Guelph Pension Crisis…. Who us Worry??? Nah taxpayers have it covered!

September 13, 2013
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The pension funds at the U of Guelph  have been in terrible shape for some time. It has continued to get worse as management does nothing to solve the problem. Of course senior management gets the biggest and juiciest pensions of all.

There is no way out of the pension catastrophe without major changes to the plans that offer up to 70% of the final average salary of an employee.

As of the 2012 Annual Report, “The unfunded status of post-employment benefits (pension and non-pension), while not recorded on the University’s statements, continued to increase with a combined deficit (on an accounting basis) of $741.3 million ($484.3 million in 2011)”

The annual revenues of the university are $698 million up 18% since 2008. The number of staff in “Regular Budgeted Positions)” is actually down in 2012 compared to 2008 yet student numbers have risen by 3200 to 21,542.

This means that the total debt just for the pensions and other retiree benefits now is over $34,000 per student.

The university has been aware of this problem for some time. In 2010 they commented in a management report on the pension that :

In a short time funding this deficit will threaten the University’s ability to meet our daily cash requirements, maintain our credit rating and raise working capital. Unabated, this scale of annual payment would require elimination of any reserves, the liquidation of unrestricted assets and increased borrowing. All of these fiscal necessities would lead to the significant erosion in both capacity and quality of our core teaching and research programs.

 The university is there now.

 With this alarming statement the management of the university explained just how serious the pension shortfall  of $ 344 million ($ 200M for retiree benefits) was at the time. They further said “funding requirements for the university’s pension plans now present the single largest and most immediate threat to the university’s fiscal stability”

Pension costs have skyrocketed at the university and the contributions currently being made are proving to be woefully inadequate. In 2002 the contributions into the pension plans were $8.1 million, last year the contributions into the plans were university $34 million.

With the alarm bells ringing and the imminent danger of the pensions plans so obvious since 2010 the Board of Governors and management of the university have proceeded to take bold and courageous action and do absolutely nothing … nada… zip. It takes a certain boldness, arrogance, and incompetence to do nothing when the threat is this great. In fact the situation has grown exponentially since 2010 and has doubled.

The only people that can do anything are management but they have the fattest and juiciest pensions of all. It’s a huge conflict of interest. The top pension goes to the President who gave himself a 5.1% raise last year to $490,857.66. We estimate his pension on this will be in the range of $343,000 the year he retires.

The President is a rare case for a university president in that he has been in his position for so long. It gives us a good perspective on what has happened to compensation over the past decade. In 2003 when the President started in the same position he earned $220,597.

It would be a mistake to assume that is was just the president who was pillaging the system but these types of compensation increases have accrued across the board at the university. Before he was President Summerlee was the Provost and earned $160,000, last year the manager in that position earned $320,000.

There were 788 employees at the university on the Sunshine list last year and in 2002 there were less than 80.

How will it end? An article by MacLeans magazine stated it best when they commented that whats  likely s just more of the same.

“Management, with their fat compensation, will continue negotiating fat compensation with faculty, while politicians hold their tongues so that taxpayers don’t go after their fat compensation next. … But if nothing changes, it’s students who will suffer. Tuition will continue to rise, student debt will continue to climb, and one day there will be no money left for things like lectures and labs.”

Its time for a change.