Friday, August 23, 2013

Budget Update from President Samarasekera

Dear Faculty, Staff, and Students,

Following many months of analysis and discussion, the deans, other members of the senior leadership team, and I met Thursday to undertake a critical task—to review and discuss strategies that have been under development and to come to agreement on what our community must do to reach a balanced, sustainable position by April 1, 2015.

We recognize the urgency of the situation and agree that it is in the best interest of our university and the morale of our community to accelerate our original plan. Given the direction the Board has now received from the ministry, we must take decisive action in the immediate term, so that we can turn our attention to long-term academic and administrative transformation. The next few months will not be easy, especially because several units and faculties already have experienced lay-offs, program suspensions, position closures, and other impacts from the cuts contained in the 2013-2014 budget.

During yesterday’s meeting, we reached many important decisions, with the university’s core mission of providing excellence in teaching, research, and service for the public good in the forefront of our discussions. Primary among the decisions made is that to balance the operating budget for 2014-2015, we must make a further overall 7% reduction in expenses relating to the core academic enterprise and an 8% reduction in the cost of services supporting those core functions. To sustain this balanced position over the long-term, we also agreed to plan for additional overall reductions of 2% in both 2015-2016 and 2016-2017.

I want to be clear: these are major cuts and every member of our community will feel the impact. We will continue to streamline administrative functions, reduce redundancies, and seek new or untapped sources of revenue. We will maintain our commitment to excellence and do all that we can to minimize the impact on student access and experience.

However, we will not achieve the goal of a balanced, sustainable position by April 1, 2015 without further suspension and closure of programs, courses, and course sections, some in degree programs that are unique in Campus Alberta. Although Alberta’s young population continues to grow, and with it, student demand for university education, we will be unable to admit the full number of applicants who are well-qualified and well-prepared for success here. We will lose valued employees through voluntary and involuntary severance. We will permanently close many vacant positions and will all feel the resulting reductions in service.

The outcome of the Voluntary Severance Program may influence the approach individual faculties and units take to achieving their share of the necessary reduction. After the September 16 VSP deadline, we will assess the result on units and faculties and determine the precise percentage of the cut allocated to each faculty and unit. Until then, the deans and VPs will be finalizing plans so that they can be ready to move quickly once we know exactly where we stand.

Let me tell you the timeline we prepared:
  • Aug. 30: Provost’s Office will send a letter to the deans, confirming the percentage cut above and affirming other details of the action plan.
  • Sept. 6: Martin Ferguson-Pell and Phyllis Clark will hold a Campus Forum (12-1 pm, ECHA L1-490) to provide details on the 2013-2014 budget to date and to provide a basic budget primer for the 2014-2015 budget.
  • Sept. 16: Deadline for application to the Voluntary Severance Program.
  • Sept. 16: Annual budget presentation to General Faculties Council.
  • Sept. 19: I will deliver the State of the University Address (11:30 am – 12:30 pm, Convocation Hall) at which I will present a new 3-year action plan for academic and administrative transformation. To register, please go to: http://www.president.ualberta.ca/2013stateoftheu
  • Early October: First draft of 2014-2015 budget prepared.
Throughout this process and beyond, we are committed to providing as much transparency and clarity as possible. Going forward, we will share the deans’ letters, action plans, and budget primers with our internal community. I will post a regular update on our progress every Friday.

Let me close with a simple observation. The University of Alberta has a proud, 105-year history of educating the leaders, highly-skilled professionals, and highly-engaged volunteers who are active in every sector of this province. UAlberta research has fueled the province’s economic growth and prosperity for more than a century and research done today will continue to be the source of innovation and discovery. We are facing grave challenges right now, but this university can withstand them.  With a shared commitment to excellence and leadership in teaching and research, we will—as a community with a proud history—find the right way to preserve and advance the UAlberta far into the future.

