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With few ideas to end its financial crisis, and austerity on the way, Athabasca U edges toward the precipice

Athabasca University

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Founded by Alberta's Social Credit government in 1970 as a leader in distance education for a predominantly rural province, Athabasca University now faces an existential crisis at the worst possible moment politically speaking -- just as the government of Premier Jim Prentice prepares to embark on another round of destructive budget cuts.

AU President Peter MacKinnon, a lawyer and former University of Saskatchewan president appointed last year on Canada Day, told faculty and staff members of the public university in a grim January 22 memorandum that he planned to strike a small task force "that will consider our options and make recommendations to our governing bodies, and possibly the provincial government."

In an earlier message headed "AU Financial Sustainability" emailed to all staff on November 26, 2014, MacKinnon had communicated the bad news that the university faced a more severe financial shortfall than employees had been led to expect by the previous administration.

"I genuinely regret to advise you that that our initial review of the budget projections for the next fiscal year is far from positive," MacKinnon wrote. "We had previously projected a potential budget shortfall in 2015-16 of $9 million. We now see that potential deficit being at least $12 million. This does not even take into account any new budget requests.

"I know this may come as a surprise to some of you, given that we reported a $3.6 million surplus for 2013-14," he said, explaining that those numbers were the result of one-time measures that "can't be repeated without threatening our sustainability."

In the November email, MacKinnon summarized the financial circumstances of an institution that has essentially been in financial decline since 2008 as "unprecedented" -- a 4.8-per-cent operating grant reduction in 2013-14, resulting in a loss of almost $2 million; a 56-per-cent cut in AU's infrastructure funding amounting to another $1.7 million lost, and only $1.3 million added back in 2014-15 with no corresponding increase for infrastructure.

At the same time, he reminded staff in November, the government of then-premier Alison Redford had capped tuition fees, AU's largest source of revenue. This has in effect frozen the revenue side of the university's increasingly difficult financial situation.

Unsurprisingly, then, the January 22 follow-up memo struck a very gloomy tone, and MacKinnon said he expected to ask the task force to report very quickly, during the current academic year.

"AU is at a critical juncture in its evolution," he wrote, describing the institution as having to cope with "inadequate resources and limited prospects of improvement."

"It is understood by many that our present trajectory is unsustainable, and that without recognition by government that its practices and policies over the decades have contributed to our condition, we face issues that will require fundamental change if we are to survive and thrive," he wrote. "Although I retain hopes that this recognition will be forthcoming, we must anticipate the possibility that it will not. …

"Our continuing preoccupation is briefing members of the government on our circumstances, and attempting to enlist support in relief of our operating budget, and IT capital needs," he went on. "I am confident that politicians and senior … public servants know of our situation and are sympathetic to our plight. The question is whether they will respond. Every discussion begins with reference to deteriorating public finances … We remain hopeful." (All emphasis added.)

Alas, awarding an honourary degree to a former PC premier is probably not going to do the trick.

This leaves the question of what MacKinnon's planned task force could recommend in the face of AU's continuing declining prospects, which are influenced by all of the following factors:

 

  • Fundamental technological change that has made it easier for any university, anywhere, to use the Internet to operate competing distance learning programs at low cost.
  • A shift in the makeup of the student body from mostly Albertans to a larger percentage of people from other parts of Canada and the world, reducing the political impact of more government cuts anywhere outside the town of Athabasca, where AU has been based since 1984.
  • Periods of irresponsible management by past university administrations that left the institution facing a financial crisis that just won't quit -- in 2012 the AU faculty association and a staff union voted non-confidence in then-president Frits Pannekoek.
  • A long period of not-particularly benign neglect by the provincial government culminating with the prospect of more cuts under Mr. Prentice.

 

Options for MacKinnon's administration are limited. The university could try to enrol more students, but with more and more universities offering distance learning, the prospects for success are circumscribed. In fact, enrolment is on a slow downward trend.

It can't increase tuition -- which raises about $70 million versus about $40 million in direct government grants -- because of the Redford freeze. It can't raise more cash from campus facilities, residence charges, recreation fees and the other sources of revenue available to conventional universities, because it has no on-campus students.

Despite the high quality of many of its offerings, a big budget cut is bound to badly hurt its sustainability in a competitive era for distance education.

The university has been moving from a tutoring model to call centre in a desperate attempt to save money, but it's unclear if it's working and what it will do to the quality of its programs and courses.

Faculty and staff have been hit hard by pay freezes, a heavier workload resulting from layoffs and early retirements left unfilled.

Rumours are rife -- takeover by another institution, privatization, massive downsizing -- but it's hard to imagine who would want to buy or take over the place, despite its quality offerings. Under the circumstances, it's unsurprising MacKinnon would have characterized the culture of AU in his January 22 memo as "entrenched, suspicious and severe."

Back in 2013, I observed in this space that Redford's government was going to have to face up to doing something meaningful to end the crisis at AU, "whether they like it or not." Well, they solved that problem by having an existential crisis of their own.

Now AU's peril has grown worse, as has the government's mood in Edmonton, 145 kilometres to the south. Without government intervention, financial failure before the university's 50th anniversary seems probable.

It comes down to this: If the government of Alberta wants a university that allows students to complete their degrees via distance education, it's going to have to pay for it.


This post also appears on David Climenhaga's blog, AlbertaPolitics.ca.

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