With few ideas to end its financial crisis, and austerity the theme in Edmonton, Athabasca U edges toward the precipice

Posted on February 23, 2015, 12:30 am
9 mins

PHOTOS: Athabasca University’s headquarters in the forest near the town of Athabasca, 145 kilometres north of Edmonton. Below: AU President Peter MacKinnon, another view of the entrance to the isolated AU headquarters building.

Founded by Alberta’s Social Credit government in 1970 as a leader in distance education for a predominantly rural province, Athabasca University now faces an existential crisis at the worst possible moment politically speaking – just as the government of Premier Jim Prentice prepares to embark on another round of destructive budget cuts.

AU President Peter MacKinnon, a lawyer and former University of Saskatchewan president appointed last year on Canada Day, told faculty and staff members of the public university in a grim Jan. 22 memorandum that he planned to strike a small task force “that will consider our options and make recommendations to our governing bodies, and possibly the provincial government.”

AthabascaMacKinnon-LIn an earlier message headed “AU Financial Sustainability” emailed to all staff on Nov. 26, 2014, Mr. MacKinnon had communicated the bad news that the university faced a more severe financial shortfall than employees had been led to expect by the previous administration.

“I genuinely regret to advise you that that our initial review of the budget projections for the next fiscal year is far from positive,” Mr. MacKinnon wrote. “We had previously projected a potential budget shortfall in 2015-16 of $9 million. We now see that potential deficit being at least $12 million. This does not even take into account any new budget requests.

“I know this may come as a surprise to some of you, given that we reported a $3.6 million surplus for 2013-14,” he said, explaining that those numbers were the result of one-time measures that “can’t be repeated without threatening our sustainability.”

In the November email, Mr. MacKinnon summarized the financial circumstances of an institution that has essentially been in financial decline since 2008 as “unprecedented” – a 4.8-per-cent operating grant reduction in 2013-14, resulting in a loss of almost $2 million; a 56-per-cent cut in AU’s infrastructure funding amounting to another $1.7 million lost, and only $1.3 million added back in 2014-15 with no corresponding increase for infrastructure.

At the same time, he reminded staff in November, the government of then-premier Alison Redford had capped tuition fees, AU’s largest source of revenue. This has in effect frozen the revenue side of the university’s increasingly difficult financial situation.

Unsurprisingly, then, the Jan. 22 follow-up memo struck a very gloomy tone, and Mr. MacKinnon said he expected to ask the task force to report very quickly, during the current academic year.AthabacsaDoor-R

“AU is at a critical juncture in its evolution,” he wrote, describing the institution as having to cope with “inadequate resources and limited prospects of improvement.”

“It is understood by many that our present trajectory is unsustainable, and that without recognition by government that its practices and policies over the decades have contributed to our condition, we face issues that will require fundamental change if we are to survive and thrive,” he wrote. “Although I retain hopes that this recognition will be forthcoming, we must anticipate the possibility that it will not. …

“Our continuing preoccupation is briefing members of the government on our circumstances, and attempting to enlist support in relief of our operating budget, and IT capital needs,” he went on. “I am confident that politicians and senior … public servants know of our situation and are sympathetic to our plight. The question is whether they will respond. Every discussion begins with reference to deteriorating public finances … We remain hopeful.” (All emphasis added.)

Alas, awarding an honourary degree to a former PC premier is probably not going to do the trick.

This leaves the question of what Mr. MacKinnon’s planned task force could recommend in the face of AU’s continuing declining prospects, which are influenced by all of the following factors:

  • Fundamental technological change that has made it easier for any university, anywhere, to use the Internet to operate competing distance learning programs at low cost.
  • A shift in the makeup of the student body from mostly Albertans to a larger percentage of people from other parts of Canada and the world, reducing the political impact of more government cuts anywhere outside the town of Athabasca, where AU has been based since 1984.
  • Periods of irresponsible management by past university administrations that left the institution facing a financial crisis that just won’t quit – in 2012 the AU faculty association and a staff union voted non-confidence in then-president Frits Pannekoek.
  • A long period of not-particularly benign neglect by the provincial government culminating with the prospect of more cuts under Mr. Prentice.

Options for Mr. MacKinnon’s administration are limited. The university could try to enrol more students, but with more and more universities offering distance learning, the prospects for success are circumscribed. In fact, enrolment is on a slow downward trend.

It can’t increase tuition – which raises about $70 million versus about $40 million in direct government grants – because of the Redford freeze. It can’t raise more cash from campus facilities, residence charges, recreation fees and the other sources of revenue available to conventional universities, because it has no on-campus students.

Despite the high quality of many of its offerings, a big budget cut is bound to badly hurt its sustainability in a competitive era for distance education.

The university has been moving from a tutoring model to call centre in a desperate attempt to save money, but it’s unclear if it’s working and what it will do to the quality of its programs and courses.

Faculty and staff have been hit hard by pay freezes, a heavier workload resulting from layoffs and early retirements left unfilled.

