Thank you for reporting on the four options proposed by Athabasca University’s Sustainability Task Force. As a resident of Athabasca, I am very concerned about the impact that many of these options could have on town residents and those of the surrounding area. But the discussions the task force report have engendered are necessary to address AU’s future viability.
My main criticism of the report is that it does not provide sufficient context for AU’s current plight. During the three fiscal years prior to the arrival of President Pannekoek in mid-2006, the University’s revenues exceeded expenses by $20.7 million. As of March 31, 2006, its internally-restricted and unrestricted operating net assets – the financial padding of the institution – stood at $14 million.
During President Pannekoek’s time at the helm and under the watch of key ex-members of the Board of Governors, this became a $13 million operating deficit as of March 31, 2014. Some drawdown of these net assets was needful, but in my opinion, the overall decline was precipitous, much of the underlying strategy questionable, and many of the expenditures ill considered.
Also during this period, the University began to face systemic financial pressures that it seems its leaders were slow to comprehend.
First (as the task force report notes), AU receives less than one out of every three dollars from government. The other three Alberta research-based universities receive on average about two out of every three dollars of operating revenue from government grants, not to mention significant capital grants for buildings and other infrastructure. This means that AU significantly relies on tuition revenue – in particular, undergraduate fees.
But even as our reserves dwindled, AU’s budgeting model assumed that the University could continue to increase per-course undergraduate tuition, yet still increase registrations. These anticipated net revenues were then allocated to initiatives that often did not demonstrably contribute to the mission of the University nor its financial well-being. These practices defied conventional economic wisdom.
As well, there was significant and disproportionate growth in (Board-approved) managerial positions and related compensation during the past-president’s tenure. AU became administratively top-heavy. To his credit, the current president has led by example, reducing his salary by over 40 per cent compared to his predecessor. This does serve to highlight prior excesses, though, all of which badly affected staff morale.
In sum, the University’s past leaders could be argued to have not only financially mismanaged the institution, but allowed AU to drift from its original philosophical moorings: to reduce barriers that restrict access to university education, especially affordability.
The current president has been dealt a bad hand. I believe he is trying his best to address the significant challenges facing AU as a result of what I perceive as a leadership vacuum that preceded him. But these past shortcomings should be publicly acknowledged to provide context for the current fiscal situation, and frame the debate about the best way forward for Athabasca University.
David Annand, CPA, EdD
Professor, Accounting
Faculty of Business
Athabasca University
