Budget cuts tear into ‘pedagogical muscle’
Academic units at Wilfrid Laurier University have been asked to “model” cuts of five and seven per cent for the 2015-16 academic year.
Academic units at Wilfrid Laurier University have been asked to “model” cuts of five and seven per cent for the 2015-16 academic year. There are two crucial things people should know about these proposed cuts. First, they will very seriously impact the core missions of the university; learning, teaching and research. This five and seven percent choice is a choice between utterly disastrous and worse. Important programs will have to be cut and student choices will be more limited, staffing levels will go down and class sizes will increase. As well of course, the alleged necessity of these cuts will be used as a kind of negative bargaining chip in the administration’s negotiations with the faculty union with respect to compensation and pension contributions.
The second crucial thing to know about these cuts is that they are entirely unnecessary. One would think that proposing such extreme cuts to the university’s operating budget would be because of a situation of dire financial emergency. Nothing could be further from the truth. Laurier has been steadily increasing its net assets over the last several years. We have as of April 2013 total assets of $615 million. This is up $128 million since 2011. Our total liabilities are only $574 million, giving us net assets of over $47 million according to our audited financial statements published online.
We have a very complicated financial situation. We rent and we lease, we buy and we sell, we borrow and we lend and we make long and short-term investments. Our assets are of many forms, some very liquidable ($70 million of our assets are in the form of cash or very short term investments) and others not; some have externally imposed restrictions upon what can be done with them, others have internally-imposed restrictions. Our liabilities are also quite various and of both a long and short term nature. But the bottom line is that we have much more than we owe. We have this abundance while departments are counting paper clips and the faculty of arts has mandated that we cannot print our course outlines for students because we “cannot afford it.”
But we have just recently agreed to purchase a shopping mall in Brantford for $5.8 million.We also have a number of other ambitious building plans on the horizon and, of course, we’re still talking about a whole new campus in Milton. How can we afford such things when five and seven per cent cuts to the operating budget are allegedly needed? The answer that will be given by the vice-president of finance and administration, Jim Butler, is that we have a “structural deficit” to overcome in our operating budget.
But what does this mean? How can we be rich and poor simultaneously? Our net worth has consistently grown over the last decade at the same time as having a consistent series of austerity budgets. The “structural deficit” means that our incoming revenue – student tuition fees, government BIUs (essentially the per-student funding), corporate and alumni donations and various sundry revenues coming from our ancillary operations (the athletic complex, food services, etc.) – is actually less than what we need to spend upon operations.
Our operational budget is composed of many things, ranging from maintenance and the electricity bills to faculty and staff salaries. But let us consider just one item here for the moment: the pension deficit. This accounts for approximately ten per cent of the operations budget each year. It is enough to push us over into this “structural deficit.” We have this pension deficit (it has its own complexity of actuarial and legal details of course) for basically two reasons.
First, the pension fund lost money in its investments, and secondly because the administration took what is called a “contribution holiday” for a number of years. The university is required by law to keep the pension fund financially viable and thus to work towards paying down the pension deficit. The way the administration has chosen to do this is through contributions from the operating budget. But this, it must be emphasized, is a choice among many possible others that they could have made.
Butler presents our financial situation as though there are only two choices available to us: the aforementioned five or seven per cent cuts to the operating budget for next year. This is disingenuous. It obscures the fact that there are other choices possible. It obscures the fact that proceeding according to one or the other of these choices is a violation of the university’s legally-mandated primary mission according to its founding act. This very clearly prioritizes educational benefit over simply acquiring financial assets.
Butler’s decision to deal with the structural deficit through operational cuts, it could be and surely will be, argued, is simply elementary financial wisdom: far better to impose cuts upon operations than cut into investments to pay debts, and this is simply because the investments have the potential to make us more money. This is sound corporate business logic. And therein lies the profound flaw in the reasoning: the university is not primarily a business. One can legitimately ask what is the point of acquiring more and more net worth if the money can never be put toward operations, toward the costs of research and teaching?
Butler seems to want to take us down a road whereby we are focused upon accumulating more and more assets, having a larger and larger net worth. This might be a legitimate goal if it was possible to do so in a way that did not cripple the institution’s real purpose: education. But this is precisely what is happening.
These five or seven per cent proposed cuts would probably not be so disastrous had they come after a decade of frivolous spending. However, we have had austerity budgeting for several years.
Operational surpluses produced by these austerity budgets have frequently been transferred to capital investments. Austerity operational budgeting has facilitated the growth of assets and contributed to the increase in our net worth. But it has also strained our educational mission to the breaking point. We are a long way beyond a situation of “trimming fat.”
Whatever fat there was, was cut away long ago. We have been cutting into pedagogic muscle for quite some time now. The fact that students have been able to see class sizes increase over the years but yet still fail to see a real qualitative decline in educational quality has been because of rather heroic efforts by staff and faculty to “do more with less.” But we have gone about as far as we can with this. The cuts being presently modeled penetrate right to the bone. Their effects will be felt. Laurier’s public relations people can crank out sound bites about leadership and excellence all they like, but the destination for the budgeting train we are on is educational mediocrity.
My pride in Laurier refers to its educational achievements – the research produced by the faculty, the learning acquired by the students and their welfare and happiness – not in the size of our real estate portfolio. It is clear what needs to be done. Instead of cuts to operations, we need to liquidate and/or borrow against our assets. We have a lot of options to choose from.
The administration has not even presented this to us as a possibility to be considered. Rather they seem to have made a dogmatic decision: to sacrifice Laurier’s primary missions of teaching and learning and research at the alter of real estate acquisition.