Ontario universities face $185-million in lost revenue next year after millions evaporated from endowment funds, says the president of the Council of Ontario Universities.
The money would have been generated by investments and interest on the hundreds of millions of dollars in the endowment funds of the province's 19 universities.
But in recent weeks, it has not been unusual for universities to report losing a quarter of the value of those funds. Operating grants for universities have flatlined, while costs increased by $270-million.
Between that shortfall and the endowment crash, universities are in a $455-million "hole."
"We are facing grave pressures," said Paul Genest, who addressed the province's finance committee yesterday in Ottawa asking for $270-million in one-time relief to protect jobs at universities, as well as a $500-million quick infusion of cash for infrastructure renewal as part of the province's economic stimulus package, and another $2-billion over the next two years for new construction to generate sustained stimulus and protect the growth of innovation at universities.
He also points out that Ontario universities have a backlog of deferred maintenance adding up to $1.6-billion, and almost two-thirds of useable space on campuses is more than 30 years old.
Mr. Genest declined to give the total amount of losses on the province's university endowment funds, but said the Council of Ontario Universities has been crunching the numbers for the past four weeks.
Meanwhile, the struggles of the endowments pale in comparison to the issue of paying for the universities' pension obligations after pension funds also took a beating. The council is asking the province for regulatory relief.
"The situation is so grave that several of our institutions would literally become insolvent if they are required to obey the letter of the law under the Ontario Pension Benefits Act," said Mr. Genest. "They would close their doors."
As of Oct. 31, if an actuarial assessment has been performed for all of the province's universities, annual pension obligations would add up to $564-million a year.
The annual provincial operating grants for all of the universities adds up to $3-billion a year.
It would mean diverting money from classrooms and cutting jobs, said Mr. Genest, who added that Quebec and Alberta have already had regulatory relief from their province governments.
"We're asking for a holiday on special payments, waiting for the markets to stabilize. We also feel that universities are being treated like businesses. They're being treated like entities that could go out of existence."
Reports of heavy losses to endowment funds have trickled out from Ontario's 19 universities. Queen's University has lost about $100-million.
Earlier this month, faculty and staff at the University of Toronto were warned the "protective cushion" on an endowment fund expected to generate $62-million next year had disappeared.
In Toronto, the president of York University circulated a statement indicating the value of its endowment fund had dropped by 19% or $55-million, which would put the squeeze on new hiring and make it difficult to meet operating expenses and demand for student aid.
In the beginning of this fiscal year in May 2007, the University of Ottawa's endowment funds were worth about $142-million. They are currently worth about $137-million, but the university doesn't plan to take similar measures, said Victor Simon, the vice-president of resources.
Duncan Watt, Carleton University's vice-president of finance and administration, said endowment funds at Carleton have dropped by about a quarter from October 2007 to October 2008, from $230-million to $176-million.
Despite the pressures, the university sector acknowledges the investments made by both the provincial and federal governments in recent years, said Mr. Genest.
"There has been tremendous momentum to making universities internationally competitive," he said. "This is the wrong time to lose that momentum.