Indira



27 comments:

  1. Dear Dr. Samarasekera (a commentator on my blog says I'm not allowed to call you Indira, as that's sexist or mysogynist): This is very hard news to take, especially as we embark on a new academic year. I believe that the University has the resources to ride out the Minister's "hiccup" — specifically, $602 million in short-term non-endowed funds. Why can this money not be used to solve this short term financial embarrassment while we find out what the GoA's long-term goals are for the U of A?

    If this really is a hiccup, then let's deal with it and move on. But if the GoA really plans to wind down funding for Higher Education in Alberta, then we all need to know so we can plan our career moves accordingly. Frankly, it's not looking good!

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    1. Thank you for your question Jeremy Richards. This question has previously been asked and answered on the Voluntary Severance Program for Continuing Academic Staff post. For your convenience, we've pasted the original answer below:
      "Here the response from Phyllis Clark (VP, Finance and Operations) regarding your questions relating to non-endowed funds: "The University holds non-endowed funds in various ways that earn interest. However, all of these funds are held for future, committed expenditures. These are contractual agreements that we need to honour. Examples include research grants, contracts, and obligations that are connected to tuition funding that is used throughout the year to pay salaries."

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    2. The BoG report says:

      "The purpose of the Non-Endowed Funds is to pool capital that is predominately short-term in nature. Consequently the primary investment focus is on money market securities which will provide liquidity and preservation of capital."

      Isn't liquidity what is needed right now?

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  2. Sounds like responsible leadership on a tough issue. The clarity on timeline and process is very good.

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    1. Responsible leadership? It is to be hoped the GOA passes judgement on the excesses of this administration: 118 staff in Central Advancement, 47 staff in UofA International, and 22 staff in University Digital Strategy. What possible impact does this have on research and teaching, our primary concern?

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    2. What possible impact, indeed? The office of Advancement fundraises for the institution, to support research and teaching. UAI forges important connections with the world, including a huge portion of students who come to enjoy our research and teaching. And UDS is dedicated to explore leading-edge technologies that can be used in support of research and teaching.

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    3. Office of Advancement and UAI are selling a product. They won't have much to sell if the core business of the UofA -- teaching and research -- take an 11% hit.

      McGill has also been faced with a budget mess. In order to move forward, McGill has embraced a plan that would protect the core functions of the university. Central functions are taking a much much higher percentage cut than Faculties and Departments -- http://www.mcgill.ca/budgetcuts/about. The budget measure adopted include a salary freeze with a 3% salary CUT for senior administrators, 7-9% cuts to central admin and 5-7% cuts to administrative units, while Faculties would see their budgets reduced by only 3-5%.

      If we seriously erode the capacity of Faculties and Departments, our reputation will tank even further. International recruiting and fund development depend first and foremost on our reputation for high quality teaching and research..

      We should all be responding to our Budget Plan to demand that Central take a larger proportion of the cuts. This is the only responsible course of action.

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    4. If faculties represent the bulk of the university's expenses it makes no sense to seek a disproportionate cut from central. I understand why faculties might argue for this to protect themselves but it really doesn't make sence to me.

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  3. Dear President Samarasekera:
    Could you or Mr. Goss please release/post the two letters (June 26th and August 16th) that Mr. Goss received from the Minister of Advanced Education? If the Minister did not order the University to balance the budget by 2014/15 why choose that path?
    2.) Since the Minister accepted the 2013-14 budget contained in the Consolidated Institutional Plan why make additional cuts this year? Shouldn't the dramatic cut to the core academic enterprise you outline above be the subject of a discussion with "our community?" Shouldn't it be the subject for even more thought and a broader discussion than even your senior leadership team has been able to devote to it over the last five months?
    3.) With respect to the cuts just announced please outline what the dollar amounts and percentage amounts of the total cuts are for each of the university's faculties. If Martha and Henry are considering sending their children to the UofA they should know the fiscal situation of every faculty on campus. I cannot see any reasonable justification for keeping them in the dark about the fiscal situation in their public university. If there are differences between faculties please take a moment and try to explain why they exist. I think our community deserves as much.

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    1. Ian, it is obvious now that the University senior leadership team wants to balance the financial books before the proposed Provincial Government appointed bean counters get a look at them, and rightly so.

