Some Different Numbers, But Same Year-end Result

midyear budget
Column A: The projections when the budget was approved last March. Column B: How we think the fiscal year will end, based on midyear numbers.

St. Clair’s Chief Financial Officer, Marc Jones, says the school is on-target with its 2019-20 budget projection at the midway point of the fiscal year.

He provided an update of the current financial picture, and a forecast of the March 31st year-end, to the college’s Board of Governors (BofG) during its November 26th meeting.

As of the end of September, Jones is anticipating year-end revenue totalling $209.5 million – up from the original budget prediction of $188.2 million.

Expenditures, he now projects, will come in at $198.4 million as of March 31 – up from the originally budgeted year-end figure of $177.1 million.

Despite the variations in all of those numbers, the year-end bottom-line looks the same: a projected surplus of $11.134 million, versus the original budget’s estimate of $11.133 million (a difference of just one thousand dollars).

While domestic enrolment at the Windsor and Chatham campuses stayed stagnant, and international enrolment has temporarily plateaued at those sites, there’s been a significant tuition revenue hike at St. Clair’s “sister school” in Toronto, the Ace Acumen Academy.

Ace Acumen is a private-sector school, that provides secondary school education and English-language training to immigrants (chiefly from Asia).

In the early years of this decade, it began searching for a public college that it could partner with, in order to provide its students with some follow-up – and on-site – postsecondary education opportunities.

After months of negotiation, in early 2014, it launched such a partnership with St. Clair.

Initially, with abundant academic oversight and licensing its curriculum to the private school, St. Clair offered two Ontario college diploma programs at Acumen’s Toronto Campus: Business and Computer Systems Technician-Networking.

The on-site offerings proved so popular among Acumen’s students that the program options expanded to include International Business Management, Social Service Worker-Gerontology, and Freight Forwarding.

The partnership between St. Clair and Ace Acumen was threatened with cancellation under the former provincial Liberal government, but the new Conservative government has recently given its blessing to such public-private school liaisons. (See http://stclair-src.org/news/need-know-news/province-gives-its-blessing-public-private-college-partnerships)

Ace Acumen enrolment is now recorded as contributing $17.9 million in tuition revenue to St. Clair, thanks to the increase of 500 students there. (That revenue is, of course, partially offset by the cost of “contracted educational services” associated with the operation of the college’s base in Toronto.)

The mid-year review also identified “Other Income” as $5.8 million (23.2 percent) higher than originally projected. Again, various fees associated with Acumen and Windsor/Chatham-based international students account for much of that, as does $1.4 million in higher-than-expected investment income.

On the expenditure side, the salaries-and-benefits of college staff were very accurately projected when the budget was set last March. The cost of full- and part-time employees should come in at $96 million by year-end – exactly what was budgeted, the Jones report stated.

An assortment of “Other Expenses” are coming in above the budgeted estimate, however: money to operate the college’s programs at Acumen, commissions for international recruitment agents, and some insurance and municipal taxation hikes.

NEW RESERVE POLICY

Also during the November 26th meeting, the BofG confirmed its previous decision to substantially enlarge the college’s reserve fund.

Previously, it had always tried to set aside one to three percent of its annual budget revenue into a “piggy bank” for emergency purposes – for instance, the repair of a collapsed roof or the replacement of a dead heating system boiler.

When the college ended the 2018-19 fiscal year with a remarkable $40 million surplus, the administration saw a rare opportunity to create a significantly larger reserve fund – and one designed for a different purpose.

On the recommendation of the administration and the BofG’s Audit Committee, half of that surplus – $20 million – has now been set aside into a special reserve fund.

Its purpose is not for architectural emergencies; but, rather, to offset a “sustainability crisis”.

Specifically, it addresses the potential dilemma of an unforeseen global economic or political upheaval that could severely deplete what has become the college’s single largest source of revenue: tuition from international students.

If such a catastrophe was to occur, the $20 million could be injected into the college’s operational budget – to, at least, “cushion the blow” as the school sought new funding opportunities (and/or implemented cost-saving methods).

A report to the BofG noted that “with internal reserves designated for sustainability at $20 million, St. Clair College will likely have one of the largest reserves for this purpose in the college sector, based on 2018-19 published financial statements (of Ontario’s two dozen colleges).”

It is possible, too, that additional cash could be added to that special fund from future budgetary surpluses.

The revised reserve policy also states that sustainability funds cannot be injected into a current year’s budget without the BofG’s approval of a Presidential recommendation to do so.

See, also, the story about a change to the college’s English For Academic Purposes program, at http://stclair-src.org/news/need-know-news/very-basic-level-added-english-training-program

See, also, the story about the college’s annual review of its Sexual Violence Policy, at http://stclair-src.org/news/need-know-news/bofg-updated-sexual-violence-stats-and-programs

See, also, the "BofG Briefs" story, at http://stclair-src.org/news/need-know-news/bofg-briefs-ocmc-ece-and-walking-safely