Decoding University Budget Matters

Categories: Ability to Pay, Arbitration, Bargaining Updates 2014, General Wage Increase, UBC Budget

This is the thirtieth in a series of blog posts to discuss both the matters that have been agreed and those that are still in dispute, as well as the arbitration process in general.

As members who have had the time annually to peruse the University’s audited financial statements will already know, UBC had another very profitable year in Fiscal 2015, with a budgetary surplus of $49 million, of which $31 million was the surplus on operations.

The future similarly looks bright according to the budget recently passed by the Board of Governors. From it we learn that the Board expects international undergraduate tuition revenue to grow by 43% between 2015 and 2017. The provincial government operating grant is expected to increase in 2016/2017 for the first time in many years and the government is also expected to expand the funding for capital maintenance.

The University’s strong financial position over the past several years has allowed the Board to make significant capital expenditures annually from its operating revenue. Over recent years UBC has diverted a large percentage of operating funds to capital. In 2015 alone, the University spent approximately 13% of unrestricted revenues on capital expenditures, the highest of any university in BC.

The University has also not been averse to creating massive administrative bloat in its complement of management and professional staff. According to a report in the Globe and Mail, between 2009/10 and 2014/15 the faculty complement increased by 0.9% while management and professional staff increased by 25%. Meanwhile, clerical and support staff actually suffered cuts. Additionally the Globe notes that “UBC has a 2:1 staff-to-faculty ratio, while (the University of) Toronto has a 1:2 ratio”.

This report in the Globe would have been no surprise to members who read the report by Janet and Cameron Morrill of the University of Manitoba’s Asper School of Business that was commissioned by the Faculty Association several years ago. Their report highlighted both the diversion of operating surpluses to capital and also the administrative bloat. Members who did not read this excellent report at that time, and who are interested in matters budgetary, would do well to read it now.

Based on the most recent budget passed by the Board of Governors, the rosy financial forecast has allowed the Board to allocate significant funds both to the capital program, and to a much lesser extent, the UBC Excellence Fund (which will be used, among other purposes, to hire new faculty in a number of departments).

Members should be aware that the University budget is not audited and is not a financial statement in any way. It is more of a statement of priorities. Unfortunately, it is clear from the budget documents that, Excellence Fund aside, funding academic departments is not a priority. The Board continues to make no provision to provide Faculties with the funds to pay merit, PSA, retention, career progress increments, and general wages increases. This is a long standing problem with the budgeting process at this university. All of the institution’s profits are retained by the central administration, so that money can be invested in capital projects and strategic initiatives while no provision is made to adequately fund Faculties and departments.

As a consequence of the University’s central administration’s priorities, members can expect the usual biennial canard from senior management that salary increases from the recent arbitration were “unanticipated” and thus departments must find efficiencies to fund the increases internally. This of course is entirely false. First, the salary increases were not unanticipated. The award of the Arbitration Board was hardly outside the plausible range. The University of Toronto recently achieved raises of 1.9% and 1.9% for 2014/15 and 2015/16. The University of Northern British Columbia was awarded a settlement that works out to more than 10% over five years, and the University of Victoria recently reached an agreement that works out to 1.44% in 2014/15 and approximately 2.94% in 2015/16. Our settlement of 2% and 2% was hardly extraordinary. We were pleased with it, given the University’s disrespectful offer of 0% and 1%, but it was hardly unexpected.

Secondly, the decision by the Board to squeeze the Faculties and departments, and keep the profits of the University at the centre to fund various investments is just that, a decision. The University certainly has the ability to pay the modest salary settlements that the arbitration panel deemed necessary to keep pace with inflation, and it certainly has the ability to pay more than the arbitration award. The panel explained its findings in paragraphs 75-78 of the award, noting “We conclude the award is within the University’s ability to pay pursuant to Article 11.02(e).”

UBC could easily afford to pay faculty salaries that are comparable to salaries at the University of Toronto. Central administration just doesn’t want to. This is not a financial problem, it is a Board of Governors problem, aided and abetted by the central administration.

This problem is not new, nor does it seem to be going away. For historical perspective we recommend members read, or re-read, our blog post on this very issue of two years ago.

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