Department chair resigns over budgetary dispute with Western

Tuesday, April 7th, 2009

Nathan Sussman, former chair of the economics department, resigned from his position last week in protest over budget cuts he was asked to make " cuts which included potential layoffs for staff and research funding.

His resignation, effective April 1, will leave Julie McMullin, associate dean of the Faculty of Social Science, acting as interim chair of the department until the process for appointing a new chair is complete.

Sussman felt there were alternatives to the budget cuts he was asked to make. He cited the university’s investment strategy as a source of why the university is facing budget cuts.

Sussman made an analogy between that of an individual who is paid their salary at the end of the month, with rent due on the 10th of the next. That individual could then invest their earnings in stock for 10 days, he said, hoping to earn some profit, before selling and paying their rent. While this plan is favourable as markets rise, a downturn like this year’s results in a loss.

“They use this kind of investment strategy to invest funds that are needed for the operating budget,” Sussman said.

According to the university’s Operating and Endowment Fund statement " which outlines Western’s investment policies " the school’s investment portfolio is designed to create a rate of return of five per cent while assuming acceptable risks.

Jamie Angood, a local financial planner for TD Waterhouse, described an expected five per cent return as a “moderate level risk.”

According to Sussman, the university would have been better pursuing a different investment strategy.

Even while still using this risky portfolio, Sussman suggested that every year a profit was made, the university could have put at least some of it aside for rainy days, like the current economic climate.

Instead, Sussman said, “They’ve spent and basically used a long-term investment strategy to fund short-term expenditures. Once this backfired, the need came to balance the budget and that’s why these cuts were instituted.

“A number of us in the economics department and elsewhere on campus as well believe that the university should find some other way, such as [borrowing] short-term to cover this short-term loss, rather than layoff staff and cutback on research funding,” he said.

According to Gitta Kulczycki, Western’s vice-president resources and operations, the university does not intend to borrow money to deal with its current operating budget shortfall.

“It postpones to tomorrow difficult decisions which need to be made. It is important to get our operating expenses and revenues back into balance within the reality presented by the current difficult economic situation.”

Kulczycki explained while the budget is directed to operate within the resources available and within the policy framework of Western’s Board of Governors, the budget process is essentially a very delocalized process.

“For 2009-10, we have in place an Initial Budgetary Reduction of three per cent to all areas [and this negative three per cent has been in place for a number of years] with an incremental 1.5 per cent average reduction, differentially applied between faculties and between support units,” Kulczycki said.

“With this information, and knowing the pressures and opportunities in each area, and assessing all of their sources of funding, the leadership of the faculties and the support units make their own determinations of the responses required to changes in allocation of funding, including any impact to positions.”

“Layoffs [are] our least preferred alternative,” Kulczycki said.

“Our goal has been and remains [to be] to minimize the impact of staff reductions through normal attrition, retirements, the potential for flexible employment arrangements and careful scrutiny of the filling of current and future vacancies.”

Sussman will remain a professor in the department. He felt his resignation as chair does not reflect his lack of strength as a leader or a lack of ability on his part to make tough decisions.

“I think it’s easier to lay off people that are below your rank, like staff and so forth, than to face people who are above you.”

Addendum: Late yesterday afternoon, Western announced it will be asking faculties to make an average budgetary reduction by one per cent this year.

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