The Nova Scotia government is covering NSCAD University's $2.4-million deficit, as long as the cash-strapped art school finds ways to collaborate with other universities and cut costs.

The province announced the bailout Tuesday in response to a report that paints a bleak future for the 125-year-old Nova Scotia College of Art and Design — the oldest independent school in Canada granting fine arts degrees.

In his 13-page report called Time to Act, consultant Howard Windsor said NSCAD must examine every aspect of its operation — from the way it's run to the programs it offers — and work with other schools.

He did not recommend an official merger with another university, though he didn't rule it out.

"We take that as far as you need to take it in order to be able to put the university on a sustainable basis," Windsor told reporters.

"You need to undertake a curriculum review and space utilization study."

The century-old art school in downtown Halifax is in "serious financial trouble," Windsor said, noting the school's deficit has grown to $2.4 million this year. He suggested the province cover that deficit and appoint a facilitator to get the review process moving.

"NSCAD has produced no reasonable plan for ensuring its future," Windsor wrote.

"The inability of the university to develop an acceptable plan in a timely fashion is as serious as the financial situation itself."

President rejects merger idea

David B. Smith, the president of the Nova Scotia College of Art and Design University, said the board of governors for NSCAD is committed to looking at "every possible option" to keep the school functioning as an independent entity. However, he didn't give specifics.

Smith also ruled out the idea of a merger, an idea that another consultant also recommended as a possibility in a report released last year on post-secondary education in Nova Scotia.

That report was authored by Tim O'Neill, an economist and former Bank of Montreal executive.

Recommendations for NSCAD

  • Province gives NSCAD up to $2.4 million for 2011-12, with conditions.
  • NSCAD develops plan that does not count on extra money from the province.
  • NSCAD immediately looks at all ways to collaborate with other post-secondary schools.
  • NSCAD reviews its programs and spaces at all three sites.
  • Province appoints facilitator to ensure review, collaboration.
  • Province's future decisions about NSCAD dependent on adherence to collaboration.
  • Facilitator gives monthly updates to deputy minister of advanced education.
  • NSCAD brand and studio-based curriculum protected in all collaboration deals.

"Even in his report last year, Tim O'Neill warned against the potential increases in costs associated with mergers," Smith told reporters on Tuesday.

"NSCAD is trying to reduce costs, not increase them for the people of Nova Scotia."

Advanced Education Minister Marilyn More said the government would provide the money to the university on the condition it submits a financial plan by March 31. She said a provincially appointed facilitator would oversee the school's plan.

More quoted from a section of Windsor's report that said the financial mess at NSCAD was neither sudden nor a surprise.

"They [financial problems] were evident at least three years but persisted and grew," More said.

"NSCAD today is operating at a loss equal to more than 10 per cent of it's annual budget. The situation is not sustainable."

Province, university accept recommendations

The report, estimated to cost $50,000, called on the school to review its programs and curriculum and also look at how it uses space at its three campuses.

Both the province and NSCAD said they accept all of Windsor's recommendations.

The report also blamed the bulk of the deficit on the school's decision to proceed with construction of its campus on the Halifax waterfront without federal funding.

The school has an outstanding loan of $8.9 million on the facility and in 2011-2012, the annual principal and interest payment on the property totalled $751,000.

"The project went ahead without securing all the necessary funding commitments and as a consequence, a significant financial burden was added to NSCAD," said the report.

At a meeting last week, the NSCAD board of governors promised to produce a plan by March 31.

Despite recommending a number of major changes, Windsor said the province should protect the NSCAD brand.

Windsor's report revealed that the province has given the art school an extra $6 million in the past two years.

With files from The Canadian Press