McGill hopes to be in the black by 2016 fiscal year, Masi says

Posted on Wednesday, March 23, 2011

By McGill Reporter Staff

Budget projections suggest McGill will not likely see a balanced budget until FY2016, Provost Anthony C. Masi said yesterday, outlining to both Senate and an earlier Management Forum meeting the steps the University needs to take to get there.

“We need to think in entirely new ways,” he told close to 200 M-class employees at a Faculty Club breakfast meeting. He also pointed to a 12-per-cent growth rate over the past five years in administrative and support staff.

Citing the province’s Bill 100, which imposes constraints on how the University can allocate resources, Masi noted that McGill is required to cut administrative operating expenses by 10 per cent over the next four years and must reduce general administrative staff through attrition over the next four years such that only one of every two administrators who leave will be replaced.

If it does nothing to address its financial situation, Masi said, the University will face a deficit of $19 million for FY2012, following a projected break-even situation in the current fiscal year. This shortfall is the result of a number of factors, including salary increases, an infusion of $2.3 million this year into the pension fund, the effect three consecutive difficult years in the investment market has had on the University’s endowment and how reduced endowment income has eaten into operating funds to meet spending commitments, an expected rise in interest rates and the rising costs of research competitiveness. New accounting rules imposed by the province and a shift in the timing of the fiscal year have added to this complexity, he said.

Thanks to an agreed-upon faculty salary increase deferral of six months ($5 million), an across-the-board budget cut of 2.5 per cent ($5 million of which will go to deficit reduction), $2 million in unanticipated extra revenue based on higher-than-expected undergraduate enrolment and an anticipated $1 million in savings resulting from the Strategic Reframing Initiative, the University should end FY2012 with a deficit of only $6 million.

From that point until 2016, smaller and smaller deficits are forecast until we get to a balanced budget. But, the Provost noted, at that point McGill can begin to address about $100 million in accumulated deficits.

“We need to find new areas of revenue growth and of savings,” Masi said. McGill is looking for help in getting rid of red tape and implementing more administrative efficiencies and is looking to its managers to participate to a greater degree in strategic planning and the implementation of best practices.

The University has to learn to do things differently, Masi said. “We can’t just say that ‘it’s the McGill way’ and let it go at that.”

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