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  4. Did you even read her statement? The cuts are not this year. The cuts are for '14-15.

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  5. Do we really have a structural deficit of 12 million/year even before the cuts as the Globe and Mail has reported? It seems like the administration has endless funds to reorganize and remodel offices, put up new buildings, create so-called living walls like the one in Tory Atrium, etc., etc. Last year in my department there still was almost no money for photocopying student handouts and one of our support staff was summarily fired. I taught at a college where I was told an accountant embezzled a million dollars and got away with it. I would be very interested to know more about the UA budget and if it takes a forensic audit to find out what's going on, maybe we should support that.

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  6. Anonymous, what is your intent, other than to muddy things?

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  7. Suspensions, cuts, lay-offs - does one resort to such measures if one is not in a situation of financial exigency? Why did the Administration not just admit that we're in that state, and make the necessary tough decisions when the extent of the cuts was obvious? We have procedures for that. But it does seem, more and more, that the Administration does not want to work within our established procedures. AASUA, what are you doing about this?

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  8. I can understand why our established procedures are too cumbersome and slow to deal with the crisis imposed by the GoA. I suppose at the crux is how close is UofA to exigency? Do people really think the structural deficit has been trumped up to satisfy conservative views on spoiled faculty? Do people not understand the cut is an ongoing thing - 600x10^6 only lasts 6 years of covering off an ongoing shortfall, even if it all existed as a cash reserve (which it is not, although they had better have something in reserve).

    The AASUA executive has told us by their actions that they prefer layoffs to salary concessions, I won't be holding my breath waiting for them to come up with a fiscal plan that works. While most of the capital budget is probably tied up with contractual obligations, surely there is some to be "freed up" to deal with the severance. Not that I would get any, I will be amongst the first to go, I am after all "Soft-tenured", and Article 33 specifically excludes me, as does the VSP. "First they came for the communists...

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  9. Is University still continuing with building the leadership college and what money UofA is going to use for it?

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  10. Not all departments will be capable to find these 11% cuts (after several cuts that already happened) and department chairs have no power to involuntarily layoff professors. So, what's then?

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  11. Dear President Samarasekera,

    I hope the current VSP accomplishes the goals you have for it. But I have my doubts that people like me will find it sufficiently inciting to bite. Here is why.

    First some facts to put my comments in perspective. I am a 60 year old full professor with 30 years under my belt in one of the two "core" faculties. Averaged over my full career here, I have been awarded 1.55 increments annually. I say that not to brag but to underscore that I tried to put in an above-average effort consistently over the years and that likely I represent the kind of higher-paid academic the Administration would love to unload. I am not angry about that. I understand it's not personal.

    But here is the deal. If I were to simply retire next July, I would qualify, say, for a post-retirement contract of, say, 3 years for 1/3 of my June 30 salary. That's all together a years salary. But, in addition, with the post-retirement contract, I would be covered by the University benefit plan. That's significant. With dependents in tow, private insurance costs about $500 per month and times the 36 months of the post retirement contract that's worth about $18,000 to me.

    The VSP would offer me 12 months salary but no benefits. However, it is true that I could collect the 12 months salary in a single payment, unlike the post-retirment contract.

    The up shot is, from a pure self-interested financial perspective, it doesn't seem to me that the current VSP is attractive enough to incentivize people like me to leave earlier than we would otherwise. And if we did want to leave in the short term, we would be better off to simply retire and take the post-retirement contract with the benefits.

    Respectfully, may I suggest that you consider modifying the VSP so that the pay out would be one month of salary for every year of service up to, say, 18 months. I think something like that would incentivize individuals such as myself to opt for taking the VSP earlier than we would otherwise retire.

    Just a thought.

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    1. Three year post-retirement? You must be in a Faculty that allows special deals since the university standard is a two-year deal. And clearly, allowing special deals has consequences, as you point out. No wonder the university has structural deficits when many of the centre's structural policies don't seem to be followed (or should that last word be enforced?)

