Recent public criticism of the UNA’s budget process, and its draft operating budget for 2024/25 may have caused residents to become concerned that there’s a serious problem with the UNA’s process for developing budgets. As chair of the UNA’s finance and audit committee, I can assure residents that the UNA’s budget process is sound, that the UNA’s finances are healthy and are expected to continue to be so, and that the UNA is currently staffed appropriately for the level of services that residents expect and need. This article responds to three of the criticisms.
UNA Board’s Responsibility for Budgets
The UNA board has been accused of not adequately carrying out its oversight responsibility for the operating budget. The basis for this criticism is that the second draft of the budget for 2024/25 is almost identical to the first draft.
UNA staff prepare the first draft of the operating budget, having regard to the UNA’s core obligations and previously established board priorities and initiatives. The draft budget is provided to the board’s finance committee for consideration. At the finance committee meeting, a thorough discussion of the draft budget occurs. Staff are questioned on budget items and changes may be proposed. The budget is then provided to the board. A second draft of the budget is prepared, and the process is repeated. Following an opportunity for public consultation, the (hopefully) final version of the budget goes to the finance committee and the board.
The lack of significant changes between the first and second drafts of the 2024/25 operating budget is not because directors were negligent in carrying out their responsibilities. Rather, staff developed a draft budget which directors did not see any reason to change significantly. Staff are to be commended for doing so.
The UNA does not have a lot of scope for flexibility in developing its operating budget. A large portion of its expenditures are fixed by its obligations, such as its obligations to provide municipal-like services for the neighbourhoods. Landscaping is a good example. The UNA has taken on landscaping responsibilities for the neighbourhoods, for which it engages subcontractors. The operational costs of the community centres are another example.
The last point I’d like to make about the development of the 2024/25 budget is that decisions regarding several projects have been expressly left to the board. These are projects that it would be desirable to undertake but are not essential. The board will determine which, if any, of the projects will proceed. There’s a placeholder of $100,000 in the budget for these projects.
Savings for Rainy Days
Turning now to another criticism: that insufficient money is being put aside to cover the risk that the UNA will face budget deficits in the future. Residents making the criticism point to the significant financial difficulties experienced by the UNA in the mid-to-late 2010s. They are concerned that the UNA could once again face financial difficulties and so would like a large amount of money saved for this eventuality.
There is a reserve available to the UNA if it encounters financial difficulties because the revenue from the services levy does not grow quickly enough. This reserve is maintained by UBC as part of the Neighbours Fund. The Neighbours Fund consists of accounts in UBC’s financial records to which are credited the services levy payable by residents and the analogous amounts payable by UBC Properties Trust in respect of rental buildings. One per cent of the total services levies for each year is added to the reserve. The reserve will have a balance at the end of March of more than $400,000.
In addition to this reserve, the UNA has surplus financial assets of approximately $400,000 that can be used if revenues fall behind expenditures. Thus, the UNA does have some protection for “rainy days.” Furthermore, if need be, it could reduce services.
It is extremely unlikely that the UNA will have to draw on these amounts in the foreseeable future. A financial projection for the next four years, prepared primarily by UBC, shows substantially increasing surpluses for the UNA.
I should add that there’s also a contingency reserve in the Neighbours Fund, to be drawn on by the UNA to cover urgent, unexpected expenditures. This reserve has a balance of more than $1 million.
The financial difficulties experienced by the UNA several years ago were the result of an unusual combination of circumstances. In brief, the Vancouver tax rate was declining while the rural property tax rate hardly changed, thereby squeezing the services levy rate. Property values in the neighbourhoods did not increase sufficiently to offset the reduction in the services levy rate. These circumstances are very unlikely to recur.
If more money were to be socked away in the reserve maintained by UBC, there would be a corresponding reduction in the amounts received by the UNA from the Neighbours Fund, and therefore a reduction in the services provided by the UNA. Given that there’s only a remote prospect of the UNA facing financial difficulties, would residents prefer that more money be put aside for a rainy day and fewer services provided? I don’t think so.
Determining Residents’ Needs and Priorities
The last criticism I’ll address is that the budget process does not include a determination of the community’s needs and priorities through, for example, surveys and community meetings.
Determining the needs and priorities of the community happens separately from developing the budget. It is not tied to the budget cycle. It can happen throughout the year. A recent example is the UNA’s Recreation and Culture Programming Review, undertaken with the assistance of consultants. The review, which included comprehensive community engagement, sought to identify gaps in current programming and to ensure that programming and events meet the needs of a growing and diverse community.
The needs and priorities are input to the budget process. The budget process has a limited purpose, namely, to produce an operating budget that is the financial framework for the UNA in the coming fiscal year and a mechanism for controlling expenditures.
I note that residents who made the criticism have not identified any needs or priorities that, in their view, are not being met by the UNA. Residents are encouraged to let the UNA know if there’s anything they would like the UNA to be doing (or refrain from doing). There are several avenues for this, such as appearing as a delegation at a UNA board meeting, writing to directors or UNA staff, or submitting an article to The Campus Resident.
BILL HOLMES IS A UNA DIRECTOR AND MEMBER OF THE UNA’S FINANCE & AUDIT COMMITTEE.