One-time budget surplus significantly less than CUPE 3903 claims

Once funds already committed for special purposes were set aside, York was left with a one-time $14 million surplus from 2017. This is not an ongoing or “structural” surplus that could be committed permanently to fund higher salaries or benefits. It was a one-time surplus resulting from significantly higher than expected income from interest on investments, combined with lower than expected costs in some areas.

In comparison the more than 110 proposals made by CUPE 3903 would cost $48 million, representing a full 57% increase in costs over the current contract.

Communications have appeared from CUPE 3903 suggesting that York had a $36 million budget surplus in the fiscal year ending April 30, 2017.

While this amount does appear in the Statement of Operations and Changes in Deficit in the University’s 2017 Financial Statement (“Revenue over expenses for the year”).  However, the union’s characterization of the $36 million as an annual budget surplus is unfortunate and an inaccurate interpretation of the University’s Financial Statement.

To clarify, this surplus amount includes funding that was required to be set aside for what is called “special purposes” including:

  • Deferred and significant maintenance projects including student housing, Sports and Recreation and parking facilities.
  • Deposits to a special fund that will pay the University’s debt for bonds issued to fund major capital construction projects, when the debt becomes due for repayment in 2042.
  • Investments in University Information Technology projects and other capital renovation projects.
  • Unspent internal research grants provided by the University and unspent professional expense funds set aside for future use by faculty members.
  • Funds set aside by the University to address various collective agreement provisions to ensure that the University’s obligations to its employee groups are appropriately funded.

These monies, cannot be used or re-allocated for any other purpose, even if not all spent during the year, and as such, cannot be made available for annual operating expenses such as compensation.  All included, the funding set aside for special purposes totaled approximately $22 million.

So that then begs the question, doesn’t this still leave a $14 million surplus?

Once the funding set aside or required for special purposes was accounted for, York was left with a $14 million surplus.

However, this surplus was a one-time surplus, resulting from significantly higher than expected income from interest on investments, combined with lower than expected costs in some areas.  It is not an ongoing surplus, that could be committed permanently to fund higher salaries or benefits.

An annual budget is a plan for the upcoming fiscal year, based on best estimates. It is normal for any organization to have some variance between its planned budget at the start of the year, and actual results at the end of the year as reported in financial statements. The 2016-17 budget variance of $14 million represented 1.3% of York’s overall annual expenditures for 2016-17.

The University has and remains committed to allocating any such one-time surplus amounts to its Strategic Investment Fund, used to support the University’s key priorities of excellence in teaching and research and providing an enhanced student experience, as embodied in the University Academic Plan and related strategic planning documents.