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    2. A reasoned analysis here. The VSP is not sufficiently attractive for me either, and my profile is similar to yours. A big issue here is of course the lifting of mandatory retirement some years ago (2009?). The U of A did a VRIP three years ago, in part to deal with this. Notwithstanding what the VP (Finance) said back in April, we now have a VSP before us. The U of A will have to do a VRIP and/or VSP or whatever every two or so years for the foreseeable future to entice productive and healthy senior faculty to retire before, say, seventy or so. There is no need to rush to accept this VSP; another (and probably better) one will be coming sooner or later, and probably sooner.

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    3. You are not conversant with the Agreement. Nothing to see here. Keep the line moving.

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    4. Anon@7:07

      Please read Article 18.18 of the Faculty Agreement. The equal options are: 1) 2year/50% pay or 3year/(1/3 pay). The university "standard" is not the two-year option. Neither can be arbitrarily denied if requested.

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    5. Bring back mandatory retirement!
      And also, cut the pensions back to what is paid for! (i.e. to about 60% of what is promised, the rest coming from (A) my pocket in higher deductions now and reduced future benefits; (B) The U of A's pocket; (C) draining the fund! and finally, everybody assumes (D) the government pitching in to cover a shortfall, as was done for the school teachers.

      Where's my pitchfork, honey?!

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  12. Could anyone in administration explain in detail why the president decided to go back on an earlier commitment to not travel internationally, and now will accompany the premier on a trip to China? The explanation provided by the president's office: “The university believes that this is a worthwhile investment for forging partnerships with the world’s second largest economy,” is quite vague.

    Is it a trip to obtain money for the current budget crunch? That seems unlikely as at most she could probably bring in research funding, which are not 'hard' dollars to put in the operational budget.
    Is it to have an audience with the premier? There are (much!) cheaper ways to do that.
    Or is it some sort of exploration of her post-presidency career? That would be completely inappropriate.

    In light of the mood on campus, I think a clear and detailed explanation is warranted.

    And wasn't there a travel ban on campus? Aside from the bad optics, the reported cost of $13,800 could (in part) save someone's position.



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    1. Do you have even the slightest idea how dependent this campus is on the tuition paid by students from China? Without them the hole would be markedly deeper. I think our president is overpaid, and has failed to do ordinary pruning of very weak programs until forced to by this crisis. And she got a cushy deal on her house... And Admin is generally bloated at many levels... And strong programs see the revenue they generate taken to subsidize weak sisters (in my faculty at least!) ... But of all the things you or I might grump about, maintaining or expanding the connection to China is not it! Remove those students and the university would have to REALLY shrink by force.

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  13. Well, an international student pays about 3.55 times the fee of a Canadian student or Permanent resident (http://www.registrarsoffice.ualberta.ca/Costs-Tuition-Fees/Undergraduate-Tuition/FallWinter-Tuition-for-International-Students.aspx and http://www.registrarsoffice.ualberta.ca/en/Costs-Tuition-Fees/Undergraduate-Tuition/FallWinter-Tuition-for-Canadian-Citizens-and-Permanent-Residents.aspx). According to the databook, in 2011-12 there were 38744 full time students, 2820 students with a Chinese hometown, and 6692 total students with a non-Canadian hometown (http://www.ualberta.ca/~idosa/databook/). Conservatively ignoring international students that are now permanent residents, Chinese students make up about 18% of the tuition here. Given the revenues in our CIP for 2013, this runs to 7% of the support from the province.

    So yes, losing all Chinese students would be about as bad as our current cut. That being said, are we going to lose all such students based on the president going or not going on this trip?

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    1. "[A]re we going to lose all such students based on the president going or not going on this trip?"
      A good rhetorical question, and my answer: "Virtually none of those individual students." Rather we may lose some (research) partnership from China's state-owned whatever. But when cutting German programs, did the Arts Faculty worry (or should it have done) about such partnership in STEM with Germany for example?
      Based on the president going, we lose $13,800 unless she pays for herself. Shall we miss her presence on campus? I don't.

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