The senate of Algoma University College has been handed the task of bringing forward a long-term academic plan to restructure and reallocate academic resources to redress Algoma's short-term financial crisis.

This is a vastly different plan than the board of governors' move to declare financial exigency and proceed with layoffs of members of the faculty bargaining unit.

An investigative committee struck under the collective agreement following the board's declaration of intent to declare financial exigency on Sept. 30 found no bona fide state of financial exigency exists at the college, notwithstanding the considerable challenges posed by a current operating deficit of about 5 per cent of the total budget.

The board's invocation of the financial exigency article of the collective agreement followed revisions to the 1997-98 operating budget made in September to reflect changes in the financial situation of the college. Enrollment had fallen by about 9 per cent, resulting in a loss of tuition revenue of over $200,000 and of another $70,000 in fees from ancillary services.

Cost increases, including the compensation settlement with both faculty and staff bargaining units, led the board to predict a current deficit of at least $350,000. This followed on the heels of a similar deficit for the previous year as a result of cuts in provincial funding to Ontario universities.

There was no doubt that some action was necessary to redress the financial situation of the college. As salary expenditures account for over 85 per cent of operating costs, the board felt layoffs would be unavoidable and singled out faculty.

Management submitted an expenditure reduction plan which would reduce the expected deficit by about one-half. But, on Sept. 30, the board of governors moved to invoke the financial exigency clause, with a proviso, however, that if the faculty would agree to concessions to reduce operating expenses by $400,000 (the $350,000 projected deficit plus a contingency of $50,000), that financial exigency would not be declared.

The Algoma University Faculty Association declined to offer concessions and, following the article of their collective agreement covering layoff of faculty for financial exigency, an investigative committee was struck comprised of representatives of management, the board, senate and the faculty association.

CAUT provided an external member, Ron Melchers of the University of Ottawa, to assist Algoma faculty member Bob d'Amato in representing the faculty association.

The committee found there were avenues for financial redress which had not been sufficiently examined. While the situation called for exigent financial management of the college's resources, it did not constitute a state of financial exigency so grave as to require the release of faculty.

Among the findings of the committee were that ancillary enterprises (a student residence and a fitness center) together accounted for about one-half of the current and projected deficit. The committee recommended that ancillary enterprises of the college be managed and held accountable for their fiscal results so as to eliminate losses. This can be accomplished through an increase of revenues or, failing that, a decrease in their expenditures.

The committee further found that non academic salaries accounted for a larger share of expenditures at Algoma University College than at any other group of comparable institutions. In part, this is consequent to Algoma's situation as a remote affiliated institution of Laurentian University. Nonetheless, this situation is not sustainable.

Algoma employs 54 administrative and support staff to provide services to 30 faculty members and 650 full-time students. The committee made a number of recommendations for the review, reorganization, reclassification and reduction of administrative and support functions, including the library. Savings from such initiatives are expected by the committee to exceed $350,000.

The committee also recommended Algoma undertake an aggressive recruitment campaign to attract new students to its high quality and diverse undergraduate programs offered in a small, intimate college setting.

The senate ratified the committee's finding on Oct. 29 and the board met the next day to receive the report and its findings along with the ratification of senate.

There are lessons to be learned from this experience by other institutions. Ancillary enterprises, although they may contribute to the quality of life of university communities, cannot be operated at the expense of the instructional and research activities which represent the core of a university. They must be managed with some degree of independence and be held fully accountable for their results. This has been a consistent factor in many recent situations where universities have faced financial difficulties.

Universities must have adequate levels of reserves to protect themselves from short-term downturns in enrolments and to give them breathing room to reorganize resources accordingly. Increasing reliance on tuition revenues increases the instability of university finances. When changes occur, reorganization must follow quickly. University administrators must have adequate planning tools in hand to respond quickly before growing deficits limit the available options.

Universities have grown "top heavy" in administrative and support expenditures. Academic salary budgets have absorbed the lion's share of expenditure reductions through retirements without replacement, low wage settlements and growing student-teacher ratios. The infrastructure which supports faculty and students has consequently grown as a proportion of operating expenditures, and often also in absolute terms, so that an inequity has occurred.

This is clearly visible in any long-term analysis of the financial statistics of universities and colleges. Yet it has received scant attention from either university administrators themselves, or from other elements of university communities. It is only a matter of time, however, before the increasing bureaucratic weightiness of universities attracts the attention of governments who are asked to foot the bill.

The key recommendation of the Algoma University College Financial Exigency Committee was that the institution undertake a long-term planning process with involvement from the community it serves to develop a concrete vision of what the university is and what it should be - its mission and goals. This is prerequisite to clear and effective decision-making on allocations of resources.

Ronald Melchers teaches in the criminology department at the University of Ottawa.