PHOTOS: Athabasca University’s main building in the Town of Athabasca, 130 kilometres north of Edmonton. Below: AU’s logo; Interim President Peter MacKinnon; and Alberta Advanced Education Minister Marlin Schmidt.

Athabasca University Interim President Peter MacKinnon will present a grim proposed three-year budget this morning to the institution’s General Faculties Council that projects growing deficits and financial insolvency by the 2017-2018 fiscal year.

The budget was drafted after NDP Advanced Education Minister Marlin Schmidt directed Mr. MacKinnon in March not to submit the distance university administration’s first draft budget, which would have involved staff and faculty layoffs, with heavy impacts on the economy of the Town of Athabasca, 130 kilometres north of Edmonton.

Mr. Schmidt instructed AU to come up with a version that did not include job losses.

The budget that will be presented to the Faculties Council in Athabasca this morning has the tone of a document drafted under protest. The budget, says an accompanying note, “represents management’s best effort to avoid a deficit in 2016-2017. Despite a concerted best effort by the Executive Group, it still comes short by $3.3 million.”

The key highlights of the proposed budget include:

  • $3.3 million deficit in 2016-2017
  • $6.8 million deficit in 2017-2018
  • Financial insolvency in 2017-2018
  • $8.8 million deficit in 2018-2019
  • $12.5 million accumulated deficit from operations at the end of 2018-2019

“It is a challenge to produce a balanced budget given the magnitude of our revenue restrictions and cost pressures combined with the directive of no layoffs when salary and benefits make up roughly 68 per cent of AU’s expenses,” the note complains. “Given this, the proposed budget also does not address long-term sustainment.”

“In the four months since the minister’s directive,” President MacKinnon said in an introduction to the budget itself, “AU’s financial circumstances have continued to evolve, partly because the ameliorative measures proposed in our March draft budget were not implemented.” (Emphasis added.)

“It is not business as usual for AU on an ongoing basis,” he said. “Sustainability issues are real, and their effects are imminent.” He went on to say he hopes the third-party review Mr. Schmidt said in March would be put in place “will address them fully.”

The budget document says the $3.3-million 2016-2017 deficit will have to be funded either from a grant in that amount from the province, or the university’s strategic initiatives fund will have to be reduced to $3.2 million and the accumulated deficit from operations raised from $10.5 million to $13.8 million at the end of fiscal 2016-2017.

Despite the proposed layoffs in the March budget that was not accepted by the Ministry of Advanced Education, AU nevertheless would have posted a deficit of $1.6 million, the accompanying notes indicate.

The minister’s directive required that the revised budget be submitted to the government by Aug. 2.

While members of AU’s faculty and staff will certainly challenge some of the assumptions in this budget, for example, its enrolment projections, all parties are likely to be in agreement that only increased funding can solve the university’s ongoing sustainability crisis, and that one component of this solution involves a funding formula that does not penalize AU because more than half its 40,000 distance-education students live outside the province.

Meanwhile, despite a search that began on March 25 for a new Board of Governors Chair and possibly other Board members, the government has not yet named a chair. Moreover, in spite of an email sent to faculty on June 2 indicating the current Board has a shortlist of three candidates for a permanent president, no successful candidate has been named.

Judging from a statement in the budget, the organization and commencement of the third-party review has not yet begun.

The presentation of a proposed budget that continues to push the government in a direction it has indicated it does not want to go suggests that Mr. Schmidt will have to act decisively soon to resolve the future of Canada’s most open university, which has long benefitted students throughout Alberta, the country and the world.

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  1. Ugh, AU again! This reads like a soap opera with the same bad actors (McKinnon, and his gang of incompetent administrators, supported by a Board of Governors made up of neo-Con political cronies), and the same recurring plot line that goes nowhere.

    No offence to David, whom I respect immensely, but all the numbers provided in this article are suspect. That is the one thing independent and intelligent faculty members agree about.

    I have stated many times in all articles concerning AU, that without a change at the top (President, VP’s, some Deans, and the Board) absolutely nothing will change. This latest article proves my point. As usual, the incompetents at the helm are asking for more money to paper over their bad planning and decisions – same old same old.

    The fact of the matter is the ones supposedly being paid truckloads of money to run the place are out of ideas if they ever had any in the first place. I’m sure the administration will present and frame its version of AU’s financial state. However, none of that spiel should be taken at face value. This is like watching a bad sequel – been there done that!

    Minister Schmidt needs to place AU under a form of financial guardianship, order a full audit, replace all members of the Board of Governors, fire the president, and replace a few, if not all the VP’s, and consider demoting some of the more problematic Deans as well. Once that’s done, then we can talk about funding, but only after the audit is completed.

    1. University governance, including budget processes, follow well-defined channels of communication. A budget is brought forward to the General Faculties Council (GFC) for information and discussion. The Finance and Property Committee of the Board of Governors considers the proposed budget in advance of the Board of Governors meeting to discuss and vote on its acceptance or rejection.

      GFC discussed the proposed budget Thursday the 21st along with elements of the Comprehensive Institutional Plan that will be submitted at the same time.

