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Grim proposed Athabasca University budget to be shown faculty today projects insolvency by 2017-2018

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Marlin Schmidt

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Athabasca University Interim President Peter MacKinnon will present a grim proposed three-year budget this morning to the institution's General Faculties Council that projects growing deficits and financial insolvency by the 2017-2018 fiscal year.

The budget was drafted after NDP Advanced Education Minister Marlin Schmidt directed MacKinnon in March not to submit the distance university administration's first draft budget, which would have involved staff and faculty layoffs, with heavy impacts on the economy of the Town of Athabasca, 130 kilometres north of Edmonton.

Schmidt instructed AU to come up with a version that did not include job losses.

The budget that will be presented to the Faculties Council in Athabasca this morning has the tone of a document drafted under protest. The budget, says an accompanying note, "represents management's best effort to avoid a deficit in 2016-2017. Despite a concerted best effort by the Executive Group, it still comes short by $3.3 million."

The key highlights of the proposed budget include:

  • $3.3 million deficit in 2016-2017
  • $6.8 million deficit in 2017-2018
  • Financial insolvency in 2017-2018
  • $8.8 million deficit in 2018-2019
  • $12.5 million accumulated deficit from operations at the end of 2018-2019

"It is a challenge to produce a balanced budget given the magnitude of our revenue restrictions and cost pressures combined with the directive of no layoffs when salary and benefits make up roughly 68 per cent of AU's expenses," the note complains. "Given this, the proposed budget also does not address long-term sustainment."

"In the four months since the minister's directive," President MacKinnon said in an introduction to the budget itself, "AU's financial circumstances have continued to evolve, partly because the ameliorative measures proposed in our March draft budget were not implemented.” (Emphasis added.)

"It is not business as usual for AU on an ongoing basis," he said. "Sustainability issues are real, and their effects are imminent." He went on to say he hopes the third-party review Schmidt said in March would be put in place "will address them fully."

The budget document says the $3.3-million 2016-2017 deficit will have to be funded either from a grant in that amount from the province, or the university's strategic initiatives fund will have to be reduced to $3.2 million and the accumulated deficit from operations raised from $10.5 million to $13.8 million at the end of fiscal 2016-2017.

Despite the proposed layoffs in the March budget that was not accepted by the Ministry of Advanced Education, AU nevertheless would have posted a deficit of $1.6 million, the accompanying notes indicate.

The minister's directive required that the revised budget be submitted to the government by Aug. 2.

While members of AU's faculty and staff will certainly challenge some of the assumptions in this budget, for example, its enrolment projections, all parties are likely to be in agreement that only increased funding can solve the university's ongoing sustainability crisis, and that one component of this solution involves a funding formula that does not penalize AU because more than half its 40,000 distance-education students live outside the province.

Meanwhile, despite a search that began on March 25 for a new Board of Governors Chair and possibly other Board members, the government has not yet named a chair. Moreover, in spite of an email sent to faculty on June 2 indicating the current Board has a shortlist of three candidates for a permanent president, no successful candidate has been named.

Judging from a statement in the budget, the organization and commencement of the third-party review has not yet begun.

The presentation of a proposed budget that continues to push the government in a direction it has indicated it does not want to go suggests that Schmidt will have to act decisively soon to resolve the future of Canada's most open university, which has long benefitted students throughout Alberta, the country and the world.

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

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