$32 million: Progress made in operating budget adjustments

As the university’s financial team reviews 2013-14 results, they have also been calculating progress made towards closing the projected gap between our annual expenses and revenues. Based on actions taken in 2012-13 and 13-14, about $32 million in permanent budget adjustments has been achieved through a combination of measures, with about $12.5 million remaining, based on our original projections, to be achieved through either additional net revenue or expense reductions, or a combination.

Savings in the first two years of operating budget adjustments (2012-13 and 13-14) are a result of:

  • Workforce planning actions: $9.8 million
  • Projected net savings from the incentive plan for retirement for faculty, after strategic faculty reinvestment : $7.6 million
  • Changes to our investment strategy and increased reliance on investment revenues in our operating budget: $6.6 million
  • Changes in institutional practices and other initiatives, such as two up one down (temperature control) and non-salary cuts: $8 million

Given the progress that has been made to date, changes in university leadership and the concerns raised about the pace of the change process, university leaders are taking some time over the summer to determine next steps. The president and vice-presidents will spend this time working with deans, executive directors, associate vice-presidents and unit leaders to assess which actions will proceed right away and which require further discussion or consultation. More information on next steps will be provided in the fall.

In the meantime, I will be using the blog over the summer to continue the discussion on financial sustainability, to accept feedback, and to provide information. If there is a topic you would like to hear about, please let me know.

Although the past few years have been challenging, and change is never easy, the university has achieved real progress due to the hard work of many on our university campus. I want to thank you for your patience as we determine what more is needed to ensure the ongoing financial sustainability and renewal of our university.

Greg

16 thoughts on “$32 million: Progress made in operating budget adjustments

  1. What seems to be missing is an honest discussion about the root of the current problems at the UofS, which is not only financial.

    The university has been importing “best practices” from the business world
    without a critical assessment whether such practices are always helpful or useful in a university setting.

    There are at least three problems with blindly importing “best
    practices” from companies to universities by integrated planning and then workforce planning so that almost all jobs at the university are strongly and
    rigidly aligned with fixed “priorities”, such as “signature areas”.

    First, the university, as a complex system, functions as an organized
    anarchy, with competing drives and sometimes contradictory goals, see the
    “Garbage Can Model” by Cohen, March and Olsen

    http://www.unc.edu/~fbaum/teaching/articles/Cohen_March_Olsen_1972.pdf

    This has served higher education very well for almost a century, since it offers flexibility to pursue novel research, nimbleness to incorporate the latest discoveries into teaching, and robustness to adapt to new circumstances.

    Second, and this is particularly relevant to Canada, the absence of strong
    innovation in Canadian companies is not due to the lack of talent or properly
    educated people. On the contrary, there is a huge waste of underutelized human capital due to the fact that companies seek to hire people who exactly match the
    work description and the companies’ immediate needs rather than hire
    competent people who might create something innovative when given some little freedom to pursue their interests and apply their skills, see

    http://www.conferenceboard.ca/topics/education/commentaries/13-05-30/skills-led_innovation_improving_innovation_performance_by_empowering_employees.aspx

    Instead of importing the culture of rigid alignment with predetermined goals and workforce planning based on this alignment from companies to universities, the opposite is very much needed in Canada.

    Third, the principle of academic freedom is antithetical to the business
    culture. Without this freedom, there is little hope in sustaining a
    culture of discovery and learning.

    Some of the “best practices” might work for companies, but not all of them are necessarily beneficial for universities, since their structures and goals are different. Importing “best practices” from companies without reflecting on their applicability to universities will spell real disaster in the latter.

    I realize all this flies in the face of “predictability”; however, exactly because the outcomes of activities in universities are sometimes “unpredictable”, exciting discoveries are made and new fields of research are created.

    • What I find troubling is that no real lessons seem to have been learned from all the trials and tribulations the university has been through in the last two years.
      Our “leaders” and a lot of faculty claim to be for academic freedom,
      but they still believe TransformUS was “good”, “systematic” … (but hurried …). Putting aside the inherent flaws of TransformUS and the recommendations that followed, if one believes that academic
      freedom includes freedom of inquiry and pursue of truthful answers (within ethical bounds), then one can not consistently support TransformUS or the ensuing recommendations. The very starting point of seeking strong alignment with “research priorities” goes against academic freedom. This is what some have been battling at USask:
      free inquiry and pursuit of truthful answers without having the whole
      research community at the UNIVERSITY (not a technical or a trades school) strongly and rigidly aligned behind six “signature areas” that mainly serve industry.
      It seems short term “interests” trump this freedom and all the fruits it yields in the long term. This is independent of
      firing/rehiring of some Dean/tenured professor.
      What I also find troubling is that support for research-intensity is translated in practice to support for signature areas. There is a lot of excellent and world class research on this campus that has nothing to do with so called “signature areas” or big money grants.

