Few things have brought me as much pleasure recently as unwrapping my new 2009 calendar and throwing the 2008 one into the recycling bin.
The past year has been a difficult one for many reasons, not the least of which is that 2008 was one of the most turbulent economic periods in recent history. Like most sectors in Canada and around the world, universities were severely affected by the global financial challenges, and we continue to feel the ripple effects.
Opening a new calender and turning to a fresh page was an important symbolic gesture for me — a blank slate and a new beginning of sorts. It's a pity we can't contain the problems of 2008 within the pages of a calendar. It would make closing it and muttering “good riddance” while aiming for the recycling can a sufficient solution to our woes.
But we have to have a more concrete and complex plan to tackle the troubles left over from 2008. For the problems are many, and some of them are extreme. So extreme, in fact, that the remedies will require changing the way we approach our core business of teaching, research and learning.
Indeed, 2009 will be a year of significant transformation at Guelph. Virtually no department, program, unit or activity on campus will be unaffected. This is an oft- repeated line for me these days, but I cannot overemphasize the seriousness and imminence of the situation.
We've faced financial challenges before, but the complexity and size of our projected shortfall are unprecedented. We all must recognize and accept it. Tough times call for tough measures, smart decisions and creative ideas.
Before I outline for you some of the changes that students, staff and faculty can expect in this new year, I want to recap how we ended up at this point. To begin with, the global economic downturn adversely affected our pension and endowment funds.
On the pension side, unless there is a major sustained recovery in financial markets or we get relief from provincial funding rules, the annual contribution U of G has to make to our pension plans could rise from $20 million to between $70 million and $100 million. This money has to come from the operating budget. There is a proposal to introduce pension legislation in the spring that would give the University some relief. To be eligible for this, Guelph must obtain agreement from employee groups and retirees for this change. Although such relief would be welcome, it wouldn't really address some of the structural issues associated with our pensions.
In terms of our endowment funds, it will not be possible to maintain current spending levels. Although we don't rely on the funds for operating budget support, the interest they earn is a major contributor to financial assistance for students. We will be working closely with Board of Governors and major donors in making decisions about what actions will have to be taken.
At the same time, we are facing a government funding freeze for at least the next three years because of the worsening economic climate, as well as a $16-million structural deficit that resulted from funding lagging behind operating costs for several years. We also continue to encounter rising costs for salaries and benefits, post- employment benefits such as pensions, and deferred maintenance and utilities.
The University has an obligation to ensure ongoing fiscal sustainability, so we will take the necessary steps to set the institution on a course for recovery.
Already the multi-year budget plan has been adjusted to recognize the additional $10 million we will have to find over the next three years because of the government funding freeze. The cuts have been differentially applied across the University, and the integrated plan for 2009/10 is being revised to accommodate these cuts and to prioritize areas for change.
A number of changes have been proposed with the overarching goal of preserving quality and programs that are strengths of the institution and differentiate Guelph from other universities.
We've already talked about some of them, including a six-month hiring freeze while we align our strategies with the fiscal realities; postponing or suspending major building projects that are not already in progress; reducing departmental discretionary expenditures; and considering ways to restructure practices to accommodate the personnel losses due to the voluntary early retirements/resignations.
Over the next couple of months, we will also be eliminating courses, majors and programs with lower enrolments; closing or amalgamating some units, activities and functions; and moving to focus on a reduced number of activities.
Members of the senior executive team have agreed that they will freeze their salaries for 2009/10, and I will be meeting with employee groups to review the ways we will have to contain negotiated settlements on salaries and benefits in the foreseeable future.
It's too early to say what the final impact on people might be, but we must reduce the scope and scale of operations in these uncertain times. Keep in mind that many other Ontario universities are in the same situation, and many economic sectors are even worse off following the turmoil of 2008. We can expect 2009 to be a time of change, of reinvention and of priority shifting for many sectors as we all strive to ensure a sustainable future.
It will be difficult and challenging, but I know that, by working together, we will continue to find creative solutions for the problems we face. I believe that Guelph, despite all these fiscal challenges, remains poised to take on even more significant roles in education and research. I am confident that we will emerge from this process a leaner, more efficient, more effective and, ultimately, stronger university.