommendation of the CAFC
  • the 2014-15 student activity fees, on the recommendation of the CAFC
  • the university’s operating budget for 2014-15, on the recommendation of CAFC
  • an increase to the Reactor Materials Testing Laboratory capital project budget, on the recommendation of CAFC
  • amendments to bylaws respecting the duties of the chair, the terms of reference of committees, and electronic voting, on the recommendation of the Governance and Nominating Committee
  • the policy statements on Health & Safety and Environmental Management, on the recommendation of the Audit and Risk Committee

On May 3, the Board received reports from Investment Committee chair Don Raymond and Pension Committee Chair David Grace on committee activities over the past year.

Risk management

Caroline Davis, Vice-Principal (Finance and Administration), provided an update on the risk management framework. The Board approved the revised strategic risk register.

Alignment of the strategic framework and the enterprise risk management framework

Provost Alan Harrison and Vice-Principal (Finance and Administration) Caroline Davis noted that the two frameworks are closely aligned and that the accomplishment of the strategic framework will help the university’s risk mitigation efforts.

 

New system to improve travel and expense processing

By Craig Leroux, Senior Communications Officer

Benefits of the new system include:

  • the partial return to per diems for non-Ontario government funded research travel
  • the ability to access the cloud-based system on the web, or via a mobile device while travelling
  • the capability to automatically import data directly from a paper receipt
  • automated calculation of items like mileage, HST rebates, and currency conversion
  • faster processing and the ability to see exactly where a claim sits in the process

A new, automated travel and expense system, to be launched in early 2015, will make the claims process easier, faster and more transparent for faculty and staff. It will also allow for the partial return to per diems for non-Ontario government funded research travel.

“The move to an automated system will make the travel and expense claims process easier and faster for faculty and staff,” says Caroline Davis, Vice-Principal (Finance and Administration). “The current paper-based system can be cumbersome and time-consuming, and automating the process will reduce the burden of managing those claims across the university.”

Queen’s recently completed a request for proposals (RFP) process for a travel and expense system vendor. The RFP’s evaluation committee unanimously selected Concur, a leading provider with more than 20,000 clients and 25 million users world-wide. A number of Canadian universities, including the universities of Saskatchewan, Manitoba and British Columbia, as well as Memorial University, already use Concur’s system, and others have recently signed on.

Carlos Escobedo, Assistant Professor in the Department of Chemical Engineering, was a member of the RFP evaluation committee and says that he was impressed with the capabilities and ease of use of Concur’s system. “Concur offers an excellent service and has a lot of experience in the higher education sector,” says Dr. Escobedo. “The system will streamline the entire expense claim process and ultimately save time.”

The implementation of the new system will happen over a number of months. Faculty and staff across the university should be able to start using it for travel and expense claims in early 2015. The project is partially funded by an Ontario Productivity and Innovation Fund grant.

Read more about the travel and expense project.

2014-15 university budget approved

The Board of Trustees approved the university’s budget for 2014-15 at its May 2 meeting. The $483-million operating budget was developed over the past year as shared service and academic units presented their individual budget plans to the Provost’s Advisory Committee on the Budget (PACB).

“The university will once again have a balanced budget in 2014-15, but many financial challenges remain,” says Alan Harrison, Provost and Vice-Principal (Academic). “The pension solvency deficit is the most significant financial risk on the horizon in 2015-16, and our deferred maintenance backlog of $243 million and inflationary cost pressures make it challenging to operate in this time of static or declining government grants and constraints on tuition fees.”

The university’s pension solvency deficit, which was estimated at $292 million as of Aug. 31, 2013, could require the university to make large annual payments to pay down that deficit beginning in 2015-16 and the university will begin planning for that eventuality.

The budget was prepared under the activity-based budget model, which helps align the budget planning process with the university’s strategic priorities.

“Financial sustainability is one of the key drivers in the university’s strategic framework, and it is integral to advancing our mission as the research-intensive university with a transformative student learning experience,” adds Harrison. “We were able to maintain the budgets of shared services constant in 2014-15 relative to 2013-2014 and we are continuing to look for opportunities to contain costs across the institution.”

With the 2014-15 budget approved, the process of planning for the 2015-16 budget will begin shortly. The shared service units will be first to develop their budget plans for review by the PACB, which will make budget allocation recommendations to the Provost. Once the shared service budgets are set, the process will then turn to the faculties and schools in the fall.

View the full 2014-15 budget report

New software improves access to financial information

By Mark Kerr, Senior Communications Officer

A new tool aimed at improving financial reporting functionality is now available for use by researchers, departmental administrators, business officers and admin staff.

“The Fast Administrative Support Tool (FAST) is a welcome addition for the financial reporting community. Based on feedback we gathered from the training sessions and focus groups, users should immediately notice the ease and speed by which they can access the information they require,” says Caroline Davis, Vice-Principal (Finance and Administration).

