A global financial crisis has cost St. Thomas University nearly six million dollars from its endowment over the past six months, and now university officials are tying to make up for it. The once $30 million fund pays for visiting academic chairs, speakers, and scholarships, using the interest it accumulates each year.
Lawrence Durling, vice president finance and administration at St. Thomas, said cuts will have to be made to make up for the lost money.
“We have an expenditure policy that allows up to five per cent of the endowments value to be spent on activities while still maintaining its value in real terms and that decrease means a 20 per cent reduction in what we can safely spend from our endowment funds,” said Durling.
“The specific endowed chairs will have their activities constrained, so they are living within the constraints of their endowment and the scholarship issue will be one that the university will have to make sure on a longer term basis that the amount being spent will be balanced.”
Durling said the effect of the loss won’t be felt greatly next year, but could be in future years. The university bases it’s endowment expenditures on a three year rolling average, so this year’s loss will only effect one third of what St. Thomas had planned to do with the endowment next year.
If the university can’t recoup the lost money over the next three years, though, it could mean an annual loss of $150,000 in scholarship money.
“That is something we are sensitive to,” said Durling. “We have to be moderate in terms of how we make changes because certainly scholarships have an impact on recruitment and it would be sort of a vicious circle if we started to take steps that would have an impact on enrollment.”
Patrick Brennan, a third year English student at St. Thomas University said he has noticed a cut back in the number of courses being offered already.
“I have certainly noticed a lack of courses. In English we have to have six credit hours of pre-1800 courses in order to graduate and I noticed out of the list of about 15 there is only three available next year, so it really limits people’s options,” he said. “For instance I wanted to take history of the novel and the classical epic, but neither of them is being offered which is pretty disappointing.”
Durling admitted that some courses have been cut because of the budget shortfall, but said the impact on students should be minimal.
“We have reduced the number of course sections. We don’t feel we have done anything that has had a significant impact on course offerings,” he said. “We do have fewer sections, but we have smaller enrollments therefore some courses which had multiple sections have been reduced, but those shouldn’t have any impact on student choice. We want to make sure that we make the cuts that have the least impact on students.”
Duncan Gallant, president of the St. Thomas students’ union, said he sees the cutbacks as an unfortunate part of life, but added that he will be paying close attention to them.
“I don’t think it is a blaring concern at this point,” he said. “There is still a variety of courses being offered, but if the trend continues and further courses are removed from the system then it will be a real concern for students in terms of variety and how full our courses will get. You might see classes being capped at 60 students and see fuller classrooms and less one-on-one time with professors, which would be a definite problem.”
Durling said he doesn’t think that will ever happen, but added that the current economic situation is keeping him from saying anything definitively.
In the provincial government’s recent budget tabled two weeks ago a two year freeze was placed on the grants given to the province’s universities.
Durling said it might be in the best interest of the province to rethink that policy. While the university’s grant is frozen next year, faculty wages will rise by eight per cent, and enrollment is expected to drop by as many as 90 students.
“We understand the economic pressures that the government is under, but a zero per cent change means that significant expenditure contraction will have to take place,” he said. “The government of New Brunswick relative to other provinces is among the lowest in terms of support and that to a degree accounts for the higher than average tuition fees in the province. In order for universities to continue providing quality programming and quality service to students, adequate funding needs to be there.”
John McLaughlin, president and vice chancellor at the University of New Brunswick agrees with Durling.
UNB is forecasting a $6 million deficit next year, and university officials say that could grow to $30 million by 2012. McLaughlin said it is time the province starts focusing on its universities as a way to ensure future growth.
“They have to bet strategically on the future and we are it,” he said. “We are the strategic resource for this province and it is something you have to bet on and invest in even in the most difficult of times. At the moment it is not happening, though. New Brunswick is not supporting it’s universities at the level other provinces are when really this province should be treating post secondary education as its jewel.”
St. Thomas is currently participating in a review commission with other universities and representatives from the government regarding post secondary funding. Durling said he hopes the process will help convey to the government the problems with university funding today.
The school will then finalize their budget for next year in the middle of April.
