COMMENTARY: StFXAUT Response to Budget Presentation The - PDF document

COMMENTARY: StFXAUT Response to Budget Presentation The administration at STFX held an information session on Tuesday, January 15 th . The purpose of the meeting was to inform faculty and staff about the impending financial crisis in which the presentation began with a message from University finds itself. the President. Although his presentation focused on dire news (“we will have to have Timing the Budget Presentation(s) less employment” ; “40 people at $50,000 is The timeline for the presentation was $2 million”; “the current budgetary curiously coincident with the negotiation situation poses an extremely serious timeframe for the three separate unions. A challenge” ), the audience clapped at the mere three months ago there was a budget conclusion perhaps clapping not because of information session for faculty and at that the content of his presentation but to meeting the budget delivered in April 2012 acknowledge the President himself. The was re-delivered with no changes. Further, effect was to dilute or partially deflect the the known information, a small decline in message being delivered. students and a number of vacancies in 1) Why was the budget information residence (160 rooms), was not quantified presentation taped? No other budget at the October meeting. We are led to information session has been taped. The believe that in three months the financial taping of the information session may be situation had shifted significantly even intimidating for some who are already though enrollment and vacancy levels had uneasy about voicing opinions/ comments/ been known in October 2012. questions in such a forum. Staging the Performance 2) What are the expected venues/forums for The presentation of the revised budget dissemination of such a taping? The taping information appeared staged. The script of the budget information session is curious was prepared, the actors (aka senior as the venues for its replay should be administrators) were well practiced, the questioned. Perhaps the Board of lights were dimmed, the video cameras Governors, the media, and/or government were on, the audience was recruited and officials were the “real” and intended the presentation was carefully delivered audience for the budget information including poignant pauses and a heartfelt presentation. pause on the word “horrible”. T he

3) Why was the information scheduled in Environment of Transparency? such a tight timeframe? Although there was some time allotted for questions, the Although the STFX administration has timeframe of 45 minutes to deliver the previously discussed transparency, no presentation and respond to any transparency is gained through the overly meaningful questions was very limited. The aggregated dissemination of information. limited timeframe undoubtedly allowed for Questions which should have been provided administration to control their exposure to (or asked) at the information session difficult questions. Their exposure to include: difficult questions was further protected as 1) What are the differences (quantified) no information was provided prior to the between the budget presented in October information session and thus it was difficult and the budget presented in January? In to digest the information in such a short order to clearly understand the differences and aggregated presentation. which contributed to the reported $4M deficit there needs to be identification and Information in Aggregate quantification of the differences from the budgeted information presented in October Information was presented at a very cursory 2012. Some credence was given to lower level. The revenue and expense levels were residence vacancy levels and to the cost of provided at an overly aggregated level and heat and electricity however these do not provided no real context for understanding add to $4M and thus it is unclear what is how a near balanced budget could be really contributing to the “revised” deficit. managed into a $4M or more deficit position between October 2012 and 2) Which of these differences have cashflow January 2013. It is perplexing how such a implications rather than only accrual significant change in surplus/ deficit levels accounting implications? Accounting allows especially given the fixed cost/ contractual for flexibility in reporting. Accrual based structure of the University. accounting allows for opportunistic Although there were promises made during managers to manage earnings even though the budget information session that there is no real impact on cashflow. Using information would be made available on accrual accounting, the earnings can be the STFX website for review, a review of the managed by using provisions and other website provides the 2012-2103 budget accruals; this is called earnings (which still shows a budgeted surplus of management and a form of earnings $2,979) and the information notes and management is the minimization of income PowerPoint for the recent information which taken to the extreme is called a “ big session; that recent information provides bath ” . only cursory/aggregate level information.

Financial Crisis, Again? to external factors (e.g., government funding) but many are a direct result of The fable of the “Boy Who Cried Wolf” is management policy (e.g., change in policy in reminiscent of the current situation the allocation of residence rooms) and presented by STFX administrators. At a decision making. Understanding the source Faculty Budget meeting a few years ago one of the differences in budgeted amounts of our Faculty members stood up and said should allow for accountability of the (paraphrased) I have been at STFX for five administration for their decision making. years and each year there is a “crisis” but yet none develops. The narrative of crisis is one that is repeated year after year. “We 2) Will the financial model used to generate are in the most serious financial crisis this the budget be revised so that that model is year in living memory ” said President Riley more sensitive to these “significant” at the budget information session on changes being identified? Financial models January 17, 2013. There may be a financial even in their simplest form should be situation in this current fiscal year which is predictive and should not produce driven by the vacancies (160 rooms) created budgeted forecasts which within three by a change in management policy but that months in a fixed cost environment does not have a $4M price tag. overestimate the predicted deficit by $4M. Administration ’s Management We have the highest paid President and the highest paid Vice President, Ramsay Duff, in We are lead to believe that the current Nova Scotia (ANSUT). We therefore should situation is a result of external factors expect good and competent administration beyond the control of STFX administration which focuses on the academic mission and beyond their ability to incorporate into instead of eroding that mission, has the a financial plan. In the preamble provided ability to plan future revenue and expenses by President Riley he blamed Government with some precision given the University’s cutbacks and the “nursing” funding. The cost structure, allows for some flexibility in level of Government funding and the cuts revenue and expenditures, and understands imposed by the current government have the implications of leveraging the University been known for years and should have been by $140M. The erosion of the academic incorporated in the administration ’s mission is occurring coincident with the planning. erosion of collegiality and collaboration which should be our Academic Model. 1) Which of these differences are a result of economic circumstances or a result of management policy (e.g., number of vacant residence rooms)? Differences in the budgeted amounts are not all attributable