CUPE 3906 Unit 1 Bargaining Blog
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McMaster in Surplus!

Ever since the “financial crisis” hit in the summer and fall of 2008, we’ve heard a lot about how bad the economy has been for a wide variety of businesses, governments and institutions. Words like “depression,” and “prolonged recession” painted dreary pictures of the sky falling and crushing the entire world economy. But now nine months later, there has been ample opportunity for a sober second look at the true financial picture.

What is becoming more apparent is that many companies and institutions are, in fact, still in strong financial positions. Even Ford Motor Company, supposedly in crisis in the Fall of 2008, has reported a strong profit for the last fiscal quarter. All of this begs the question, what is McMaster’s true financial outlook? Normally this information would be kept hidden behind the veil of McMaster’s administration; however, McMaster’s current financial outlook has been confirmed by Peter George himself in a confidential memo to the University Planning Committee on May 14, 2009:

“Finally, one-time year-end funding from MTCU was received in April 2009. This funding is a welcome relief as it gives us some surplus, unexpected funds to set aside for the next budget year. However, it does reinforce the ongoing difficulty in communicating the impact of provincial funding received at the end of Ontario’s fiscal year. This funding is unpredictable. It also creates what can seem like a mixed messaging in that we have a surplus of funds while at the same time we are discussing significant financial challenges. There has been, and continues to be, criticism of our budgeting process and approach in light of these surpluses and whether they should be used for ongoing rather than one-time expenses. Given the uncertainty of many of our revenue sources I believe that it is still prudent to be cautious and conservative. The work of the Alternative Budget Model Committee will be releasing its report in the next few weeks and this will guide the preparation of future budgets for the University.”

See the whole memo here:

A surplus ?

Despite all the doom and gloom, University President Peter George has definitively stated that McMaster was absolutely in a surplus through the fiscal year encompassing the financial crisis. Despite this surplus, the McMaster Board of Governors chose to massively increase tuition for all students for 2009-10. This increase has been felt by undergraduate students who were already suffering from record high-unemployment during the summer months, due to the financial crisis. For graduate students, the tuition increase has come directly off their paycheques resulting in less money to cover the basic costs of living. In terms of the financial picture of the Univeristy, the graduate student tuition increase was only 0.2% of the entire projected revenue for 2009. With a surplus, was this harsh attack on the accessibility of education really neccessary?

Mixed Messaging

Its interesting that the phrase “mixed messaging” actually comes up in this written document. For years, members of the McMaster community have complained that this University Administration has always strived to hide the truth conveniently out of sight. This memo clearly proves that an effort to mislead members of the community is not just a method of accounting, but a strategy to be exploited at the bargaining table. The University Administration has claimed that it had to curtail pensions, post-retirement benefits and joint-job evaluations for our collegues in CAW 555 because of the extraordinary financial challenges of the University. Yet, the “mixed message” is that these extraordinary financial pressures might just be ficticious. If the University Administration has claimed that its budgeting models had the sky-falling in 2008-9, and yet they ended up with a surplus, then can they really be trusted to accurately portray the financial picture 5 and 10 years from now?

The Danger of Over-conservative budgeting

While the University must be prudent in its budgeting process, the extreme over-conservative budgeting practised at McMaster University has led this Administration down a dangerous path. The problem with over-conservative budgeting is that money that could have been well spent improving the educational experience during the academic year is instead kept tucked away until the end of the fiscal year, when it is often spent in a splurge of “one-time” expenses. Every year that this occurs is a lost opportunity for the University to invest in making McMaster a better place to get an education and puts us further and further behind other more pragmatic institutions.

One-time expenses

One of the clear messages of the memo is that McMaster’s model for using MTCU year-end funding is to fund one-time expenses. What are some examples of one-time expenses? Well anyone who has been on campus all summer has seen numerous examples: the new patio between TSH and CNH, various freshly minted stone walkways on campus, interactive educational toys, barely-functional touch screen projection displays, etc. What is missed by always spending the year-end money on one-time expenses is the chance to actually invest that money in the educational experience of students at McMaster. While the MTCU certainly intends the money to be spent towards “accessibility” and “quality” of education, McMaster’s model effectively prevents this from ever happening.

Is the funding from MTCU really one-time

While the year-end funding always comes from the provincial government with a string attached of “one-time,” in recent memory it has been a yearly occurence, within a reasonably well defined range. The regular nature of the funding betrays the “one-time” label. A more accurate description would be “yearly funding with a well defined mean and fluctuations from year to year.”

Our Pledge to the McMaster Community

While the McMaster Administration is responsible for the budgeting at the University, there is a structural problem with the year-end funding from the provincial government. The CUPE 3906 bargaining team absolutely recognizes that the provincial government’s lack of transparency helps to fuel these problems. Our bargaining team pledges that, if the University Administration is willing, we will jointly meet with MTCU representatives to convey our frustration with the current funding model and to argue for a codified and transparent model for University funding. If the funding comes year after year then there is clearly a model being used at the provincial level to determine the funding. It is time that the provincial government ends the practise of pretending to give Universities a year-end “surprise” present every year and makes a serious effort to be transparent when it comes to spending OUR tax dollars.


2 Responses to “McMaster in Surplus!”

  1. hello,

    thanks for the great quality of your blog, each time i come here, i’m amazed.

    black hattitude.

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