Pension shortfall leaves huge gaps in U of G budget
Tuesday, July 20, 20101 Comment
With a review pending, a projected shortfall in the University of Guelph’s pension plan is leading to concerns over th
With a review pending, a projected shortfall in the University of Guelph’s pension plan is leading to concerns over the institution’s long-term fiscal health.
It has also divided members of the Central Student Association over how to address the issue without angering unions on campus.
John Miles, Assistant Vice President (Finance and Services), told thecannon that the University of Guelph is asking the Ontario government for temporary relief from the to its pension fund obligations, which are expected to cost an additional $30 to $60 million annually for the next five years.
Miles said the university’s pension fund investments, like those of many post-secondary institutions, were severely impact by economic recession.
As a result, the university has asked the Ontario Ministry of Training, Colleges and Universities to allow the institution to spread out the period of repayment from five years to ten years in order to lessen “a significant deficit.”
“We are not asking to be relieved of pension fund obligations… we are simply asking for more time to repay it,” Miles explained.
The university is required by law to submit a report on its pension fund by August 1, and will be bound to top up its pension plan to meet the so-called “wind-up” of $300 million – the amount required to pay the pension of all employees at the university.
The University of Guelph is also facing an estimate budget shortfall of $14 million for the coming year, compounding the financial stress.
The university is still holding out for last-minute relief from the province, Miles said.
“I can’t speculate what the province will do. All I can say is that we’re talking.”
CSA, Unions wrangle over pension fund woes
Central Student Association Board representative Gavin Armstrong (CPES) insisted students should get onside in asking the provincial government to grant the university’s request.
"[The payments expected] would basically cripple this institution," he claimed.
As a student senator and member of the Student Budget Caucus, Armstrong brought forward a letter at the last CSA Board Meeting addressed to Finance Minister Dwight Duncan.
The letter urged Duncan to provide temporary pension solvency relief for U of G to give the institution "a chance to survive," noting that the estimated annual pension funding payments amount to between a third and a quarter of the university’s operating budget.
“Such payments would effectively destroy the position of the University of Guelph and ruin the educational quality and opportunities for many current and future generations of students,” the letter read.
The letter also urged the province to give U of G time to establish a "sustainable pension" for the long-term.
However, a motion to endorse the letter was defeated after leaders of union on campus spoke out against it.
Janice Folk-Dawson, Chair of CUPE Local 1334 representing trades and maintenance workers on campus, warned that endorsing the letter would provide put the CSA onside with the university at a crucial point during contract negotiations.
The university initiated non-binding conciliation talks with Local 1334, whose members have been without a contract since April.
While not objecting to temporary funding relief, Folk-Dawson said the university was trying to use the threat of insolvency to “play students and workers against each other.”
“We have often had discussions with the university where the say that when our wages go up, your tuition increases, and vice versa,” she said.
Kevin Skerrett, a CUPE pensions expert who attended the meeting, said terms like sustainable, when used by the university, “really mean slashed.”
He warned that the university would try to leverage the support of the CSA when asking for concessions.
"You'd be lined up with them, against us," Skerrett said.
CSA External Affairs Commissioner Denise Martins agreed with CUPE, saying that the CSA needed to maintain its strong ties with campus unions in pursuit of common goals.
“In talking about pensions, which affect workers on this campus, we failed to consult the workers,” she explained.
CSA Board members and union leaders also expressed skepticism that the government would allow the University of Guelph to become insolvent.
"The ministry is not going to allow an institution that employs a huge number of people... and that houses 18,500 students, to go belly up," said Anastasia Zavarella, CSA Local Affairs Commissioner.
The motion was easily defeated, which disappointed CSA Board Member John Sakaluk.
"I thought it was going to be a no-brainer," Sakaluk said.
Miles denied that pension relief proposal had any bearing on current contract negotiations.
"I do not understand the connection between getting solvency payments [for pensions] and bargaining. They're unrelated," he said
Armstorng also said he was "shocked" by the resistance to the proposal and the connection made to ongoing negotiations, which he called "misleading."
Armstrong said he agreesd that the U of G won't close its doors. RHowever, he warned that the university might be taken over by province in the event it is unable or unwilling to balance is budget.
"If that happens, [the province] will force those cuts on the university without regard to students' interests," he explained.