Correction appended – Wednesday, Sep 1
On May 25, the Board of Governors approved the McGill University Budget 2010-2011, an ambitious document that has the potential to dramatically alter the direction of the University and its finances in coming years.
Among the goals set forward in the nearly 60-page Budget Book is the funneling of funding to lucrative graduate research, the deregulation and increase of student tuition, and the elimination of the University’s deficit by the end of this fiscal year.
The University’s Fiscal Year (FY) has been shortened to 11 months, with the year ending April 30 as opposed to May 31. The measure is part of an effort by the provincial government to bring the FY of Quebec universities closer in line with the provincial governments’ FY, which ends March 30. The measure is also aimed at reducing the province’s overall deficit. Various revenues and expenses have been reduced to accommodate the 11-month FY, to the degree where revenues now outweigh expenses.
The 11-month FY proposes a “close to break-even scenario’’ for the University. Within an 11-month FY the Budget predicts total revenues to reach approximately $1.03 billion, with total expenses at approximately $1 billion.
Thus, the 2011 Budget is projected to break even, a significant accomplishment given the severe deficit the University has faced since the 2008 recession, and the even worse financial situation of other Quebec universities, as well as the provincial government that provides a large portion of their funds.
Of nine Quebec universities surveyed by the Conférence de recteurs et des principaux des universities du Québec, McGill had the fourth highest accumulated operating deficit in May 2009 with an approximately $70-million deficit. Université de Montréal led the way with a deficit of approximately $140 million. Université du Québec a Montréal had approximately $115 million in deficits, but the impact of UQAM’s capital project deficits, including millions of dollars the University lost in a failed real estate investment last year, was not taken into account. The average accumulated operating deficit amongst Quebec universities was approximately $55 million.
By the end pf FY 2007 McGill had a deficit of almost $20 million. By the end of FY 2009 the deficit had been reduced to $11.4 million, and last year — FY 2010 — it was reduced to $5 million.
The provincial government is in even worse financial straits. For the FY 2009-2010 the province posted a $4.3-billion deficit, a level not reached since 1996-1997. As part of the provincial government’s attempts to reduce expenses, post-secondary education institutions have received major funding cuts in recent years.
The University still relies heavily on the provincial government for its funding; the most notable provincial grant, one from the Ministère de l’Éducation, du Loisir et du Sport (MELS) accounts for almost half McGill’s revenue.
“The Federal government has been slashing the post-secondary education budget, and the provincial government has followed suit,” said SSMU President Zach Newburgh. “There’s a serious underfunding crisis [at McGill].”
As a result of underfunding, McGill has attempted to find revenue beyond provincial grants in this year’s Budget.
“The percentage of McGill’s budget that comes directly from MELS is being reduced (even as its dollar amount increases),” wrote Provost Anthony Masi, in an email to the Daily. The Provost and his office are responsible for drafting the Budget each year.
Instead of relying on provincial grants, McGill is harvesting additional revenue from “select priority areas” that are beneficial to the University’s global reputation and lucrative for its bottom line. The priorities are focused mainly on graduate studies and research.
“We are increasing research dollars and the overheads that accompany them…[and] we are working with foundations and the private sector on projects,” said Masi.
The University Budget is comprised of four funds: Operating, Restricted, Capital, and Endowment. The Operating fund deals with all activities associated with McGill’s core research and teaching activities. A large proportion of the MELS grant goes into this fund.
Click the graph above to download the University’s budget book
The Restricted fund is essentially the same, only the money deposited in that fund has specific restrictions. Research grants are an example of restricted money. The 2010-2011 Budget forecasts restricted fund research revenues to total approximately $263.5 million. Of that total, roughly $140 million comes from the federal government, $35 million from the provincial government, and $5 million from the U.S. government. Canadian corporations accounted for approximately $2.5 million, while Canadian foundations and associations contributed $14 million, and U.S. corporations contributed $92, 000, with U.S. foundations and associations accounting for almost $2 million.
The Capital fund comprises all revenues from sources specifically earmarked for the acquisition, construction or renovation of capital assets — in other words infrastructure purchase, maintenance, and construction. The recent purchase of a downtown hotel was funded in this way.
The Endowment Fund is comprised of all gifts, donations, and bequests made to the University for specific purposes, such as financial aid.
Due to an editorial error, the printed version of this article (News, Sep 1, pg, 3) contains inaccurate figures concerning the contributions of U.S. corporations and the University’s past deficit. The Daily regrets the errors.
Other installments in this series*
Part 2 – Budget forecasts severe tuition increases; student aid still inaccessible
Part 3 – McGill stuck on deferred maintenance treadmill; admin using outside investments to pay for new property
Part 4 – McGill cycling out tenured professors to cut costs; Admin staff, salaries, on the rise