Concordia digs into deficit

Photo by Madelayne Hajek

Concordia announced Jan. 23 that it will enter into a deficit of up to $7.5 million for the 2012-2013 fiscal year; one of the biggest deficits declared in the university’s history.

After the province announced a $124-million slash to university funding across Quebec in December, Concordia administrators were scrambling to find a way to end the winter semester as planned with a loss of $13.2 million.

Concordia President Alan Shepard explained that the cut accounts for approximately five per cent of Concordia’s operating budget and that the interest rate on the deficit will be a standard 2.5 per cent. Shepard went on to say that since provincial funding is dispensed incrementally throughout the school year in the form of an operating grant, Concordia will never see the $13.2 million it had been banking on.

Board of Governors Chair Norman Hébert stated in an interview that “we don’t have a history of running deficits,” and that “both the financial committee and the Board took this extremely seriously.”

University spokesperson Chris Mota confirmed that prior to the government cuts, “this would have been the third year with absolutely no deficit.”

Mota also explained that deficits in the past usually ran between $20,000 to $30,000 and were “not anywhere near what we’re dealing with now.”

As Shepard explained, deficits are a “short-term solution,” and not something the university is eager to enter into. He went on to emphasize that his priority moving forward would be to avoid making any changes which would negatively affect academics, research and student financial aid.

Concordia’s budget has been revised four times since the beginning of the academic year. The university had originally planned for a $600,000 surplus in an earlier draft of the budget, but now the money will go towards covering the $13.2-million loss. The university will also be cutting costs by closing positions which are currently vacant and have been vacant for some time.

Looking to the future, Shepard said that it is still unclear whether or not this government cut will be a one-time occurrence and that “all eyes are on the [education] summit” which is set for Feb. 25 and 26.

Shepard also explained that Concordia will likely not be alone in declaring a deficit.

“It will surprise me if, in the final quarter of the year, anybody has five per cent of the money sitting around and they can just absorb it no problem. We run closer to the bone than that,” he said.

When Quebec Premier Pauline Marois cancelled the tuition hike imposed by the former Liberal government in the fall, universities were promised additional funding to make up for the loss in revenue. As of yet, Concordia hasn’t received confirmation about the exact amount or when that money will be transferred.


Unbalancing the budget

Photo by Madelayne Hajek

With four revisions to its operating budget in eight months and little communication from the provincial government, Concordia University is heading for a deficit, all the while waiting to hear about additional funding from the Parti Québécois.

It was revealed Friday during a Senate meeting that confusion and uncertainty have clouded the university’s finances during the entire academic year. Following the PQ’s decision in December to cut universities’ budgets across the province, Concordia lost $13.2 million for the last four months of the year — a slash that runs so deep that the university is now backed into a corner.

President Alan Shepard discussed the issue with Senators, saying that the revision created “so much uncertainty” for Concordia.

“It’s a very difficult time,” said Shepard. “We’re trying to figure out where we could get more money.”

In order to offset the cancellation of the tuition fee increase initially proposed by the Charest Liberals, the PQ was supposed to provide additional university funding. During Senate, Chief Financial Officer Patrick Kelley said that the provincial government has not been forthcoming with information as to when Concordia will be provided with that money.

“It’s absolutely physically impossible to not declare a deficit,” said Kelley. “We will have a deficit.”

During this year alone, the university’s projected funding dropped from $372 million to $359 million by December. The provincial government promised Concordia an additional $3.4 million for the 2012-2013 academic year to compensate for the shortfall they incurred from the freeze implemented in September when the university announced they would refund students the additional tuition they paid.

According to Kelley, the provincial government “categorically refused” to answer when Concordia requested a date for when they would receive the funding.

In the meantime, Interim provost Lisa Ostiguy emphasized that administration will have to cut funding to all sectors and that the university will have to be more careful with its fiscal management.

“We need to be fiscally responsible,” said Ostiguy. “It’s going to be difficult because reductions and changes are shared by all and there is no one sector that will take the hits.”

Ostiguy explained that the larger cuts will affect sectors such as the president’s office and advancement in order to minimize the setback for academics and student services. Furthermore, suggestions about how to use resources more effectively and ideas to “generate official revenue” are also welcomed by the administration.

What concerns the administration now is the lack of directives for the following academic year and if additional cuts will follow. Shepard stressed that while information has not yet come to light regarding potential reductions in the future, Concordia’s administration did ask Premier Pauline Marois if the shortfall in funding was an isolated incident.

“We asked Madame Marois if it was a one-time occurrence,” Shepard said. “And she said to wait until the education summit.”

At the meeting, Shepard urged Senators not to propose a motion to denounce the PQ as he deemed it a “dangerous move” in a time of unpredictability.

Until more is known, Concordia will not declare a budget until March or April for the 2013-2014 academic year that starts on May 1, so that the university does not commit to a budget it may not be able to handle.

The Board of Governors will hold a special meeting Tuesday to discuss declaring a deficit.

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