Report: February 25, 2008


Report of the meeting of the RESOURCE PLANNING AND PRIORITIES COMMITTEE of Erindale College Council to be held on Monday, February 25, 2008 at 3:10 p.m. in the Ante Room, #3129, South Building.

Present: A. Wensley (in the Chair), I. Orchard, R. deSouza, C. Capewell, U. Krull, D. Pond, Y. Li, N. Basiliko, C. Jones, V. Barzda, T. Al-Sarraj, S. Munro

Regrets: R. Reisz, D. Crocker, G. Averill

In attendance: Sameer Al-Abdul Wahid, graduate student and Vice-Chair of Council; Chris McGrath, Assistant Dean of Student Affairs, Mark Overton, Dean of Student Affairs

1) Approval of Minutes of the Previous Meeting (January 14, 2008)

The minutes of the previous meeting was approved.

2) Reports of Committees and Officers:

a) South Building Master Plan: update from the Chief Administrative Officer, Mr. Ray deSouza

Mr. deSouza reported that since the library was vacated over a year ago, there has been ongoing planning not just for the library, but also for the entire space that surrounds it, including the Meeting Place.

The Chief Administrative Officer summarized a plan for the so called South Building Master Plan in four phases as follows:

  • Phase 1: renovation of the third floor of the old library to provide spaces for the departments of Sociology and Geography as well as administrative space for the offices of the Vice President & Principal, the Chief Administrative Officer, capital planning and Campus Police;
  • Phase 2: renovation of the main floor of the old library, to make it ready for a new student services space, to include the Office of the Registrar; He noted that there will be some elements of both student services and the Office of the Registrar that will not fit into this space (see phase 3)
  • Phase 3: locate those areas that could not be placed into the earlier phases of this project. For example: the T-card office and the AccessAbility Resources office
  • Phase 4: Meeting Place renovation and beyond: this will include a long-term plan on an enhanced South Building entrance, a better link with the RAWC and to Spigel Hall. He noted that the particulars of this phase are dependent on funding.

The Chair opened the floor to questions.

A member asked whether the early plans addressed the space needs of campus police. The Chief Administrative Officer replied that additional space for campus police has been incorporated into the planning during both phases 1 and 2 of the South Building Master Plan renovations.

b) Attribution of ancillary funds to Residence: An explanation and discussion of the current university model – Ms. Christine Capewell, Director of Business Services

Ms. Christine Capewell presented an explanation of the current UTM model for attributions or transfers between departments. The Chair noted that this issue was referred to the Resource Planning & Priorities Committee by Council.

Ms. Capewell started her presentation by discussing what Conference Services should pay to Residence. She explained that the mandate of conference services is to use UTM resources that would otherwise remain unused, which include residence rooms, classrooms and other UTM resources. She explained the difference between fixed costs (do not change with the amount of use/number of users) and variable costs (they change with the amount of use/number of users) and gave four examples of how these transfers or attributions could be worked out between conference services and residence. All of the calculations in these examples use ‘bednight’ costs and the numbers are not actual. The examples presented are as follows:

  • Example 1: Base case: no conference business; residence net profit is zero and residence has 5000 unused bednights
  • Example 2: introduces conference activity; conference services pays nothing but uses 5000 bednights; this is not considered a good situation since it results in a loss for residence; residence is worse off than with no conference business and will choose not to accept conference business
  • Example 3: conference services uses 5000 ‘bednights’ and pays increase in variable costs; residence has the same net profit as in the base case of no conference business
  • Example 4: conference uses 5000 bednights and pays variable cost plus allocation of fixed costs allocated per bednight; residence net profit increases; conference cannot operate and will choose not to operate

Based on the above examples, Ms. Capewell noted that as long as Conference Services pays $1 more than the variable cost, Residence benefits. Conference Services will accept business with Residence as long as charges are affordable for the conference unit. If the price is between these two points, the organization and the two individual units are better off.

Christine Capewell listed all the costs currently paid by conference services to residence, which include three major categories of utilities, garbage and capital renewal

In conclusion, she stated that Conference Services pays all variable costs to residence; in addition it pays some fixed costs, and pays additional costs such as light bulb replacement, locksmith costs, appliance, electrical and plumbing maintenance directly.

Ms. Capewell summarized her presentation by making the following points:

  • Conference is subsidizing residence: the amount is small and it would take quire an effort to calculate and adjust to zero subsidy
  • Residence is in a better financial position than they would be if there was no Conference business
  • Losing Conference business could result in increased residence rates
  • Conference services would, naturally like to pay less to residence and vice versa
  • UTM management has decided to continue with the current approach
  • All units are better off than if there was no conference business for residence

The Chair opened the floor to questions and discussion on the Conference Services issue.

A member asked Ms. Capewell about how much profit Conference services makes per contract. Ms. Capewell explained that the profit margin varies greatly depending on the number of people involved as well as whether the business is high versus low end. It also changes from year to year as a change in one customer can really impact results. In response to the member’s suggestion that the profit be split between residence and conference, Ms. Capewell explained that Conference Services deals with more than just Residence; it uses facilities throughout the campus and would have to then transfer money to the Office of Registrar or Facilities for example. The profit is given to the Vice President & Principal to use to fund overall campus priorities. She added that there has been always been a payment to residence, based on the idea that Conference Services makes use of resources that would otherwise not be used, but that this action also has related costs which would then have to be reimbursed.

