Notes from Budget Town Hall Jan. 10, 2017
January 10, 2017
President Shaver welcomed attendees at 12:30 p.m. and made the following remarks:
- This meeting is the second of two Town Hall meetings under the Open Governance Initiative
- The topic of today’s meeting is “opportunities and challenges in budgeting for next year”
- We are joined here today by Christine Bovis-Cnossen, Provost and Vice- President Academic and Matt Milovick, Vice-President Administration and Finance
- The event is being livestreamed
- People not attending in person may engage in the discussion via Twitter, and people at the Williams Lake campus are connected by Livestream
President Shaver then turned over the meeting to Christine Bovis-Cnossen and Matt Milovick.
M. Milovick stated that, on screen, there are some instructions for polls, which will allow audience participation. This will help him to gauge a sense of what people know about the budget and TRU’s finances.
C. Bovis-Cnossen provided instructions for the question and answer period to follow the presentation. She stated there are stationary microphones set up and asked people to come up to a microphone if they wished to speak, and advised those joining by Livestream that they may type their question in Livestream or send it via Twitter.
M. Milovick indicated that people can also participate in the poll remotely.
C. Bovis-Cnossen asked for a show of hands regarding how many faculty, Open Learning, CUPE, students, and management exempt people were present. She then read out the first poll question and asked people to respond.
Milovick and C. Bovis-Cnossen launched their presentation. C. Bovis-Cnossen noted that the presentation will be posted to the web so it can be reviewed later. C. Bovis- Cnossen presented several slides (during which she also asked poll questions) and some of the comments she made were as follows:
- As of the end of Q2 (September 30, 2016) The University is looking at a surplus of potentially $6.4M, despite having budgeted it to be about $2.8M for FY2016/17. The reasons for the unexpected increase in accounting surplus are revenue from an unexpected high number of international student tuition and unspent wages largely at the faculty level. The reasons for the unspent wages, include failed searches or budgeting for an employee who started work later than anticipated.
- We will have better information in the next couple of weeks about what the anticipated accounting surplus will look like after the Q3 numbers are compiled.
- With regard to the academic portfolio, if Deans are looking at unspent compensation funds they can request to spend it in other ways, which several Deans have done.
M. Milovick followed up, stating that it is important to note that when we budget, we do so with a relatively small surplus every year and this past year it was $2.8M. We do that as a bit of an insurance policy because, for instance, we never know for certain what enrolment numbers will be. On a $180M budget, a $2.8M surplus is a small insurance policy. Accumulated surpluses can only be used for capital, not operating expenses. The good thing about capital is it allows us to do things we wouldn’t otherwise be able to do, such as the new Industrial Trades and Technology Centre.
- Bovis-Cnossen called upon Dorys Crespin-Mueller to review enrolment trends.
- Crespin-Mueller presented several slides, explaining how projections are determined. She stated that the unanticipated increase in international students is positive, as is the increase in OL enrolment, but one area of concern is the decrease in domestic on- campus enrolment.
M. Milovick presented information about grant, tuition, and fee comparators with other universities, noting that the TRU Students Union is lobbying the government to change TRU’s allocation. He stated that the operating grant per actual FTE is concerning because TRU’s grant amount is second-last amongst BC teaching institutions and universities. The funding formula is historic and predates TRU becoming a university. It does not take into account new realities such as legal requirements, reporting requirements, and supports that universities did not necessarily need 15 years ago but need today. He also presented comparators with other universities regarding distribution of operating expenditures, and employee FTE trends.
M. Milovick reviewed Budget Assumptions as displayed in the presentation, noting that the maximum 2% tuition fee cap is a government mandate, which has been in force for at least a decade. The TRU Students’ Union is lobbying for more funding through increases to TRU’s grant rather than an active campaign to lower tuition fees, so for the University not to increase tuition by the permissible 2% would be contradictory to TRUSU’s efforts and send a message to government that we don’t need the extra money. Based on future year projections, we will very much need that money. Without changes to revenue forecasts, we are projecting a very slim annual accounting surplus of approximately $1M in the near future.
Bovis-Cnossen made the following comments:
- By the 2019/20 fiscal year, all things being equal, including expenditures and enrolment trends remaining as forecasted, a $1.775M deficit is projected.
- As mentioned previously, neither the Ministry nor the Board of Governors has a tolerance for a deficit, so a balanced budget will be submitted.
- We are still optimistic, but there will be work ahead regarding what we need to do as an institution.
- She thanked the audience for their time and offered an apology for the technical problems with the online polls.
- There are approximately 50 pages of additional appendices that will be posted online with the presentation.
Question and Answer Session
Speaker (Chris Montoya, Psychology):
I’m on the Budget Committee of Senate. There are no students in attendance today to speak. As I read the budget, we have one more year of surplus. I’ll preface my comments by saying I think you folks are doing an excellent job. Here’s the “what if” side. At BCOS, I requested we not take the 2% tuition increase this year, which was shot down. I’d like to ask that, as a token, we take 1.9% or 1.95% just to say to the students that we hear their plight. It’s not going to kill us. Make it for one year only. I know an accountant who will say that the government will then look at us as though we don’t need this money, but maybe we need this to bring up the students’ hopes. My recommendation to the Board is that we take a 1.95% increase. We would be the only university in Canada to do this; the only university with a heart. It’s a question. Can we do this? I know what your response is going to be, but I think we should do this.
