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Budget nears completion
Vice-Principal (Administration and Finance) Morty Yalovsky is the first to admit that his proposed budget for 2001-2002 is deceptive at first glance. Following the lead set by last year's budget, there will be no budget cuts, and reinvestment in hiring, in the physical infrastructure and in the libraries will continue -- that is, of course, if the budget is approved by the Board of Governors at the end of this month.
On the revenue side, what's new is government reinvestment of $9.6 million more than last year's allocation, a $4.2 million cost indexation adjustment, increased revenue generated through the deregulation of incoming undergraduate international students, and a fee increase of $500 per 30 credits for all deregulated students.
Undergraduates from outside Quebec will pay an increase per credit of $5 in their out-of-province supplement, all of which will be returned to Quebec. There will also be interest due from the proposed sale of John Abbott College and some savings on interest costs.
The total revenue is budgeted at $358.2 million -- of which $198.7 million is from the Quebec operating grant. With expenditures budgeted at $364.2 million, the University will incur an operating deficit of $6 million.
On the spending side, investments will be made in new areas, some of which are targeted and funded under the "contrat de performance" signed last December with the Minister of Education. The government is providing $1.4 million, for instance, in the area of student internships and job placement. The Quebec Policy on University Funding also funds bursaries for studying abroad to the tune of $1.1 million.
There will be $500,000 in funding to help with the creation of five new multidisciplinary research centres. There is another half-million allocated to support the infrastructure required by the Canada Foundation for Innovation (CFI) fibre optic backbone project.
The amazing success rate of the University's recent applications to the CFI didn't come without added expenses. While the foundation puts up 40 per cent of the costs of projects, an amount matched by the province, the University must still come up with the remaining 20 per cent, either from internal sources or via external sources; McGill's 20 per cent of costs has not been included in this budget.
In addition, outside of the infrastructure of a project, there is sometimes need for additional support staff, not to mention the costs of heating, cooling and maintaining premises.
Other new areas proposed in the budget include $275,000 for professional development for managers and $160,000 for the Environmental and Safety Program in order to hire a second fire prevention officer and provide additional support in the areas of radiation safety, biosafety and hazardous waste management, and environmental protection.
A further $125,000 is proposed to develop an electronic distance learning program in rehabilitation sciences in conjunction with the Faculty of Medicine and an external partner.
In terms of the continuation of support for the program initiated two years ago, there will be a $4 million expenditure for campus renewal. Next year, as in the current and last year, $10 million will be borrowed in order to repair buildings and facilities that, in the principal's words, might otherwise have to be closed; $1 million will be required to service the debt on the $10 million loan.
A further $1 million will go toward increased energy costs. For the current year there was a $3.7 million difference between the actual and forecast energy costs -- this despite a 14 per cent decrease in energy use. The Quebec government is expected to help fund the increase in energy costs.
Concerning academic and non-academic salaries, an increase of $10.5 million is proposed. On the academic side, the intention is to have salaries reach the 50th percentile in relation to the country's nine other top research-strong universities.
In another investment to help make the University relatively more competitive, $200,000 is proposed to strengthen Development and Alumni Relations so that the unit may achieve its goal of raising an annual $100 million in private donations by the year 2010.
Recruitment and support services to students, too, get a proposed boost of $400,000 in order to support projects which include recruitment and retention of students, francophone students in particular.
At the departmental level, each dean will have discretion over his or her slice of $1.6 million, while Yalovsky will administer the allocation of $1.3 million to administrative units. Coming out of the former sum is $25,000 for each of the field stations, the Gault Nature Reserve and the Morgan Arboretum, a sum which will increase to $50,000 each next year. While such funding isn't new to the Gault, this is a first for the Arboretum.
What's changed, vis-à-vis last year, is the number of new academic positions to be created and filled. Instead of the 20 new scholars that were meant to be hired annually for a total of 10 years, beginning last year, this year's quota is 14 at a price of $1.4 million. This decision was made due to "special requirements in the area of compensation."
These positions do not include the Canada Research Chairs, of which 35 will be recruited next year, nor does it include the replacement of faculty who will retire this year.
In the proposed budget, the principal notes that last year 115 new faculty were hired to both replace those retiring and lower the faculty to student ratio. He notes, however, that due to "the structural deficits" that objective may be unrealizable in the short term.
While all this new and continued spending looks dandy, the matters of $164 million worth of deferred maintenance, a deficit that will climb to $31 million (down from $80 million 10 years ago but up from a low of $16.5 million two years ago) and the deferred acquisition and technological infrastructure for the libraries, not to mention establishing competitive salaries and the as yet unknown cost of implementing pay equity legislation, loom in the background.
And they will leap to the foreground next year when the University is obliged under the contrat de performance to have a zero operating deficit.
In Part I of the proposed budget, the principal makes it clear that "in order to 'keep the faith' with both the academic renewal process and the University's other strategic investment programs, it seems almost inevitable that a general budget cut in 2002-03 will be required."
Yalovsky explains that even though the University will receive increased funding under the contrat de performance, amounting to a total of $100.8 million over a three-year period, "we're already pre-spending a large part of our future increases."
In other words, the University is mortgaging its future in the belief that in the long term, the spending outlined above will more than compensate for the risk and costs involved.
As Principal Bernard Shapiro put it in the draft budget: "Despite the uncomfortably shaky fiscal foundations of the University, I intend to keep with my policy of providing -- within each annual budget -- for new investments that alone can make it imaginable that, over time, the University will be able to both respond to the rapidly changing environment in which McGill and all other universities must operate and sustain the quality of its teaching and research programs."
Whether or not the Board of Governors can live with a projected $6 million deficit to fund such a strategy remains to be seen.