What you need to know about Queen’s new budget

The Journal breaks down newly approved 2018-19 finances

Gordon Hall.

This month, Queen’s Board of Trustees approved the University’s 2018-19 operating budget to tackle faculty recruitment, research and a growing pension solvency deficit.

The budget, set out in a multi-year framework, retains many of the central commitments in last year’s operating budget, with some exceptions. 

This year, Queen’s will continue the push to hire 200 tenured or tenure-track faculty members over the next five years. The budget also allocated almost $8 million to two research funds.

The university created a $600,000 “Research Catalyst” fund under the Vice-Principal’s (Research) office. The new money will “support emerging and strategic research opportunities.” 

Additionally, the budget doles out $7 million for the creation of a new Research Intensity fund to “support the indirect costs of conducting research.”

Also noted in the budget is the additional accessibility funding of $250,000 in response to a recent accessibility audit. The new funds will add onto $3 million pledged for accessibility in last year’s budget.

In the University’s ongoing efforts to reduce the worsening solvency deficit of Queen’s penion plan, new measures are in the works. According to the budget, the pension solvency deficit is the “most significant budgetary challenge” facing the University. 

According to a report to the Board of Trustees on May 11, the pension fund’s solvency deficit has increased from $285 million on Aug. 31, 2014 to $313 million on Aug. 31, 2017. The increase is attributed to “the impact of changes in assumptions for interest rates and mortality changes.”

Based on solvency relief regulations from 2016, Queen’s will begin partial funding of the solvency deficit in the fall.

The University will be required to make solvency payments of $15.6 million annually starting Sept. 1. Also effective in September, the total special payments made to the pension solvency deficit will be $19 million, down from $20.7 million in 2016-17. According to the budget, if the solvency relief regulations hadn’t been implemented, the special payments would be around $50 million a year. 

In response to the deficit, the University is also exploring a partnership with two other Ontario universities to create a Jointly Supported Pension Plan (JSPP).

According to the budget, “Queen’s, the University of Toronto, and the University of Guelph are now looking to finalize the outstanding design and governance elements of the project.”

Once established, all other Ontario universities will have the option to join the JSPP. 

The goal of the JSPP is stability. The University hopes   entering a pension plan with a much wider scope and joint employee-employer governance strategy, it will result in “a more secure and stable future for plan members.”

Though the University has endorsed the idea of a JSPP, the shift will require employee consent before moving forward. According to the budget, “further information on the new plan and the consent process will be forthcoming once agreement has been reached on the outstanding matters.”

Potential risks to the University’s financial situation are also outlined in the budget. Primary concerns are a dependence on government grants, regulated tuition, and market volatility affecting university investments. Pension solvency remains on the list of risks.

As mandated by the Board, the University is projecting to run a continually balanced budget under the multi-year budget framework.

 

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