  2. The answer seemed pretty clear to me:

    “Given the progress that has been made to date, changes in university leadership and the concerns raised about the pace of the change process, university leaders are taking some time over the summer to determine next steps.”

    The second phrase would preclude the idea that this approach was foreseen while the former provost and president was in office.

    Next?

    • I just think it would be nice to have an straight answer offered in a more plainspoken way. Perhaps a yes or no question would have elicited either a “Yes, our former leaders, including myself, did see this coming” or a “No, we’ve only come to this conclusion since our interim president was installed.” All of that passive wording is a red flag for me… “concerns raised about the pace of the change process”? Those concerns were raised a long time before now. If they are NEW concerns, then raised by whom, or is it the case that these are new concerns than that there are new ears listening to them?

  3. Just a question: There hasn’t been much in the way of replies from admin folks these days. Should we no longer think of this as a venue for exchanging ideas? Is this an early sign of a transition away from the “TransformUS” brand?

    • Hi Kevin,

      During the summer months we are reducing our activity on the site, but we will provide periodic information and updates. We are still here, encourage the discussion to carry on, and I will inform the conversation when it is appropriate to do so.

      Greg

  4. Just a quick question, unrelated to budgetary concerns but that I’ve not seen addressed elsewhere: Does Dr. Busch-Vishniac retain her membership on the Science, Technology, and Innovation Council (annouced in late April)? If not, does our university lose that seat or might it be reassigned?

    • And I apologize–I meant to ask if that seat might be reassigned to another member of the University of Saskatchewan community were Dr. Busch-Vishniac no longer to hold it.

      • From http://www.stic-csti.ca/eic/site/stic-csti.nsf/eng/h_00008.html

        “The Council consists of a Chair and 17 members (at full complement). STIC members are appointed by the Minister of Industry and the Minister of State (Science and Technology) to serve for three-year, renewable terms. ”

        STIC members are selected by the federal government, and USask does not have a “representative”. With MacKinnon and Busch-Viscniac as members, we’ve definitely been punching above our weight.

        • Sorry, that last post, with information on STIC members, was posted by me. I didn’t intend to be anonymous.

          • Aha! Thanks for clarifying the nature/makeup of the STIC, Stephen, and for the link. I note that Dr. Busch-Vishniac is no longer listed as a member–a loss for UofS, I think.

  5. As regards taking time to consider next steps: that approach is radically at odds with the “pedal to the metal” approach we were enjoined by the previous president and provost to accept.

    How much of this current “easing off the gas just a bit” is due to progress to date (much of which was presumably forecasted) and how much is due to more level heads pointing out that the sky is not falling (and perhaps never was)?

    • The communications of the forecasted financial situation have consistently maintained that the projections being to 2015-16, having the time to work through the situation, taking time to consult and yet being proactive, and placing the university on a long-term path of financial sustainability, rather than having to incur budget adjustments every four or five years. The other main objective is that the adjustments were to be based on priorities, rather than across-the-board cuts. Most recent history points to this as budget adjustments were taken in the early 1990’s, late 1990’s, 2004, 2008, and then again starting in 2012. This is evidence of an organization that is not operating on a financially sustainable basis.

        • On behalf of Greg Fowler…
          To clarify, I wanted to emphasize that the financial concern was a forecasted one, which gave us the time to discuss options and choose the best long-term path to financial sustainability for the university. Prior to multi-year budgeting, we faced immediate financial situations that required quick action to balance our budget in the short term. This approach saw us implementing budget cuts every four or five years. Our current approach is forward looking, aims for longer-term financial sustainability and reduces the chance of unforeseen financial challenges.

          • Thank you. But I’m not hearing a clear answer to my original question about the change in rhetoric re: taking the foot off the gas pedal. What I am hearing, instead, is a reiteration of the slogans we’ve been hearing since last year.

            But perhaps my question was unclear, so I’ll pose it in a different way: Was this “we can lay off the gas for a bit” approach foreseen while our former president and provost were still in office, or has it only been realized now that we have changes in senior administration? I don’t recall having heard about it before now.

            The campus community deserves a clear answer to this question.

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