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Concordia Deficit Balloons

by Archives September 15, 2009

Concordia’s budget deficit is expected to grow to $4.2 million this year, up from $1.8 million in 2008-2009, according to Natalie Laporte, the university’s controller.
The larger deficit projection was caused by Concordia’s endowment fund, called the Concordia Foundation, which ceased payouts for one year in order to recoup its operating losses from last year. In March, the Concordian reported the fund’s value had dropped more than $20 million since the stock market’s plunge the previous fall. The endowment fund usually pays for student financial aid, research chairs, speaker series and other programs at Concordia. This year that money will be coming out of the University’s operating budget.
Kathy Assayag, president the endowment fund, confirmed that, because the fund grew in previous years, levels of student financial aid will remain at last year’s level. She cautioned, however that because the endowment’s payout of five per cent yearly was based on a three-year average, next year the amount could drop. Additionally, increased enrolment at Concordia this year means less money per student.
Assayag said the decision for the foundation to cease paying out was the best one for both the endowment fund and Concordia.
“It’s a win-win situation,” said Assayag. “The combination of not paying out and the positive market returns we experienced from March to August will put us in a position where we have recuperated to the same level prior to the market downturn. We got very positive feedback from our donors, because I think we did the right thing.”
The move, however, places a $4.2 million burden on Concordia’s budget, indirectly putting pressure on departments to cut back. “We wanted them to limit the amount of the deficit to an amount that could be manageable, so of course then there were some cuts,” said Laporte, noting that departments were asked to cut 1 per cent of their budget.
The $4.2 million deficit will add to Concordia’s existing $10 million debt, according to Laporte. She stressed, however, it was a one-time occurrence. “It’s a year only. Its not a commitment on the university’s part to have this shortfall over a long period of time,” she said. “We expect the Foundation will resume its payout as of next year.” She also noted that increased enrolment had helped the financial picture somewhat by bringing additional government funding.

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