      The Board meets Thursday, July 28th at the Office in Edmonton at 8:30 am to discuss the matter. Meetings are open to the public, except portions that are held in camera.

      In my capacity as a member of General Faculties Council I have received the documents, read them and commented on them at Wednesday’s meeting. Out of respect for the governance process , procedure counsels anyone interested in their content to await the outcome of Thursday’s meeting before entering into public discussion of their merits and limitations.

      We can then begin public discussion of the documents after the meeting on the 28th; until then, let us respect the process by seeing it to its conclusion.

      The deadline for the submission of the documentation to the Ministry is Tuesday, August 2nd.

      Until then,

      Jane Arscott, faculty member and member of General Faculties Council

      1. Respect what Jane? A process that is rigged so this miserable budget put together by incompetents gets near unanimous acceptance by the Board? People at AU aren’t even placing bets on the odds the proposed budget will be accepted, because the likelihood that it won’t are zero.

        Too bad MacKinnon and his crew can’t manipulate and intimidate the Minister of Advanced Education using that same rigged process.

        I’m sure Erdogan and his cronies in Turkey are advising everyone to respect the process by seeing it to it’s conclusion as well. That doesn’t mean much when everyone knows what the outcome will be and everyone else won’t to speak up our of fear.

  2. So management wants a handout.
    How is it that ‘competitive’ managers are only able to come up with handouts or layoffs of non-management personnel, all the while receiving ‘competitive’ pay packages in the 6 figure bracket?
    If it’s up to Minister Marlin Schmidt to make the decisions, then get rid of the over-priced self-aggrandizing management leeches and bring in some clerks and supervisors to implement the Ministers plan.
    Likely there is your $3.3 million right there.

    1. Oh, heck we don’t even have to find the savings through wage reduction and replacement of the top 10 wage sucking administrators.

      Believe me there are at least a dozen ways to find $3.3 million in savings at AU. However, there are only a handful of people who know where the bodies are buried so to speak.

      First, the elites need to be coerced into abandoning their sacred cows for the good of the institution. Right now this bunch isn’t willing to do that. They are clinging to their expensive and wasteful pet projects at the detriment of everyone else.

      Unless everything is put on the table, including what McKinnon and his sycophants cherish most, AU won’t solve its manufactured and avoidable financial crisis.

      So, while I agree with Political Ranger, I have to caution that he is only scratching the surface by suggesting the current administrators be replaced with cheaper and better talent. A lot more could be done.

      1. Can you elaborate? Some hints as to what these sacred cows and wasteful pet projects you’re thinking of are? Unless doing so would compromise you some-how, of course.

        1. Mike, I’d love to provide specific examples, but I can’t for the very reason you mention.

          AU administrators and their toadies are as vindictive as they are incompetent. They have a lot to protect (e.g. ego, status, power, paycheques, sycophants) and they don’t take kindly to anyone who would upset their cozy arrangement.

  3. Being a former member of the BoG, as well as student, this is very sad to see that in the past few years absolutely nothing has changed! It’s the same old story, with the same old players! It’s time to shake things up and make some tough decisions! AU provides a wonderful service to students who can’t attain PSE in the traditional way BUT they are not the only players in the game anymore and it shows. They are way behind the mark and other schools are catching on to distance Ed and it’s only a matter of time before AU no longer exists. The time is NOW to make some hard decisions starting with the top down.

  4. The current administrative model sucks. It’s top heavy with often unqualified officials, a silly effort to imitate bigger institutions that are also too bureaucratic but can hide that a bit more in their bigger budgets. Stop creating unneeded positions for risk management, fund-raising, student recruitment and the like and let faculty make the links with other universities and institutions that bring in students and sometimes money. Stop contracting out computing and survey work that can easily be done in-house. Commonsense is needed but Athabascan is right. It won’t happen without a form of guardianship. Extra funds are needed but not in the amounts that the current administration suggests.

    1. “Stop contracting out computing and survey work that can easily be done in-house.”

      Doctor Finkel is correct. I once worked as a systems administrator at an organisation with over a thousand workers. I introduced free open source software (FOSS) systems into the company and saved, literally, millions of dollars per year. However, senior management didn’t like my ideas and attempted to revert to expensive proprietary systems. They eventually frog-marched me out the door for my heresy. Ironically, they still use the FOSS systems I implemented.

  5. Same old story – the highest paid executives want to cut everyone else’s jobs and pay. If these people truly cared about the institution they seem to be running into the ground, they would cut their own pay first. Perhaps then they would be taken a bit more seriously.

    From other comments about this over time, it seems to me that management/staff relations seems to be a big and ongoing problem at this institution. Management seems to be a part of the problem here so perhaps not part of the solution. If they can’t turn things around they should at least do the honorable thing and quit without taking big severance packages.

    I would love it if management did something honorable and started to turn things around, but I think it is very unlikely. I expect they will have to be fired and some one else will have to come and clean up their mess while they go off to look for their next high paying job. It seems to be the past pattern in Alberta.

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