An External Analysis of the University’s Budget Model

Categories: Ability to Pay, Bargaining, Bargaining Updates 2014, UBC Budget

In preparing for the 2012-2014 arbitration, the Faculty Association commissioned a report from Professors Cameron Morrill and Janet Morrill, accounting professors in the Asper School of Business at the University of Manitoba. The Morrills have considerable experience in examining University budgets for Faculty Associations in Canada. While we did not use this report in the actual arbitration, it did help us to understand a variety of issues related to the University’s ability to pay appropriate salaries to faculty members.

Some of the highlights of their report include the following observations:

  • UBC has continuously had unrestricted operating surpluses i.e., operating revenues that exceed operating expenses. In the most recent fiscal year [for which data were available, 2012], UBC had the highest operating surplus of the five years covered by our analysis.  The $135 million operating surplus in 2011-2012 was equivalent to just over 13% of total UBC salaries for the year.  It would be interesting to see how this figure compares to total UBC faculty salaries.
  • Despite small reductions in government grants, UBC has a large student base and unrestricted revenues per student that are stable and have increased over the period of our analysis.
  • Net assets: unrestricted and operating became negative in 2012 after a 90-million-dollar decrease during the year, but this situation was created by the Administration’s decision to transfer $229 million in unrestricted funds to Capital Assets.
  • The recent level of capital asset acquisitions is extremely high and is financed with an unusually high proportion of unrestricted funds.  Management’s future commitments to purchase capital assets are minimal.  Thus, they can elect to not make as large capital assets purchases from operating funds, or can be forced to make such an election.
  • Over the period under study, management has expended large sums to increase their complement of management and professional staff.  While we only know the number of staff, our experience from other universities is that these staff are very highly paid and have often had salary increases that far outpace the increases provided to professorial faculty. 
  • As with many universities, UBC’s budgeted figures for the future tend to be pessimistic and should therefore not be relied upon as a basis for assessing ability to pay.

We encourage you to read the Morrills’ report carefully.