M. Milovick responded:
I appreciate your passion and I think we all appreciate the plight of students and what it costs to go to university. There are 2 things to reiterate: 1) I think when we’re the only institution in the province that doesn’t take the increase, we send a strong message to the government that we don’t need any more money; 2) even if it is a slight decrease, we never recover it because once it’s gone it’s gone forever. Let’s contextualize the 0.1% or the 0.05%; should amount to about $30K and therefore is a token, but the message to the government is loud and clear. It also undermines the work we have been doing in Victoria showing we need more grant money. It also undermines what the students are trying to accomplish in a similar way. They can be more vocal and active in their advocacy than we can. There is nothing preventing anyone from making that kind of recommendation to BCOS and having that discussion at BCOS, but it is not something I would suggest that we support. It’s not the right time.
Chris Montoya asked:
We’re looking at a potential $6.4M surplus. Do we have transparency of where that money is earmarked to go?
C. Bovis-Cnossen responded:
At the end of the second quarter we were projecting a $6.4M accumulated surplus. It will not be that as we go into the quarter three. Our budget officers are now working on Q3 forecasts and the university community will be updated once we have that number in. Even if the projected surplus trends at $3.5-4M, if not allocated this fiscal year, it will go into our accumulated surplus which can only be spent on capital. As Matt previously pointed out, without the accumulated surplus, we are not actually able to build new buildings. If we hadn’t been able to demonstrate to the federal government we had money available, we wouldn’t have been given funding for the Industrial Trades and Technology building. We are going for other types of academic buildings as well and we need to be able to rely on that surplus. It’s about building the campus out for the future.
Dr. Shaver thanked people for their questions and made the following comments:
The University does have a heart and so does Kamloops. We’re raising more money in student support every year and it’s a major priority for our capital campaign. We’re looking to raise millions in student support.
Many people here also give every year in support of students. We need to do more to support students but we have to keep up the pressure on the government. There is something wrong with the allocation formula. There are regional disparities. The core funding has been overlooked for years. Let’s not lose our long-term perspective, and let’s look after our students when they’re in trouble. Whether it is the costs or the tuition fees, they need our support.
M. Milovick added:
Regarding the latest forecast of an approximate $4-6M surplus, that was not a planned surplus. We don’t decide that we’re not going to hire people in order to save money. We have an aging demography so there are more retirements, and often we don’t get advance notice so we can’t make replacements fast enough, etc. Achieving a surplus is not part of a strategic plan to put more money in our coffers. The Board understands this and has agreed to reduce the Board reserves, which will allow us to move money back into operating rather than accumulating additional surpluses, and they deserve credit for having the foresight to do that.
Speaker (Oliver Harrison, Marketing and Communications):
I have a question about the red-circling of CUPE members over the last year. I don’t know the exact numbers but around 200 CUPE members have been red-circled. What I do know is that all the CUPE members who have been red-circled have lost the cost of living allowance (COLA) increases over the next 4 years. With COLA in Canada being approximately, 1.35% per year that means the people who have been red-circled are losing about 2.4% per year. How does the University hope to retain CUPE members and not allocate COLA increases to them? How are they going to address that situation where a good percentage of their CUPE members are underpaid in relation to the rest of industry? Is there a plan to address the situation with CUPE funding like you’re addressing constantly TRUFA and other faculty organizations?
M. Milovick responded:
Any compensation increases to bargaining units have been collectively bargained. It’s not that we are picking on TRUFA to advance their situation at the expense of CUPE. We have a red-circling issue that we are actively trying to address.
Milovick then invited Larry Phillips or Denis Powers to speak to specifics of the red- circling issue.
Denis Powers, AVP Human Resources, responded with the following comments:
This has been a concern for some time that salaries in the support group need to be competitive. There are about 40 positions out of 450 that are red-circled.
We have had discussion with representatives of the CUPE bargaining unit to talk about the job evaluation process, and will look at adjusting it to try to address red circling. We’re aware of the concern, and we don’t have answer yet but are working on fixing it.
Milovick added the following comments:
When the job evaluation system was revisited, it was done with participation from the CUPE executive from their head office and was a system that was designed collaboratively, in partnership. We have seen some holes, some problems, and management recognizes we need to fix this.
The plight in CUPE is acute, and we have a similar problem in the management ranks as a result of compensation being frozen by the government in our ability to be competitive, not only within the industry, but within our local market. We constantly lose talented people to other industries that pay better. It’s frustrating when those agencies are other government agencies that pay substantially better than us for the same or lesser work.
Speaker (Jacquetta Goy, Risk Management):
I have a question regarding enrolment. Is the work that’s been underway around increasing awareness of TRU beyond the province proving successful?
