Recent rounds of provincial austerity cuts have decimated public sector funding and led universities to look to students as a quick fix for more financial resources. At McGill, senior administrators typically adopt a slogan of protecting the institution’s “core academic mission” by prioritizing professors’ salaries and research output. Historically, we have seen this come at the expense of front-line and support services that students rely on to navigate their university experience. As a result, dedicated student fee funding, now over half a million dollars annually, is being redirected away from Student Services and into the central operating budget.
“Student Services” is the McGill administrative umbrella encompassing eleven units: Mental Health and Counselling Services, the Career Planning Service (CaPS), International Student Services, the Office for Students with Disabilities (OSD), and more. These support services are essential for student wellbeing: approximately 3,500 students were seen for 23,000 appointments at Mental Health Services during the 2014-2015 school year alone. At the same time, wait times for follow-up appointments are four months on average, leaving hundreds of students without access to care when it is most urgent. Oftentimes, these campus services are the only options available for international and out-of-province students in need.
For a full-time student enrolled in 15 credits, McGill charges approximately $575 annually in these mandatory fees. In comparison, the same student pays around $240 in SSMU fees, the majority of which are opt-outable.
The administration has been vocal about its inability to provide sufficient resources to meet rising demand, with the Deputy Provost of Student Life and Learning stating that Student Services is “not a hospital.” However, they have been less forthcoming about money siphoned from the Student Services budget through “overhead” charges. These overheads involve billing student fee-funded units for central administrative services, which are provided through the operating budget.
The provincial government places a cap on the tuition amounts that McGill can charge and regulates fees that students pay to the University. However, our administration uses overhead charges to convert a portion of this restricted fee funding – set aside for Student Services – into “discretionary” money that they can redistribute as part of the operating budget. This continues a trend of forcing students to finance more and more costs of the University, violating the spirit of provincial fee guidelines and ultimately contributing to an unsustainable budgetary model that harms students on our campus.
The lack of a set formula or oversight for these backdoor increases means that the administration can increasingly redistribute essential funds from Student Services based only on the constraints facing other budgets. The combined costs of overhead charges and eliminated University contributions already represent almost $2.5 million in lost Student Services revenues since 2010.
A “self-funded” unit?
Understanding the University’s use of overhead charges requires examining the source of Student Services funding. In 2015-2016, this revenue totalled almost $11.5 million, primarily provided through student fees, government grants, and the sale of goods and services like immunizations and safer sex supplies. This differentiates Student Services from academic Faculties and other units that are funded out of the University’s operating budget, which is financed by direct tuition payments, provincial grants, and restricted funding, like endowment revenue.
Full-time McGill students pay a mandatory fee of around $145 per semester in order to support Student Services, an amount which falls under the provincial category of frais institutionnels obligatoires (FIO). In general, FIO revenues are dedicated toward a particular unit or program, and may cover costs such as technology improvements, student life, support services, and sports or recreational activities. Aside from automatic adjustments for inflation, the creation or increase of a FIO requires approval from students via referendum, although this may be university or student initiated. FIO’s are distinct from SSMU fees, which support student groups rather than university services, and are often opt-outable. In contrast, students are not allowed to opt out of FIO’s.
For the coming year, the Student Services FIO is projected to make up over $8.7 million in funding, or approximately 75 per cent of total revenues. Beyond this, different FIO’s exist for McGill Athletics operations, facilities, and accessibility initiatives. In fact, McGill students pay some of the highest FIO’s in the province: for a full-time student enrolled in 15 credits, McGill charges approximately $575 annually in these mandatory fees. In comparison, the same student pays around $240 in SSMU fees, the majority of which are opt-outable. Because students are providing this revenue through FIO’s, units like Athletics and Student Services are often described as “self-funded:” as in supported without significant direct investment from the University’s main operating budget.
In order to account for central administrative costs such as legal, accounting, and maintenance services provided to self-funded units, McGill has implemented overhead charges. These are levied on a number of student-financed units throughout the University, including Student Services, Athletics and Recreation, and Student Housing and Hospitality Services, and are paid by those units. Not only are students already directly funding these services, but they are indirectly paying for university administrative costs through overhead charges, despite also contributing to the overall operating budget through tuition.
This approach is not really about covering the actual costs of the institution, given that many McGill units benefit from other support resources without paying for them. For example, the Libraries are not charged for administrative services from the Provost’s Office because they are both funded out of the same overall operating budget. In comparison, the University clearly feels little responsibility toward Student Services and expects students to fully bear both the direct and indirect costs.
More concretely, these overhead clawbacks allow the administration to convert a portion of restricted FIO revenues, intended solely for units like Student Services, into unrestricted funding that is distributed to other priorities through the operating budget. Since there is no government regulation on overhead charges, the University is free to increase these as much as they like. As a result, overhead charges on Student Services have risen from $30,679 in 2009-10 to $651,385 for 2016-17, an increase of over 2100 per cent in just seven years. For comparison, the starting salary of a psychologist at McGill Mental Health Services is around $55,000 a year.
