Dear Colleagues,
By now you may have heard the news of a
hiring freeze announced at the University of Alberta (listen to AASUA VP Kristine Smitka’s interview with CBC
here). On December 17, the Employer sent an email to hiring managers announcing a hiring freeze effective January 1, 2025. As relayed to AASUA, the freeze is being implemented as “the university continues to experience a constrained budget environment with no foreseeable increases in funding and continued cost pressures.”
The AASUA would like to take this opportunity to help our members understand the alleged economic conditions of the University in their actual context, and to assure you that there is no need to panic. For those of you that may be newer to the University, or to the world of unionized work more generally, and even for you more seasoned types, we want to say the following:
This announcement, and its timing, is right out of the Universal Employers’ Playbook to Collective Bargaining.
Messages of financial dire straits are commonly circulated by employers right before unionized employee compensation negotiations commence. We’ve seen it here before at the university in previous bargaining cycles. The timing is intentional. The Association sees no good reason other than the fact that negotiations around our monetary proposals are likely to commence in early in 2025 as to why this doom and gloom projection was trotted out right before the holidays.
The information provided was selective and taken out of context. It could rightly be called spin.
The AASUA’s Executive was advised in the week immediately before the holiday break about the alleged “hiring freeze.” However, when we pressed the question, there appeared to be no absolute freeze, only an admission that hiring would still continue “where the case could be made.” We also know that, given the ambitious enrolment growth plans this university has for the near future, achieving these broader objectives is going to take all the AASUA’s Constituencies.
Even the most informed budgets are expected to contain at least some variances. For example, in the Board of Governors’ approved 2024-25 budget, the Employer had projected a deficit of approximately $46.2 million in the consolidated budget, but the deficit is more likely to come in around $25 million, or about half of the projected deficit, on account of increased investment income over 2024-25. In the context of about $2.0 billion in projected overall expenditures in the 2024-25 consolidated budget, $25 million corresponds to about a mere 1.2% variance in total expenditures in the approved 2024-25 consolidated budget. The projected deficit of about $46.2 million in the 2024-25 consolidated budget was fully offset by getting government approval to access about 15% of the accumulated unrestricted surplus, which stands at about $300+ million.
Budgets are about Administrative Choices
When we look at the percentage of funds allocated for “academic teaching salaries” within the University of Alberta’s operating budget, since about 2010-2011, the Employer has consistently allocated a diminishing fraction of its operating budget to academic salaries. And since about 2016 – 2017, the U of A has also consistently allocated a smaller fraction of its operating budget to academic salaries than other Alberta post-secondaries, with the gap between us widening over time. Based on recent Canadian Association of University Business Officers (CAUBO) data, the U of A also allocates a smaller fraction of its operating budget to “academic salaries” than all other U15 Universities in Canada.
The optics of a budget: it can be structured to support a certain end goal or conclusion
Net assets are the net worth of an organization (the difference between an organization’s assets and its liabilities). U of A’s net assets include a) unrestricted assets; b) net assets invested in capital assets; c) internally restricted net assets; and d) endowment funds. Internally restricted net assets are net assets that could have been used for operating purposes if left unrestricted but were instead earmarked by the Administration for specific projects or purposes. Net assets invested in capital assets represent funds that have been diverted from general operating budgets into capital projects.
To the best of our knowledge, this university began internally restricting net assets in approximately 2019, and this restricted pool of money has grown significantly since then. Intentionally designating an increasing proportion of net assets from “unrestricted” to “internally restricted” funds, and publicly presenting a consistently lower balance in unrestricted net assets, leads to the impression that an organization’s financial situation is precarious and unable to withstand even relatively small unexpected adversity. University administrations have been known to use this approach to intentionally leave the impression that salary growth must be kept in check and/or new efficiencies must be found.
Net assets invested in capital assets
Like other universities, the U of A has been spending a good chunk of its unrestricted funds on capital purchases. Over the time period of 2018 to 2023, just over 45% of the university’s spending for capital asset acquisitions was financed from unrestricted funds. While it is normal and necessary that some level of capital expenditures are funded from operations budgets at universities, heavy allocations can lead to starving front-line operations (like staff salaries) in order to fund novel vanity projects or other extravagances. Over the six-year period from 2018 to 2023, approximately 81% of the U of A’s estimated operating surplus was transferred to capital projects.
Contradictory Employer narratives
The Employer continues to try to reassure us that they are committed to growing “our impact as a world-class learning and research environment” but as of 2022–2023, our university has slipped with respect to faculty compensation within the U15 group from 2nd place (around 2010) to 9th place overall. Since then and over the last year, other U15 universities have settled collective agreements with significantly higher across-the-board (ATB) salary increases than our Administration is currently offering our academic staff, leaving the U of A to drop even further behind in the pack.
