Update on 2015-16 Budgeting Planning and Approval Process
June 4, 2015 – Update on 2015-16 Budgeting Planning and Approval Process
While work continues to finalize the university’s budget for 2015-16, we understand faculty and staff have a lot of questions about what impact the outcome of the budget planning will have. At this time, we are working through the details of the budget and are listening to those questions and concerns and sharing information whenever possible.
We have identified some principles that will guide all proposals:
- Minimize the impact of budgetary measures on students, employees, university programs and operations.
- Share the contribution to solving this serious challenge among all people and units at Memorial.
From a process perspective, the Vice-Presidents Council is continuing to work with deans and the Senate Budget and Planning Committee.
The University Pension Committee is considering the issues related to the $20.9 million special payment and how they might be addressed. The committee will meet again in the next couple of weeks and provide a recommendation to the Board of Regents coming out of that next meeting.
Regardless of where we are in the budget planning process, we know faculty and staff are concerned about the potential impact on students, on their colleagues and on their own work environment at Memorial. Student leaders are also concerned. As the province’s only university with a responsibility to the people of the province, it is understandable that a number of news stories with speculation around tuition or fee increases, discussion of administrative salaries and staffing levels and the deteriorating state of our physical structures are topical. These are just a few aspects of the serious and complex budgetary challenge facing us.
Below are some facts for your consideration.
Revenues and Expenditures
Memorial University has three primary sources of revenue to fund its operations:
- the operating and infrastructure maintenance grants from the provincial government,
- tuition fees paid by students, and
- revenues generated from other sources.
Memorial’s expenditures are approximately $491 million, of which 66 per cent is for academic operations.
|Domestic undergraduate students||12,886|
|International undergraduate students||1,085|
|Total undergraduate enrolment||13,971|
|Domestic graduate students||2,559|
|International graduate students||1,038|
|Total graduate students||3,597|
|Diploma and certificate||632|
|Post graduate medicine||224|
|Total students (undergraduate, graduate, full and part time)||18,424|
Should any budget proposal include a potential tuition increase, Memorial’s president has stated it will not happen before the 2016-17 academic year to provide students with time to plan.
Implications of potential 30 per cent tuition increase for graduate and international students:
|Group impacted||Actual increase||Tuition as percentage of 2014 Canadian average|
|International undergraduates (1,085 students)||$2,702/year (two semesters)||57.3%|
|International graduate students (1,038 students)||$854/year||26.6%|
|Domestic graduate students (2,559 students)||$752/year||52.5%|
Employee demographics and salary levels
While the number of employees at Memorial has increased by 23 per cent in the past five years, the ratio of faculty members to staff members is unchanged. Currently, 41 per cent of employees are faculty while 59 per cent are staff.
Memorial’s total salary levels have increased about 62 per cent in the past 10 years. Almost 30 per cent of that increase was because of the template salary increases for all public servants under the provincial government’s pattern bargaining arrangement. The rest was growth in key areas supported by the province, such as Grenfell Campus, the Marine Institute and the faculties of Engineering and Applied Science and Medicine. In the Faculty of Medicine, most of the increases are unpaid clinical physicians and standardized patients.
The majority of staff are employed in academic units, supporting the academic mission.
Further, Memorial’s shift in recent years to a fully fledged multi-campus model to better serve the needs of the province has resulted in additional senior leaders at Grenfell Campus and the Marine Institute as well as the Labrador Institute. About half of the senior administrative management salary group hires and reclassifications in the past five years have been for positions at these locations.
Today students and faculty have higher expectations of services and support. One example is the relatively new role of Aboriginal advisor to the president. The advisor works to advance all Aboriginal initiatives at Memorial University and the establishment of the position is an outcome of the findings in Memorial’s Report of the Presidential Task Force on Aboriginal Initiatives.
Meanwhile, the demands placed on the university to meet legislative, transparency, accountability and other regulatory requirements are increasing, as is our research enterprise growth. Some of the senior positions that have been added in recent years, such as chief risk officer and chief information officer, reflect the complexity of the modern university environment.
According to the Centre for institutional Analysis and Planning there are 3,086 staff working across Memorial’s campuses, contractual and permanent. Of these, 130 are senior managers, directors and executive directors in the senior administrative managers group. In 2009 that number was 102. There are five vice-presidents, a deputy provost and a president.
There are 2,139 faculty members, permanent and contractual. There are 174 academic management positions. In 2009 that number was 165. Sixteen of these are senior academic administrators, including 12 deans, three associate vice-presidents and a university librarian. Other academic management positions include associate deans, assistant deans, department heads, directors and associate university librarians.
