WHERE DOES THE MONEY GO?

People in and out of AUFA have been asking me about the BOG’s financial situation. Analysis of public information reveals that although BOG’s income exceeds that of most Canadian Universities, debt is growing.

Long term debt is extremely high: $46,708,000, almost four times what it was in 2001 (Acadia University Financial Report 2005 & AUFR 2001). Net short term debt is also large. Year end Current Liabilities exceed Current Assets by $11,978,000 (AUFR 2005). In other words, almost 12 million dollars of last year’s bills must be paid from this year’s income. Pension debt has recently become very large. It is projected to require annual special payments of $1,500,000 for the next 15 years according to Highlights of the 2005-06 Operating Budget (Highlights). Both long term and short term debt continue to grow since work for a new biology building has started and operating expenses exceeded revenues last year by $1,825,000 (AUFR 2005). BOG is overspending its income.

The growing debts are not due to income inadequacies. Acadia’s BOG receives more tuition money per student than any other university in Canada. A few universities are wealthier when alumni contributions and grants are included and some have lower debt, but Acadia’s BOG has more money than most Canadian university boards (Maclean’s November 14, 2005). After debt service, BOG has more money per student than 17 of 21 primarily undergraduate universities and more than 8 of the 11 comprehensive universities. It even has more money per student than 9 of the 15 medical and doctoral universities. Dalhousie is the only Nova Scotian university with more money. Income is not the problem.

Where does the money go? The BOG’s administrators are frequently quoted in the press blaming faculty salaries. Faculty salaries and benefits are 26% of total expenses. (This figure comes directly from Highlights, page 6. Page 6 appears to say something quite different, but careful reading and a calculator reveal that it actually says 26%.) Although 26% is significant, faculty cannot possibly be the cause for BOG debts (nor for high tuitions). We have fewer faculty per student than 75% of Canada’s universities. Average Acadia salaries must increase 41% to reach the Canadian university average. Acadia is below the averages for both Nova Scotia and its Maclean’s category (Stats Canada CAUT Series, December 2004; CAUT Almanac of Post-Secondary Education in Canada 2005).

Where does the money go? Why does it cost so much to operate a university with minimal faculty costs. Mismanagement? Failure to exercise due diligence? In my opinion, millions of dollars are wasted because BOG spends too much money on too many administrators with the wrong priorities.

It is not possible, from public documents, to determine how much BOG actually spends on administration because much of the cost is hidden. Some analyses can however be done with the acknowledged costs listed in the “Administration” column of Schedule B (AUFR). Benefits for acknowledged administrators average 25.2% (almost twice the level for faculty). Acknowledged administrative salaries and benefits increased 46% in the last two years (Schedule B, AUFR 2005 & 2003): a 46% increase when many believe 2003 expenses were already too high. There are now 9 VP level administrators with VP level salaries. They have expense accounts and staffs. Some have large staffs and sub empires of their own with large numbers of highly paid, highly benefited, highly sub-staffed subordinates. Total acknowledged administration expenses were almost seven million dollars in 2004-05, almost $2,000 per student, $28,000 per faculty member. The total cost of Acadia’s administration is much higher, but unknown.

Acadia has good administrators, but too many without enough real work to do. The inevitable result is turf battles and empire building. Mismanagement is unavoidable but well hidden, with a few exceptions. KCIC is simply too large to hide. BOG loses $534,000 a year on a free building (with its own administrative staff). In addition to edifices, we are given one small glimpse of the millions wasted when more attention is paid to building empires than to managing economically. Continuing Education is featured in Schedule VII of Highlights. Before analysing Con-ed itself, it is worth noting that creative accounting for Con-ed was part of the mechanism used to produce the inflated impression of faculty costs discussed above. The mismanagement of Continuing Education would have remained hidden except for this attempted deception. See Schedule VII, Schedule II, and page 6.

Although shown as generating a $310,000 surplus, con-ed actually loses money. It is given revenue credit for Intersession and Fall/Winter degree courses taught on campus. These courses are developed and taught by faculty in the departments and schools and supported by administrative staff in the departments and schools. Department heads and directors recruit faculty. Payroll pays faculty. The registrar records grades. Physical plant cleans the blackboards. Whatever function Con-ed might perform is irrelevant or redundant. These courses are projected to generate $1,251,000 in revenue. Estimated teaching costs are $406,000 (Highlights; Credit Course Listings – On Campus Classroom; 11^th Collective Agreement, Appendix H). Con-ed is credited with the resulting $845,000 surplus, a surplus created by the departments and schools. Removing this from the nominal profit results in a true Con-ed loss of $535,000 per year - not surprising given the large staff, 17 when the budget was released to AUFA, and obfuscatory accounting. ‘Other’, for example, represents over 25% of budgeted expenses. Continuing Education is one part of one VP’s empire. Its administrative costs do not appear to be included in the $7,000,000 above. $845,000 is almost $3,400 per faculty member. Imagine all the wasted millions hidden in all the parts of all the empires.

Faculty salaries are embarrassingly low at Acadia, but not due to a shortage of money. BOG is well able to pay salaries considerably above the Canadian average. I do not expect it to do so voluntarily.

Rick Sparkman

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