NORTHWEST COMMUNITY College needs a better financial system providing clear information leading up to making budget decisions, says Skeena NDP MLA Robin Austin.
Faced with a deficit of at least $1.6 million and under pressure from the province to balance its budget, the college has announced it will need to cut nearly 32 full time equivalent positions.
What has Austin and others puzzled, however, is how the college fell from a surplus position on its operating budgets to three years now of escalating deficits.
“Something has happened, but we don’t know what it is. All of a sudden there’s a huge deficit,” Austin said of a pool of red ink that has grown from $568,000 for the 2009-2010 financial year to $1.1 million in 2010-2011 and which is estimated to be at least $1.6 million by the time this year’s books close the end of March.
“There really needs to be a public accounting system, not just for Northwest Community College, but for all colleges,” said Austin.
“That’s so people can understand what is happening month to month,” he added.
He said a clear system providing up-to-date financial information would not only assist the college’s senior managers in making decisions, but also its governing board.
“It would also assist the president in going to the provincial government,” Austin added.
He said it was ironic the college has to make cuts at a time when northwestern residents should be trained to take jobs in major economic developments either underway or about to start.
For her part, advanced education minister Naomi Yamamoto also wants to know why the college’s deficit is climbing.
“I’m glad you asked that,” she said in a recent interview. “That’s the exact question we’re asking and right now and we’re waiting for Northwest Community College to provide that information.”
Provincial legislation requires colleges to operate with balanced budgets but Yamamoto’s ministry has given the college permission to run a deficit for the past several years as it struggles to balance its budget.
That permission extends to the upcoming 2012-13 financial year with an expectation the deficit will be eliminated by the spring of 2014.
“We’re working with the college to address their deficit,” said Yamomoto of the situation.
But what won’t happen is permitting the college to dip into a $2.5 million accumulated surplus to ease its deficit.
“That would only be a temporary solution and it wouldn’t address the ongoing fiscal situation,” said Yamomoto.
She likened the prospect of using a surplus to a family that has a drop in income only to then use its savings without any attempt at cutting spending.
The college can use a surplus to buy items to further the educational needs of students.
Yamamoto did add that the college can also invest the surplus and use the proceeds to pay for operating expenses.
But she acknowledged that with interest rates being so low, the college’s investment income wouldn’t be that much.
Northwest Community College isn’t the only post secondary institution hit with a deficit it can’t pay for despite having a surplus, says the NDP critic for advanced education.
Michelle Mungall, who represents the Nelson-Creston riding, says the inability of the college to use its surplus is rooted in the way its accounting system is structured.
“You just can’t save it for a rainy day,” said Mungall of surpluses from regular operations which the college then tucks away. She said the inability of colleges being able to use their surpluses for budgetary relief has been raised during sessions of the legislature’s finance committee.
“The government itself in the 2010 throne speech said they would correct the problem but there’s still been no action,” Mungall said.
She wondered how the college, or any other training institution, is going to train workers for new jobs or to replace retiring workers if there’s not enough money to provide programs.
“What we’re going to have is jobs without people and people without jobs,” said Mungall.
Mungall, like Austin, said the college’s financial hardship stands in contrast to the need to train residents for jobs in new industries.
“It’s a lack of leadership. It’s a very odd strategy,” she said.