In the 2015 provincial budget, government announced it would not fund a $20.95 million payment to Memorial’s pension fund. As the university is legislatively obligated to make these “going-concern” payments to address a calculated deficit in the plan’s reserves, there remain two options: make the payment using funds from the university’s operating budget, or request from government a deferral of the payment for this year. Government has signaled its willingness to grant a deferral, provided Memorial requests this and agrees to review its pension plan and consider changes to ensure the plan’s future sustainability.
Memorial’s pension deficit can be traced to a number of factors. Among the more significant are the global financial crisis of 2008-09 that dramatically reduced the value of plan investments, and large employee wage increases totalling more than 20 per cent during 2008-11, which significantly increased pension liabilities.
However, recent returns of the university pension fund have been much higher than expected and this has had a positive impact on the plan and has improved its funded ratio. Due to certain provisions of the Pension Benefits Act, the special payments cannot be reduced once commenced as long as the underlying going-concern deficit remains. As of Dec. 31, 2014, the plan was more than 93 per cent funded. This funded ratio is based on the market value of plan assets and is exclusive of the indexing liability which is being funded by additional contributions made by employees and Memorial.
A special meeting of the University Pension Committee was held May 5 to discuss options to address the government grant shortfall related to the pension payment. The committee met again on May 26, 2015, and will meet once more to provide formal advice to the Board of Regents, which is responsible for the administration of the plan.
Through the guidance of the pension committee and the Board of Regents, the pension plan is on solid footing. The university raised its contribution rates a number of years ago and instituted pension indexing. Memorial’s pension plan is not at risk.
Life safety issues on all Memorial campuses are the first priority for infrastructure spending and the university will address all life safety concerns.
Government has provided significant funding over the past number of years for deferred maintenance. However, Memorial continues to have major challenges regarding aging infrastructure, particularly on the St. John’s campus which was built in the 1960s and not significantly retrofitted since that time.
Memorial’s guiding document for infrastructure renewal, its Multi-Year Infrastructure Plan, approved by both the Board of Regents and Senate, identifies all areas of infrastructure need at Memorial University.
While Memorial received no money in the recent budget specifically directed at deferred maintenance, it did receive a grant-in-lieu of a tuition freeze for domestic students that it can direct to maintenance issues, particularly for health and safety issues.
Core Science Infrastructure
The first new academic building on the St. John’s campus since the Earth Sciences Building opened 25 years ago, Memorial’s new core science building is a $325 million teaching, learning, research and engagement space that will allow Memorial to continue to attract and retain world-class faculty who will provide the best possible education for undergraduate and graduate students.
The core science facility will address many health and safety concerns with respect to Chemistry/Physics and old Science Building and to enable doubling of Engineering.
The building is designed with an interdisciplinary approach as a core value, reflecting the reality that current and future problems are becoming increasingly complex and their resolution requires an interdisciplinary approach. The building also serves to physically link medical faculties (Medicine, Pharmacy and Nursing) with the rest of the St. John’s campus, creating further research opportunities.
The project cost is $325 million of which $25 million is drawn from the Memorial Matching Fund; $125 million from the Hebron settlement with the provincial government; and $175 million from borrowing. The payment on the loan portion of the cost will be approximately $10.3 million annually over a 30-year period. Funding in the budget from the government’s grant-in-lieu of tuition and savings generated by the ongoing operations and budget review will make up the annual payment.
Memorial’s Battery Facility will host a wide-range of programming and services for Memorial students, faculty and staff, and members of the public, including student accommodations, public engagement programming, conference and meeting spaces and services, and more (planning and public consultation are still underway).
Graduate students will begin moving into accommodations at the Battery Facility this fall, helping to address identified student housing needs. Public engagement programming will also be offered through phase 1 tenants such as the Genesis Centre, the Gardiner Centre, the Harris Centre and the Office of Public Engagement.
The estimated launch date for phase 1 units to begin moving into the space is winter 2016-17, easing the space crunch and parking challenges at Memorial’s campus in St. John’s.
The property was purchased for $9.5 million in 2013, with up to $16.2 million approved for renovations as needed. Funds for these expenses, along with day-to-day operating costs, will be provided through redirected lease expenditures for off-campus space, philanthropic funds, accommodations rentals and revenue generated from activities and tenants at the facility, including a planned mid-size, multi-purpose conference facility and food service providers.
The business model for the Battery, which was approved by the Board of Regents and provincial government, does not anticipate any operational or capital funds from the university’s ongoing budget.
For further information
As work continues to address the 2015-16 budget, Memorial is committed to sharing information that informs proposal development. Additional information is available in Memorial’s response to the 2014 Auditor General Report Responses, Findings and Recommendations.
As well, the presentation delivered by President Kachanoski and Kent Decker, vice-president (administration and finance), to Senate is available online.