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October 30, 2014
 
 
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WLUFA Newsletter, January 24, 2012



Wilfrid Laurier University’s Clarifications & Corrections webpage is an opportunity for the university to provide comments and corrections to information written and published about it by other sources.

The following paragraphs marked "original story" are excerpts from an article published about Laurier. The bullet points that follow each of these paragraphs are the university's response.

The excerpts represent a selection of key points but may not be an exhaustive list of all erroneous or misleading information contained in the original article.


1. Original Story:

The recent history of Laurier’s pension plan is that the Administration made optimistic actuarial assumptions in the 1990s and borrowed against the fund via the pension contribution holidays, thus creating the deficit in the pension fund we observe today.

The overall point is that the Administration certainly had the management right to borrow against the pension fund, and thus to create the pension deficit in the 1990s, at their discretion. However, that deficit is what we are now looking at in the pension plan. The deficit was caused by the Administration borrowing against the pension plan, not contributing to the fund, and not setting money aside for future contributions. Thus, no modifications whatsoever to the Laurier pension plan are required as a result of today’s deficit in the pension plan.

The Administration exercised the management right to borrow against the pension plan and to create the deficit in the pension fund. The Administration must now accept the responsibility of residual liability that is inextricably tied to that management right. In short, the Administration must contribute to the pension plan to pay the deficit they created.

Correction/Clarification:

  • Nearly every pension plan in Canada is currently experiencing significant funding issues — Laurier is not alone. The difficulties affecting Laurier’s pension plan, and that of most pension plans, are the result of a combination of broad economic and demographic forces, not simply the result of contribution holidays taken nearly a decade ago.
  • In the 1990s investment returns had been so favourable that many pension plans found themselves in a surplus situation – meaning the funds that had accumulated in the plan were much greater than the funds required to pay for current and future retirees’ benefits. The Income Tax Act, however, limits the amount of surplus a plan sponsor can hold in a registered pension plan.  Since it was not legally possible to continue to accumulate surpluses in the pension plan, most plan sponsors used their surpluses to pay their annual contributions, a strategy commonly known as a “pension contribution holiday”.
  • This approach to dealing with plan surpluses was not only widely accepted as an appropriate practice, it was also encouraged by government. In the 1990s there were expectations from the Ontario government that universities should be using the surplus in their pension funds to address shortfalls in university operating funding from the province and as a publicly funded institution committed to delivering high quality post-secondary education, it is incumbent upon us to direct available operating funds to support the mission of the institution.
  • Based on the recommendation of the WLU Plan’s actuary, the University took a contribution holiday from 1993 to 2003 to reduce the level of surplus in the Plan. WLUFA members also agreed to take a partial contribution holiday from July 1, 1999 to June 30, 2001. During this time, the surplus funds in the plan were redirected to make the full required money purchase account contributions as defined by the Plan text, thus maintaining the intended actuarial design of the plan.
  • The notion that the University should have set aside or invested the funds normally contributed to the pension plan in anticipation that, at some time in the future, the plan may become underfunded is not reasonable for three key reasons.
  1. First, the funds that had accumulated during the 1990s were greater than what was then expected to be required to fund the benefit promise (current and future), and greater than the Income Tax Act limits on the amount of funds a plan sponsor could shelter in a registered pension plan.

  2. Second, at that time in the 1990s, there were expectations from the Ontario government that universities should be using the surplus in their pension funds to address shortfalls in university operating funding from the province.

  3. Third, as a publicly funded institution committed to delivering high quality post-secondary education, it is incumbent upon us to direct operating funds to support the mission of the institution.


2. Original Story

Funding Laurier’s Mission:

It has been ascertained that the Administration has the financial resources to support faculty members and librarians, to maintain the pension plan and health care benefits for retirees, and to provide for fair compensation to faculty and librarians. It is critical to the Laurier community that the Administration make these investments; indeed, their fundamental unwillingness to do so contradicts the University’s own mission statement, which states the primary functions of the University to be teaching and research: “[WLU] is devoted to learning, research, scholarship, creativity, professional expertise and personal development in a student?centered environment.” Pursuit of such a mission requires a full complement of faculty who are fully engaged in research and teaching duties, as well as in service to the University, to their disciplines and professions, and to the broader community.

