Extra, News Feed, Uncategorized | Dec. 2, 2012

Between a rock and a hard place: leaders discuss UBC budget realities

UBC looks out of the box to find relief from the budget squeeze

There is an uncomfortable reality facing the UBC community. Costs are up, revenues static, and the university is looking in unlikely places for solutions to the financial crunch.  The battle waged to fend off unsustainable budgets is a complex one, yet how it all works out has interesting ramifications. UBC could well leverage this difficult context into a game-changing opportunity. 

Vice President Finance Pierre Ouillet, Vice President Human Resources Lisa Castle and Vice Provost Angela Redish discuss the university’s challenges and choices with UBC Reports.

UBC Reports: In the recent finance presentations to the Board of Governors and to the Senate, the picture that is emerging seems less than optimistic. What is at the root of this financial problem?

Pierre Ouillet:  On the revenue side, the provincial grant is facing cuts and domestic tuition is capped at two per cent, so our regulated revenues are flatlining. Yet our expenses are up because like any other sector, we are subject to inflation. After two years of salary freeze, our faculty and staff expect an increase, and in fact the first bargained agreements have two per cent annual wage hikes for each of 2012 and 2013. Then you add the rising cost of electricity, the increase in carbon offsets and more …  It is pretty simple: it all adds up to a deficit.

UBCR: Have you done enough on the cost side? Some have pointed to the compensation paid to UBC’s top earners. In lean times, should the university be reexamining compensation packages?

Ouillet:  We have already done major cuts because we’ve had to. The operating grant from the provincial government has not been indexed to inflation for a very long time.  The B.C. government support for building maintenance has been just about all cut these last two years. We are getting significant provincial investments to double the BC Medical program, but that’s all earmarked.

As a result of our 2010 restructuring plan, we have been able to find over $30 million in efficiencies and tackle our deficit. Management was streamlined, Building Operations was restructured, IT was integrated and we reorganized some of our academic programs. Administrative units are required to submit zero-based budgets – they can no longer hang on to funds they don’t need or use. Faculties realigned their curriculum. We are still looking for more, but we are reaching the end of the road on savings.

Lisa Castle:  UBC offers competitive compensation packages to faculty and staff because we want to retain and recruit people who contribute to UBC’s excellence. We need to be competitive with our peers when we recruit faculty, not just in Canada, but beyond.  For staff, we provide packages in the middle of a representative market of other large B.C. public and private sector employers and Canadian universities. Staff who come from the private sector often take significant pay cuts to join UBC. We need outstanding people to continue to excel, so we do what we can within our financial means to provide the kind of compensation that will attract people of this caliber.

UBCR: It is hard for many to understand how UBC could be facing a squeeze when its endowment is so healthy.  Is that not also a part of the equation – could these funds be mobilized in challenging times like these?

Ouillet:  Unlike older universities like Harvard, UBC’s endowments are still relatively small and contribute less than four per cent of UBC’s operating budget. They help in critical areas, but their spending can only be used in very defined areas as specified by the original donor. Donors don’t generally fund ongoing operational expenses.

UBCR: What are some of the options UBC is considering to increase revenues – and where does UBC draw the line? Are there revenue-generating avenues that you will not pursue?

Angela Redish:  First, we are looking at making the most of our facilities during the summer by offering more courses, and we’re also looking into developing 12 month programs whenever this makes academic sense. Secondly, we want to welcome a greater number of international students who are keen to study here – mostly because they really help UBC connect to the wider world. With their distinct perspectives and experiences, they really bring the world into our classrooms and our research – they often become our most enthusiastic ambassadors.

Ouillet:  International students pay full tuition, meaning they are not subsidized by the provincial government or other sources of revenue. Their tuition contributes to our fixed costs, which certainly helps when public funding is no longer supporting our infrastructure. But let’s be clear: international students do not displace domestic students; admitting them has allowed UBC to add to the number of spaces funded by the B.C. government.

Redish:  Thirdly, we are looking at offering lifelong learning opportunities to past and prospective students by expanding programs for mature students and improving our offering of professional programs. We are exploring online opportunities, either by blending courses – combining face-to-face classroom methods with computer-mediated activities — or offering more complete online experiences for remote students. By the way, this kind of approach will also be considered for our undergraduate students.

It’s exciting to me as a teacher to think of having some course content delivered online so our faculty can focus on one-on-one work with students.  This could really transform student experience at UBC.  One principle is clear though – and I want to emphasize this: any option we launch must clearly benefit our students. A stronger summer offering can accelerate degree completion. A more international campus provides richer experiences. Blending courses offers a more integrated and effective experience to our students.

UBCR:  Some might argue UBC needs to accept the current tuition rates and B.C. government grant, and live within its means. Are you ruling out this option?

Redish:  We could do that, and settle for being a solid provincial university. But that would be a huge mistake. To survive, UBC must continue to improve. We aim to be one of the very best public universities in the world because ultimately, this serves the interests of people here in BC and beyond.

Ouillet: We have no choice. With globalization and online learning, it will be increasingly difficult for regional universities to survive, and this is unfolding now in the U.S. There is going to be a major restructuring of the post-secondary sector in the coming years. UBC needs to position itself to thrive in that challenging yet exciting environment.

Castle:  There is already tremendous momentum right now. UBC has truly inspiring students, a world-leading faculty, beautiful and sustainable campuses, and committed, talented management and staff. There is a consensus among UBC’s leadership that we owe it to our community – and to the people of this province who have believed in UBC for over 100 years now – to strive to become all that we can be. A place of mind.

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Pierre Ouillet, Vice President Finance, Resources and Operations

Pierre Ouillet, Vice President Finance, Resources and Operations

Lisa Castle, Vice President Human Resources

Lisa Castle, Vice President Human Resources

Prof. Angela Redish, Vice Provost and Associate Vice President Enrolment and Academic Facilities

Prof. Angela Redish, Vice Provost and Associate Vice President Enrolment and Academic Facilities

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