Why is our benefits package being modified?

McGill still has to face and deal with significant financial uncertainty. The economic downturn has affected the level of donations to McGill and income from our endowment, as it has for most other universities. Even before the downturn, McGill had already been asked by the Quebec Government to commit to balancing its budget by fiscal 2010-11 (our financial year ending May 31, 2011), reducing our annual operating deficit from the $11.4 million that it was as of May 31, 2009 to $0 in two short years. These combined financial pressures mean that we must find ways to reduce our expenses with a target of $17 million in 2009-10 alone. We have no choice but to contain costs in a number of areas, including benefits. If McGill cannot meet the target of $17 million in 2009-10, more drastic measures will have to be considered.

Why benefits? Weren’t there other ways of reducing costs that affect colleagues less?

Throughout the process of deciding how to reduce $17 million in expenses, our primary objective was to try to preserve jobs wherever possible. To do so, we are reducing expenses in a range of different areas, on the assumption that moderate cuts spread over many different areas would ultimately cause less pain to our people than more drastic measures, such as layoffs. While no one welcomes changes to one’s benefits, the University’s overall compensation package is considered generous, and even after these changes, it will remain very competitive.

What was the consultation and approval process?

The Provost’s Administrative Task Force on Dealing with Economic Uncertainty consulted broadly with the McGill community through faculty councils and four town halls to discuss options for expense reduction. The senior administration also reviewed measures being taken by peer universities and performed extensive analyses to weigh the various options. On three occasions, we consulted with the Staff Benefits Advisory Committee, which includes representation from the major staff unions and associations. While the consultations yielded agreement in some areas, ultimately there was no overall consensus on how to achieve the savings needed. Unfortunately, some groups will feel that their voices were not heard, but we took all advice into account and had to make some tough choices.

Once the draft modifications were finalized, the new package was presented to the HR Committee of McGill’s Board of Governors. The Board approved the changes on November 23, 2009.

The out-of-pocket maximum for the health plan is now triple what it had been. Why were such drastic changes made?

The out-of-pocket maxima were extremely low and have not been changed for many years. At the same time, salaries have increased substantially. If you compare McGill’s new maximum with that for Quebec’s RAMQ drug plan, for example, McGill’s new single rate is still about half of RAMQ’s.

Why did we receive so little warning of the changes to the benefits package?

In her February and April economic letters, the Principal explained McGill’s difficult situation in the context of economic uncertainty and warned that expenses would need to be looked at and contained. At that point, the Provost’s Task Force was still undergoing consultations and looking at options, and as such details of the cost containment measures had not been finalized. In addition to the consultations noted above, discussions took place with the Staff Benefits Advisory Committee about the need to modify the benefits envelope to reduce costs by $1 million, in that instance. The Provost’s fall budget update, posted on October 13th, listed potential benefit modifications as one of the measures being examined or planned, and the Principal’s fall economic letter also highlighted benefit modifications.

We hope that you will find these few comments helpful in understanding the reasons for and the limited impact we hope these changes will have on each of us. The final determinations that were made, after extensive consultation, aimed at achieving the objective that was set while limiting the impact on all of us. Some of the changes result in reducing the costs to employees and should not be overlooked. A great deal of care and, I submit, professionalism was invested in the process that led to these changes.