As a result of the strategic initiative fund, we allocated more resources to Marketing and Communications to increase awareness of TRU, not just in Alberta but also in the lower mainland and Fraser Valley. We had about a 13% increase in applications around this time last year, but that did not translate into an actual 13% increase in student numbers, which was only slight. There is a strategic enrolment working group looking at both recruitment and retention.
There is a slight increase in the number of people coming from outside of School District 73 for the Kamloops campus. Without having the data, it is small numbers at this particular point in time, but we are seeing a slight increase in students coming from the Fraser Valley area.
Speaker (Hugh Burley, Information Security):
This question is for M. Milovick. Can you help me understand what the rules are for spending around surplus? Does it have to move into capital surplus before we can touch it, or can we actually use it and, if we can, how do I get some of it?
Milovick responded with the following comments:
I anticipate the surplus will be about around $4M at the end of Q3.
What we’ve allowed Deans and other budget holders to do is, if they have unfilled vacancies, propose a plan for strategic purposes such as program development, and present plans to the Provost, me, and Alan, and we would look at them with a view to move those forward to bring down some of that surplus.
With regard to anything that is left on the table, the government has said, for the first time ever that if a university has a surplus and declares it before the end of its fiscal year and it can go into the university’s accumulated surplus as a reserve restricted for capital. Then in future periods when the university spends it, it will not attract a depreciation expense. Therefore, in theory, if we had 2 or 3 years of surpluses that equate to what we need for our contribution to the Industrial Trades and Technology Centre, then 100% of that building would not be depreciable. Therefore, we would not have any ongoing operating expenses associated with depreciation. That’s a great thing for us. I wish it had been allowable 20 years ago because then we probably wouldn’t have any depreciation expenses.
In terms of how you get a piece of it, I’m pretty sure that there is nothing left in the IT budget. I will point out, however, that we saw this coming and made about a $1M investment in improved and upgrading the wireless infrastructure on campus.
You can continue to have those conversations with Brian, and if there is anything strategic or required, if there’s room somewhere we can look at it. At the end of the day I expect somewhere from $3-4M to fall to the bottom line and we’ll apply it to the Industrial Trades and Technology Centre.
Question from Williams Lake:
On one of your last slides for expenditures, there was a section for planned hiring of $753K. Can you explain further the breakdown of this section? Is it backfilling of open positions or new positions?
M. Milovick responded:
My understanding is that it is for new positions but we can get that detail. (Addendum to notes, from M. Milovick: The $753k increase to compensation noted in the expense assumptions was for planned hiring of faculty.)
C. Bovis-Cnossen also responded:
With regard to that question, it will be posted in the notes from this Town Hall in the Question and Answer Session section. When we don’t have an answer here, we will ensure the question is answered in the notes section.
Question from Williams Lake:
Is it possible that low spending on Library resources compared to other institutions influences recruitment and retention?
C. Bovis-Cnossen responded:
I wish our University Librarian was here to answer that question. I’m uncertain if there is a direct correlation between spending on library expenditure, whether in terms of actual resources, e-resources, or human resources. We will follow up with Brenda Mathenia. Last year when a number of areas across the university were required to consider a 2.48% reduction in expenditure, we tried as much as possible to keep library and student services budgets the same. That has an impact not only on students, but on faculty involved in research.
Speaker (Kevin O’Neil, Computing Science):
I have a question regarding revenue opportunity. That is, how are our completion rates doing for our students? The example I saw in a Globe and Mail article was that UBC was seeing a $25M loss in revenue because their completion rates for international students were lower than their completion rates for domestic. So, across the board, we’re doing lots of recruiting but how are our completion rates for our students who are here, wherever they are coming from?
I will get some data for you with regards to our retention rates. When we look at strategic enrolment it’s not just about recruitment, it’s also about retaining the students we actually have here. Once we get them here, it is much easier one would think to retain them through high quality programming and services than to go out and get another student.
When it comes to comparators, because we are actually a recruiting, Open University, very few of our programs have quite restricted, selected recruitment. Most of our programs are open access as our mandate is one of the open access institutions within British Columbia. So, I would not want to compare ourselves to UBC where, for instance, to get into some of their programs you require a 90- 95% average. We don’t require that for any of our programs. We will look into this more for you and ensure you get the information. There will also be a presentation on strategic enrolment forthcoming at Senate this spring.
M. Milovick added:
Last year, as part of the strategic initiative fund process, there were investments made in student services/support for early alert to identify students who are at risk with regard to completion. We have also invested in DegreeWorks, a tool for advisors to be able to provide best advice in terms of a student’s progression through his or her program.
Eventually that information via DegreeWorks will be available for students to allow them the obstacles that students face. to self-select and self-manage their academic programs, to lessen the bureaucracy and
C. Bovis-Cnossen handed the meeting back over to A. Shaver.
A. Shaver commented:
There are 30 minutes left in the meeting time, and we will stay behind if you want to have private conversations. The notes of the meeting will be transcribed and we will try to enhance them with some answers. Feel free to send additional questions to email@example.com. I want to thank everyone for coming out today. I really appreciated the turnout and the questions. It is helpful to us to hear your opinions, so feel free to send further opinions to me. Thank you.
The meeting ended at 1:35 p.m.