Algoma University needs to improve when it comes to assessing the profitability of its academic programs going forward, according to a recent report from Ontario’s Auditor General Bonnie Lysk.
Part of that assessment should also include a determination on whether there are programs at Algoma that could be reduced or restructured, Lysk says in the report entitled Value-for-Money Audit: Financial Management in Ontario Universities, which looks at operations and governance structures in four universities.
The 113-page report states that Algoma University completed an analysis of the profitability of academic departments for the 2020-2021 academic year, but only as a one-time exercise.
“The analysis was done at the department level (not at the program level) and took into consideration tuition revenue and cost of instruction for each student enrolled in each specific department. However, the analysis did not take into consideration any other related costs such as for physical space, administration or maintenance. Therefore, a more comprehensive assessment of profitability was not available,” reads an excerpt from the Auditor General’s report. “The analysis that was performed did not look at each of the Sault Ste. Marie, Timmins and Brampton campuses’ performance separately.”
Ontario’s Auditor General has made a handful of recommendations to the university in order to have a clearer picture of the financial contributions of its programming:
- complete an analysis of profitability at the academic program level;
- determine whether there are programs that can be reduced or restructured to provide a better financial contribution to the university while still retaining overall academic credibility with department course offerings;
- reduce or restructure program offerings based on the results of its program profitability analysis and academic need, in consultation with its academic departments and with the approval of its board and senate.
“To enable the senate at Algoma University to make well-informed decisions with regard to academic programming, and that consider the financial sustainability of the university, we recommend that the senate be provided with regular costing information on the financial contribution of individual program offerings, by campus and the university as a whole,” the report reads.
Speaking with SooToday Monday, Algoma University President Asima Vezina says the university is working with some of its departments, including social work, psychology and sociology in order to assess the marketability of their programs, much like what the university did with business, computer science, health sciences to build new programs while enhancing pre-existing ones.
“We saw great success. We had programs that doubled and tripled their enrolment,” said Vezina. “So, I think we’re ready to take another group of programs on to really invest and work with the faculty, who are very keen to really think about what will attract students into their programs.”
The president says her university is in the process of moving towards what’s known as a responsibility centred management (RCM) budget model that will ensure the profitability of its programs, but notes that some courses, particularly Indigenous courses and arts programming, will be protected by the university even if they're not necessarily money makers.
“It allows you to really take a close look at all of the indicators within a program and see where the costs are and the revenues, and then to make informed decisions as you move forward,” Vezina said of the RCM budget model. “But at this point, we are not talking about a reduction in programs.
“What we’re really looking at is a re-stimulation and really ensuring all our programs are really speaking to enrolment — and if they’re not, there are programs that we may run at a deficit and will do that because they’re very important to the overall university experience and our special mission.”
The Auditor General’s report also recommended that Algoma present its board of governors with the university’s “projected cash flows from operations, financing and capital purchasing activities to inform the board on the impact of each activity on the university’s resources.”
Vezina says Algoma University has been busy revising and adding policies around financial management that will satisfy that recommendation.
“We brought new technologies in, and so that recommendation will actually be in place probably within the next four to six months, if not sooner,” she said. “We think it’s good. We think it’s very positive, and we were already in the process of doing it.”
Board needs to be big on financial literacy but smaller in size, report says
The Auditor General also wants to see Algoma’s 18-member board of governors, its five related committees and two subcommittees all scaled back in size in the name of efficiency.
“I think we all know that in terms of best practice in governance that boards that are huge are not always as effective as they might be,” Vezina conceded.
The report goes on to note that half of Algoma University’s board has “limited or no competency in the area of finance, and 44 per cent had little or no experience in accounting.”
“Because boards are responsible for overseeing universities’ financial operations including reviewing and approving operating budgets, capital expenditures, debt/financing, and financial statements, the majority or near-to-all board members should be financially literate at least to the extent they understand university finances and have the ability to read and understand university financial statements, either at the time of appointment or through training within a year of appointment,” reads an excerpt from the report.
Vezina says the board has “some very strong finance people,” with certified accountants and people working in leadership positions in finance within its ranks.
“We’ve got a lot of talent on the board, but what the auditor is recommending coming out of Laurentian’s audit is that boards actually make up a much higher percentage of financially literate board members,” she said.
Ultimately, the president says it’s “good news” that Algoma University has been noted by the Auditor General for being a “sustainable organization” overall.
“We’re in a very different place than we were five years ago, and I think we should be very proud of this university and what it’s accomplishing — and we’ll continue to work with these kinds of recommendations because they’ll only make us better,” Vezina said of the report.