University demonstrates instability in financial report

Queen’s releases draft financial statements for 2015-16

Queen's financial statement draft for 2015-16

Important terms for understanding this article.

On Sept. 23, Queen’s released a draft of its audited consolidated financial statements, summarizing the last fiscal year, which ended April 30, 2016 with a surplus. That draft is set to go before the Board of Trustees for approval on Tuesday.

Big-picture, the University’s revenue for 2016 was $912.3 million, with expenses of $872.8 million. Other data regarding the year in review finances can be found in the charts below.

Graphic by Rachel Liu. 

According to CAUT’s Guide to Analyzing University and College Financial Statements, having a positive number for net revenues indicates that an institution is healthy, however there are many other factors when determining whether or not an institution is healthy or not, including net revenues before interfund transfers, unrestricted cash plus investments, and unrestricted net assets.

Queen’s excess of revenues over assets (net revenues), totals a surplus of $39.5 million.

According to The Gazette, the surplus is due to pension expenses being lower than pension contributions, utility savings, and increases in tuition revenue.

The University’s unrestricted cash plus investments increased from 2015 to 2016, but despite the improvement, Queen’s numbers are still low overall, indicating financial instability according to the CAUT guide.

Another indicator of financial difficulty by CAUT’s measures is an increase in long-term debt, such as Queen’s, where long-term debt increase at $36,566 from 2015, to 2016

Caroline Davis, Vice-Principal (Finance and Administration) until several weeks ago when she changed positions, explained in the report that regardless of how the reported financials may appear, the University is in fact struggling.

“Despite the surplus, the financial position of the university was negatively impacted by weak investment returns,” she wrote.

Queen’s financials ended with another note from Davis, who wrote that “we continue to carefully manage our financial risks which include our unsustainable pension plan, a significant deferred maintenance backlog, and continued reliance on grant support and tuition revenue.”

The unsustainable pension plans have been an ongoing concern for several years, with a Queen’s Pension Plan estimate in 2014 listing a solvency deficit of $285 million and a going concern deficit of $175 million.

Terms you should know

Operating - Teaching and administrative activities at the University (eg. student fees).

Ancillaries - Business units that provide goods and services to the University community.

Trust and Endowments - Funds captured and restricted for a particular purpose.

Research - Activity on campus related to research. Funding comes from various non-for-profit organizations.

Capital - Any activity related to capital infrastructure on campus (eg. funding for renovations).

Consolidated Entities - This includes PARTEQ Innovations, Bader International Study Centre, the U.S. Foundation for Queen’s University at Kingston, the Queen’s Centre for Enterprise Development, and the Queen’s University Pooled Trust Fund.

Interfund Transfers - Transfers between funds (eg. ancillary funds transferred to operating funds).

Unrestricted Net Assets - A group of items owned by the government that have no external restrictions regarding their use.

Unrestricted Cash plus Investments - Unrestricted cash and investments are not tied to a particular use. These values were calculated by subtracting the endowed net assets plus unexpended deferred contributions from total cash and investments.

CAUT’s Guide to Analyzing University and College Financial Statements

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