University of Toronto ponders what to do about its $1.1-billion deficit
The shockwaves of the 2008 recession are still travelling through the economy, even as countries struggle to get back on their feet. Canada’s universities aren’t as bad off as Ireland, say, but apparently their pension funds took a serious pounding during the financial crisis. It seems that the University of Toronto (doesn’t it have a business school of some repute?) has to make up $1.1 billion and is looking at service cuts to make up the shortfall.
From the Globe and Mail:
The University of Toronto’s pension fund was the hardest hit, losing 29 per cent in 2008. As a result, the school expects to owe an extra $50-million a year on top of $100-million it already contributes from a $1.5-billion operating budget. Since an arbitrator recently ruled against a proposed premium hike for faculty and librarians, cuts to services are the likely solution again.
This fall, Ontario temporarily eased pension requirements on universities to give them time to regroup, but U of T argues solvency tests make no sense for universities.
“We’re not going to go out of business unless the government decides to put [us] out of business,” said Cathy Riggall, U of T’s vice-president of business affairs. “We can’t just raise our prices to raise our revenue: The government controls our tuition levels, the government controls our grant funding, so they hold all the cards.”
Meanwhile, the University of Western Ontario has made most other institutions of higher learning look like a bunch of dorks by adopting a defined-contribution plan. Instead of facing a deficit of hundreds of millions of dollars, it’s looking at a deficit of zero dollars. London, Ontario, might be Toronto’s most dangerous rival, but even we can applaud some prudent fiscal management. Also, who doesn’t like the chance to make fun of U of T at least a little bit?