Graham Carr: ‘If we stay true to our principles, I believe Concordia will manage this challenge’
As much as we might wish otherwise, 2020 is a year none of us will forget. COVID-19 has taken a heavy toll on our daily lives, disrupted global society and upended many parts of the world’s economy.
Needless to say, the university has also been greatly affected. Not only have we had to significantly reorganize all of our activities, but we also now confront a very challenging financial situation. Our operating budget continues to take a major hit because of COVID. The repercussions will be with us for several years.
Normally, we present the budget to the Board of Governors in spring, at the beginning of the fiscal year. However, as I wrote in May, because of the uncertainty we faced, including around the level of our government grant, the Board agreed to delay the budget adoption and instead approved a six-month Authorization of Expenditure. That included $300 million to cover basic operating expenses and a $25-million contingency to provide funds for unanticipated costs and to help the university’s recovery.
Since that time, we’ve gained a clearer picture of our budget reality. This allowed us to construct a 2020-2021 operating budget that the Board of Governors approved yesterday. It will come as no surprise that Concordia will show a significant operating deficit for this budget year. Furthermore, we anticipate that we will continue to be in a deficit position for the near future.
Prior to the current crisis, of course, the university was in a healthy financial position. In 2019-2020, before COVID, we had a balanced budget for the first time in six years. We were hiring a record number of faculty, advancing transformational initiatives to further our growth and poised to continue along that path.
Instead, we find ourselves in a very different place. Although the government has indicated that it will fund the university sector at the same level as in 2018-2019, and while our enrolment — in terms of headcount — is relatively strong, our revenues will be significantly less than what we have relied on in recent years. The drop is attributable to lost income from on-campus activities such as residence room rentals, parking and conferences, and diminished tuition revenue because of a decline in international student registrations, particularly at the graduate level.
On top of this, the university continues to incur unprecedented new expenses related to the transitions we have had to make. These include substantial technology investments to support the move to remote course delivery and assistance to faculty and staff, direct financial aid to students as well as online learning supports, increased on-campus health and safety measures, and stepped-up cybersecurity in a context where cyberattacks are proliferating.
Although we announced that Concordia will deliver the winter term remotely, we cannot predict how the coronavirus will evolve in the months to come, or when the health crisis will end.
Given all these factors, we ran a number of scenarios to prepare the 2020-2021 budget. In our view, the most likely scenario is that we should anticipate a deficit between $28 million and $45 million. This would represent about 5 to 8 per cent of our operating budget. It is a large amount; however, the figures are similar to what the Government of Quebec has invested in proportion to its own budget to address the COVID crisis.
How do we plan to manage this?
It is obvious that we will need to economize in order to manage this challenge. That said, our financial framework will be guided by four principles: prudence, agility, continuity and long-term sustainability.
All sector leaders have been briefed on our reality and know that they must adapt and manage their budgets accordingly. Among other things, this means taking a very careful look at current expenses, delaying new expenditures and strictly prioritizing initiatives. It also means remaining committed to the importance of student recruitment, support and retention, and continuing to enable the steady growth in our research profile. We will also deploy some of our accumulated reserves to help offset the deficit.
Despite these challenges, Concordia remains strong and determined to advance our standing nationally and internationally. The fundamentals of our financial profile remain solid. Unlike many Canadian universities, our capital assets are of high value and our structural deficit is among the lowest for Quebec universities.
We are committed to sustaining our momentum, supporting smart growth and investing in a limited number of key initiatives that align with our institutional values. These initiatives include: the Digital Strategy; launching a Next Gen Cities Institute; creating an Equity Office; establishing a Task Force on Anti-Black Racism; continuing the implementation of the Indigenous Directions Action Plan; nurturing the creation of a Concordia Health Research Initiative; unveiling our Sustainability Action Plan; and committing our university to advancing the United Nations’ Sustainable Development Goals.
As has been our practice for several years, the provost and the chief financial officer will soon host a series of town halls — virtually, of course — to discuss the budget and answer your questions. Watch for an invitation to participate in the coming days.
In closing, I want to reiterate how very proud I am of the Concordia community. Through the concerted efforts of staff, faculty and students, we have overcome countless hurdles in recent months and, again, I thank all of you for that.
There is no denying that we have our work cut out for us. But if we stay true to our principles and act in a rigorous fashion, I believe Concordia will manage this challenge as we have succeeded in overcoming other difficult financial moments in our past. Concordia is a first-choice destination for students who are attracted by our programs, our research, our commitment to innovation and our focus on their success.
I want to thank the Board of Governors for its unwavering support in this critical period and extend my sincere gratitude to my colleagues, the academic and executive leaders of the university, for their tireless work as we move forward.
President and Vice-Chancellor