Budget blues lifting

DANIEL McCABE | And now for something completely different: good budget news. The University finds itself in the happy position of being almost $2 million better off than it had expected to be. Once McGill's budget planners had factored in some recent changes to the Quebec government's granting system for universities, McGill ended up with an unexpected $1.9 million. "It's like playing Monopoly and winding up with a bank error in your favour," says Vice-Principal (Administration and Finance) Phyllis Heaphy. The University is also faring better than expected in slicing away at its accumulated deficit. The figure now stands at just under $58 million -- the lowest it's been in years. Last spring, the University's board of governors grudgingly okayed Principal Bernard Shapiro's request that McGill be permitted to run a one-time-only operating deficit of $5 million for this year. The request was made to enable McGill to deal with the last round of budget cuts from Quebec City. When the ledgers are closed for 98/99, "we'll be in better shape than we thought back in May," says Heaphy. The operating deficit should end up being considerably less than the $5 million that was forecast. Heaphy will be presenting more detailed information on the budget to Senate and the board in the weeks ahead. The news isn't all great. Premier Lucien Bouchard recently announced that if his Parti Québécois government wins the next provincial election, the freeze on tuition fees at universities will likely remain in place. Bouchard told student leaders that if the PQ is successful in generating budget surpluses in the future, students will continue to enjoy the lowest tuition fees in the country. "My reaction? Complete and utter dismay," says Heaphy. "If I had confidence that the government would increase [Quebec universities'] grants to make up for not increasing tuition fees, then I could accept it. But I don't have confidence that this is going to happen." The government has indicated that its budget cuts to Quebec universities might soon be a thing of the past. Universities have been told that their funding situation could be stabilized this year and that the days of budget slashing might be over. Heaphy says she'll believe it when she sees it -- much depends on how well the PQ succeeds in getting the province's finances in order. "If their finances turn out to be not so good, they could come around again," she cautions. Even if the cuts from Quebec City are finished, McGill units could face further budget reductions. The University faces a number of pressing issues that have been largely put on hold while Quebec City wielded its budget axe. McGill's administration believes it must take action to improve the University's deteriorating physical plant, for instance, but more money for buildings will probably mean less money for something else. "Any new spending is going to have to come from the same old pot of cash," warns Heaphy. "That means we'll have to cut from somewhere else to provide for this." Heaphy is currently investigating the possibility of borrowing a large chunk of money from a bank for the purpose of spending it on urgently required campus repairs and renovations. Another area where McGill will soon have to spend more money is salaries. The University recently hired an outside firm to compare academic salaries at McGill with those of other top Canadian research universities. The results concurred with an earlier study done by the University itself -- McGill's professors are underpaid. A new study, comparing non-academic salaries at the country's research universities, will be carried out shortly. McGill hasn't suffered much in the wake of the recent turmoil in the stock markets, says Heaphy. "To date, our endowment fund is either slightly ahead or exactly the same as it was a year ago. "Our endowment is a long-term investment," explains Heaphy. "Short-term market fluctuations don't really frighten us. We believe that, in the long run, it pays to be in the market and we'll benefit from being in the market. There's no need for panic." Canada's currency woes have actually worked to McGill's advantage. "We have a lot of investments in U.S. dollars. Most of the currency fluctuations have had a positive effect on our endowment."