Deficit – The Concordian

Concordia has lowered its deficit by 58 per cent in the last two years.

Concordia University intends to reduce its deficit for a second straight year. In its 2017-18 operating budget, released on June 12, the institution anticipates a $3.9 million deficit, down from a $6.3 million projection in 2016-17, and $8.2 million in 2015-16.

At a Board of Governors meeting on March 8, the university’s finance committee highlighted the need for the school to reduce its deficit in the next budget in order to obtain a larger borrowing capacity from the provincial government. The deficit has been reduced by 58 per cent in the last two years.

The university projects a total revenue of $473.7 million and its total expenses to be $477.8 million during the upcoming fiscal year, from May 1, 2017 to April 30, 2018. According to a letter signed by president Alan Shepard and published on the university’s website, Concordia “anticipates that [it] will be in a position to present a balanced budget within the next two years.”

The school last projected a balanced budget in 2011-12. The university was successful in doing so in 2012, but then faced major budget cuts starting the following year when the government made cuts to operating grants.

To limit the impact of these cuts, the institution launched—amongst other measures—a Voluntary Departure Program in 2014 and a Voluntary Retirement Program in 2016. The first gave administrative staff the option to leave Concordia before the expiration of their contract in exchange for a severance package. The expectation was at the time was to save as much as $5 million. Ninety staffers ended up leaving.

The 2016 Voluntary Retirement Program was open to both staff and faculty and was intended for people nearing retirement.

Concordia will also benefit from a three-per-cent increase in higher education funding from the Quebec government, as it will receive $3.2 million in new funding from the province in the upcoming year. Since 2010-2011, the university’s revenues have decreased by $90 million. However, Concordia’s student population has increased by 6.5 per cent during those years.

Archive graphic by Florence Y.

Banks on fee levy increase to mitigate deficit

The Arts and Science Federation of Associations (ASFA), Concordia’s largest faculty organization, recently voted to add $16,000 in additional expenses to bring an already red budget deficit to a total of $61,000.

VP Finance Melina Ghio explained that the deficit is a response to rising costs, inflation, and additional funds given to ASFA’s member associations (MAs), which are department specific student associations. She says two budgets were originally proposed during council deliberations back in June.

“There was one option where we did not have a deficit, where we had cut majorly where we could …so you ended up having a zero dollar deficit,” she said of the so-called ‘Thrifty Budget.’ These cuts would have been to variable costs, like administration.

Ultimately the council decided on adopting the ‘Generous Budget’ over the one that would have curtailed costs and eliminated the gap. Originally, before additional costs were voted in late August, the previewed deficit was at $44,000.

“The reason, I think, that council thought it was best to go to the generous budget is that we’re going to look into increasing our fee levy this year,” Ghio said. “Economically speaking, ASFA’s income has been fairly stable — our main source of income has been the fee levy, by far. Essentially the fee levy is the source of our income.”

Comparing last year’s budget to this year’s showed the fee levy income (which currently accounts for around 75 per cent of ASFA’s revenue) to have increased by less than $2,800, while expenses have in some cases gone up dramatically. Currently, the fee levy for ASFA stands at $1.22 per credit per student.

“That [fee levy] has not increased, but MAs…need more money,” Ghio said. She believed the fee levy discussions and changes would most likely come next year, but couldn’t commit to any firm dates.

“Nothing’s been set in stone…but we definitely want to look towards covering most of…the deficit [with the fee levy],” she answered to the question of how big the increase would be, saying several more weeks would be required to crunch the math and come up with accurate numbers.

Alongside factors like election expenses and the creation of a communications coordinator position, ASFA purchased a printer and related office supplies for some of the MAs located at the Loyola campus.

“Instead of imposing it on their budget, FinCom thought it would be better to have it as part of ASFA’s budget,” she said. Counting the supplies, printer, and surrounding expenses, it added $1,500 to the bill.

“If [the fee levy hike] doesn’t pass, ASFA has enough money in its bank account to account for the deficit,” assured Ghio, though she would not say how much of a surplus the ASFA coffers contained.

Aside from fee levies, Ghio did say there has already been a higher-than-expected profit from ASFA’s first event of the year, Frosh Week. “When we hold events, there’s a certain amount of money that comes in from our events, but not much,” she said, saying Frosh had earned around $5,000 more than anticipated.

In any case, the VP explained that previous experience has shown budget spending to be more prudent than the figures show.

“Generally speaking, according to the budgets that we make, we don’t spend as much as we anticipate. To look at ASFA historically, I’d say we anticipate spending more money than we do over the course of the years.” She says MAs, for example, typically organize less activities than planned because of time constraints and other commitments.

She also said the deficits were broadly proportionate to those of other organizations like the CSU, which she says will also be asking for a fee levy increase to cope with rising expenses.

“We didn’t want to be in a situation where we end up with a crash,” she said at the fattening of the budget and in relation to previous financial difficulties encountered by Concordia student organizations.

NOTE: An earlier version of this article stated that fixed costs would be reduced in the Thrifty Budget. As these costs are fixed, they would not be reduced with this plan.

It was also stated that ASFA’s cost for students per credit is $9.75, when it is in fact $1.22.

The Concordian apologizes for these errors.