If we are going to retain our position as a flagship university in Alberta and indeed, in Canada, this institution must regain its competitive position with respect to compensation. Competitive compensation is essential for recruiting and retaining world class researchers and teachers in order to offer first-class opportunities to students and innovators around the globe.
What we do know
If the U of A would have allocated a similar percentage of its operating budget to academic salaries as our U15 competitors do, or even the Alberta average, then average faculty salaries at the U of A would have remained competitive with other average faculty salaries within the U15 Universities in Ontario and BC, as well as the other “top-5” QS world-ranked Universities in Canada. While it is true that the cost of living, particularly housing, is lower in Edmonton than Toronto or Vancouver, the U of A must remain competitive to draw and retain top talent to a smaller metropolitan area in a Northern climate.
As the University is a public sector employer, it is the Government of Alberta that is holding the purse strings.
The AASUA acknowledges that the Government of Alberta has disproportionately cut provincial operating grants to the U of A over the past number of years. However, these cuts have been offset by increases in other streams of revenue as well as reductions in expenditures, particularly to our salaries. As you are well aware, the last collective agreement saw three years of 0% ATB (July 1, 2020, 2021 and 2022) and only a 1.25% increase in April 2023 and 1.5% ATB in December of 2023. It also saw other cuts including the introduction of a lower salary scale for new ATS members and the start of a year-over-year decline in our Academic Supplementary Retirement Plan (ASRP). Currently, our benefits remain underfunded by the university. These measures were in large part imposed upon us by the Government at the time as part of broader provincial fiscal austerity measures.
Today, we are not in a financially austere economic environment in this province and Administration cannot just throw up its hands in helpless defeat.
In November 2024, in its Q2 reporting, the Government of Alberta announced it was projecting a $4.6-Billion surplus for this fiscal year, following last year’s exceptionally high surplus. Like the Employer, our Government caveats its comments about its robust financial position with cautions about already designated funds and the unknown variables that might crop up in the future. These messages are submitted for public consumption along with the reminder that we still need to catch up on projects that were put on hold in past, leaner years.
Yet the fiscal year 2021-22 marked the largest ever improvement in Alberta’s financial health, with a record setting, inflation-adjusted per-capita increase in the provincial budget balance, a historic high for any Canadian province. Alberta’s economy and government finances continue to outperform all other Canadian provinces. There is no legitimate reason why our world-class university should be left behind.
We know that, through the use of legislation called the Public Sector Employers Act, it is the Government of Alberta that actually sets the bargaining mandate for monetary matters and term (length) of contract for public sector employers, including this University. The opening offer to our members from the Government, via the Employer, was (like every other public sector employer that we know of that tabled a monetary proposal) a 2% across-the-board increase in the first year, 2% in the second year, 1.75% in the third year and 1.75% in the fourth year.
However, we also know that while the Province estimates future revenue conservatively and sets its budget line items tactically to induce tight budgeting within public sector institutions, it is able to enhance such funding by ad hoc funding envelope changes. Like the U of A’s, the Government’s budgets are all about strategy and choice. While not ratified by the province’s nurses, we have recently seen the mediator’s recommendations at the United Nurses of Alberta (UNA) – Alberta Health Services (AHS) table for a next collective agreement come in with monetary significantly higher than what the U of A has tabled (although AHS’s opening offer at that table was the same as our Employer’s); and more recently, at least one of Edmonton’s CUPE Locals has seen an offer similar to the nurses’ tabled by the Edmonton Public School Board.
To a large extent, we are bargaining our monetary proposals with the Government of Alberta alongside the U of A Administration. If the Administration needs to, it can go back to the Province to get a new mandate, while at the same time rearranging its own internal budget designations and priorities.
You have been subject to the same sustained inflationary pressures that Administration is complaining about.
When inflation has been accounted for, the average purchasing power of our members has declined about 10% in the past few years, largely since 2019. Expert economic analyses suggest that the compensation (ATB) increases that would be required from 2024 to 2028 in order to regain the purchasing power lost due to recent inflationary pressures is 5% annually - just to return our real value of earnings to their 2021 levels.
We ask you to reflect on the request that Administration has brought to you in this recent communication: Will you take on the responsibility for solving the University’s budgetary issues by accepting below-market offers and ever decreasing real wages?
Don’t let the Employer’s portrayal of the university’s economic situation fool you as it was meant to. The aptly-timed message was meant to instill fear, increase anxieties and lessen our collective resolve as we move into our monetary negotiations in bargaining. Don’t let it achieve its intended purpose.
The time for concessions is over.
Sincerely,
Gordon Swaters
AASUA President