Rumours are rife – takeover by another institution, privatization, massive downsizing – but it’s hard to imagine who would want to buy or take over the place, despite its quality offerings. Under the circumstances, it’s unsurprising Mr. MacKinnon would have characterized the culture of AU in his Jan. 22 memo as “entrenched, suspicious and severe.”

Back in 2013, I observed in this space that Ms. Redford’s government was going to have to face up to doing something meaningful to end the crisis at AU, “whether they like it or not.” Well, they solved that problem by having an existential crisis of their own.

Now AU’s peril has grown worse, as has the government’s mood in Edmonton, 145 kilometres to the south. Without government intervention, financial failure before the university’s 50th anniversary seems probable.

It comes down to this: If the government of Alberta wants a university that allows students to complete their degrees via distance education, it’s going to have to pay for it.

This post also appears on Rabble.ca.

NOTE: Athabasca University President Peter MacKinnon has responded to Monday’s blog post with a statement that “while the financial challenges we face are very real, there is no substance to the notion that we are either on the verge of closing, or being taken over by another institution.” Read the entire statement from Mr. MacKinnon here.

15 Comments to: With few ideas to end its financial crisis, and austerity the theme in Edmonton, Athabasca U edges toward the precipice

  1. Jerrymacgp

    February 23rd, 2015

    This is most worrisome…I’m enrolled in a Master’s degree programme with AU, and I’m in the final phases of preparing to start my thesis. What will happen to all of that work if AU folds? What about all that hard-earned money invested in this? Here I am on the high side of 55, & there is a risk I’ll have to start over?

  2. Jim D.

    February 23rd, 2015

    It is not just Athabasca that is under threat here, all traditional universities face this challenge. New technologies are, for the first time ever, allowing the globalization of higher education. As these technologies develop and as traditional educational boundaries are broken (i.e. students in Ottawa can take classes in Athabasca, but soon elsewhere), post-secondary education is threatened. You might look at this and say “that could never happen”, but you can accomplish a lot by simply wearing people down.

    Post secondary education has been under attack for over a decade now by neo-cons who can’t see the value of anything that cannot generate private profit. And it is not just education that is under attack. The deteriorating political, ecological, and social landscape of this planet is just the most obvious outcome of this blind pursuit of profit over all. We can continue to live in the technologically driven fantasy that the world is getting better, and just watch as more and more of our way of life stripped from us, or we can start demanding a change and we can start fighting this nonsense.

    I don’t see the U.S. government too worried about the deficit they run and the debt they accumulate. We are decades away from that kind of financial fiasco. Why should we worry? It is just a club that is used to beat us with. We live in a boom and bust economy and we simply need to weather this storm with a view towards long term expansion and diversification. We need to fund our infrastructure, fund our services, grow our expertise, and expand our economic, social, educational, and technological diversify. You want an image of our future if we continue on this path, take a look at Greece. If we engage another round of cuts, reducing educational flexibility, remaining blind to the threat of globalization, letting the neo-cons beat us with their debt and deficit clubs, all we are doing is limiting ourselves, reducing our diversity, and ensuring that Alberta will become the next “collapsing economy” in the unfolding tragi-comic scene.

    • Adam

      February 23rd, 2015

      I add that governments like online learning because they think it will save them money. They are wrong. Online learning, if done well, is actually labour intensive and expensive.

      • JoeQPublic

        March 8th, 2015

        AU currently has close to 40,000 active students, and receives a fraction of government money compared to a conventional institution with that many students.

  3. Alvin Finkel

    February 23rd, 2015

    I was a professor of history at Athabasca University for 36 years before my retirement in August, 2014. During that period the provincial government portion of the university’s income dropped from over 80 percent to less than 30 percent. While such a drop mirrored the province’s declining support for universities generally, it left Athabasca University to fund its expenditures with a far smaller subsidy per student than any other university in the province. The province funds universities only for students who have an Alberta address. That’s a minor problem for conventional universities since out-of-province students move temporarily to Alberta and can provide Alberta addresses. Students at Athabasca University, which the province proudly bills as “CANADA’s open university,” stay home and home for over 60 percent of them is somewhere outside Alberta.

    The out-of-province students help to lower overall costs–the costs of developing a course for 500 students are the same as for developing a course for 200 students. And the special levy on out-of-province students means that they pay more for their services as students than do Alberta-resident students. But, as for conventional universities, it is impossible for Athabasca University to charge higher fees than they already do without making them even less accessible to those without big incomes than they already are. The lack of subsidies for students without Alberta addresses costs AU about $10 million per year.

    The provincial government could solve Athabasca’s funding problems with one stroke: just give the university the same per-student subsidy that the province provides to its other universities. In return, though, the province would be justified in calling on Athabasca University to get rid of all the management positions it has created in the last decade. Athabasca University, mimicking bigger universities, had created a top-heavy administrative structure before 1995. When Dominique Abrioux became president that year, he streamlined the university, creating more democratic structures and getting rid of most of the vice-presidencies, associate vice-presidencies, and all of the deanships. That made it possible to expand front-line teaching and student support services. For the next ten years, the university operated very well without any of the former bureaucratic positions, but a degree of “position envy” of other universities caused the Board, the next president, and some sections of staff to demand that the “traditional” positions within universities be restored in recognition of the fact that AU’s enrolments doubled within a decade. Suddenly as well a risk management department was created because every other university had one, and spending on recruiting and marketing expanded without clear results. Combined with steep provincial funding cuts and questionable management decisions regarding technology expenditures, the top-heavy management structure resulted in cuts in teaching and service positions that have weakened the effectiveness of Athabasca University.