A member commented that according to any of the reasonable models presented if the cost of a bednight is approximately $13.70 and Conference Services pays approximately $2-3 per bednight, conference would have to raise their fees about $10 a night to make the amount they pay for bednight comparable to the amount students pay when they live in residence for a night.

Christine Capewell continued her presentation on attributions/transfers with an explanation of Food Services and its relationship to Residence.

Christine Capewell listed all the costs currently paid by Food Services to Residence, which includes utilities (approx. $55,000 annually for the kitchen, servery, and seating area of Colman Commons), cleaning/caretaking in Colman Commons and repairs and maintenance in Colman Commons. She noted that this was the financial model used to initiate the building of Oscar Peterson Hall in that the initial arrangement called for Food Services to contribute the cost of equipping the kitchen and servery only.

With respect to the question of why Food Services does not pay for a portion of the mortgage related to the dining hall space, Ms. Capewell made the following points:

When Oscar Peterson was designed, there were two options:

1. Without a dining hall: this would have cost approximately $80,000 per bed or $34M
2. With a dining hall: this would have cost approximately $63,000 per bed or $27M

Therefore the addition of a dining hall saved Residence about $17,000 per bed or $7M

Food Service could operate under this model only if its contribution was limited to $500,000 of equipping the kitchen and servery;
Food services operations at the University of Toronto and across the country use the same approach

Ms. Capewell explained that Food Services cannot pay for more costs because food services prices (meal plan and cash) must be at market rates and if the operation had to absorb more costs, they would either increase prices or reduce costs through reducing hours, reducing selection and quality and closing outlets or both. She concluded by noting that the impact of transferring costs from residence to food is either a zero net effect if residence rates decrease and food services prices increase or a net cost to students if residence costs do not increase.

The Chair opened the floor to questions.

A member noted that there is only one food service provider on campus and wondered if introducing competition through multiple food service providers would help the quality as well as price. Ms. Capewell explained that there is competition on campus and cited the pub. She also noted that the food service business is competitive: it is put out for bids and companies can bid on it. UTM has tried various food service providers over the years, each of which brings in different outlets. She noted that the bid process involves a lot of consultation with students and is a very long and arduous process. She acknowledged that food services could be improved, but emphasized that now was not the time to change food service providers as developments are currently underway with the current provider. She added that a campus cannot be changing its food service provider continuously as it takes time to build up services and facilities.

A member asked why costs are not below market rates since food services does not pay into the mortgage of residence. Ms. Capewell explained that UTM negotiates a whole package with a food service provider, which involves trade offs; for example if UTM wants a food service provider to open a Tim Horton’s outlet, the campus has to lower the amount of rent and/or payments it asks for from the provider. This depends on whether a campus has capital or other needs. Over the last ten years, UTM has moved to a model that does not ask food service providers to buy outlets; the campus buys the outlet, but then asks the provider to pay the camps an increased payment back. This interplay is based on interest and finance costs. She concluded by noting that what UTM’s supplier pays, is the best the campus could negotiate from them compared to the other food service bidders at the time that contracts were negotiated. She added that food service prices are very sensitive to market and that demand will be adversely affected if prices are too high.

Mr. McGrath, Assistant Dean of Student Affairs made the following comments. In observing the issue of transfers and dealing the residence budget over the past several years, Mr. McGrath noted the pressure that SARG (Service Ancillary Review Group) places on residences to improve their financial situations. He cited a case on the St. George campus of a residence having to increase fees by 20%, attributing it to there not being an intricate interplay between the ancillaries that all use shared assets, facilities and resources. He noted that the way UTM and Scarborough have organized their ancillaries differs from St. George’s organization and from that of many other institutions. By having Conference Services, Food and Residence as separate ancillaries, with the Residence ancillary being the largest of the three, it cannot capitalize on the business of the other two in order to offset rates for students.

Mr. McGrath remarked that the challenge at UTM will be to decide the campus’ priority under a new budget model where the deficit carried by Residence is a UTM and no longer a central university issue. He asked whether the campus priority should be to take a $40,000 profit and allocate it to the operating budget of the campus or to allocate it to the ancillary that is shouldering a significant amount of wear and tear on its facilities. He added that residence has some fixed costs that are not met through existing calculations and that ultimately the ancillary has to download costs to students on an annual basis. He noted that he was working with the Manager of Retail Planning, Development and Operations to discern what a bednight constitutes. He remarked that all the ancillaries have a part to play in reducing the campus deficit and in order to do this, the right strategic decisions need to be made to make this a shared responsibility.

Seeing no further comments, the Chair noted that the next meeting of the Committee would be on Monday, March 24, 2008.

The meeting adjourned at 4:00 p.m.

Secretary ________________________________ Chair ______________________________