In comparison, the University clearly feels little responsibility toward Student Services and expects students to fully bear both the direct and indirect costs.
This approach would be comparable to SSMU taking money out of our Club Fund in order to pay for accounting services, then announcing that we do not have enough resources to support our student groups. McGill deductions undermine provincial regulations on what FIO’s should be funding and exacerbate resource constraints in Student Services, in turn pressuring students to vote for FIO increases in order to sustain rising costs.
A history of student financing
The administration has been moving service units from the central operating budget to Student Services during periods of financial crisis or funding cuts since the 1970s. This has led more of these services to be funded by supplementary fees rather than tuition costs, a trend which continues today with growing overhead charges. Both changes broaden the scope of what restricted funding can cover.
Originally created in 1966 under the Dean of Students, Student Services included only Vocational Guidance (now Counselling Services), a Placement Office (now Career Planning Services), and Health Services (now Student Health & Mental Health Services). Between 1971 and 1974, multiple units were added from the central budget due to provincial cuts, including the Student Aid Office, Chaplaincy Service, and Orientation Office. The Career Planning Service (CaPS) was similarly integrated into Student Services in 1987 when federal funding for the campus Canada Employment Centre was cut. The first overhead charge – a flat fee of approximately $20,000 – was applied to the Student Services budget in 1975 in order to cover the accounting and registration costs of the University.
Models of students financing their own services are not without precedent – student associations, like SSMU, have long provided services such as the student emergency response team (M-SERT) and sexual assault centre (SACOMSS). As a result, these services are primarily run, overseen, and held accountable by students. However, there has been little student authority over FIO’s or Student Services at McGill beyond voting in referenda for proposed increases.
This approach would be comparable to SSMU taking money out of our Club Fund in order to pay for accounting services, then announcing that we do not have enough resources to support our student groups.
The Senate Committee on Student Services (CSS) was created in 1974 and is comprised of equal numbers of students and staff, ostensibly in order to provide oversight for the management and financing of these resources. Despite this mandate, it has done little more than rubber stamp the annual budget. This was well demonstrated in 1992, when the McGill administration refused to fund an Office for Students with Disabilities – mandated at a provincial level – out of the central operating budget. Instead, it was created under Student Services despite outspoken student opposition at CSS. Similarly, the First Peoples House was initially created in 1997 on a five-year provincial grant, but later absorbed by Student Services.
Increases to overhead charges began in earnest in 2010, and particularly in 2013 following a $19 million cut to McGill’s operating funding by the Parti Quebecois (PQ) government. Existing overhead charges were consolidated and increased under a model that deducts a percentage of total annual revenue, rather than a flat cost. This ended the consistency of past charges and opened the door for massive annual increases to overhead costs from 2010 onward, growing from less than half a per cent to over five per cent in under seven years.
During this same period, dedicated funding transfers from the central budget for maintenance of the Brown building ($300,000) and orientation week programming ($112,000) were also cut. These expenses did not simply disappear, but must now be covered either by redirecting funds from other initiatives or deferring projects to a later date. Despite overall increases in government grants and student fees, the total revenue that Student Services has lost to overhead charges and cancelled transfers between 2010-2017 represents nearly $2.5 million.
Looming overheads, lacking oversight
In the past, student representatives have struggled to receive adequate budgetary information from the University, particularly with regards to the logic and calculation of overhead charges, as well as the formula for distributing government grant funding. In addition, there is no reporting on where overhead reductions are redistributed to in the operating budget.
Furthermore, despite years of advocacy by student representatives and assurances to the contrary by administrators, increases to overhead charges have not stopped for almost a decade. The University has even admitted outright that the only formula behind determining these charges has been the resource constraints of the institution at any given time.
This lack of internal oversight contradicts provincial FIO regulations, which indicate that the University is not doing enough to provide students with information on where their fees are going. The Quebec regles budgetaires state that student associations have the right to receive documentation from the institution detailing all FIO amounts collected and the correlated expenses by July 1 of each year. Otherwise, the Ministry of Education can withhold the University’s operating grant or request an independent audit of their practices. In reality, however, these transparency provisions are not respected by postsecondary institutions across the province, according to a report released by the Fédération étudiante universitaire du Québec (FEUQ) in 2013. SSMU, for instance, only receives annual FIO schedules with the approved increases and total amounts for these charges.
The University has even admitted outright that the only formula behind determining these charges has been the resource constraints of the institution at any given time.
While the actual increases to the Student Services fee are within provincial limits, it is the increase in central clawbacks that is the issue here. FIO’s are not intended to replace the financing for already budgeted services, and they should not be abused as a means of increasing students’ financial contributions. Nevertheless, there has effectively been no government effort to ensure compliance with the regulations. Given that the regles budgetaires are not actually enforced by law, this makes recourse outside of the Ministry of Education itself difficult.