    But it should be noted that the funding cuts from the Klein years onwards have reduced the quality of programs and the standards of teaching and grading in all of Alberta’s post-secondary institutions. Athabasca University is still far more student-oriented than the U of A or U of C. You’ll never be in a classroom with 300 other students, listening to some monotone prof who says “uh” 500 times in a 50-minute lecture (I experienced several of those as a student) and who has two office hours a week. Yes, that’s a caricature of conventional universities, and many of their profs are student-oriented, but my own experience was that they were a minority. AU courses are prepared by course development teams with instructional developers and editors aiding professors who are under strong pressure to make sure their courses are coherent and readable and that their exams actually test what is taught. If you are a working stiff or a parent of young children or someone over the age of 30 who does not want to sit in classrooms with strung-out 18-year-olds with no real world experience, distance education is a tangible means for you to get all or part of a university degree. The Alberta government is not going to let Athabasca University disappear though it may combine it with some other entity (that would be a shame however because in all of the other universities, distance education is treated as a poor second cousin to classroom instruction).

    • Liz

      February 23rd, 2015

      Re: ” listening to some monotone prof who says “uh” 500 times in a 50-minute lecture”. On CBC radio today at lunchtime, there was a prime exhibit of this, with a U of A prof who could not give a sentence without an ‘ahh’ in it. I was so tuned out by his speech pattern that I forget his topic!
      Isn’t it time that those who teach or lecture, are forced into Toastmasters or similar, if they cannot speak fluently, without the horrible earworm of “uh”, “ahh” and “hmm” included in their vocabulary?!!

    • athabascan

      March 2nd, 2015

      AU is the Alberta advantage. It is in fact an Alberta home grown success story. As such it deserves to be supported by the government. It is by any measure a unique university. Some institutions are worth preserving.

  4. PJP

    February 23rd, 2015

    It is not just AU.

    At MRU, departments have and are going to be ‘consolidated’… entirely for cost savings. (Journalism and Broadcasting are now part of Biz school).
    Market modifiers are being applied to Nursing, Science and Biz courses. That is to say, the market for these courses has been deemed capable of bearing $50 to $150 increases to tuition.

    According to the MRU Faculty Association’s Advocacy, quoting the instituon’s January townhall meeting, MRU is going to conservatively run a $7 to $13 million deficit in 2015-16 based on NO CUTS to funding (i.e. if funding is merely continues to stay ‘frozen’ as it has been every year since 2010-11).
    See http://www.mrfa.net/files/funding%20challenges%20primer.pdf

    So what will an additional 5% cut look like? Salaries? Jobs? Programs? All of the above?

  5. conrad

    February 24th, 2015

    Time for AU to close. Waste of money. University in a remote town? Stupid idea to begin with.

    • jerrymacgp

      February 24th, 2015

      It’s a distance education university with no on-site teaching. It doesn’t really matter where it is, and arguably building it in a small town reduced the cost for the land it sits on. In addition, it provides knowledge economy jobs in an otherwise agricultural and resource extraction community…how can that be a bad thing?

      • Ryan

        February 24th, 2015

        Athabasica U is losing money because it is not needed. Let’s close this university and concentrate our efforts elsewhere. Clearly, there’s no demand and that’s why it’s failing.

        • Nathan

          February 24th, 2015

          No demand? They have 40,000 students annually. That’s right up there with any other major university.

          Is it just me or does Conrad and Ryan’s comments feel very spam like and specifically placed to stir up conversation….

          • Hollaye

            February 26th, 2015

            Athabasca is a leader in distance education and without it and the flexibility it allowed I never would have been able to complete my graduate degree! As I am now a post secondary educator and learning the educator side of on line learning it is not an “easier” method to deliver or even less costly but it is a different and necessary option for today’s world – Why can’t all educational institutions function the way Athabasca has? Those posts by Ryan and Conrad are pure snobbery with unenlightened, “old school” academia values. Government support for this valued institution is a necessity. Get with the 21st century boys !!!

  6. February 25th, 2015

    I’m surprised AU doesn’t make more revenue from international students, who are outside the tuition cap. Perhaps they should do more international recruiting.

    It would be sad to see AU close for sure. I have a friend who got a Master’s degree there, and several who have benefited from online courses – it does make a difference to many people. If necessary, though, AU could become a college of U of A, like Augustana and Campus St Jean. U of A is adopting a new President (David Turpin, former president of my alma mater, the University of Victoria) and new VP Academic over the next year. Perhaps AU can become part of our new vision. This would also allow them to share most of our administration to reduce costs.


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