Dear members of the McGill community,On April 4, 2013, we wrote to you to describe the breadth, scope and probable impact of the cuts to our operating budget imposed by the Quebec Government. Today, we are writing to inform you that on Friday April 26, the Board of Governors approved the FY2014 proposed budget, the outline of which the Provost had presented previously to Senate.
The approved FY2014 budget includes a $10.4 million deficit. In December 2012, the Board approved adding the $19.1 million in Government cuts announced eight months into the fiscal year to the deficit for FY2013. As a result, McGill’s FY2013 deficit now totals $29.8 million.
By April 30, 2014, therefore, we will have added just over $40 million to our operating fund deficit. As a consequence, in addition to planning for a balanced budget in FY2015, we must have a repayment plan for at least this amount over the next five to seven years. Revenues will therefore need to exceed expenses by close to $8 million every fiscal year from 2016 through 2020.
It is a complicated situation, but the simple fact is that McGill must immediately and significantly reduce spending. We just cannot push this debt forward, given that the promised future reinvestment from Quebec comes with no guarantee.
As indicated in the FY2014 Budget Book, over the next five years, we intend to pursue our academic priorities in ways that lead McGill to a sustainable future, one grounded in quality, excellence, accessibility, and sound fiscal management.
The measures we have adopted reflect four primary objectives that guided the preparation of the budget for FY2014:
1. Protect our core academic and research mission and programs;
2. Act in a fiscally responsible and prudent manner as the steward of funds, both public and private;
3. Minimize the negative impact on McGill’s staff and services;
4. Comply with the funding rules and repayment of deficits as established by the Quebec government.
Approximately 75% of McGill’s operating expenses cover wages, pensions and benefits. While the FY2014 budget contains measures to reduce non-personnel related expenses, we have had to put in place concrete measures to reduce the University’s overall wage bill:
· A voluntary retirement program for administrative and support staff; eligible employees were notified on April 2 and have until June 3 to signify their intent to retire.
· A hiring freeze on all vacant administrative and support positions, thus allowing natural attrition as an additional measure for reducing staff counts.
· No re-matching or re-classifications of positions in these categories for an indeterminate period.
· Recruitment licenses for academic hires slated to start in September 2014 will be set below the replacement rate.
· Several groups, including most academic staff, will be subject to a salary freeze until June 2014, and the pay of all senior administrators has been cut by 3%.
As noted above, the budget also calls for targeted reductions in non-personnel related expenses. They include an overall reduction ranging from 7 to 9 per cent in the operating budgets of the Vice-Principals’ portfolios and the Offices of the Principal and Provost.
The success of the cost savings taken between now and June will determine the extent to which layoffs have to be contemplated; we will report next steps, as they are determined, over the summer. Implementation of involuntary terminations would respect the terms and conditions of the Quebec Labour Code and collective agreements.
There is concern in our community about McGill moving ahead with these cuts, while other Quebec universities may take a different approach. For a variety of reasons, our reality is different from other universities – including McGill’s higher-cost model under which more of our full-time students are taught by full-time faculty. What sets McGill apart also reduces the degrees of freedom available to us to deal with budget cuts of the magnitude we are facing. For more, we invite you to read the FAQ on the budget cuts site.
McGill Human Resources is fully committed to providing support and information as individuals and units begin to deal with the impact of these budget cuts. There will be a separate communication to unit heads that will outline processes and procedures for dealing with staff reductions.
We would like to take this opportunity to offer sincere thanks to those members of the McGill community who have provided suggestions on these issues at Town Halls, in personal conversations, or in writing.
For further information, we invite you to consult the McGill University FY2014 Budget Book. Over the comings weeks and months, we will keep you apprised of further developments and decisions through the Red Blog, the budget cuts website, and future letters to the community.
These are trying times for everyone on campus. Thank you for your understanding, your continuing dedication and your efforts on behalf of McGill and all members of our community.
Respectfully and with best regards,
Prof. Anthony C. Masi Mr. Michael Di Grappa
Provost Vice-Principal (Administration and Finance)
May 3, 2013