Financial Games and Manufactured Crises at Nipissing

Do you know that old Groucho Marx line: “Those are my principles. If you don’t like them… well, I have others.” That’s a pretty good summary of what it’s like to negotiate with our current administrators: one day, the strike is about money; the next, it’s about governance. One moment, they’re eagerly trying to set dates to meet; the next, they can do nothing but wait on the mediator.

In their most recent public statements, the Administration has decided to return to claiming that the strike is all about money and that their last tabled offer, although less than half the average provincial settlement in the sector, is “fair and reasonable.” It’s also half what the Board of Governors recently gave senior administrators in percentage increases in a single year. Apparently when it comes to Senior Administrative salaries, the so called “financial circumstances” at the university don’t matter.

The real question then is this: just what are the financial circumstances of the University? Despite the Administration’s claims to transparency, it can certainly seem difficult to tell. If by transparent they mean that it took NUFA filing a bad faith bargaining complaint against the employer at the Ontario Labour Relations Board in order to force them to release documents related to their financial claims, including a third-party audit conducted by PricewaterhouseCoopers (PwC) on behalf of the Ministry of Training Colleges and Universities, then indeed they meet this unusual definition of ‘transparent’. The PwC financial report reveals a complicated story of financial mismanagement at Nipissing and clearly identifies worrisome financial practices; “NU’s current financial management practices have impacted the University’s ability to manage the deficit in recent years. The lack of timely and reliable information and strong financial management practices resulted in the absence of long-term strategic plans…” (PwC, 2015: 4)

The report also contains damning statements related to the Board of Governors, like the following: “Reporting to the Board has not included detailed analysis of performance against budget and risk mitigation discussions due to limited availability of financial reporting,” and “Capital budgets for the University are not discussed in appropriate detail during Board and Management meetings” (PwC, 2015: 30). Ultimately this means that major decisions, like the decision to close our satellite campuses or to cut 54 positions at the University have been made without a sound financial rationale, let alone an academic one.

Moreover, during the same period in which full time contract faculty positions were not renewed and the decisions were made to close the Muskoka and Brantford campuses, Nipissing did not have a Chief Financial Officer. The Finance team at this time and indeed since has been the Provost and Vice President Academic as well as the Head of Human Resources.[1] No surprise then that the PwC third-party audit report rated the Administration’s financial performance as “Poor” and “High Risk” in almost every category of evaluation (PwC, 2015: 33-42, 83-90). This is a story that needs to be told, too, for the sake of the future of the university

Yet there is a much simpler story which is equally revealing. From 2010 to 2015, the Administration projected budget deficits every single year. But every year until 2013, the reality of what was actually spent turned out to be very different as each time the audited financial statements indicated surpluses. In 2014, the current Administration projected a budget deficit of $4.8 million, but after the annual audit it was revealed to be a deficit of only $400,000 before amortization. This year, the Administration ramped up their rhetoric and declared a financial crisis – though this time, they pleaded, it was for real – and laid off 54 employees. This time they projected a deficit of $11.9 million. Shockingly, though again perhaps not surprisingly in light of the PwC assessment of their inadequate and risky financial practices, the actual deficit in the audited financial statements was $3.5 million before amortization. The VP and Provost, Harley d’Entremont has repeatedly insisted when pressed in question period during Academic Senate that this discrepancy was not the result of the job cuts at the University, since severance payments cancelled out the reduced payroll costs. In other words, the only conclusion to be drawn here is that this enormous difference between projected and actual spending is sheer, and perhaps strategic, error. But this time, this is an error that saw 22 limited-term full-time faculty lose their positions regardless of the actual need in the programs they taught. This has left many of those programs straining to offer enough courses for students to complete their degrees. Some of those same faculty have been reemployed on part-time contracts which is a clear demonstration of programmatic need. Financial decisions so dramatically removed from programming implications are irresponsible and damaging to the short and long term health of the university.

In reality, every year since 2003 – with the sole exception of 2008, when the University invested in a capital project – the administration has dumped money into its “Internally Restricted Funds” account, including every one of those years in which they reported a deficit. But it does not count these funds in its operating budget, so it does not include them when calculating deficits or surpluses. As we write, and in the context of their claims to a structural financial crisis, the University is currently sitting on nearly $30 million in this account.

Chart Internally Restricted Funds

Data Source for chart: Statement of Changes in Net Assets in Nipissing University’s Audited Financial Statements

So what else does the Administration leave out of their projected operating budget? It turns out that they leave out the $5.8 million in “sales and services” that Nipissing has consistently made each year since 2010. The 2011 annual financial report describes this as “Accommodation fees and conference services”: in other words, money made from residences and other rentals of university property.

What that means is this: every year since 2010, the Admin has left out about $5.8 million dollars of expected revenues in their projected budgets so that they could claim that there would be a deficit, and they have used that claim to justify a number of decisions which have seriously impacted our students and co-workers. In every one of those years they have found money to put into their Internally Restricted Funds account at the same time as the audited financial statements have revealed their projections to be millions of dollars off every single year. The Board of Governors of the University, which approves these budgets and receives the audited financial statements, has signed off on this charade, year after year after year. Once again, this university Administration deserves an F.

Astonishingly, in an inflammatory and misleading email to students sent at the end of week three of Nipissing University’s first ever faculty strike, the Chair of Board of Governors, Marianne Berubé, exclaimed to students that “our projected deficit this year is $5 million, less than half of what it was last year”.  Given the wild inaccuracy of budgeting at the University, it’s nothing short of astonishing that she finds grounds for pride in the performance of the senior Administration and her own colleagues on the Board on this score. It appears that the Board again finds themselves unaware of the pattern of fiscal incompetence that has plagued the university over the recent past. In her communication to students, Berubé neglected to mention that the budgeted prediction for last year turned out to be $8 million dollars off the mark.

In the final analysis it is students, our vulnerable contract faculty and the staff who pay the highest price for this level of financial incompetence. The termination of 22 full-time contract faculty in the last year, justified as it was by a manufactured financial crisis, has resulted in fewer courses for students. When we are already hearing that retention is an issue at Nipissing, in part because of limited course choices, the termination of faculty can only be considered to be a management failure on the part of Administration. Securing faculty stability means securing more options for students and this is one of the crucial issues NUFA is fighting for in this round of negotiations. This is one of the things we mean by governance. The current Administration’s financial mismanagement cannot go unchallenged.

[1] The Head of HR was recently appointed CFO and is now fulfilling both functions, no doubt in response to the criticism in the PwC report.