Investment losses add to U of C budget shortfall
The University of Calgary has written off almost $17 million in at least one investment in U.S. mortgage-backed securities hit by the credit crisis.
The school, which has more than $400 million in investments, wrote off its asset-backed commercial paper, which is popular with companies, banks and pension funds. The short-term notes are designed to pay investors interest from mortgages and car loans.
"I'm certain that everybody that invested in it felt that they were parking their money in a safe place. As it happened, that wasn't the case, but we are one of many, many organizations that got swept up in that," said Roman Cooney, vice-president of external affairs at the U of C.
The market turmoil is just one factor in the school's projected budget shortfall this year, which professors and students say will have a trickle-down effect.
Part of the shortfall comes from the U of C's ambitious growth plans. The school is in the midst of $1 billion in infrastructure projects, including a new digital library, an international students residence, a veterinary school and the Institute for Sustainable Energy, Environment and Economy (ISEEE).
"Construction inflation was running at 1.5 per cent a month. I would be surprised if there was anybody out there who was building anything that wasn't confronted with the challenge of rising construction costs, and we were no exception," said Cooney.
Salaries also went up about $40 million last year, and the expansions came with several new positions.
Rising energy rates — utility bills jumped about 13 per cent last year — tacked on about $3 million to operating costs.
Frustration over emphasis on select priorities
Cooney said that meetings have already been held, asking senior administrators and faculty to find ways to economize.
But Tom Langford, head of the U of C's sociology department, said cutting staff positions is the only solution these days.
"When a position comes open, you cut it. That's the only way you can do it because the fat has already been sort of trimmed from every discretionary budget line in the previous cuts over the last five years, and staff costs are the only major thing left," he told CBC News.
Langford said his department has lost four faculty positions since 2004, while hiring just one during the same period.
Staff in liberal arts and social sciences departments say they're frustrated that benefits flow to select priorities, while budget pain is felt across the board.
"We're still carrying the same number of students. We're still expected to teach the same number of course enrollees. But we're looking at about a 25 per cent contraction in our human resources," said Langford.
Some faculty predict fewer course offerings and as a result, a narrower experience for students.
Rithesh Ram, president of the U of C Graduate Students' Association, said thesis research grants have already been slashed.
"The graduate travel grants, which is the conference grants, have been greatly reduced, so the success rate is going to be very limited and to very few students this year," he said.