Correction/Clarification:

  • The University is facing significant financial challenges, but it is managing those challenges well. However, the uncertainty of funding remains a constant concern.
  • The university is absolutely committed to supporting its core mandate but must do so responsibly given current financial challenges.

  • The University is indeed supporting faculty members and librarians (as well as students and staff).
  • The University is not proposing to eliminate the pension plan. The University is committed to ensuring the plan design is sustainable, and its proposals reflect this. There is no proposal to reduce retiree health benefits. The University’s proposals deal with funding the benefits so they can be maintained.
  • In Ontario, there is a fair bit of uncertainty in university funding from one year to the next. When the University receives additional funds beyond the funds included in the budget, these will be reflected in the financial statements. These additional funds do not mean the University has unrestricted cash surpluses. The funds have pre-planned uses and are allocated strategically to avoid significant budget cuts. In many cases, the party giving the funds to the University designates the funds for a specific purpose, such as research grants, and the University must allocate the funds according to the purpose identified.
  • Salary-wise, Laurier faculty members are close to the provincial average when you compare salary by years of experience. It is in the best interest of the University, its faculty, staff and students, to have a competitive salary stream, and the University’s proposals reflect this.
  • In the past 10 years, the number of full-time faculty (not including LTAs, part-time faculty or deans) has increased by 63 per cent.



3. Original Story:

Conciliation Next Week:

As announced at the last bargaining unit meeting, a conciliator has been appointed by the Ministry of Labour; conciliation will start on January 24th and continue on January 26 and possibly January 27. Your bargaining team is busy preparing for conciliation. If the Administration is ready to bargain seriously, WLUFA feels an agreement may be possible.

As announced at the last bargaining unit meeting, a conciliator has been appointed by the Ministry of Labour; conciliation will start on January 24th and continue on January 26 and possibly January 27. Your bargaining team is busy preparing for conciliation. If the Administration is ready to bargain seriously, WLUFA feels an agreement may be possible.

That said, we must be prepared in the event of a negative outcome. If a tentative agreement cannot be reached, the conciliator reports to the Ministry of Labour that an agreement is not possible at this time. The Minister then issues a notice called a “no-board report” to WLUFA and the Administration. At that point, the dispute is left in the hands of the parties. Either party can request mediation/arbitration, but only with the agreement of both parties. After a waiting period, WLUFA would be in a legal strike position. If conciliation ends without an agreement, WLUFA must be prepared for a strike or a lockout. WLUFA must have a solid strike vote and demonstrate that all preparations are in place for a strike. Note that WLUFA is a member of the CAUT Defense Fund that will provide support for strike pay and benefits during a strike.

A common strategy used by university administrations in the last two years is to wait till the last possible moment, and table its last proposals only when the threat of job action is real and imminent. We need to be prepared for the Administration to implement the same strategy.

Again, thank you for your support. Your show of support has already significantly enhanced the power of the WLUFA Bargaining Team to represent your interests at the bargaining table.

If you were unable to attend the last bargaining unit meeting, but are interested in volunteering for strike preparedness, including picket captain duties, communications or back?office work, please contact the WLUFA office: Linda Watson (Ext. 2603, lwatson@wlu.ca) or Larissa Brocklebank (Ext. 3721, lbrocklebank@wlu.ca).

Correction/Clarification:

  • The University has bargained seriously since the current round of negotiations began in July. The University remains committed to reaching an agreement that is fair and equitable, and in the best interests of the institution and its students.
  • There is no strategy to “wait till the last possible moment” — the University has tabled all its proposals with the WLUFA bargaining team.
  • WLUFA continues to misrepresent the University's actions and position. The ongoing mischaracterization presented in this and previous WLUFA communications, combined with the aggressive strike readiness activities described in the newsletter above, can only be seen as particularly worrying at this critical juncture in negotiations. The University must question whether or not WLUFA has a totally different agenda.


All original article excerpts: © 2012 Wilfrid Laurier University Faculty Association (WLUFA)