ANTIGONISH (CUP) – The global economic crisis has extended to Canada’s universities, but depending on an institution’s ties to the market, this could be a good thing.
Dalhousie University in Halifax, N.S. is one institution hoping to capitalize on the recession.
“Some literature suggests that post-secondary enrolment increases in periods of recession. People can’t find jobs, so they stay in or go back to school,” said Ken Burt, the Dalhousie’s vice-president of finance and administration.
“We’re watching our marketing dollars very closely to try and get the best bang for our buck. We won’t be cutting back on recruitment when developing our budget for next year,” Burt said. “We’re cautiously optimistic.”
Meanwhile, some large universities have made sure that endowment funds - invested donations that are highly susceptible to the swings of the market – don’t figure into annual operating budgets, allowing them a degree of security.
Ivan Muzychka, associate director of communications for Memorial University of Newfoundland in St. John’s, N.L., says his institution isn’t particularly concerned about the downturn of the market.
“We don’t rely on investments for our operations. Funding comes from the provincial government and tuition. Despite the downturn, we don’t expect to experience any severe difficulties,” he said.
Muzychka says MUN plans to continue its national and international recruitment campaign because, in a declining market, some people see university as a good investment of their money.
But, Muzychka does admit that it may be difficult to recruit students from outside Newfoundland and Labrador if people have less money to spend.
Unlike MUN, however, some universities rely on investments of their endowment fund to operate their institutions. The profits are often used to fund scholarships, bursaries, or even faculty pensions. A hit to those funds could spell long-term restrictions for universities.
At the University of Prince Edward Island in Charlottetown, the endowment and donation funds were invested to a value of $19.9 million.
Faculty and staff pension plans were also invested. These investments had decreased in value by approximately 10 per cent as of the end of September – before the worst of the market plunges in October – costing the university up to $10 million.
But, even UPEI president Wade MacLauchlan is maintaining his confidence in the face of his university’s huge losses.
“The pension plan has absorbed this kind of loss before, but it takes a considerable period of rebuilding and careful management to regain the ground. The big question at this stage is: when we will begin to see more positive market results?” he said.
UPEI’s investment strategy has been cautious and well advised, MacLauchlan says.
But not everyone is hopeful for Canada’s post-secondary institutions. Roberto Martinez-Espineira, an economics professor at St. Francis Xavier University in Antigonish, N.S., says there are other ways the current crisis might affect students.
“Invested scholarship funds and financial aid could be reduced. Universities might need to rely more on tuition, so [it] will rise, making it more difficult to pay,” said Martinez-Espineira.
Students may also see a decline in part-time employment opportunities, he says.
MacLauchlan believes that as money becomes tighter across the country, so will donations to universities. Philanthropic support makes up four per cent of UPEI’s budget and a decline will inevitably mean a cut to spending, he said.
“One way or another, there will be belt-tightening. We can be thankful that we enter into these challenging times with our fiscal house in order,” he said.
UPEI doesn’t have any debt and isn’t running a deficit.
On the bright side, Martinez-Espineira suggests universities could take advantage of the recession by playing what he calls a counter-cyclical role.
“Universities could be doing a public service by spending money themselves. It’s a good time to invest in infrastructure because labour will be cheap, or find new faculty because the demand [for jobs] will be higher,” he said.
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