Not all Canadian universities operate on this budgetary model. The University of British Columbia, for example, does not impose overhead charges on its student services or even charge additional service fees. These support resources are recognized as core to student success and a necessary contribution of the institution, fundamentally different from an ancillary service like parking. At the University of Toronto, the Student Services budget is governed by a Council on Student Services (CoSS) with its own constitution and bylaws – an approach that better holds administrators accountable for potentially abusing the system.
The administrative defense
How does McGill’s administration justify these increases? Whether at Senate, in the press, or on university committees, they rely primarily on arguments about the “core academic mission” and the current surplus in Student Services.
Administrators like to argue that, given current resource constraints and cuts across all departments, there is a shared responsibility for all community members to bear the burden of fiscal austerity in service of the institution’s broader mission. This perpetuates a narrative of austerity that wilfully ignores the disproportionate impact of cuts on marginalized groups, including support staff and those most in need of support services – like students with learning disabilities and mental illnesses.
However, this argument also admits that overhead costs are not actually intended to reflect the costs of resources provided back to these units. This is supported by the fact that, while overhead costs have increased in the past seven years, central administrative services have effectively decreased. Not only that, but student fee revenues are often lumped into a similar budgetary category as research funding. This ignores the difference between government grants that include funding specifically for the indirect costs of research (such as lab facilities), and restricted fees intended for direct services to students. In reality, overhead charges can only be justified as a means of receiving more money from students.
Another argument that the administration favours is the current Student Services surplus of approximately $5 million, which was accrued due to unexpected staff vacancies, the 2011 MUNACA strike, and administrative restrictions on reallocating unused funds within a fiscal year. This surplus has led to new investments in infrastructure improvements as well as a Student Services Innovation Fund (SSIF) in order to improve existing service delivery. By using this fixed surplus to justify the ongoing redistribution of funds, however, the University is creating an unsustainable budget model that will require future increases to student fees.
In reality, overhead charges can only be justified as a means of receiving more money from students.
Paradoxically, the same administration that denies the need to reduce mounting overheads due to the surplus has also tried to redistribute this surplus to other projects outside of Student Services. Similar trends have persisted in the use of the Innovation Fund to finance the AskMcGill initiative, a communications collaboration between various Student Life and Learning units. This again involves using dedicated student fees to cover basic services that should be provided as part of the operating cost of the institution. While collaboration is necessary to better serve students, this integration should occur with investments from the central operating budget, rather than prescribed funding intended for front-line services.
Toward an accountable budget
The University would like to ask students for an increase to the Student Services fee. However, why should we agree to even consider such a request when existing services already fall so short, and particularly if a significant proportion of funds are not even being directed where they are most needed? For students to vote on such a proposal in good conscience, several steps must be taken by the administration.
First, they must commit to ending artificial overhead increases and consult with student associations to develop a clear and transparent formula for financing these costs. Second, they must make detailed budgetary information on Student Services, and other FIO-funded units, available to student representatives and studentsat-large so that we can understand where our money is going. Third, the Senate Committee on Student Services must have a clearly defined role in the yearly budgeting process, including a mandate to review and approve the budget.
Finally, the administration must actively involve students in plans to invest the current surplus in infrastructure updates to make existing services more efficient, like with an Electronic Medical Record and centralized intake space in the Brown Building. In order to reduce demand for support, efforts to align healthcare services along a “stepped care” model also need to invest heavily in preventative measures. This means that the administration must commit to changing policies that act as barriers to student wellbeing. For example, our model for students seeking academic accommodations is outdated, requiring students to focus more on obtaining supporting documentation for their situation than on actually improving it. If students see real progress not just in how services are offered, but at the root causes of harm in the university environment, then they may be more willing to consider additional investments.
The McGill administration’s current budgetary approach to Student Services contradicts their message of support for student wellbeing on campus.
Beyond McGill, SSMU also has a role to play in advocating for real government oversight and enforcement of current FIO regulations. This work could well be pursued at the table of a student federation – an organization that allows local student associations to coordinate their priorities at the provincial level. While currently unaffiliated to a larger federation, SSMU has a mandate to sit as an observer at the Association pour la voix étudiante au Québec (AVEQ).
The McGill administration’s current budgetary approach to Student Services contradicts their message of support for student wellbeing on campus. The use of overhead charges to convert dedicated fee revenue into discretionary funding undermines provincial regulations and continues a trend of pushing more costs onto students. Most of all, this ignores the vital need for more investment in support resources as part of McGill’s “core academic mission.” Students must speak out against current trends, or else administrators will continue to prioritize increasing revenues over student interests.
Erin Sobat is Vice-President (University Affairs) for the Students’ Society of McGill University (SSMU) and has served as a member of the Senate Committee on Student Services since 2013. He can be reached at firstname.lastname@example.org.
This feature was informed in part through a report by the 2015-16 SSMU Academic Research Commissioner, Cecilia MacArthur.