An uncertain future
Financial town hall a chance for presentations, questions

February 27, 2009

By Mark Ferguson and Colleen MacPherson

A general feeling of concern about how the University of Saskatchewan will weather the current economic storm and what impact that storm will have on jobs, pensions and students was evident at a town hall meeting held Feb. 24 to discuss the situation.

Some 300 people—employees and students alike—spend their noon hour in Convocation Hall to listen to presentations by senior administrators and to take advantage of the opportunity to ask questions about the university’s future.

A number of topics were raised but downsizing, early retirement and pensions seemed to be of particular concern.

One staff member asked whether jobs would need to be cut while another asked about the possibility of forced early retirement, to which Richard Florizone, VP finance and resources, answered that neither possibility was being ignored but that the current situation did not require such action. The university has “time to talk about it,” he said.

The town hall began with comments from Provost and Vice-President Academic Brett Fairbairn who told the crowd the current economic turmoil is not expected to improve in the near future. “The situation is uncertain and it is serious,” adding the university is doing what it can to mitigate the effects of the downturn.

In his presentation, accompanied by PowerPoint slides, Florizone described various sources of revenue for the university, including investment income, which makes up about three per cent of the total operating budget, or about $9.5 million in 2008-09. This is one area hard hit by the economic downturn but the university expects to be able to cover those shortfalls with little effect on the day-to-day operations, he said.

The other two areas being watched closely are pensions and capital. Florizone spoke about the need to fund losses in the university’s pension fund to the tune of $8-10 million a year.

Overall, the U of S is relatively financially healthy with balanced books, no major institutional debt and no structural or other deficit. But the Board of Governors has still asked administration to develop and evaluate various scenarios or possibilities for what the financial future might hold for the U of S. “The forecast is getting more negative … uncertainty is high and there is a deteriorating view,” said Florizone, “but Saskatchewan and Canada are still forecast to do better than other jurisdictions.”

In developing the scenarios, Florizone said a number of factors were taken into consideration. These included the global economy, the Saskatchewan economy and government revenues, federal and provincial stimulus and infrastructure spending, U of S enrolment, labour costs at the university and the overall psychology or mood of the province.

He then described the four different possibilities that will be presented to the board at its March meeting. The first anticipates a moderate recession of nine to 12 months that barely affects Saskatchewan and where commodity prices return to commodity-boom era levels. The second scenario, called the Deep V, forecasts a deep recession of one to two years with revenue sources bouncing back by 2011 and general wariness of long-term commitments before that rebound.

In the third case, called the Bathtub, the recession is moderate but lengthy, lasting three to five years. Commodity markets are expected to stagnate, leaving the province in a weaker position than in 2007 but stronger than in the 1990s. Florizone also suggested a return to the Saskatchewan psychology of self-reliance.

Scenario four, or the Swimming Pool, is the most extreme with a recession predicted to last five years or more, revenue sources for the province expected to decline sharply as commodity prices stagnate and general uncertainty about the future.

With the various possibilities defined, Florizone talked about the challenges the U of S will face in each case. None of the scenarios anticipates significant impact on enrolment and, in fact, people have been known to turn to education during economic downturns, which creates opportunities for the university. There are, however, significant pension losses expected which will require funding. 

Determining which scenario the university faces will depend on a number of indicators to be watched between now and spring 2010, he said, including commodity prices, messages from government and erosion of research funding.

During a question period following the presentation, several members of the audience voiced their concerns and comments including one faculty member who asked about spending on the new student residence project. Fairbairn stressed that moving forward with the project is part of the university’s commitment to the student experience.

Tuition costs and enrollment numbers were also raised as topics, to which Florizone said he expects the numbers to remain constant in terms of income for the university, and that those same, steady numbers were assumed for all of the financial scenarios he outlined in his presentation.

Questions, comments or ideas from members of the campus community can be directed to Ginger Appel, director of budget strategy and planning in the Institutional Planning and Assessment office, at 966-1825 or ginger.appel@usask.ca