The user-friendly software allows users to run four new financial reports:

• Project summary report for researchers and the non-research community
• A new statement of operations report
• A trust and endowment report
• A summary expendable balance report

“I am thoroughly enjoying these reports and I am really looking forward to using this reporting tool,” says Patrick Legresley, Associate Director, Finance, Queen's School of Business. “What a difference already.”

Michael Blennerhassett, an associate professor in the Department of Biomedical and Molecular Sciences, says the new tool addresses the frustration he has experienced managing multiple grants that contain several different types of grant accounts. The new financial reporting tool gives him fast access to each grant with the current balance immediately visible. Within each grant, he can identify the transactions and examine them further for date and origin. He can easily find totals for different types of costs over time and select different time periods.

“This is a tremendous improvement. It is really valuable for understanding how money is being spent, and allows informed decision-making on future costs of research,” says Dr. Blennerhassett.

Financial Services plans to introduce additional reports in the future and will work with stakeholders to prioritize development. Users who would like to submit a request for a new report can use the feedback form provided in FAST.

Users can access FAST by logging into MyQueensU/SOLUS directly from www.queensu.ca. Authorized users of the tool will find a section called Financial Reporting Information that contains a link to FAST.

Training videos are available on the Financial Services website. A dedicated help desk is available by calling 613-533-6000 ext. 78426, emailing, submitting an issue through a webform.

More information about the new tool is available on the Financial Services website.
 

Framework will guide enrolment planning

By Craig Leroux, Senior Communications Officer

A framework to guide enrolment planning at Queen’s over the next 10 years was approved by Senate at its March 25 meeting. The Long-term Strategic Enrolment Management Framework lays out a variety of factors for consideration within the enrolment management process . The framework also details principles, goals and actions aimed at aligning enrolment management with the university’s strategic priorities.

“This framework is an important planning tool that will help Queen’s manage enrolment strategically to the best advantage of its distinctive academic mission,” says Daniel Woolf, Principal and Vice-Chancellor. “It is closely aligned with the Strategic Framework and will promote two of our key strategic drivers, an enhanced student experience and improved financial sustainability.”

The framework was developed by the Strategic Enrolment Management Group (SEMG) and informed by community engagement and consultation. It considers external factors such as government funding and the demand for post-secondary education, as well as internal factors such as institutional capacity and student retention.

Alan Harrison, Provost and Vice-Principal (Academic) and Chair of the SEMG, says the framework will be used by the SEMG, which includes all Deans, to develop annual enrolment targets.

“The framework itself does not suggest specific numbers because a 10-year timeframe involves too much uncertainty,” says Harrison. “Rather, the SEMG will continue to recommend rolling three-year enrolment targets to Senate through SCAD each year, informed by the Long-term Enrolment Management Framework.”

The SEMG’s short-term enrolment projections for 2014-15 and 2015-16 will be submitted to SCAD at its April meeting and will then proceed to Senate, for its consideration.

View the Long-term Strategic Enrolment Management Framework

More on enrolment planning at Queen’s

New tool offers reseachers enhanced features for managing awards

By Mark Kerr, Senior Communications Officer

Members of the research community now have a new tool to apply for and manage awards.

“This latest phase of the Tools for Research at Queen’s (TRAQ) project is intended to provide users with enhanced features that will free up time they previously spent on research administrative tasks,” says Cynthia Fekken, Associate Vice-Principal (Research).

The TRAQ Awards (Grants and Contracts) module replaces the Data Summary and Signature System (DSS). Researchers can access TRAQ Awards by logging into MyQueensu/SOLUS using their NetID and password where they will see a section entitled ‘TRAQ Researcher Portal’ in the bottom right-hand corner. The Awards (Grants and Contracts) module is accessible by clicking on the TRAQ Researcher Portal.

“As a faculty member dealing with multiple funding sources, I am optimistic that this new system will be easier to access, will have greater functionality, and will be beneficial to the entire Queen’s community,” says John Smol, a professor in the Department of Biology and a member of the TRAQ advisory committee.

The new tool improves communication between University Research Services, Research Accounting, the principal investigator and project team members by allowing all parties to connect within the system. Furthermore, researchers will now have the ability to:

• Attach multiple documents to an award file
• Give project team members access to edit the application file before it is submitted for approval
• List multiple sponsors for a single award submission
• Link certifications directly to the awards file
• See both workflow approval and project logs in pre- and post-award periods

Research community members can consult role-based manuals and YouTube videos if they missed in-person training or need a refresher on how to use the tool. A dedicated help desk is available by phone 613-533-6000 ext. 78426, email, or in person by visiting the office at University Research Services on the second floor of Fleming Hall, Jemmett Wing.
 

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