CUPE 3906 Unit 1 Bargaining Blog
~ your issues, your process, your contract ~

Grant in aid explained

Your bargaining team’s proposal on grant-in-aid is one of the most important proposals in this bargaining round. Grant-in-aid is an accounting instrument that allows a University Administration to convert part of the pay of a graduate student TA into a special type of bursary. It has been successfully implemented at York University and the University of Guelph for many years.

The genius of grant-in-aid is that it allows both the University Administration to save money, and TAs to end up with more take home pay, with absolutely nothing more than a few changes in accounting software. The savings come because the various payroll deductions that are taken off wages do not have to be taken off grant-in-aid money. The net result of this is almost 10% savings for the Employer and 9% savings for Employees.

We’ve currently proposed a grant-in-aid amount of $3000 per full Graduate TA. Running through a quick calculation using current TA compensation, this level of grant-in-aid results in $290 of savings for the Employer and a $276 increase in take home pay for employees, as is seen in the graph and table below.

grant-in-aid-explained

Table 1: The effect of grant-in-aid on a full graduate TA.

With Grant-in-aid Current Practice
Take Home Pay $9422 $9146
Employer Savings $290 $0
Employer Payroll Deductions $491 $781
Employee Payroll Deductions $458 $734

Why does the government, specifically the Canada Revenue Agency (CRA), let you do this?

Both the provincial and federal governments make significant monetary contributions towards the education of graduate students. They have always intended that a portion of this money is paid out to graduate students to offset their costs of living while contributing to the betterment of society through conducting research. As universities have grown and evolved, they have converted to using money they get from government for graduate students to pay for Teaching Assistant positions. This allows for the university to extract labour from graduate students, for graduate students to contribute back to the university community and for a stronger university system. Despite TAs being paid out in wages, the fact still remains that money for their wages is coming directly from the government and was meant to provide support for them in their status as students. Due to this, the CRA allows a portion of TA compensation to be converted back to the bursary it was originally intended to be.

Why can’t all TA wages be grant-in-aid?

An effective upper limit on grant-in-aid exists because the CRA won’t allow all wages to be grant-in-aid as TAs are students and workers. The limit exists to ensure that TAs pay sufficient EI and CPP contributions to ensure they are actually entitled to coverage. The exact upper limit depends on numerous local factors; however, we know $3000 is reasonable as York University already has this level of grant-in-aid and University of Guelph has $2525 in annual grant-in-aid.

There has to be a downside, what is it?

The big loser in the whole equation is the Union Local. One of the employee payroll deductions that are reduced by grant-in-aid is Union Dues. Implementing grant-in-aid would result in a decrease of over $100,000 per year in Union Dues received by your local. Despite this hit to the Local, your bargaining team is still 100% behind grant-in-aid as the benefits to TAs far outweighs the cost to our organization. One caveat is that a significant amount of the union dues that would be reduced are currently used to cover the shortfall in benefits funding from the University Administration, so it is absolutely critical that, combined with grant-in-aid, the University increases its contributions to benefits funds.

One other downside to be aware of is that the accumulated hours towards EI eligibility will also be reduced by the amount of grant-in-aid. While most TAs do not work sufficient hours to reach EI eligibility, some employees who work at another position may have their EI eligibility affected. If any TA is concerned about the effects on their EI eligibility, they should contact the Union to find out more information.

What happens to the savings that the University receives?

Based on current TA numbers, the University Administration stands to save $430,000 per year by implementing $3000 of grant-in-aid per full graduate TA. Your bargaining team has made it clear that this funding MUST be put towards improving the benefits funds at the Local. The benefits funds have annual shortfalls which run into the tens of thousands of dollars due to increased number of TAs and increase used of the funds. If the University Administration tries to pocket the savings, the Local will be forced to cut benefits funds even more than we have forecast, resulting in massive losses for all TAs (graduate and undergraduate).

What can we do to help the bargaining team get grant-in-aid?

At the moment the University Administration has not budged on any monetary item in our package, and grant-in-aid is clearly monetary, as we’ve requested the savings all go towards benefits. They’re expressed willingness to talk on grant-in-aid, but have not yet taken the opportunity to do so. This refusal to budge is one of the reasons your bargaining team has asked for a strike mandate vote, the University Administration has continued to stall on key proposals and we need them to start making significant moves. The Administration is waiting to see whether TAs support their bargaining team before moving on monetary items, so we absolutely need you all to vote YES in the strike mandate vote in order to get the leverage to resolve items like grant-in-aid and benefits at the table.

Methodology: The current wage rate of $36.54 / hour + 4% vacation pay and 260 hours per full TA have been used to calculate compensation in both cases. Employer payroll deductions are: CPP, EI, Ontario Employer Health Tax and WSIB Premiums. Employee payroll deductions are: CPP, EI and Union Dues. Income tax has not been included in calculations. Employer savings are due to decreased Employer Payroll Deductions. A PDF of the spreadsheet used to do the calculations is available here. If you would like a copy of the original spreadsheet or more explanation of the methodology please contact our research team at: bargaining@cupe3906.org.

Advertisements

No Responses to “Grant in aid explained”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: