Tuesday 5 February 1991

Annual Report, Provincial Auditor, 1990

Ministry of Colleges and Universities

Continued in camera

Afternoon sitting

University of Guelph



Chair: Callahan, Robert V. (Brampton South L)

Vice-Chair: Poole, Dianne (Eglinton L)

Bradley, James J. (St. Catharines L)

Charlton, Brian A. (Hamilton Mountain NDP)

Conway, Sean G. (Renfrew North L)

Cooper, Mike (Kitchener-Wilmot NDP)

Cousens, W. Donald (Markham PC)

Hayes, Pat (Essex-Kent NDP)

Johnson, Paul R. (Prince Edward-Lennox-South Hastings NDP)

MacKinnon, Ellen (Lambton NDP)

O'Connor, Larry (Durham-York NDP)

Tilson, David (Dufferin-Peel PC)


Cunningham, Dianne E. (London North PC) for Mr Tilson

Daigeler, Hans (Nepean L) for Mr Conway

Fawcett, Joan M. (Northumberland L) for Mr Bradley

Haeck, Christel (St. Catharines-Brock NDP) for Mrs McKinnon

Hope, Randy R. (Chatham-Kent NDP) for Mr Hayes

Clerk pro tem: Carrozza, Franco

Staff: McLellan, Ray, Research Officer, Legislative Research Service

The committee met at 1006 in room 228.


Resuming consideration of the 1990 annual report of the Provincial Auditor.

The Chair: Let's start. We have a quorum. We still have the ministry before us. The clerk has drawn to my attention that on 25 February, with the committee's concurrence, we would like to meet at 1 o'clock as opposed to 2. That will allow the auditor, as well as our researcher, to brief us on what we will be dealing with that week. So if there is no problem with that, 1 o'clock on Monday the 25th instead of 2. Is that agreeable? That may eliminate the necessity of that 11 o'clock change we had made during that week for research.


The Chair: We welcome back Mr MacKay and Mr Lyon. Perhaps you would like to proceed. Oh, we were into questions, I guess, were we not? Are there any further questions from members of the committee? Have any percolated overnight?

Mr Daigeler: The auditor describes what, I am sure you are aware, is a very complex system for giving grants by enrolment to the different universities. I was mentioning some numbers here, but it is a very, very difficult and I am sure in its application also very hard on everyone. Have you looked at all at perhaps trying to make this system simpler, or are you stuck with it, there is no way to change it? The more complex the system goes, the easier it is I guess, not by commission but perhaps just by the simple complexity of the system, to make mistakes.

Mr MacKay: Mr Chairman, I think that is right. The formula has just gotten more and more complex with almost every year since its establishment as the government of the day has tried to accomplish certain objectives and has responded to institutional demands that there be more stability and so on. Certainly from the ministry's point of view we would like to see a simpler formula for operating grants. In fact I think it is fair to say that there are probably only a few people in the province who really understand how the current formula that we have in place, which we are really just moving into the implementation of this current fiscal year and over the next few years, operates. Each institution has its expert. Our advisory council has an expert or two, the ministry has a couple; that is about it. It has gotten complicated.

It certainly has made some of our discussions with the Provincial Auditor's staff on the financial implications of some of these findings difficult because the Provincial Auditor's staff does not have any experience with a particular formula. A lot of it is going through and trying to explain how it works so that they can make those kinds of calculations. Unfortunately, we are just in the stages of implementing once again a new formula which is even more complex than some of the last ones. I am not optimistic we can move to a simpler model in the near future.

Mr Daigeler: So up to now there is no consideration in perhaps taking a major review of that whole area. Is that something on your horizon at all? Again, perhaps it is a political question.

Mr MacKay: You have to understand the role of our Ontario Council on University Affairs in providing advice to the ministry. They advised the ministry to implement this particular formula. There were a number of objectives associated with it. In fact, one of the objectives identified at the beginning of this current round of formula reform was in fact to have a formula simple to understand. I think when this current formula is formally or completely implemented, that is, when we get to these new enrolment targets that Dr Brzustowski was talking about yesterday, it will be simpler to understand and an institution's moving average of enrolment will be able to fluctuate within a certain range and grants will not be adjusted. Until that is fully implemented, it is extremely complicated to understand.

I think the university community is generally supportive of the particular formula that we are putting into place right now and we certainly want to discuss changing it with the university community and with our advisory council. It is not something that the minister or the ministry at this time has identified as a priority.

Ms Poole: Towards the end of your discussion document yesterday you listed some trends and statistics which I found very helpful. I would like to ask you about one statistic in particular that you mentioned. It said at the bottom of page 18, "The Ontario university system produces the largest proportion of graduates in Canada, granting some 43% of all degrees awarded in 1988." Then juxtaposed to this, immediately thereafter, is the line, "Operating income for Ontario universities, however, represents approximately 32% of the operating income for the whole of Canada."

While I would love to take that on the face value and say that this in itself shows great efficiency within the system and value for money, I suspect that at least part of those statistics relate to economy of scale. The University of Toronto obviously would operate on a more economical basis per capita than a very small university and in many of the provinces that would be what you would have, a very small university.

Do you have any statistics that would compare with a province that is more comparable, such as Quebec, which is again a larger province with larger universities? Do you have any statistics showing what percentage of degrees are granted in that province as compared to the operating costs?

Mr MacKay: I think we can get those. I do not have them here but certainly the information that was used to compile these particular numbers does include information on individual provinces and we can certainly get that. I think you make a good point when you talk about comparisons with other provinces. Certainly provinces with only two or three universities are difficult to compare with a system the size of Ontario's.

The ministry, our advisory council and the Council of Ontario Universities do publish on an annual basis a document called Interprovincial Comparisons which gives quite detailed comparisons of funding per student and funding per various other measures.

As indicated in the statement that Dr. Brzustowski made yesterday, Ontario ranks pretty close to the bottom, and has for a long time. Certainly one of the lines government usually takes in response to that is that economy-of-scale argument, that it is not fair to compare the Ontario system with some of the smaller provinces.

Ms Poole: I just had one further question along that line. Do you have comparisons between individual universities? For instance, could you compare the University of British Columbia with an Ontario university, or is that information not readily available?

Mr Lyon: The simple answer to that is no, we do not have that individual university comparison, but comparative information among the provinces is one of the concerns of the Council of Ministers of Education, Canada, which is an organization of the provinces and of the ministers. There is a project ongoing that is attempting, in collaboration with Statistics Canada, to produce a document that describes to some extent this comparative information.

Having said that, one of the most difficult things in doing this type of comparative work is the recognition of the unique differences among the provinces and the provincial educational jurisdictions. Let me give you an example. To compare Ontario with Quebec, one of the difficult issues is, how do you take into account the CEGEPs, where you have the transfer of programs, whereas you do not have the equivalency in Ontario? So once you have that issue on the table and start looking at the cost per student, it becomes an extremely difficult matter. An attempt is being dealt with at that level with the Council of Ministers of Education and there is an expectation that later on this year a publication will come out which will give to some extent some comparative statistics, with all the caveats and so on.

Ms Poole: Is the method that you have established in Ontario for weighting with honours students, arts and sciences, so on and so forth, is that system unique to Ontario or is that the common way of doing it across Canada in most jurisdictions?

Mr MacKay: I think many jurisdictions have some form of weighting. In other words, a certain kind of student, be it a doctoral student, a masters level student or a medical student, is funded at a different weight than a student in a general arts program. I am not at all sure that other jurisdictions differentiate between honours and general arts. That is something I have never looked into. I do know that the original decision to make that distinction was based on examining costs at an Ontario institution. I am not sure that what other jurisdictions did at the time was even looked at when that decision was first made. It is certainly something we can try and find out for you.

Ms Poole: I would appreciate that.

Mr Cousens: When the auditor reviewed the enrolment of students, one of the things he did not comment on, yet it has bothered me for a number of years, has to do with the number of foreign students who are taking up places for Ontario grads in the Ontario post-secondary educational system. Foreign students might well include those from other provinces, as far as I am concerned. I have a concern that Ontario students get first attention, yet I am prepared under circumstances to understand there can be reciprocal relations that allow us to say there is some quid pro quo, and also there are certain areas of specialty where we only have it in Ontario. So though I have a certain prejudice, it has to be that I am looking after the interests of Ontario students first. That might upset some people. I heard a gasp behind me, but maybe she is just breathing for a change.

The Chair: Mr Cousens, "She's breathing for a change," did you say?

Mr Daigeler: No, no, I was gasping.

Mr Cousens: Yes, I have very sensitive ears, with my business, you know.

I would be interested in knowing to what degree your ministry has looked at the number of foreign students in different universities. Do you have any involvement in the numbers that are accepted? To what degree are they subsidized by federal grants and assistance? Has there been a decline in the number of foreign students? I am specifically thinking outside the country at this point, but I also would like to know what the numbers are for extra-provincial types who come in.

Mr Lyon: Let me address the question of the numbers. I do not have the statistics with me on hand as to the sort of 10-year experience with foreign student enrolment. I will be quite happy to provide that to you.

Mr Cousens: I would be interested in that. Thank you.


Mr Lyon: Do you want to deal with the fees?

Mr MacKay: We do charge foreign students fees that are substantially in excess of those of domestic students. An attempt is made to cover the full educational costs associated with those students but not the research costs associated with those students. Once again, I think the fee levels are probably set out in that operating funds manual that we distributed -- right in the back.

Mr Cousens: The appendices.

Mr MacKay: Yes. The very last page in fact shows standard fees for the current academic year and the additional fees that international students have to pay. You can see they are quite substantially above the domestic fee.

Now, I should also mention that in the operating grants manual we have quite an extensive section on exemptions from that fee for students from developing countries who are sponsored by international agencies, the Canadian International Development Agency and so on. We also have a program to exempt 1,000 graduate students from the differential fee. We actually share the cost of the forgone fee revenue with the individual institutions that take the students in.

There has been a great deal of concern at the institutional level with the effect of the differential fees on foreign students. They feel that they are a very necessary component, especially in the graduate schools. As Mr Lyon indicated, we will provide the actual figures. My recollection is that we did see a significant drop during the 1980s in the foreign student levels.

We also have information on interprovincial migration of students. I think it is fair to say that Ontario is a leader in terms of educating students from other provinces compared to the number of students from Ontario who are studying in other provinces.

Mr Cousens: I guess to me it becomes a concern when I know I have young people from our area who are not able to get into university and those places are being taken by others and we are somehow not accommodating them. That is a concern to me. You send me those data and I will have some time to look at them.

Just one other aside, if I may, Mr Chairman. It has to do with quotas that are brought into the school system. How do you handle that from the ministerial level when you are back seeing different universities -- teachers' college is a classic, where you have a number who want to get into teaching. You get 23,000 who apply to become teachers and you have only 5,000 openings, and yet if you did some kind of analysis into the future, you are probably going to need more than the number of spots you are providing for. We should do this in estimates, but it is nice in here and I am not going to be there. It just does not wash, one hand is not washing the other. We have a need for teachers and yet we have the quota system. I would almost think the ministry should be trying to beat up the universities to get them to do a better job. What club do you have?

Mr MacKay: One of the features of this new funding formula that is currently being implemented is that we have not only an enrolment target for each institution but we have identified priority areas, including teacher education, including a number of the rehabilitation sciences, and we have set specific targets in teacher education that we have actually exceeded this year. Enrolments in teacher education, and once again I do not have the numbers in front of me, have substantially increased in the last couple of years. There are still thousands of applicants who are not getting in. We are not nearly accommodating all of them, but enrolments have increased.

We are also working with the Ministry of Education. They now have developed a model where they are attempting to forecast teacher requirements, factor in the numbers that traditionally come from other jurisdictions and advise us on how many graduates the system does need from year to year. It will probably require that the province direct even more resources to further extending teacher education enrolment over the next few years.

Mr Cousens: I have one more question on a pet interest that I have. Dianne Cunningham asked a question on this during the last session. It had to do with the decline over the last several years in our whole educational system, in the number of students taking maths and sciences, and yet an increase in those taking the social sciences. To me that just spells doom for our future in R and D and technology areas, which I happen to have a special interest in. Is your grant structure that you are starting in going to give some encouragement to that, or are you doing other things to try to change the ratio as it is now developing?

Mr MacKay: As a matter of fact, another priority that the government identified was science and technology enrolment. There has been a very substantial decline. In fact the targets are really to get us back up to the levels that we had in the early 1980s in science and engineering. We are particularly concerned about the number of women that are studying in science and engineering. I think they are not significantly represented in engineering particularly. While their overall participation in post-secondary education has gone up quite dramatically -- they now make up more than 55% of undergraduate students -- they are concentrated in the social sciences and humanities.

There are some initiatives under way to address the whole question of women in science. I think it is certainly something that the ministry is aware of and is trying to work on with the Council of Ontario Universities to see what we can do. There are various initiatives, but I think there is not just the women's aspect of this particular issue. There has been a declining interest in sciences and engineering.

Mr Lyon: There is a federal program in place right now that has been working for the last couple of years. It is called the Canada scholarships program and is specifically directed to the encouragement of people going into the sciences and engineering. It also awards them to 50% of the applicants who are women and is particularly targeted to increasing the number of women in sciences and engineering.

Mr Cousens: I appreciate your answer.

Mrs Fawcett: In regard to women taking sciences, does your ministry now really liaise closely with the Ministry of Education? Because to me you have to start a lot sooner than university, as people may be pretty well programmed in their choices by the time they reach university. It is down in the elementary and secondary, which of course you would not really have that much contact with. At least I am wondering, do you have the contact? Are you looking at that together with the Ministry of Education?

Mr MacKay: Yes, we have had discussions with the Ministry of Education. It is certainly true that if students do not develop an appreciation of science in elementary school and if they do not take the proper courses in secondary school, they close the door to studying in maths, sciences or engineering by the time they are in grade 11. The option is not even open to them. There are a number of initiatives from summer camps that some of the universities are running for women in sciences to role model projects where women scientists and engineers and so on speak to high school students. There are a number of things.

Mrs Fawcett: Yes, to me that would be the real route to go, to try and get the interest, bring the high school or even the elementary schools in too. Thank you.

Mr Daigeler: I just have a comment on the earlier remarks by Mr Cousens. In fact I did gasp. I really think our party would take a very different position. I am not sure whether Mr Cousens was speaking for his party when he was arguing to look at students from other provinces as foreign students. I would place myself on a very different level here.

My question really is to the ministry officials. I think this document was distributed at the finance and economic affairs committee from your department. It refers to the operating fund and other revenues. On the operating side, it refers to the moneys that are coming from the government and from other revenues. It distinguishes between colleges and universities and says that for the colleges the revenue from other sources is 25% and for the universities the revenue from other sources is only 5%. Why is that different and where do the colleges have these additional resources?


Mr Lyon: I cannot give you the exact breakdown but the college system also serves the skills development needs of the province, and to a great extent the federal government has programs in place that provide for those skills development programs. In addition to the operating grants the province gives the colleges for programs that lead to accreditation, they do a lot of work for the federal government and for employers as well; whereas in the universities they do a lot less of that.

The 5% from the universities, as I understand it, would come from ancillary enterprises, donations and that type of thing. The major source of revenue for the universities is the operating grants, which take up something like 77% to 80%, and the tuition fees, which make up something like 18% or 19%.

Mr Daigeler: So you are saying that is really federal money on the other side there?

Mr Lyon: They do have federal money, they have direct money that comes from employers for which they deliver services to employers and moneys that come from the Ministry of Skills Development. Looking at that figure of 25%, it looks like the 75% already includes moneys that come from the provincial government through Skills Development. As far as I know, the operating grants that the Ministry of Colleges and Universities gives the colleges take up something a little bit over 50%.

Mr Daigeler: I am not sure whether it is in order to ask this from this committee, but is it possible to get some more background on this, a breakdown?

Mr Lyon: Sure. We will be quite happy to provide you with the information.

The Chair: I just wanted to ask, if there are no questions from members of the committee, I noticed that 31 December is the cutoff for advising the ministry as to the numbers in either honours or bachelors programs. What happens if a student does not come back in January and you have given them the moneys for that student? Is there some sort of accountability to return that money?

Mr MacKay: In fact, the funding is done on a per term basis, so a student is counted on 1 November, I believe, for the fall term and the institution is funded on that basis. There is another count in the winter term and there are counts in the spring and summer terms. So we calculate a full-time equivalent enrolment for the entire academic or fiscal year before deciding on the funding. One of the principles is that if a student is not there, we do not pay for that student. That student would only count as half of a full-time equivalent for the year if he in fact dropped out in December.

The Chair: So when is the cutoff date in the spring term?

Mr Lyon: I can elaborate on that. The institutions are required to report enrolment four times a year. For the spring term the count date is 30 June. For the summer term, because it varies from institution to institution, it will be the midpoint of the session. For the fall term it is 1 November and for the winter term it is 1 February and 15 March, the latter date for certain courses where the students start after the count date.

The Chair: Just so I can be clear on that, do they get the money after the count is in or do they get it before?

Mr Lyon: The money is determined on the basis of the students who are enrolled throughout the entire year, so the money is not calculated after each count date. All the counts are aggregated together for a year and that goes into the calculation.

Mr MacKay: I think it would help the understanding of the formula to understand that we use what we call a slip-year formula. In other words, grants for 1991-92 use enrolments up to 1990-91. We are always a year behind the actual enrolment, because it takes so long to get the final enrolment counts. We are well into any fiscal year before we are able to do a final calculation of the enrolment in the previous year.

The Chair: So in fact the money that is being received is based on past history?

Mr MacKay: That is right, sir.

The Chair: How do you get that back if past history does not repeat itself?

Mr MacKay: An accepted part of the formula is that if you have an enrolment decline in a particular year, you will get the dollars in that year based on the previous year. However, the next year, even if you have an enrolment increase, your grants will go down.

The Chair: I see, so it is deducted at that point.

Mr MacKay: I believe that decision was originally taken in the early 1970s just for administrative reasons, if nothing else. We were literally having to do adjustments of operating grants right up to the end of the fiscal year because we would be making original payments on enrolment estimates and then having to change them. It gave the institutions a little bit of certainty. They would know what they were going to be getting during the course of the fiscal year because we would know what the enrolment was the previous year.

The Chair: I notice the university has the ability to charge whatever it wants. That is not governed by anything the government says.

Mr MacKay: In terms of tuition fees?

The Chair: Yes.

Mr MacKay: Legally, the universities are fully entitled to charge whatever tuition fee they want. However, it has been a feature of the university operating grants calculation that we tell them what the standard fee to be charged is and we allow them to charge an additional 13% fee on that standard fee. Anything else they charge, beyond what the ministry tells them they can charge, is deducted from their operating grants. So in fact they could exercise that university autonomy but there is no financial benefit to them from doing so. In effect, we do control tuition fee levels despite the universities' legal authority to set them. That has just been a matter of government policy since the initiation of the funding.

Ms Haeck: There is a substantial difference in how the colleges are funded. I am raising this because Mr Daigeler definitely raised the issue of what the percentages may be and how they differ. Could you explain for the committee exactly how the colleges are funded in comparison to the universities? I should not do that to you, should I?

Mr MacKay: I am afraid we have to have somebody from the college affairs branch describe the college formula in detail. My understanding is that they do have a moving average of enrolment that does funds on the basis of previous years' enrolment and changes over time given changes in those enrolments. I may be mistaken but I think they have a two-year slip here, so that they are funding two years behind actual enrolments.

The Chair: Actually, as you can tell from their answer, we are dealing with universities, not colleges. That may be our next endeavour.

Ms Haeck: Mr Daigeler brought up the colleges so I thought --

The Chair: Right. I think somebody asked for some information about that. I would ask you, gentlemen, to supply the information that has been requested to the clerk and he will distribute it among the committee members.

Mrs Cunningham: Just on that point of asking for information, Mr Chairman, I was not here at the beginning and I hope I am not repeating something that someone has already perhaps asked or requested. One of the great issues, I think, in travelling from universities is this international student fee. When I take a look at the fee differentials and exemptions as written up in this book, it seems to me there is a fair bit of latitude for fairness in exchanges between countries or whatever, and I am not certain what this issue is.

From the university's point of view, I would expect that the Council of Ontario Universities has probably advised you that there are some specific concerns. I am not aware of anything that has been written or any specific information that may have been brought to your attention. If there is anything, I think it would be helpful if we had it.

Otherwise, what is the issue? As I look at the exemptions, it would be very difficult for me to figure out what it is. But it certainly was one of the eight topics that we discussed in our meeting last Friday at the University of Western Ontario, and it has been raised at other universities as the faculty or the students have presented their concerns. I would like to know specifically, from your point of view, what you feel their concerns are and what is being done about them, if anything.

Mr MacKay: From my perspective in the ministry, in the university relations branch, the problems with respect to the exemptions themselves do focus around particular interpretations: Is a particular agency eligible to sponsor students and thereby allow them the exempt status? There are certain auditing problems around identifying students who are not deemed to be international students, and how do you certify that?


I think from a broader policy issue there are a lot of people concerned with the very concept of there being differential fees. There are a lot of people who feel that it is very important for universities to have international students and that these high fees act as a disincentive.

In fact the minister has expressed some concerns with the differential fee policies and has asked us to look at how we treat them, look at the exemption categories, look at the whole question of whether there should be differential fees. I am not sure about the exact figure, but I think it is somewhere between $30 million and $40 million, though, of additional revenue for the system that is generated by these differential fees. While a lot of people indicate a belief that in principle we should do away with these differential fees for international students, they also indicate that the system cannot afford to lose that substantial amount of revenue.

I am not sure what the answer is. We are certainly going to be reviewing the subject for the minister. I would think he would want to make a statement with respect to ministry policy within the next few months.

Mrs Cunningham: If I may, this of course is historical. It has gone back a long way. There are arrangements that have been made, I think, between universities in other countries and our own universities that have probably been very useful and have worked for the student. Certainly, as someone who studied at an American university, when I wanted reduced tuition, I had to teach for them for nothing in order to do it. So there were ways of getting differential fees dealt with, I think, fairly -- I hate to say it -- probably 30 years ago anyway.

What is wrong with you?

Mr Cousens: That long ago.

The Chair: You must have been a very young teacher.

Mrs Cunningham: I was a very young student, teacher, mother and the whole bit.

But the point is that there have been arrangements that have worked and have been fair. I certainly think our ability to attract the best students is extremely important and the only way we can do that is by having universities that operate to the world competition level. I think members of this committee have heard that is not happening and we are losing it. That is my great concern in being here at all: How do we improve it?

It simply was raised as an issue by the universities themselves. That is why I asked the question. I think it is important we get good information. I heard about the political exchanges. We enjoy Mr Cousens frequently on Tuesday mornings in our caucus. He enlightens a lot of us from time to time and influences our decision-making. I am sure he tries here in public as well.

Mr Hope: Just a couple of things dealing with accountability of the universities: Number one, I was just briefly looking through some of the legislative research services that have been provided. Talking about accountability of assets, as I look through here there are a lot of assets that are not recorded or that I cannot find in the auditor's report. I wonder if the ministry is looking at making sure that the accountability of assets is there, and if you are looking for more control mechanisms to make sure that the accountability is there.

Mr MacKay: The ministry took the position in responding to all three of these university inspection audits that it would not comment or take a position on any matters with respect to asset control or matters that we and the universities both deem to be within the exclusive jurisdiction of the board of governors or governing council of that particular institution.

We have basically restricted our comments to those areas dealing with enrolment reporting as they are tied directly to the funding we provide. Frankly we feel that the institutions themselves should respond both to the Provincial Auditor and to the members of the committee with respect to matters like asset control.

Mr Hope: Would that not raise the question in your head, "Where has the dollar value gone to?" I guess I just wanted to put that forward.

The second question that I have deals with the grants for research. What accountability are we getting back? We are providing moneys to universities to develop research or to do whatever kind they want to do, to develop our economic market, I would call it. What returns are we getting on the investment we are putting into dollar grants that are provided for professors to do research analysis? What are we really receiving back? I question some of the granting that we do to universities.

Mr MacKay: I think I should explain that there are a number of sources of funding for research activities. There are three federal granting agencies that provide money directly to universities. It is generally awarded on a competitive, what they call peer review process. The quality of actual research proposals is examined and the federal government decides which grants to provide. Ontario universities receive a very substantial share of that funding. Of course the overhead costs of doing that research are basically absorbed by the universities and therefore are covered by our operating grants to the extent that they are incurring real costs.

We have within the province a program called the university research incentive fund which specifically matches funding provided by private sector companies and businesses that undertake joint research projects with universities. That is a program that has been reviewed at least once since it was initiated and found to be very successful in terms of the kinds of projects that were being funded and in terms of the actual delivery of new products to the marketplace and so on as a result of that funding.

In terms of an actual assessment of the type of research that an individual university professor does, whether it is related to a grant that he has received or whether it relates to a study that he or she is publishing or an article that she is writing, I think the effective evaluation, once again, is a peer review process. Individual professors are subjected to the comments of others in their field when they publish. You can get some pretty lively academic debates going in the journals in the various disciplines. There is not an actual mechanism for the government to assess the actual research that has been undertaken, but there certainly is within the university community a lot of assessment of each other's work.

Mr Hope: Coming from the automotive sector and dealing with new technology, what we are finding out is that we are not producing. We may be producing through university grants for those individuals in their particular fields, but we are not producing for the citizens of Ontario as far as keeping the academic in Ontario to improve our standards is concerned. When I see people from Japan and Germany come over here with the technological expertise that we are missing here in advancing ourselves here in Ontario, that is what I somewhat question. That is why I want to bring the question up about the granting, because what is the turnaround of these people who we are developing this money into? Are they staying here in Ontario or are they leaving to go to higher-quality jobs as far as pay is concerned? I just wanted to make that point.

Yesterday we were talking about government appointments to boards and I was just wondering what boards there would be that we have some say in as a government.

Mr MacKay: I believe there are government appointees on about eight of the governing boards. We can get you the actual numbers. In fact I was just looking at a table the other day that broke down the membership of all the governing bodies for the universities. We can certainly provide that to the committee.

Ms Haeck: To return actually to the point that Mrs Cunningham and Mr Cousens raised earlier, do we have a handle on how we stand in relation to other jurisdictions in dealing with foreign students when we are talking about, say, what is happening in the United States or Britain, where we have some sort of comparison of what we charge or what kind of grant we give students, how we figure into that larger scheme, even other provinces in this country?


Mr MacKay: Yes, we in the ministry do have some data with respect to foreign student fees charged in other jurisdictions. Once again, we can provide that to the committee. My memory of it is that our fees are still considerably lower than they are for many American institutions. In fact our differential fees are lower than the actual domestic tuition fees that many of the private American universities charge. I cannot recall exactly how we compare to the public universities in the United States.

Ms Haeck: That is fine.

Mrs Cunningham: Just on that point, that information was tabled last week by the president of the University of Toronto, so perhaps we will bring it to the committee. I will bring what I have and distribute it.

On the issue Mr Hope raised, I think it is a very valid one and it is probably the most critical one we have at all. Although I know we are talking here about the funding mechanisms of universities, I think you cannot ask a question about funding without seriously considering who is training whom and for what purpose. He raised the issue of the automotive industry. I think it is an excellent example. I certainly travel a lot from London to Toronto where I meet with these young people who are going to Japan to be trained and returning to Ontario after their training, which bothers me a lot.

On this whole issue of program, there will probably be a more appropriate place for us to have some serious discussion, I hope. I am sure we will be on the same side of that argument. We have some tremendous deficiencies, but the question, I guess, at the bottom is, who should be doing the training, whether the universities should be in the business at all or whether it is in co-operation with the private sector? Certainly from what I have seen, we have not decided that question.

There is the other issue I was going to ask the representatives of the ministry today. One of the points that was made last week as we were looking at the Council of Ontario Universities talking to our committee was a great concern that many of our bright young people were choosing for their undergraduate work universities outside of Canada, certainly the American universities, and were more than capable of spending their own money to do this.

We had a number of delegations before a committee at the University of Western Ontario recently and it was of great concern. That university was putting it in the light that it could not attract undergraduate students to engineering and to science courses, so if we do not get the students in in the first place, how are you competitive within your own universities? Back to the issue, do you have good data on how many of our secondary school students in fact are choosing to go and pay full fees outside of our province and country, and is this an issue this committee should be concerned about as part of our deliberations?

Mr Lyon: If I can answer that one, I do not believe we have data on students who make that type of a choice, to go south of the border for their education. If I could speak anecdotally, my daughter went to first year at university this year, and among her classmates it is not that they could not get into an Ontario university; for whatever value system they have that is embedded in the families and what not, some of them decided to go to the United States. Obviously one of the things that makes a difference is the availability of scholarships. I think down in the United States you have more of an abundance of scholarships than we have here in Ontario and in Canada, because of the large amount of bequests and trust funds that are there. That is a factor that might influence some students. But we do not have any definitive data that would tell the story.

Mrs Cunningham: I am assuming your daughter is an undergraduate student as opposed to a graduate student. It is just another example. That is interesting. I really had not thought of that. Numbers alone tell us that there are many more scholarships, but it is interesting to note that students from this country would be as eligible for those undergraduate scholarships. I am certainly aware that they are for graduate scholarships, but I had never heard of them at the undergraduate level.

The Chair: Golf, football, basketball, hockey.

Mrs Cunningham: Astronomy.

The Chair: That is right.

Mrs Cunningham: I am assuming these are not sports scholarships.

Mr Lyon: No.

Mrs Cunningham: They are science scholarships.

The Chair: Was that a scud? They are shooting in the right direction, though, at us.

Mr O'Connor: University experiments, no doubt.

Mrs Cunningham: Yes. That is just another example of who wants to be competitive and who thinks it is important to be competitive technologically and economically. Certainly I am the mother of two university students now and in the last seven years they have talked openly about the difference between what they are getting in classes of 200 students as opposed to what some of their friends are getting elsewhere. They have chosen to stay here. Their line of work allows them to be here, what they are planning to do anyway, but certainly other younger students going into some of these science courses I know are choosing to go elsewhere. But I did not think it was to such an extent.

It is probably something you can ask the COU for, whoever is responsible for advising the government, because it certainly will affect future policy direction. It is a shame, after listening to the incentives that had been presented by both the federal government, believe it or not, and the province over the last decade, certainly the secondary school students, that in fact we have fewer students in science and technology, in spite of the incentives that have been put in place.

Mr Lyon: Mr Chairman, in the absence of structured information, I just do not know or will not be able to comment on the extent to which this is a significant issue. It is very hard to tell. There is no structured way of collecting that information from the students who go to other jurisdictions.

Mrs Cunningham: That is in the secondary schools.

Mr Lyon: That is right.

Mrs Cunningham: In fact, we do have a computer base. We have to have it to plan for admissions to our universities. Perhaps we just have to ask the right questions, but I thank you for your personal observations as well.

Mr O'Connor: Just in the way of trying to evaluate, within your ministry and the Ministry of Education, is there some way of evaluating where the teachers who are going to our secondary schools are coming from in the sciences and in areas that would lead to encouraging research and development in the future? Is there any mechanism in there that can maybe let us know, as a form of evaluation, what the end product of our universities is in the direction we need to head?

Mr MacKay: We certainly are able to identify those student teachers who have undergraduate science degrees and are interested in teaching science and math at both the elementary and the secondary school levels. That is information we do get in terms of evaluating their success in teaching those subjects and in terms of evaluating their success in creating an interest among our children in those sciences. I think we probably have to talk to somebody in the Ministry of Education to really answer that question. I am not aware of anything in terms of actually evaluating how well we are doing in imparting an interest in science and technology to our young people.

The Chair: I do not want to stop this, but I always believe you bring a witness in and he has some idea of what you are going to ask him, but we are getting well beyond what the auditor's report was all about.


Mr Lyon: It might help the committee to know that Statistics Canada does regular surveys of university graduates and asks them the types of work they are doing three to five years after graduation. I would be quite happy to provide that type of report to the committee if it would help the committee get a sense of what happens to university graduates.

The Chair: Would that be up to date? Because if you bring it really up to date you will probably find that a lot of them are doing nothing.

Mr O'Connor: I was just concerned about the co-ordination between where our teachers are coming from as a report card for the universities.

Mr MacKay: Part of our ongoing work with the Ministry of Education in terms of identifying the overall need for teachers is certainly identifying specific needs for teachers -- technology teachers, science teachers, French teachers. That is all part of it. In fact, the position of the Ministry of Education, as I understand it right now, is that while we do not have an overall global shortage of teachers, we do have shortages in particular disciplines and shortages in particular areas. That is what we are concentrating on at this point, rather than just the overall number.

Mr O'Connor: That is exactly what I was referring to.

Mrs Fawcett: Just on the stats as to the numbers going to the United States, I wonder if there is any availability of that through the Canada loans, because it is a different type of OSAP that they get, is it not, when they go to the United States? It is under the Canada loans. I just know that my son went to the United States, at Princeton, and he had a partial scholarship, so then he applied and got the Canada loan. He is an undergraduate.

Mr Lyon: I can provide the information as to how the student assistance program works, but from my recollection, the student who studies out of this country, unless it is in one of the eligible programs in institutions out of this country, would not be entitled to the financial assistance.

The Chair: You just let the cat out of the bag, Mrs Fawcett.

Mr MacKay: The Ontario grants are not eligible but the federal government's loans are, and we can certainly check with our student assistance people and see what information they have on it.

Mrs Fawcett: It was federal rather than Ontario.

Mr MacKay: We would not of course have any information on students not receiving any assistance.

Mrs Fawcett: Right.

Mr Hope: I was just verifying with the research services, as you stated earlier to stay within the confines of the auditor's report and I am just trying to make sure it is there. So I will have to pass right now, but I guess the whole report talks about accountability of universities to government funding. That is what I really want to focus on. It may not be labelled in this report. It may be an oversight, it may not be, but I think the accountability is to the students. What actual service are they getting? We are paying professors X dollars to be instructing our youth, in a way, and how much class time is being actually generated? Those are some of the questions that I have and I guess it will turn to a later conversation.

The Chair: On your questions about foreign students, I am a product of that. I came here to Canada to get a university education because it was dirt cheap and it was class education. That was in 1954. What you got here for $2,000 for room, board and tuition would have cost you in those days probably US$10,000 in the United States. So I would just say you do get some value for all of that. I would not be here if it was not for that.

Ms Poole: On a point of order, Mr Chair: I think you are jumping to conclusions there.

The Chair: I made an assumption which is probably a non sequitur really.

Mr Hope: I know this falls within the report now. One of the things I was curious about is the availability of access, making available for people to access our universities. Are there any statistics done on the levels of income where the university student is coming from, if we have some kind of data that we can refer to? Because what really scares me the most is -- and I heard somebody say yesterday the word "élite" is no longer, and I still say it belongs there -- it is only going to be confined to an élite group that will have access to universities, which will then put more pressure on community colleges.

Do we have statistics that show the amount of people coming in, their background, where they are coming in, the statistics whether they are middle-, low-, high-income value and, the end result, whether they are coming out? Because not only do they get in but we also have to look at, are they able to fulfil the university courses? There is a lot of financial debt that is put on a lot of parents about entering their children in the universities.

Mr MacKay: The universities themselves and, therefore, the ministry do not actually collect data on family income. However, Statistics Canada did do a special survey of university students. I believe they published it in 1986. It shows a breakdown of students at that time by family income level.

While it indicated there had been some progress in the decade studied in terms of more access for lower-income families, there is certainly an imbalance. I think it was fair to say at that time, and probably is still true today, that a majority of university students are from higher-income families. I certainly think that is a challenge that our minister has identified as something he would like to address, that access for various groups of our society that are currently underrepresented. It is certainly something that has to be addressed.

The Chair: Are all happy? All right, thank you very much. We appreciate your reattending today. We are now going to get together as a family in a closed session. We will be meeting in camera from now until the time we adjourn. We will back out in public session at 2 o'clock this afternoon.

The committee continued in camera at 1106.


The committee resumed at 1404 in room 228.


The Chair: Perhaps whoever is going to make the presentation from the university could introduce the other people for the purposes of Hansard, and then proceed. There will be questions from committee members after you have finished your presentation.

Mrs Gelberg: My name is Solette Gelberg. I am vice-chairman of the board of governors of the University of Guelph. With me today are Dr Brian Segal, the president of the university; Charles Ferguson, the vice-president of administration; and Colin Graham and John Dines of the firm Ernst and Young, who are our external auditors.

I want to start out by telling you how pleased we are to appear before the standing committee on public accounts today to present our views on the public inspection audit that was conducted at the University of Guelph and to respond to members' questions.

We are pleased because I and other members on the board have paid close personal attention to the Provincial Auditor's report and to the inspection audit. Our experience of the process as it applies to universities has led us to form some conclusions about universities' accountability that we think need to be put before the public of Ontario. We also welcome this opportunity to explain more fully some of the points which were raised by the report.

From the outset of Mr Archer's inspection audit at the University of Guelph, we have welcomed those suggestions we found reasonable in light of current accounting practice and useful as a supplement to the advice of our own internal and external auditors.

We understand that in carrying out inspection audits, the Office of the Provincial Auditor seeks to comply with the directive issued by the Management Board secretariat in 1988 which called for the establishment of "an effective framework for transfer payment recipients to account for their management of public funds."

As outlined by the Provincial Auditor on page 13 of his 1990 annual report, an effective accountability scheme not only would set out planned objectives and results for recipients of transfer payments, but also "would ensure that the recipient: understands or agrees with these objectives and results; reports the achievement of objectives and results on a timely basis; and takes corrective action when objectives and results are not being achieved." The report goes on to assign to the relevant ministry the responsibility "to ensure that accountability processes that meet the mandatory requirements of the directive are in place and are maintained."

As citizens of the province of Ontario, we applaud Mr Archer for pursuing this objective. After all, over $2 billion in transfer payments went to higher education in the past year. There can be no doubt that universities have a duty to be accountable to the government and to the public for the responsible expenditure of funds, a significant percentage of which come from the public purse.

The act that established the University of Guelph in 1964 assigns to the board of governors the "government, conduct, management and control of the university and of its property, revenues, expenditures, business and affairs," granting the board "all powers necessary or convenient to perform its duties and achieve the objects and purposes of the university." In a clear separation of powers, the Legislature, by the same act, entrusted our senate with responsibility for determining, controlling and regulating the educational policy of the university, including the establishment of degree programs and academic standards.

As you know, universities differ from governments, industry and profit-making corporations, not only in their basic missions but also in their systems of governments. Universities in Ontario have always retained a high degree of autonomy owing to, I believe, the recognition by successive governments that the purposes of teaching, scholarship and the dissemination of knowledge can best be served by allowing universities to be responsible to their time-tested traditions. This does not, of course, remove their obligation to be responsible to the larger society, nor would any university desire that freedom.


The split in authority between academic and financial governing structures -- senates and boards -- together with a strong tradition of collegial decision-making might seem to suggest to outsiders that university boards are limited in their ability to ensure that the programs and practices of their institutions can stand up to rigorous examination. However, those familiar with universities know they are subject to constant internal and external review. They demonstrate accountability daily by making regular reports to government ministries and other agencies on a variety of factors that affect their eligibility to receive funds both for operating and capital purposes, including enrolment, use of space, occupational health and safety, employment and pay equity, and research procedures and results.

Universities are obliged to submit academic programs, both new and ongoing, for examination and review, not only according to internal academic legislation but in conformity with the requirements of quasi-governmental approval bodies, accrediting agencies, granting councils and external reviewers. Ontario Council on University Affairs approval of new professional or quasi-professional undergraduate degree programs and Ontario Council of Graduate Studies approval and periodic review of all graduate programs are only two such requirements.

Our university also has external reviews of the effectiveness of all its academic units conducted every few years. We require faculty members to undergo a rigorous performance review by peers inside and outside the university every time promotion is sought or merit increment considered.

The university undergoes special audits ordered by provincial and federal government ministries or agencies, for example: the audit of the Ontario Ministry of Agriculture and Food contract conducted by OMAF; Canadian International Development Agency audits and special Department of Supply and Services audits, both subject to federal audit inspection; annual audits for capital funding; pension plan audits; audits of spending under special funding envelopes such as faculty renewal, equipment renewal and excellence funds. Academic activities in spending are documented in annual reports which are freely available to the public.

In essence, the university's affairs are conducted in accordance with normal business practices judged appropriate by external auditors and by a competent lay board. In fact, given the frequency with which reviews of the effectiveness of the university programs and staff take place and a system of governance that harks back to medieval models, it is a source of wonderment to most of us on the board how much our university manages to achieve and how efficiently it does so. It is precisely because the University of Guelph board of governors believes that the key to the practice of public accountability lies with a responsible lay board that we follow practices which, in our opinion, demonstrate a high degree of personal and corporate commitment to the philosophy espoused by the Provincial Auditor.

Our board meets frequently and its sessions are open to public attendance. It receives reports at every meeting on financial performance, including budget changes and variances. It continuously reviews auditing standards and ensures strict financial control through its audit committee, which directs the internal audit department. The board takes part annually in a collaborative university planning process with the senate. We have a unique management compensation scheme, through which the performance of senior administrators is evaluated by the board and merit pay awarded for performance against objectives approved by the board. In addition, the board pays particular attention to regularly conducted external audits of the university's operation.

Any delegation of the board's authority has been clearly defined. A comprehensive board committee structure, shown in the appendix to these remarks, has responsibility for such functions as oversight of hiring and employment practices, employment equity, long-term planning and strategic planning, linking available resources to institutional objectives, growth of endowed funds, selection and orientation of board members, and relations with students, faculty, staff and the external community. Frequent committee meetings require a significant commitment of time on the part of the lay board members, most of whom sit on three or more committees. It is not unusual for a lay board member, who receives no remuneration, to devote 10 to 15 hours a month to board or committee meetings and related board business.

I think members of the standing committee can see that ours is not a rubber-stamping operation. Our board annually sets a highly responsible business plan that monitors the administration's management to ensure that expenditures are within the limits we have established.

It is a source of pride for us that in all cases the administration has ended the fiscal year within budget projections. At the end of 1989-90, for instance, this university had no cumulative deficit. The purpose of this short discussion on university governance and performance is not to introduce special pleading on the university's behalf, but to demonstrate the complexity of its organization. An understanding of that complexity is crucial to an appreciation of the parameters within which we think an inspection audit of a university ought to proceed.

Mr Archer and his staff have clearly recognized -- page 15 of the 1990 report -- that devising a framework which takes into account "the great diversity in the nature of the transfer payment programs," traditions of institutional autonomy and complex accountability relationships between ministries and recipients requires "time and effort, understanding and compromise." We would agree entirely with Mr Archer that under the circumstances "standard expectations, uniformly applicable to all transfer payments, cannot be established." That is why our board has taken special care to examine each segment of his report on the inspection audit of the University of Guelph with an eye to this university's management.

Now that you know the extent of the board's interest in seeing that we have a responsive and responsible institution, you will not be surprised to learn that upon receipt of the Provincial Auditor's initial report in the spring of 1988, the board of governors, in its desire to thoroughly evaluate and verify the content, appointed a special committee of lay members that spent a great deal of time reviewing all the financial statements and related audit information of the university.

Let me now turn to some of our committee's observations and actions surrounding the complicated issue of enrolment reporting, which, as you know, is the basis of OCUA's recommendations to the Ministry of Colleges and Universities on the allocation of operating grants. As a result of Mr Archer's report, the university has made changes in the reporting of students enrolled in the winter semester. Guelph had been reporting students enrolled in winter in accordance with a special agreement made with the ministry in 1977, designed to recognize our unique three-semester system and put our university on a par with other institutions that do not have separate registration in the winter.

Under the terms of that agreement, we were allowed to count students who registered in September with the stated intention of attending classes for two semesters. Subsequent to the audit, it was claimed by the ministry that the 1977 special approval was extended for one year only. However, the university did not receive any subsequent letter revoking that arrangement. We feel that the board and our external auditors cannot be held responsible for changes in ministry policy which are not communicated. It appears that the Ministry of Colleges and Universities has had no process in place to monitor the special rulings that have been made over the last 25 years in recognition of the complexity of registration practices at the graduate and undergraduate levels system wide.

The Provincial Auditor's report stated that some first-year students were being miscounted as upper-year students, increasing the university's income. Employing the criterion recommended in a recent report of the Ontario Council on University Affairs, 90-V, on honours and general program differentiation, namely, completion of eight half courses, the university was out a net of 44 of the 21,618 basic income units. The university has taken steps to implement the new accounting criterion and has been audited for 1990.


The Provincial Auditor questioned Guelph's method of differentiating between honours and general students. In its reporting of honours students, our administration has consistently followed criteria for determining honours standing approved by our senate. There is a wide variation in definition of honours programs across the Ontario system. In November 1990, OCUA released the report I have just alluded to. It should be noted that among the universities studied, Guelph has an unusually high percentage of students graduating with honours degrees who were reported as honours students. This is consistent with our observation at the time of the audit. It would seem, therefore, that Guelph's criteria for honours standing have a high degree of correlation with graduation.

Another issue which applies to all of the conclusions made by the Provincial Auditor is that of a permissible error factor. The error factor allowed by the ministry in reporting enrolment is 2%. We agree with Mr Archer that it is critical to have in place information and reporting systems that efficiently capture what actually takes place in a registrarial operation, and we continuously take steps to improve our procedures. Without going into the technical details of our existing systems -- these can be explained by our officers in response to any questions you may have -- it is sufficient to point out that the University of Guelph has not received a cent of extra funding from the province as a result of enrolment reporting errors the Provincial Auditor claims to have discovered.

A further issue that received our board's close attention is accounting for fixed assets. Mr Archer's report on this item carries the heading "Poor Safeguarding of Assets," yet he produces no evidence to show that our losses are significant or that different systems of control would have significantly differing results. Instead, the university is faulted for inadequate cataloguing of plant assets. We think there is an important distinction to be made between cataloguing assets and safeguarding them.

In most instances, the board is satisfied that we have adequate safeguards; in some, for instance, library holdings, our systems can be shown to be superior. Almost all furniture and small equipment not currently recorded in a central inventory is kept in locked offices. An insurance policy on computing equipment requires the production of annual lists for departmental verification, and there is an incentive for departments to keep the listing current to ensure that this equipment is covered for loss. Major equipment such as vehicles and computer hardware, our art collection, audio-visual equipment, telephones and fire prevention devices are all inventoried. It is interesting to note, however, that in the case of fire extinguishing equipment, the listing process does not prevent rather high losses through theft or vandalism.

While on our balance sheet fixed assets are shown at a total value of $409 million, committee members must understand that when you eliminate land, buildings and major equipment, you are left with approximately $30 million in movable equipment, acquired with MCU and OMAF funds, that is not on some form of inventory. Our statistics show that for the last five years theft losses to university property, net of recoveries, averaged $35,000 a year, $3,000 of this amount in vandalized fire extinguishers. The board has discussed on several occasions, both before and after the inspection audit, the need for a central inventory listing of all fixed assets, and concluded that, given the estimated annual cost of $100,000 such a system would entail, it was not cost-effective. It should be pointed out that equipment represents only 4% of our operating fund expenditures. Moreover, considering the varied locations we deal with, movement of equipment between sites, and cannibalization of research equipment to meet unique needs, it is doubtful whether an inventory could be maintained effectively.

In the area of purchasing procedures, the Provincial Auditor questioned the competitive selection process employed by the university in awarding a contract for supply, delivery and installation of microcomputers and related accessories with a local supplier. The report pointed out that after a 30-day trial period with a new supplier, the contract was renewed with the local supplier even though the new supplier's prices were lower. It refers to questionable bidding practices.

Upon investigation, the board's special committee verified that the approach to suppliers, the awarding of the contract and subsequent activities were reviewed by a group independent of the purchasing department, and a potentially troubled service situation was avoided. No evidence of wrongdoing or inappropriate business practice was discovered.

Overall, Mr Archer was satisfied that financial controls at the University of Guelph are very strong, and the extensive research conducted by our special board committee on the inspection audit only served to confirm that knowledge for us. For that reason, we feel comfortable about choosing to disagree with certain of Mr Archer's judgements, and would be happy to respond to further questions.

I can assure you, on behalf of our board of governors, that the government and the Provincial Auditor have our continued commitment to achieve "enhancements in accountability," to borrow Mr Archer's phrase. We may not agree in every instance on the precise method for demonstrating that commitment, but I hope your committee is satisfied that a knowledgeable and expert board, entrusted by the legislation of the province of Ontario with responsibility for the financial management of the University of Guelph, has carried out its task with diligence and will continue to do so.

The Chair: Thank you very much. Are there any comments from either the president or the vice-president of administration over and above what has been presented?

Dr Segal: We are prepared to answer questions.

Mr Daigeler: First, I wish to thank you for coming to the committee and being available for questions and helping us to continue the good work the Provincial Auditor has done, and also give, hopefully, the universities the support they need, in fairness to the rest of the members of Ontario society.

I have a few questions with regard to your actual report. You are saying on page 4, "The university has external reviews of the effectiveness of all its academic units conducted every few years." Could you describe what that is?

Mrs Gelbert: With your indulgence, I think I will let the president answer that question.

Dr Segal: The reviews of our programs take place in a number of forums. First, all graduate programs in the province must undergo cyclical review by the Ontario Council of Graduate Studies, which is an organization established under the aegis of the Council of Ontario Universities, but which submits its annual reports to the Ontario Council on University Affairs. Essentially, if graduate programs are reviewed negatively, that is, do not get either an A or a B-plus rating, the government then has the right to decide whether to continue to fund those programs. All graduate programs go through that process.

In addition to that, all new undergraduate programs of a professional or quasi-professional nature must be submitted to the Ontario Council on University Affairs for evaluation and review and to their academic advisory committee. In addition to that, all of those programs generally must carry with them letters from various different stakeholders and constituencies about the quality of the program and about whether or not there is a requirement for graduates of those programs in those particular sectors.

As to existing undergraduate programs, in the case of the University of Guelph, we have established what we call an internal review process, which mirrors at the undergraduate level what happens to our graduate programs externally. The difference is that we run the program, we will choose a number of departments every year, they will then be reviewed; but, as with graduate programs, they are not reviewed by people from inside the institution. They will be reviewed by experts that are invited to the institution from other institutions. They will then be evaluated on that basis.


In addition to that, all of our professional programs are regularly evaluated by accrediting bodies, whether that would be in engineering, veterinary medicine and so on.

That is the kind of nexus of evaluations the programs undergo. If I could just add another comment, the students evaluate the teachers, and student-based evaluations are part of all tenure and promotion and merit discussions. There are student evaluations in every class throughout the university in every semester, and they clearly form part of the evaluation record of the faculty.

Mr Daigeler: If I could continue on that, basically all these evaluations you are describing are looking for academic criteria, the quality of the program, and probably -- correct me if I am wrong -- very little about the concerns the auditor would have above all in terms of economy and efficiency and effectiveness of the resources that are being applied.

Dr Segal: Yes, the general orientation of those evaluations relates to academic quality. However, external reviews will make comments, clearly, about the relationship between resources available and the job that has to be done. In many instances, particularly at the graduate level, you will get a review that may put a program on notice because either its library holdings or the number of graduate-eligible faculty is low for the number of students.

Let me be precise, if I may. As members may remember, in 1983 the Ontario Veterinary College went from full accreditation to provisional accreditation by the American accrediting body, and it was precisely because there were inadequate resources available to do the job, both clinical resources and teaching resources. Major changes had to take place within OVC in order for us to recapture full accreditation. We reduced the number of students by 100, with a BIU weight of six. That is 600 BIUs, which is very significant, and we went on a major capital effort to improve our facilities.

So I think in terms of the way the Provincial Auditor looks at it, from a straight efficiency perspective, the answer is no, they do not look at it that way but they do certainly attempt to make judgements about the relationship between resources and the task at hand.

Mr Daigeler: Do your external auditors give a management report as well, or is that part of their mandate?

Dr Segal: Yes, our external auditors provide a management report to the audit committee of the board. The president of the university is not a member of the audit committee of the board. The external auditors meet privately with the audit committee of the board to raise any matters with it that they feel are material. In addition, the audit committee receives regular management reports from the internal audit department within the university.

Mr Daigeler: That is all. I will let some others get by. I may have some more questions afterwards.

Mrs Cunningham: Welcome. It is good to meet you finally. My questions will probably appear to be somewhat philosophical in the beginning, because I have read so much and we have had some opportunities to take a look at some of the concerns that have been underlined, which vary from one university to the other among the three universities.

One of my great concerns in representing the public is this whole issue of accountability and whether the money is well spent. Until this year, with one exception, I think 1981 or 1982, the universities have not been subject to audit by the Provincial Auditor. Now here we are in the business of taking a look at universities, as we have done with school boards and hospitals in the past. There seems to me, according to the law of the province, to be some concern by the universities as to whose responsibility it really is to get involved, and what aspect of university life the Provincial Auditor should be involved in. I wonder if you would like to speak to that briefly from your point of view, with perhaps some suggestions as to my problem of accountability.

Dr Segal: I would, because I think it is an important issue. When we talk about accountability, we have to talk about accountability in a democratic society, and a democratic society demands a pluralistic form of accountability. It does not demand a unidirectional or simply hierarchical form of accountability. Totalitarian societies very clearly demand unidirectional and hierarchical accountability. In a pluralistic society we expect public agencies to be accountable in a variety of ways. It seems to me that one has to, in some respects, differentiate the notion of accountability and break it down into its parts, because we keep talking about it as if it is only one concept. It in fact embodies a variety of concepts.

As it pertains to the Provincial Auditor, one is clearly concerned about fiscal, administrative and organizational accountability. That is one area and we should talk about that. Legal accountability. We are also concerned about professional accountability. We are also concerned about political accountability; and finally, but most important, we are concerned about moral accountability.

It is important, when looking at a university, to assess how it is performing within this pluralistic concept of our society its measure of accountability. Clearly, one of the instruments for conducting that measure of accountability is the Provincial Auditor coming in and conducting an inspection audit on those matters that pertain to the Provincial Auditor's mandate.

But the university ultimately is responsible to a variety of constituencies. I do not want to go through all of the details because it would be unfair to take up the time of the committee, but we are fundamentally responsible to our students. We have boards of governors that have elected students on them. There are very few other public agencies that have elected customers or clients on them. We have elected faculty, we have elected staff on our board of governors. We have four Lieutenant Governor's order-in-council appointments. Certainly the government, as one example, at its will could invite its appointments to the board of governors to suggest what it would like see the appointments do on the board of governors at the University of Guelph. It could even go so far as to suggest to them how they might vote on certain issues, or the kinds of concerns it would like to express.

Our boards are held in public session. I do not think the Ontario Hydro board is held in public session. I do not think TVOntario or the Royal Ontario Museum are held in public session. I do not think the hospital boards are held in public session. The press is at our board meetings. I think one has to take a look at a variety of instruments through which one conducts the process of accountability.

If we take a look at just the issue of legal accountability, we are obviously accountable for all legislative and juridical matters. We are accountable for every piece of legislation. We are accountable for all of our collective agreements. Whether it is employment equity, whether it is environmental protection, whether it is occupational health or safety, all of those laws of the province, we are clearly accountable. We are not outside of those laws.

I think one has to go back, if I may quote, to a recent decision of the Supreme Court of Canada. This, I think, gets to some of the complexities of the issue, the Supreme Court decision on mandatory retirement. It said: "The fact that a university performs a public service does not make it part of government....The universities are legally autonomous. They are not organs of government, even though their scope of action is limited either by regulation or because of their dependence on government funds. Each has its own governing body, manages its own affairs, allocates its funds and pursues its own goals within the legislated limitations of its incorporation."

The last point I would make is that in our act, the government of the day has the right to request from us any information of any sort and we must provide it. Nothing stops the government for asking us any information and it does ask us for a lot of information, and we do provide that information. So I think even when one looks at the issue of political accountability, that is important.

If I may -- and I will stop at this point -- get to the issue of moral accountability, the people of this province expect our universities to behave with great integrity. They expect our universities to behave with fairness, within a context of natural justice, and therefore they come to expect certain things from us. They come to expect no favouritism on admissions: cutoffs are cutoffs are cutoffs. They come to expect absolutely no favouritism on grading. It does not matter who you know or what size you are or how much money you have, the universities have absolute standards that we must maintain. They come to expect natural justice from us. If we do not admit someone to the university, we are called to account. We have to be able to explain to the parent and the student why we have not accepted him and be able to do that in writing. We have appeal procedures through which this takes place.

So I think ultimately, and I only use those as some examples, there are multiple forms of accountability.


Mrs Cunningham: Thank you. I think from our point of view from time to time we mix them all up. It is easy to do given the advice we get from time to time from whomever and wherever we travel in our work.

Given what you just said, in our position today we are looking at the role of government, certainly the role of the ministry with regard to what they ask for and what they give you by way of information so you can do your work and follow the rules. On page 8 there is a discrepancy as to who gives whom what information and how best our institutions can follow the rules. Given the size of government and the fact that it is growing, I think it is becoming more difficult to follow rules. I am wondering if there are any basic rules left that anybody can follow. I am looking at the new legislation that is being proposed.

This is not a partisan committee, by the way, and it would probably happen no matter who proposed it. Government and legislation are just becoming very, very complicated, probably by Band-Aid approaches. So given what you said, "We feel that the board and our external auditors cannot be held responsible for changes in ministry policy which are not communicated," given how I feel about every time something goes wrong we just hire another level of bureaucracy to fix it, and given that we at least have, I think, an attempt by the ministry to put everything together around the operating funds distribution manual, how do you think we can communicate better? Do you think we need fewer rules? What would you do given the problem that we are facing here today, where we have seen some discrepancies pointed out to us by way of an audit which I think should be helpful? Perhaps you could give your views on that.

Dr Segal: I think one has to try and isolate the various components of the problem. When one moves from a 1977 special approval to a 1989 audit, one is putting 12 years in the middle. The ministry must have moved four times in that period. They must have had a whole range of people change from who was there at the beginning and so on. I guess, as we point out in our opening remarks, the ministry, I think, has not been overly effective in monitoring the special arrangements it made.

I think one of the important results of the provincial audit is to identify that. We can sit here and debate whether they did tell us or they did not tell us. Our external auditors never heard back from them and therefore they accounted for 12 years that way. I do not think there is any point in doing that.

But on the question you ask as to communication, I think the changes that have come out of this review will undoubtedly improve communication between the ministry and the universities as to expectations and standards and the new operating grants manual, and I believe the changes in counting that come out as a result of the Ontario Council on University Affairs review of honours-general will result in some improvements.

But back to your basic point, if one ever tracked the funding formula, today the funding formula has a 100-page manual. That is separate from the operating grants manual, by the way. Just to figure out how this elaborate ever-changing corridor enrolment-based funding formula works is a 100-page manual in complexity. And yes, every time the centre hires more pitchers we have to hire some catchers in order to deal with those issues.

Part of the difficulty, I guess, is that if you could wipe the slate clean and say, "Let's start afresh," there might be more rationality to it, but you really cannot do that because when institutions have been behaving on the basis of certain expectations, you cannot all of a sudden say: "Those expectations don't exist. Let's start afresh and let's have a level playing field." Really what the complexity of the formula does is it really does try to provide a much better level playing field.

But you are right, I think it becomes more complex and therefore you have more difficulty administering it. My sense is that some of the basic issues Mr Archer identified in the enrolment counting here and at U of T and Trent are being resolved.

On the question of special dispensation, we saw that one of the interesting things in the three audits was that somewhere in history there was a special dispensation for one reason or another. I would argue that in a system that has the kind of variety we have, one has to come to expect to have those special dispensations. The issue is, how can we and the ministry more effectively monitor those? My sense is that as a result of this process we will be in a better position to do that with them.

The Chair: I am sorry; I am going to have to interrupt. We have a few other questioners.

Mr Johnson: Whether the presenters or Dr Segal think the integrity of the university is impeccable or not is not really important. What is important is, does the public think the integrity of the university is impeccable or intact? I think we cannot forget that. So as I read through their presentation today I see some problems, because I am very concerned. When the public sees any institution or any agency of the government as being pompous or arrogant, it bothers me a lot.

As I looked through this presentation again and as I heard it read to me, it bothered me somewhat, especially on page 11 where they said "it is doubtful whether an inventory could be maintained effectively." We are talking about accountability, and if we are talking about accountability of assets, I grant that the university has the right to autonomy and I understand that, but when we are allocating public funds to universities for their use and we as a committee, we as a government, are responsible for the accountability of those funds, then likewise I think the university is accountable. It bothers me somewhat when I hear them say that they doubt whether they could maintain an inventory or be accountable. I interpret it to mean to be accountable for some of their assets, so I have some concerns.

The Chair: You have sort of posed a question and maybe we should give the witnesses an opportunity to respond to whether that was what page 11 meant. Would anyone like to respond?

Mrs Gelberg: I am going to start and then I will ask Dr Segal to perhaps explain some of the nuts and bolts that are involved.

Mr Johnson, let me assure you that when I first was on this board as a lay member of the public, I had some of those same questions. When one goes into an institution that is as complex and as large and as varied as the University of Guelph, and its variety and its own sense is different from the variety of the other institutions, you begin to have some inkling of understanding what goes on there.

At first blush it looked like this was an easy thing to do. You list everything and you have got a list, probably this thick, and on you go. There are so many various locations which make up the University of Guelph. There are so many various colleges, and within those colleges, departments, doing very different kinds of things that make up the University of Guelph. It is not simply a matter or an issue of just listing what we have, and we were not in any sense being arrogant, I can assure you.

What we were trying to do is ensure that every cent that was spent -- whether it was money from MCU or money from some other member of the public, in the end it is all in a sense public money -- was being protected. We very rapidly discovered that what was important was protecting those assets, and that in many instances the simple listing of an asset did not provide any protection. But I would like to ask Dr Segal if he would perhaps just describe to you in more detail the nuts and bolts of some of the operations and why an inventory listing not only is not going to safeguard the assets but in some cases is almost impossible.


Dr Segal: If I could just reiterate, in re-reading the document, I do not sense that anything here was attempting either to say that we could not be accountable or that we are attempting to be arrogant. I guess our view is that in a hierarchy of decisions around accountability, it is in fact more accountable not to spend $100,000 a year if you do not fundamentally believe it is going to prevent the loss of equipment, and I guess that is the decision the board has taken. Let me say, however, that given the ongoing concerns raised by the Provincial Auditor and others on this issue, the matter will once again be reviewed by our board, but I note that in a document, I believe tabled the other day, the Provincial Auditor talked about the decentralized system at Algonquin and how that seems to be working. We have been in touch with Algonquin and our impression is not the same as the Provincial Auditor's on that question.

In fact it is a centralized system. We understand that they began the system by recording every item worth $15 or more, then they upped it to $50 or more, then they upped it now to $100 and are trying to get it up to $500. Then each department actually gets a huge printout, because they have not removed any of the $15 items, of all of the items that are supposed to be in their department and given the amount of time that they have available I am assuming that the departments say, "Yes, I guess that's there."

The losses at Algonquin are about $35,000 a year, as we understand it, which is the same as the losses we have at the University of Guelph with a much bigger asset base, so I guess what we are trying to do is make a judgement call about what is really in the best interests of the university, given the availability of funds.

If I could give you a classic example of how either a central or a decentralized system could create problems, you take our department of crop science. If you go and conduct an audit of their inventory in the middle of winter, you have no problems whatsoever. Let's say you go in around December and you go to the various different holding areas and you do a central inventory of that equipment. You come back and try and do the same thing in the summer. That equipment has now been dispersed over seven or eight miles of different lands in a circumference of 45 miles from the university.

Then we would have to fill out a slip which moves it from the central warehouses to the field, and then if they move it from Arkell to Elora it would require a slip to do that because you have to transfer where the asset is, and at the end of the day we may come back, six months later, and find out that instead of having 75 seeders we have 66 seeders. We may not know that some smart people decided to cannibalize four seeders in order to get enough seeders to make it work.

I guess from our point of view, when we try to take this through the logic of how it would work, we do not come to the conclusion that centralized or decentralized it would be effective. Right now, we do not want to have to impose more workload on departments that are already massively overworked and underfunded.

I guess it is up to my board, and as I said, I think the board will want to have another look at this issue because it is something that the board has looked at continuously, well before the Provincial Auditor came to visit.

Ms Poole: Thank you for your presentation today and your very eloquent defence of the various forms of accountability to be held in a university. I am actually interested in doing a follow-up to Mr Johnson's question, because it was of concern to me as well. Perhaps I can explain that part of members' concern in this area may stem from the fact that both in Guelph and at Trent there was no centralized system of accounting for assets, so it was very difficult to tell what the theft ratio or the loss ratio was. At the U of T, where they did have such a system, there appeared to be quite a number of discrepancies and it appeared that the system was not working very well, I guess is the best way to say it.

While I understand your comments about how widely dispersed the university assets are and the buildings are, by the same token you have said, for instance, that "theft losses for university property...averaged $35,000 a year." I would assume those would be the losses for which you could account, but without a central inventory you really would not have any way of determining what had been lost or stolen. This is what was noticed, identified and reported, but it does concern me that there is no mechanism to determine how valid that statistic would be.

Dr Segal: I appreciate that and I think you are correct that when we identify losses, we identify those losses that have been identified, and frankly the losses identified of university property are substantially lower than personal losses, stolen bicycles and a whole bunch of other matters that happen on campus. But it is important to note that we have very strong controls over major asset categories. Our computing equipment is inventoried. Our fire equipment is inventoried. Our library holdings are inventoried, and even with probably one of the most sophisticated systems of library inventories, we identified that 1,000 out of 2 million volumes were missing.

So you have a very significant system. I am not sure that there is a relationship always between the capability of the system and whether things stay or not. Even in the case of the library we frankly did not know at the snapshot time we did it whether they were missing or whether the undergraduate trick of hiding a book in a wrong location so he can get it again was at play. Around exam time that trick remains there. We also have our art collections, for example, all of our major equipment, the cooling systems or massive air-conditioning systems, vehicles and things of that nature.

I guess the issue that you are raising and the committee is raising -- which is a fair question, and we are trying to pose it and we are certainly interested in advice on it -- is that one has to computerize the system. We might get a bargain, but essentially we are looking at some upfront capital costs of hardware and software in the vicinity of $300,000 or $350,000. That would buy a lot of microscopes. In addition to that, we are looking at the maintenance of the system and about $100,000 a year central costs, plus we are looking at what would happen in every single local department where the accounting practice has to come. Whether it is a centralized or decentralized system the costs are going to be there, because there has to be some record or method of recording it.

I guess if the public accounts committee is of the view that we ought to go back and have another hard look, and yes, take a look at the relationship between those costs and the results, then I think our board would be delighted to do so. I do not think we are trying to be difficult; we are just trying to say that given everything we see before us, we are not sure that is the best way of doing it.

In an ideal world, I do not think there is any question that if we had all the money that we needed, yes, we could put a sticker, as Queen's Park does, on every chair. For example, if I had a sticker on every chair and table that is used for the examinations in our gymnasium, it would be so funny because they are collapsing. They have not been replaced in 35 years and here we are sending people around to go look at whether this battered, broken-down chair is recorded on a central inventory. And so what if we find out that it is? I mean, we needed to replace a lot of that stuff a long time ago. So I guess those are some of the inconsistencies we are struggling with.

Ms Poole: I guess your basic premise is that since there is nothing supporting the fact that it is indeed a problem of theft, loss, misuse, whatever, given priorities, given the type of money you are talking about, you would rather put it into something which has more tangible results.

Dr Segal: I think also, if I may, we have a very highly decentralized budget system and if a major piece or even a minor piece of equipment is missed by a department, it has nowhere to go. It is their problem. So if they need a tape recorder or if they need three or four personal computers for particular tasks and those computers are missing -- they will report the computers because of the deductibility on the insurance policy -- they have a vested interest in locking their equipment and maintaining their equipment.


Mr Hope: You talked about volunteer work and most of us are familiar with volunteer work of sitting on boards of directors. The question I raise is when you talk about rubber-stamping, when you talk about the makeup of the committees, I have a hard time believing that, to be quite honest with you. Most stuff is directed and it is rubberstamped in most organizations that I have been involved in. I do not think this one is very much different than any other organization.

You had talked about the makeup of the board and the makeup of the committees in themselves. Does the student body play a major role in what takes place as far as the input is concerned? What ratios do they work on on boards? I am looking at the ability for power, recommendations that have been put forward, the number of recommendations that are also being looked at and acted upon, or whether they were just set to the side.

I guess you know I am starting when I read that word "rubber-stamped" -- a lot of us do not like the word "rubber-stamp." A lot of us air concerns, but we know through the system in itself, the system overrides and the overriding board is the one that makes the decision. They may not say it is rubber-stamped. I can put forward all the recommendations I want, but will they go through?

I want just some clarity about the committees, because you said the lay board members would sit on three or more committees. What does the lay board committee consist of, and also, what is the ratio versus non-directive influence as far as the overall board is concerned?

Mrs Gelberg: First of all, I can assure you -- and I chair the pension and benefits committee; I have been on that committee for some years -- there is no rubber-stamping. I, personally, have spent hundreds and hundreds of hours in the last nine years working on policy for pensions and benefits and policy for the investment of the pension funds of the University of Guelph. We spend a great deal of time. We used the word "rubber-stamping" in the sense that we were trying to reassure you that that does not happen. We have very active committees.

Our two student members obviously cannot be on every committee, but they are appointed to their fair share. Believe me, they are not reticent about asking questions or making their feelings known and we pay attention to them. There are very many issues where they have a different perspective than we have. That is what they are there for and we find that, by and large, very helpful.

The same goes for our faculty and staff representatives. We have representatives of both the faculty and staff, and have had in the past, on the pension benefits committee. We have them now on a committee that is advisory to that committee and, once again, they have often a different viewpoint. Perhaps sometimes they just see things from a different direction and they are very much paid attention to.

I can speak for the board that we have now and tell you that there is no one there who will rubber-stamp anything. I suspect our administration would be happy the odd day if we had the odd rubber-stamper. Because of that, we ask a lot of questions, but we expect answers and we get them. We ask for a lot of explanation. Many of the issues with which we deal are indeed complicated for laypeople.

I have some background in the issue of pensions and investments, but if one has no background at all in that, it is a very complex matter and it requires a lot of time to help people understand what is involved. So I can assure you that certainly any committees that I sit on or have sat on of this board do not rubber-stamp anything. There is great deal of work done, there are very many questions asked, and very often things that are brought as recommendations from the administration are sent back for further investigation and more information. I do not know if that satisfies your concern. Is there anything else?

Mr Hope: I guess what we are hearing is the viewpoint that you have put forward and I guess when you say you hear -- a lot of people have heard me but have never done anything about it and that is why today I am sitting in this position that I am, because I knocked or kicked on doors and never got any action. So I guess I question when you put it that, "Yes, they were heard." But what influence do they really have?

Dr Segal: Let me give you an example. This is a little more current example, but early in the new year we had moved the fine art department out of an old building downtown in Guelph as temporary accommodation because there is a major renovation of the old building going on. Students came to the board and expressed some grave concern about the environmental and working conditions in the temporary quarters.

The board made it very clear that it was not going to tolerate that and that action had to be taken, and it wanted to hear back about the results of the action -- which in fact is what took place. There was a letter from the affected students directly to the board indicating that they were satisfied with the changes. I think that is significant input.

If I could just add one other point, unlike corporate boards where, by and large, board members meet with senior staff and not with anybody else, the University of Guelph board does not only meet with senior staff but with students; it will meet with faculty, it will meet with alumni, and in areas of complexity, it meets with outside consultants. The pension and benefits committee, as lay members, spends as much time with the pension consultants as the administration would.

That would be the same thing in physical resources. The physical resources and property committee of the board will spend a substantial amount of time with the architects and with costing of projects and other capital matters. I think my sense has been right from the beginning that it is important not just to have an active board but to have a board that is heavily engaged, not in the itty-bitty administrative stuff but in the larger financial management issues.

Mr Hope: Why I am posing this question is because the first statement says, "Universities are different from government, industry and profit-making corporations." I do not know how you are categorizing yourself much different than those.

Mrs Gelberg: Let me make one more attempt at this. I am not an elected member of the board of governors, although I was originally an appointee of the Lieutenant Governor in Council, then was gone for some time and am now back as a university appointee. But I can tell you there are many days when I feel no different from the way you must feel, because our constituents are not at all shy about making their views known, making their demands known, and they find me wherever I may be.

I no longer live in Guelph but they seem to know. And they have no trouble finding me, either showing up at my door or getting me on the telephone, and as with public life or political life, I consider my work on the board of governors to be public life because almost everything that we do, save for property and certain personnel matters, is done in the public forum. I consider that to be a part of public life. As with you and public life, I can assure you that you ignore your constituents at your peril. It is no different in the university than it is sitting in the Legislature in that regard.

Mr Hope: That is why I pose it, just because, you know, when they meet the end of the road with you, they come to see us and say, "Look, we need the government to do something," and we are acting on their behalf.

Mrs Cunningham: Thank you for being so frank, Mrs Gelberg, in your responses, certainly as a person who represents the public in a different way. Just to put what we are doing here in some sort of perspective, I sat on the finance committee last week where Dr Prichard made a very eloquent, probably one of the most eloquent, briefs to that committee on behalf of the universities. I know all the members of the committee were somewhat taken aback by his strong use of words. I think most of us would share his concern, that is, the crisis that Ontario universities find themselves in. He used the words "developing tragedy."

It is not new to us, except it is new to know that we are now 9th out of 10 in funding. I am saying that to put what we are talking about today in perspective. In order to get the kind of support I think we need as elected representatives from our constituents to change things and, ultimately, for me in opposition -- by the way, the only purpose that I get to speak more than once at the committee; I mean, they have to take turns and we get the fair share in parties here.

One of the real concerns is when you read the table of contents -- if you read it out of context or did not know very much about the universities -- of this report, the report on the inspection audits on the University of Guelph and others. It does not look great if you take a look at the titles, does it? We were talking here about the safeguarding of assets that Mr Johnson approached and we talked about the claiming for students not attending the university, those kinds of things. There may not be a lot of money involved, but certainly in the eyes of the auditor there always is, because he is pretty stingy about every dime and that is good for us.


What we are trying to do today, I think, is to make things better. I would ask you to respond to some of the choices that I think we have, just myself, from having listened and from having taken a look at some of the comments, especially from the auditor himself, and now in response from the universities we have got an opportunity for you to respond.

He has talked to us about the real concern, and I think -- and I may be wrong, but he is sitting here and he can jump in if he wants to -- what he is telling us is that nobody wants to take any responsibility for this, from the government's point of view. Certainly the administration of the government has said the universities are autonomous in a sense, and no one has clarified how autonomous they really are.

This whole business about monitoring and knowing what is going on and asking for appropriate reports, which is where we left in our last discussion today, concerns me greatly. I do not like, as an elected politician, government officials to tell me, "Well, it's the universities' responsibility," and then the universities to say: "What are they doing up there? They've left their letters for seven years and nobody bothered to tell us. How can we do the work?"

Now these are, I think, specific choices. We may change as the days go on, but we can take a look at the legislation itself, because the auditor has said, "To whom these governing bodies are accountable is an issue that remains in limbo." Those are his words. You may want to respond to that. So we can take a look at the legislation perhaps.

We could also take a look at some guidelines for administrative matters, more specific guidelines. God help us, I do not want to be part of building a bigger bureaucracy. I would rather give the money to the university so the students would have smaller classes. But, you know, somehow it easy to say, "We're looking at it," or, "We've got a pilot project," or "We've got another layer of government." I do not want to be part of that. But if somebody can write some quick and dirty guidelines, I could probably buy into that.

Sooner or later, somebody has to be very specific and say, "It's your responsibility for monitoring," either to the government offices or to the universities, "You will fill in this form, or the outside auditor may come in here and he may be the one that talks about" -- I think I am using the words correctly when I say "the accounts of the university have been fairly presented." Quite frankly, as a school board trustee, I did not care about that. I wanted to hear from the auditor where we could be more efficient.

I have really thrown a mouthful at you but I see three things that we could consider as a committee.

The Chair: Can we ask one of those people to respond to your suggestions?

Mrs Cunningham: You are so timely with your interjections, Mr Chairman. You should have cut me off five minutes ago, but anyway go on.

Dr Segal: I would be delighted to attempt to respond. I should point out, Mrs Cunningham, that I hope the ministry and perhaps the Provincial Auditor and the Council of Ontario Universities have an opportunity to really think through your questions in more detail and provide not simply an off-the-cuff response but a more comprehensive response.

I do think there are ways in which, without undermining autonomy, which I do not think the Legislature would wish to do, we can -- in fact, if I may, on Mr Johnson's point -- appear to be more accountable than we appear to be based upon a cursory reading of the report. Some of the avenues available to us might be in some kind of report covering all of the areas that I alluded to earlier in your question about accountability. It will mean more work, but essentially universities could be asked to provide a comprehensive accountability report which would include not solely the external auditor's view but the results of evaluations and a whole host of other forms of accountability. I think that is one way.

I know the Provincial Auditor is pitching for more authority and would like more responsibility to come into the universities, and I think when you read the table of contents of his report, yes, you can be misled by it and you might wish to have a discussion with him about more neutral language. We certainly had those discussions with him, but neutral language does not lead to the kind of coverage that sensational language does. That is an editorial matter. I would not want to dwell on that.

I think the question of furthering the role of the Provincial Auditor is an important one because, as I read his intentions, the areas that he would like to pursue relate to matters that come under the purview of senate, ratios of academic to non-academic staff, for example. Why 30 courses for a BA degree? Why not 21 courses for a BA degree? Why 40 for an honours Bachelor of Science? Why not 29 courses for an honours Bachelor of Science? You could be more efficient. The auditor may even recommend that we take all first-year economics students and put them in the Dome. You can have your per-unit costs lowered as a result of that. I guess the point I am making is --

The Chair: Could I just interrupt? I did not read any of that in the report and if you are ascribing that to --

Dr Segal: No, not in our report. I was reading it in the report that I realized was tabled about -- the auditor is commenting on the fact that the boards do not appear to be accountable, and I guess I am trying --

The Chair: But I do not think, in fairness to the auditor, in any way, shape or form he was suggesting that he would get involved in things that are strictly sacrosanct in terms of the autonomous nature of a university.

Dr Segal: Without being disrespectful, if I read into the notion of ratios of academic to non-academic staff, I would think that certainly is an area that may well fall within the purview of senate.

If I may just conclude, I guess the issue really becomes, how can we publicly ensure that the universities are perceived to be more accountable, including reporting on the work of our external auditors, but touching a whole range of other areas where we know we are accountable, but defining them more publicly than we have been doing and making them more transparent in the future than we have been doing in the past?

The Chair: Mrs Cunningham, we are going to have to move on. We have a number of other questioners.

Mrs Cunningham: I think, in fairness, we were looking at changes in legislation. We were looking at administrative guidelines or more efficient monitoring. So you have said that the monitoring would be your choice.

Mrs Fawcett: Some of the questions that I had have been touched on, but just getting back to the safeguarding of assets, I understand correctly then that each department is sort of accountable for its assets. Is that where it stops?

Do the departments ever get together or is that not done? I can understand the tremendous costs -- it has been cited here as possibly $100,000 -- to do the whole thing. What if you just did certain sections, like we do, each year? We do not do the whole government every year; we just do certain areas. Has that been thought of, or do you have any plans to maybe do a little bit more than has been done?

Dr Segal: I think there has to be some central inventory established, so there are going to be front-end costs. Do you want to do that?

Mrs Fawcett: But if each department is doing it, you already have that done, right? It is just getting it together, collating it. Is that going to be $100,000?

Dr Segal: I think that would be part of it. Let's say that you have that done. Now you have to go back and the department and the university have added a range of other equipment. That has to be recorded by the department and then you have to go back on a regular basis and have them audit it to make sure that in fact all of it is there. That is where you begin to have --

Mrs Fawcett: Is the new equipment coming in being recorded now? Is that automatically being recorded and listed?

Dr Segal: All large equipment, all computing equipment, all library holdings, all fire equipment, all audio-visual equipment is recorded. We have recordings of all of those areas. But as I said, in hearing the concern of the committee and taking the concern seriously, I think it is a matter that should again be looked at by our board of governors.

Mrs Fawcett: I was just interested in the sabbatical problems and cited problems of lack of reporting and sort of people refusing to report. I just wonder what the criterion is for granting sabbaticals and why would someone object to submitting a report?


Dr Segal: If we talk about the current policy that is in place, that was established in 1987, that policy, we do not have a sabbatical policy. It may simply be a play on words, but we do not see it that way. We have a study/research leave policy. Individuals must apply to their department heads and must be approved by the dean if they wish to have a study leave. After six years, they are entitled to two semesters. That is eight months of study leave. The auditor is correct, approximately 9% to 10% of the faculty would be on study/research leave at any point in time. The average number of years when study leave is taken, if you divide it among the faculty, is probably between 9 and 10 years. While the policy states every 6, it probably ends up being about 9 or 10. Frankly, at least 30% of the faculty do not take study/research leave even though they are eligible for it.

The policy, you have correctly identified, is that they must submit a report upon return. We are implementing that policy, given the one or two problems that the auditor identified. We, as a result of that, have tightened up the reporting requirements and are ensuring that reports are submitted.

The issue of what happens is that we do have from time to time one or two recalcitrant members of the professorate who may not always be inclined to agree with policies that have been collectively agreed to, by the way, between the faculty and the university. There are sanctions within joint faculty policies to deal with that and those sanctions will be implemented. They range from a letter of disappointment which goes into the file to a suspension without pay and so on, and those policies are being adhered to.

Mrs Fawcett: Thank you very much.

Mr Charlton: Perhaps first we could deal with a couple of questions that I have on the funding issue around the enrolment question. I just want to be clear in my own head what it is that your response is saying here. I would gather from my listening and my re-reading of the sections on pages 7, 8 and 9 that essentially you are ending that off by saying that the University of Guelph has not received a cent of extra funding from the province as a result of the enrolment recording, and I would assume that you are saying that essentially for three somewhat separate reasons.

The first one is that you were accorded a special agreement in 1977 and from your perspective that agreement was not ceased and therefore it is not your problem that the ministry did not cease that agreement. "So you cannot say we got extra funding as a result of that." That would be the first one.

The second is contesting the question of -- what is the phrase they use here? The first-year students were being miscounted as upper-year students and you are basically saying, "There are only 44 out of 21,600 and therefore we do not find that as any significant problem."

Third, in terms of the question of differentiating honours and general students, your numbers in fact come up relatively close, the criteria for honours standing have a high degree of correlation with the actual graduates out of the university and therefore the numbers would stand up. Your last point, I guess, being that you are within the ministry guideline of 2%.

Dr Segal: Yes, if I could perhaps start with the last point, if you assume that every institution in the province is allowed a 2% error factor; furthermore, if you assume that all of the errors identified by the Provincial Auditor -- some of which we do not agree with, but assuming those are errors -- are below 2%, one has to assume that the random distribution of errors within the system would not be any higher at Guelph than it would be somewhere else. In fact, I think the three audits identify that there is a random distribution of errors within the system. Also, my institution alone has 450,000 separate registrarial transactions on an annual basis. On that basis, if everybody is within the 2%, we are within the 2% and therefore we have not received any additional money. That seems to be the covering point.

Mr Charlton: Having said that, you have also said, though, there were some clear problems identified in the reporting mechanisms.

Dr Segal: Yes.

Mr Charlton: I do not want to pursue that in the context of whether or not there were past moneys -- we have dealt with that for the moment; I think the auditor may want to comment on that himself again -- but from the prospective of where we are going in terms of changing the procedure in terms of monitoring and recording, will we eliminate the kinds of problems that we saw here at Guelph, eliminate the kinds of problems in terms of what is a special arrangement and what is an ongoing system and all of the other things that are more general to the rest of the system?

Dr Segal: It is my view that we will significantly address those problems, because I think the areas identified have all been clarified. I believe the ministry has requested from all institutions all special arrangements, and to the extent that they currently exist elsewhere and are inappropriate, they will be changed and they will be monitored. The OCUA has completed the document on honours/general and the counting thereof. I do believe that the deputy minister here yesterday indicated the government has accepted that and that will become part of the operating grants manual 1992-93, resulting in a consistent counting process across the province. I believe also that we have clarified the issue of what is a first-year versus upper-year student, ie, that any student who has eight courses can be classified as an upper. Eight half courses can be classified as a third-semester student. So that matter, I think, has been clarified.

In our case, the 1977 letter, independent of whether we debate about history, has obviously -- we have been told we can no longer count that way and we are not counting that way, although that does not remove our disadvantaged position, frankly. But we will live with it.

Mr Charlton: All right, my last question on this part of the auditor's report is simply on this 2% allowance for errors. Will that be necessary in the new system? Do you think we can get to a much lower percentage?

Dr Segal: Well, we obviously -- and I think the Provincial Auditor has helped a great deal -- have dramatically tightened up our systems, and our view is that we should be substantially below 2%. We think if you multiply the transactions at the University of Guelph, which are about 450,000 -- when you think of it, students come and they drop courses, add courses, they stop in the middle, they change, they change from one program to another. All of that sort of takes place and you have to capture all that. I think the permissible limit of 2% remains wise in the context of the diversity and also wise in the context of no extra money is going to the system as a result of it. The government decides how much it will allocate to the system and all the 2% does is it has an impact on the way in which it is distributed. But I think if what you are saying is, "Ought we to be closer to 0%?" the answer is yes. Ought we to try better and harder to get closer to that? The answer is yes.

Mr Charlton: The last one I want to hear from you is that we will get closer.

Dr Segal: Yes, we are getting closer. I think we will get closer and we are getting closer. I believe that we now have to report not just whether we are within the 2% but other problems that have occurred within the 2% so that the ministry is aware of where the auditor has identified some other problems.


Mr Charlton: Just very briefly on this assets question, my understanding of essentially what you have told us is that there are parts of your asset inventory that you in fact have control of and it is those areas where you have been able to identify losses. You have said you have control of, for example, the fire equipment, and a lot of your losses are in fact in fire equipment and the reason why you have been able to identify those losses is that they are part of a list of control systems.

Dr Segal: No, I am sorry. I did not mean to leave that impression. I believe we have control over many more of our assets than those that are simply listed on our inventory systems, and I think the losses have come, as Mrs Cunningham has identified -- or I think it may have been Mrs Poole -- from the reports made by departments. They would report any losses, whether the item happens to be recorded or not.


Dr Segal: Well, they first report it to the university police and security. There is an investigation that takes place. This is not just an open door. I mean, we do have a security system, we do have university police. Our net of $35,000 of losses, I believe we recovered about $10,000 of reported losses through police investigation. So that is there.

Mr Charlton: Okay. Let's get back to your comment earlier about the $35,000 being identified losses. Essentially what you are saying to the committee is that you do not believe that setting up a centralized system where investment in computer hardware and software may cost you as much as $350,000, and an operating cost of perhaps $100,000 a year to operate the system, that the cost of that system would be greater than the total of losses reported in any small amount unreported presently. Is that essentially what you are saying to the committee? I would assume that all of the universities in the province to some extent have the same problem. The University of Toronto has some kind of system in place.

The auditor has identified a number of discrepancies and problems with it even when there is a system in place, so it is not necessarily the answer just to have a system. Would it make sense for us to perhaps look at globally, perhaps picking one of the universities as a test place rather than just to have you talk about it every year or every second year and decide that it is not worth doing, and never really being 100% absolutely sure that you have a handle on this question? Would it be worth our while looking in a global way at trying to pick and do an identification test to determine whether pursuing the matter further is really worth while or not?

For example, you mentioned that if we were to do an inventory tour at Guelph in December, it would be much, much easier to do than if you were to try and do it in May. I understand that. It being an agricultural university, that is going to be true. I guess what I am getting at is, would it make sense so that we are not talking to Guelph and to U of T and to Trent and others and having them say, "We'll consider it; we'll think about it"? Would it make sense for us to consider trying to pick a place to do a test to find out whether you are right about the losses being much smaller than the cost of identifying those losses?

Mrs Gelberg: I guess you could go into one institution, certainly, and do a test case and try it.

The Chair: Probably Kingston Penitentiary.

Mrs Gelberg: Maybe, yes. But as a taxpayer in addition to a board member, it does not make very much sense to me that we would expend $300,000-plus of capital and $100,000 annually to put in place a system to protect losses which we know to this date average $35,000 a year, some of which are recovered.

Mr Charlton: You believe.

Mrs Gelberg: No, I think we can say more than we believe, Mr Charlton, with respect. Let me try for a minute to explain why. I think sometimes people think of universities as this big place into which everything goes. And in fact in much more sense is it definable units. I guess the best example that comes to mind is a department office, for example, in the MacKinnon building at the University of Guelph, one that I am reasonably familiar with. If you go into this department office, it is in fact two or three smaller offices. It is self-contained, it is locked at night when they are not there, it has in it a couple of computers and in the old days it had a typewriter -- I do not think we have too many of those any more -- some filing cabinets, some desks.

In the chair's office there is a couch and some chairs and a table where they hold meetings. Those people would know very quickly when they went there tomorrow morning if something were missing, and we depend in some sense on that as part of our control, in addition to all the things the president spoke about, in addition to inventory lists for insurance purposes.

We also have another wonderful incentive. We promised someone earlier that we were not here to cry, but given the tight financial constraints under which we live, each department is responsible for the first $5,000 of losses and if things are missing or lost, it comes out of its next year's budget. I can assure you, having worked with those people, that there are a lot of things that they both need and want and that is a pretty powerful incentive for them to keep an eye on what is around.

So it is not just this big hole into which everything gets poured and nobody keeps track of it and nobody counts it. It is a series of little places, if you will. So in that sense there are people who know what is there and they do know when things are missing and they do tell us.

Mr Charlton: I hear you. I also know, though, having worked in a number of institutions and in the government itself, there are all kinds of things that happen that never get reported. I am trying to get a sense of whether it is worth our trying to -- not by imposing it on all of the universities but trying to define whether the concerns that the auditor has raised may go deeper than what we understand at this point in looking carefully at the system from a test case perspective.

The Chair: I do not think that requires a response. I think that was a statement which you can mull over. We have to move on because we have a number of other people who would like to pursue these matters, and perhaps this will come up again.

Mr Daigeler: Dr Segal, judging from your remarks in response to Mrs Cunningham, it seems that you agree with a greater degree of public accountability of the universities. I heard you say mostly, though, about initiatives that the universities, perhaps together with the ministry, could be taking; I did not hear you say very much about the role of the Provincial Auditor and I would be rather interested to hear your views on the possible continuation of the inspection audits. I think the auditor gave us to understand that he was not very welcome at the beginning. Has this climate changed? Second, how do you feel about expanding that mandate of the Provincial Auditor towards what he described as due regard for economy, efficiency and effectiveness?

I am saying this because I am rather confused by what I hear, on the one hand, from the universities, where the council of universities is saying that the educational experience afforded the citizens of this province has suffered enormously over the past decade and that the damage done must be repaired and, on the other hand, the Provincial Auditor, in his overall report on the basis of these three inspection audits which he presented to the Deputy Minister of Colleges and Universities on December 20, says at the end, "Accordingly, we are of the opinion that accountability for the significant amount of funding provided to Ontario universities remains inadequate." I think I am leaving you a pretty heavy question here. I am just wondering what your comments would be on these points.

Dr Segal: I think I would not comment positively or negatively on the continuation of inspection audits as they are currently defined. Obviously the Provincial Auditor has the authority of his legislation to do so and it would be up to him and his committee to decide whether he wishes to continue to do it or not. I think, and I was trying to allude to it earlier, on the issue of efficiency, economy and effectiveness, I am not sure the only way of calculating effectiveness is through an accounting procedure. One has to identify the variety of modes through which one measures effectiveness and I think if the government wishes to establish effectiveness standards, I am not sure that is something that only the Provincial Auditor should have a say in. I would think the ministry, in consultation with the university, should be looking at the issue of evaluation and the issue of standards, as I believe the Council of Ministers of Education, Canada now intends to take a look at some measures of output standards in the primary and secondary schools across the country.


I think there are larger issues of accountability, not just how many degree graduates you are producing at what cost. I believe there was an Organization for Economic Co-operation and Development study done five or six years ago which identified the current cost of producing an undergraduate degree in Canada as being the lowest of all the OECD countries.

In my sense, one has to, I think, more clearly define what elements of accountability should be measured by what processes. I do think, as I mentioned earlier, that it would certainly be worthy of discussion between COU and the Provincial Auditor and the ministry to more clearly look at the Provincial Auditor's role. I think also the Provincial Auditor mentioned in that report to the deputy minister that he did not have a sense of being welcome terribly much, and that the universities had narrowly defined the terms of an inspection audit. But he accepted those definitions; he certainly, within the purview of the act, could have challenged those definitions. I think he also mentioned that he did not have access to board decisions. I checked in my institution, and he will correct me, I know, if I am wrong, but I do not believe any request for any information from our board of governors which he requested of us was not given to him.

So we may need more clarification around what the elements of an inspection audit are, we may need to better identify how we can be more transparent in accountability patterns, and we may need to take a look at what are effectiveness measures in addition to accounting effectiveness measures.

Mr Daigeler: I certainly agree with you that it is very much a broad picture and we cannot just use one instrument to measure, as it were, the product of the universities; the term itself is perhaps misleading, because I think universities are there not only to produce a product.

In any case, as we are dealing with auditing matters in this particular committee, I am concerned, especially in light of the tremendous campaign that is under way by the university sector to argue for more public funds, when I read in the report from the auditor -- and you may not wish to comment on another university, but I leave it up to you -- that: "Subsequent to our audit of Toronto, the media reported that the university was faced with a significant operating deficit for 1990 fiscal year due to many years of government underfunding. However, we noted that in fiscal years 1988 and 1989, the university had accumulated an operating surplus of well over $50 million, which was transferred to a restricted fund." With that kind of figure, really, you begin to wonder as a representative of the public whether there is something going on here that we are not aware of. On the one hand, I got macaroni thrown at me as a representative of the former government because of the underfunding; on the other hand, I read from the Provincial Auditor, in whom I certainly have a lot of trust, that there is money being transferred to funds over which there is no public control. It just does not look that good.

Dr Segal: I know my colleague President Prichard will be here tomorrow, and I think as it relates to any matters associated with the University of Toronto, let me suggest that it would be better to address them to him directly.

As far as my own institution is concerned, I should point out that we have always had a strong belief that just because you are poor does not mean you cannot manage effectively. Independent of some of the items that Mr Archer found within our institution, the sense is that we have a very high level of accountability to the public via our board of governors and via the ministry to effectively and efficiently use funds that are provided to us by the government.

I know President Prichard will shed a very different light on the issue than perhaps has been shed until now. One does not always get a chance to reflect upon one set of analyses versus another. I think the institution often views things in a different light based on different circumstances.

Let me just suggest to you, if I might, that I would never agree with any assumption that because you are not financed adequately you do not have a responsibility to spend the money you do have efficiently and effectively. Certainly, it is our view that we do that.

Mr Hope: I have one question with two parts. The first would be your definition of autonomy, because I was one of the ones who claimed their autonomy back in 1985 when we left the UAW and claimed our own union. I need to know your definition of autonomy. As you stated, it was history. Do we want to harp on history? No, I want to look for the future. What role do you see the Ontario government playing in your future?

Dr Segal: I think the definition of autonomy is the ability of a university within the context of government policy to determine its own academic policy and academic directions. I think it perhaps is easier to give some concrete examples of what I would mean by autonomy: the ability to teach courses in the way we think they ought to be taught; the ability to develop content within courses the way an individual member of the faculty or a curriculum committee believes ought to be taught; the ability to establish admission standards and to implement those standards; the ability to establish grading standards and grade progression required for graduation, graduation standards.

All of those issues, it seems to me, relate to the autonomy: the ability of the faculty to speak out on any issue it wishes to speak out on without any threat of coercion as a result of that. Let me suggest to you that they speak out as often against university administrations as they do against any particular government. And academic freedom in the context of an individual's right to do research, to pursue scholarship and to publish and to write in a way that is reflective of his capacities and analysis.

Those are some of the basic tenets I see of autonomy: the right of a university to determine what it will or will not finance in terms of academic programs. It is interesting. The senate of the university determines academic programs. It is the board that decides whether to finance them. That is, if you will, where the checks and balances are. The board can decide it does not wish to support a particular academic direction and will not provide funding or space or personnel to those programs, which is all within the board's jurisdiction. I think the issue of natural justice within the institution is terribly important, and the courts have recognized natural justice within a university as being in the context of university autonomy.

Anyway, those are some examples of what I mean by autonomy.

Mr Hope: The second part of the question is: What do you see as the Ontario government's role in your achievements?

Dr Segal: Very clearly, the government has the role to legislate us to do anything it wishes to do. The government governs our legislation. The government can change our legislation if it desires to change our legislation. We might want to have some consultation and we might not necessarily disagree. In fact, the assets of the university can revert to government at any time the government wishes to remove the act, so the government has the ultimate control. Government has control over financing, it has control over priorities associated with financing, it has control over reporting, it can have control over monitoring.

The government does, in many respects, steer institutions in particular directions. If the government decides we ought to have a specific fund of money for faculty renewal because of a high retirement rate, they provide a separate envelope. If the government decides we ought to have a program adjustment fund so we can either close down or shift programs to meet government priorities, it provides incentive money to do that.

Those are some examples of the role that government has played and can continue to play.


Mr Hope: Dealing with the first part of the question, where you talk about the autonomy aspect, I just need some clarity. Are you talking about the university as a whole determining the academics it wants to teach, or are you talking about independence among the universities? Why I put that forward is that if we start scattering things around, we are going to end up with a bigger mess than we already have.

Dr Segal: You are absolutely right. I tried to put the notion of accountability in the context of government policy. For example, in theory there is nothing that would prevent the University of Guelph from deciding it wishes to establish a medical school. There is nothing in our act that would prevent us from doing that. The chances of the government ever financing it are very, very low, because essentially the government has identified that within the university system there is both overlap and specialization and differentiation. There is rationalization within the system, so we see certain institutions that have a dominant orientation in a particular area, others that are in other areas and meet different stakeholders in different constituencies. I think the government drives that to some extent.

Therefore, by autonomy -- I hope I am being clear -- I am not suggesting that we have unbridled freedom to do as we will, because we do not. The university system is a highly regulated system, in many respects.

Mr Hope: The last question: Do you have a slush fund? We talked about U of T, and I am just posing a question. I have always been direct. I am asking you if you have a slush fund.

Dr Segal: I do not think that the --

Mr Hope: Not a long answer; a short yes or no.

Dr Segal: The answer is no.

The Vice-Chair: Shall the record note a slight hesitation prior to your answer?

Dr Segal: No. I was not sure if by "slush" he meant the kind of money we use for snow removal.

The Vice-Chair: Good answer.

Mr O'Connor: As far as being autonomous in your curriculum and how you run your school, your courses, and the senate saying which courses should be taught is concerned, I do not think we have much problem there.

Maybe you could help me. When we talk about a 2% error in enrolment, how many students would that be?

Dr Segal: Unfortunately, I cannot answer the question on the basis of students; it is on the basis of basic income units. That would be 2% of 23,000, about 400 basic income units.

Mr O'Connor: The thing you use to go through all that is new to me; I was just handed this earlier today. I am sure you are very well versed in how it works and everything else. This seemed quite complicated to me, to a parent. My son, some day, will be going to university, I hope. I do not think I can afford it, but maybe. Anyway, this is a very complicated system. I wondered if you think that perhaps there is some way of making it a little easier and work a little better, a little more understandable?

Dr Segal: Let me just say that the operating grants manual is very complicated because the system is very complicated. If you look at 16 institutions, and you look at the incredible variety of full-time, part-time, continuing education programs, undergraduate and graduate, internship programs, co-op programs, and you were to put that on some kind of scheme, it would be mind-boggling. I think what the operating grants manual has attempted to do is add some sanity, if you will, to a very diverse and very complex system. I am not an expert in these matters, but I am certainly not sure that one could have an operating grants manual that was substantially less complex than the system it is attempting to direct accounting in.

Mr O'Connor: Is there any way that you think perhaps it should be reviewed, other than just amending it from time to time, that would make it in the end result a little bit less complicated? If we are talking 400, 600 students or whatever basic income units, then maybe that does relate to a substantial amount of money and there could be some sort of system devised to make it a little bit more accountable to the public that asks us about this, yourselves and ours.

Dr Segal: Again, I am not an expert in the area of the operating grants manual. I would certainly be delighted to participate in any process that found a way to make that simpler than it currently is. I do not think we are ever going to get, no matter how hard we try -- and as I said to Mr Charlton, we will try to be 100% perfect -- but if you look at just one institution, and we did an approximate calculation for this meeting, the University of Guelph goes through about 450,000 individual registrarial transactions a year.

We have systems in place to try to account for all those transactions. Given the way errors take place, I guess there is going to be some error, and if you multiply the 450,000 -- we only have 13,000 students -- can you imagine what the University of Toronto goes through with 50,000 students? So somehow, to the extent to which we can be as close to 100% perfect, we would like to do that, but I am not sure we are ever going to get, on an annual basis, much above 99%. One year we might be 99.9% efficient, the next year we might drop down to 98.5% or whatever, but I do believe there are mechanisms now in place to capture the reason why we were not at 100%. That is an important change.

The Vice-Chair: I am the last person who is on the Chair's list, and since he has not returned, I guess I had better place my last question. It relates to the payroll and employment benefits. The good news is that the auditor has given you quite a good review in this area, in that he says that payroll and benefit transactions were well controlled. But alas, as usual, there is a "however" added.

The outgoing president, after he ended his four-and-a-half-year contract in 1988, was given over $100,000 to take early retirement, even though the university was under no obligation to renew his contract and even though the president's employment contract stipulated that he would not participate in the university's pension plan. I wondered if you might like to comment on this particular situation and why it arose that there was a significant benefit to the outgoing president.

Mrs Gelberg: Perhaps rather than commenting, by way of explanation, when Dr Matthews was hired as the president of the University of Guelph, as with my understanding of most presidential hires, he was hired, first, as a professor with tenure within the University of Guelph in his own area of expertise and, second, to act as the president for a determined period of time. What happens with these situations is that when someone in that position steps down for whatever reason from the presidency, he automatically reverts to being a professor with tenure. I think that is a very important issue, first of all, to keep in mind.

His situation was a little bit more complicated, because he had been at the University of Guelph as an employee at a time when the employees of Guelph were civil servants. So he was also a past employee of the university who had been there in the capacity of a civil servant. There was a period of time before the university was made the University of Guelph, as it is now, in 1964, when the faculty were in fact civil servants and they had all the benefits of civil servants, particularly with regard to pensions.

There was a promise made to those people that they would not be disadvantaged by becoming employees of the University of Guelph, in that whatever benefits they would have pension-wise as civil servants they would be able to obtain from the university. So when Dr Matthews opted not to renew his term, not to take a further term as president, he stepped down as president and instantly became what he was all along, which was a tenured member of a department.


But you have to understand that Dr Matthews at that time was 62 years old. He was in a position where he was out of touch with his discipline, all disciplines. Life today changes so rapidly, but even more so within the sciences. He would have required probably a year to a year and a half to upgrade himself, to become familiar with everything that was new and current, in order to go back and teach and be fair to the students, the graduate students, the undergraduate students, he was teaching.

He opted not to do that. He opted instead to take advantage of an early retirement window that happened to be open for a short period of time around the time when he stepped down as president. So he took advantage of that early retirement window and it was not a gift in any sense. It was the amount of money that was computed to be owed to him under the early retirement window and the fact that he was taking early retirement and that he had some leave coming to him.

In retrospect, it probably was not a bad deal for the system. It would have cost the system a lot of money in any case to re-educate this man in order to get him back for what would have probably been only a year and a half, until he was 65 years old. I know it is a little bit complicated, but that is in essence what happened. It was not that we suddenly said: "You're a great guy. We're going to give you this wonderful present." He was able to fit into a program that happened to be in existence at the time.

The Vice-Chair: From your comments, am I to take it that this was not in effect an unusual procedure, that some of the details were different than the normal situation, but that this would be followed in another university if there were similar circumstances?

Mrs Gelberg: It could happen again. My understanding of presidential contracts in Ontario particularly is that presidents -- I can speak for sure for Guelph -- the last four presidents that we have had have all been tenured members of a faculty first and president second.

The Vice-Chair: There appeared to be a number of instances in which the records for presidential expenses and also days of vacation taken, that type of item, were not really well documented. Has the university changed its policy in this regard? I notice Dr Segal looking very uncomfortable. Do you have anything --

Mrs Gelberg: He has no reason to look uncomfortable. We took advantage of the information that was pointed out to us by Mr Archer. I can tell you that a special committee of the board reviewed every expense of the last president and we satisfied ourselves that they were in fact justified. But in doing so we realized there had to be a better mechanism for doing that in the future, so presidency expenses are now reviewed on a quarterly basis in detail by the current chair.

One other thing about vacation entitlement. There is a certain amount of vacation entitlement within the university. People must take that before they retire. In other words, they do not normally get cash in lieu. I can tell you that I was there throughout Dr Matthews's tenure. It was during the time that we had a capital campaign under way, and I venture to say that he not only did not take any vacation, the man probably hardly got a day off to stay home with his family. So again, we have mechanisms in place to keep track of that and we are being more careful about that, but we were very satisfied in our review that there was absolutely no abuse of the system.

The Vice-Chair: So the fact that he got a significant cash sum in lieu of vacation was indeed a very unusual situation dictated by the fact that Dr Matthews took virtually no time off.

Mrs Gelberg: No time off, and we made some other changes that you perhaps ought to know about. At that time presidential remuneration and contracts were delegated by the board through the executive committee of the board to the chairman, who was the late Mr Bovey. He made those arrangements with Dr Matthews. We now have a committee of the board that does that. That is no longer a matter strictly between the chair and the president.

That is another change that we have made in response to Mr Archer's audit. Again, we found absolutely no evidence of anything wrong, but we felt more comfortable having wider involvement from a board committee rather than just having the responsibility rest with the chair.

Ms Haeck: Just sort of following along in this, I have before me a Toronto Star article of 29 November 1989. It makes reference to the current president and some contractual arrangements given to him as part of coming on board with the University of Guelph. Understanding that as being a public figure my situation obviously does come under some scrutiny as well -- and I hope you appreciate the fact that I know where you are sitting right now -- by the same token, I think it would only be fair to comment on how you come to a contractual agreement now. I am happy to hear the direction that this is taking, but I think you also understand how this plays in the public.

Mrs Gelberg: Even though the actual final details of the contractual agreement were worked out between Dr Segal and Mr Bovey, the decision to hire Dr Segal was certainly not made by Mr Bovey. It was made by a committee of people from within the institution. There were board people on that committee, there were faculty and staff on that committee and there were students on that committee.

It was agreed at the outset by the board that that would be a confidential search. I tell you that in the sense that because it was a confidential search, anyone who applied for the position or was interviewed by the committee was guaranteed confidentiality. I was not a member of that committee but was a member of the executive committee of the board and I do not know who those people were. That was the guarantee that was given to them as part of the process.

Dr Segal, obviously, was one of the applicants. The committee had obtained the services of a consultant who specialized in senior administrative appointments and had some experience within the university system. The committee, once it agreed to hire Dr Segal, had information from the consultant who had in fact searched out what the arrangements were currently within various universities of our size and our complexity across the country and made recommendations for the level of compensation and any other arrangements that were made. That was how that was arrived at. The final sort of nailing down of the little details was done between Dr Segal and Mr Bovey, but it certainly was not a number pulled out of the air.

Ms Haeck: You understand that there is in fact a great deal of concern, and obviously there have been more recent articles and some dismay on the part of the public where some of the perks are perceived to be rather pricey and possibly inappropriate. I put that out. I am happy to at least hear that you have gone through a much closer examination process in recent days.

Mrs Gelberg: And have since re-examined it, I can tell you. We are quite confident that the arrangements that were made with President Segal are in fact fairly comparable and are normative for the system and for executives working at his level of responsibility and complexity.

Ms Haeck: This again relates to another institution, but some rather pricey golden handshakes have in fact been given. Is there a mechanism that you have established to review that, not specifically in the case of Dr Segal, but at some later date to review, in fact, be it performance or what might have to be paid out in the case of an executive having to leave?

Mrs Gelberg: I am not sure what you mean by having to leave.

Ms Haeck: A severing of the relationship.

Mrs Gelberg: We have no special arrangements right now.

Dr Segal: Let me respond to that. I have always been of the view that the board of governors should have the right to dispose of me as president at its will. There is a very specific termination clause in my contract with the board, which was approved by the full executive committee of the board of governors, which specifies very clearly the terms and the conditions under which they can ask me to pack up my books without any notice and without any reason. I think as my vice-chair said --

The Chair: Even worse than our tenure.

Dr Segal: However, the difference between you and me is, I do revert back to being a professor but I do not get the same pension.

Ms Haeck: I am concerned because I know of another institution in this province where in fact there was a difference of opinion and they were obviously given a very handsome remuneration to part company. Then in the midst of also having a rather large campaign from alumni, I would say that some people were somewhat disconcerted to realize that several hundred thousand dollars went in one direction and it was of some concern.

Mrs Gelberg: I can fully understand where you are coming from. I can only tell you that we have no intent of parting company, we have no intent of any kind of an award and I can tell you, speaking for this board currently, the way they guard the pennies it is not going to happen in our institution.

Ms Haeck: I am happy to hear that. I think that definitely, even for executives of that level, it is wise to have some review process, evaluation process, and that everyone is clear in fact what is at the end. I think there have been some rather interesting things happening in the past and it is definitely good to be on top of it.

Dr Segal: My contract is a five-year contract with the university and it does require a review process if it was going to be renewed. That is totally at the discretion of the university. We do not only have a review process for the president, by the way; we have a review process for the vice-president in academic, the associate vice-president and the dean's department chairs. There is a regular five-year review process that re-appointments are not automatic, and that includes the president.

Ms Haeck: Just to put a little twist on this, what kind of internal evaluation do you have on your board members?

Mrs Gelberg: What kind of internal evaluation on our board members? That is a very good question. I am not sure exactly what you are asking.

Ms Haeck: Well, sometimes you have in bylaws of organizations a clause that basically says that if you do not attend three consecutive meetings, the institution --

Mrs Gelberg: We have such a mechanism.

Ms Haeck: You basically try to make sure that the people who are re-appointed, who are there, are active members, productive members.

Mrs Gelberg: We have such a clause within our bylaws which would allow us to remove someone who did not attend. We have only 24 people at our board. We have a tremendous workload and I can only assure you that it is in our own best interests to try to ensure that the people appointed to our board have as much to bring in the way of knowledge and skills as possible to share the work.

Ms Haeck: Having been a board member at a college myself --

Mrs Gelberg: Then you know what I am talking about.

Ms Haeck: But you have to put out the question.

Mrs Gelberg: Fair enough.

The Chair: Any further questions? That is not an invitation. That is making an observation.

We would like to thank you very much Dr Segal, Mrs Gelberg, and also Mr Ferguson, although while I was here I do not think you got a question thrown at you. I appreciate you and your auditors coming here today and I think you can appreciate that all of the members, as are you people in the university, are concerned. We appreciate your coming here and sharing your thoughts with us.

Dr Segal: Thank you very much.

Mrs Gelberg: Thank you both for the opportunity to participate and for your attention.

The Chair: We have one item that I would like to clear up. You asked to have the ministry back and I am wondering if Thursday morning 7 February at 10 o'clock is acceptable to the committee.

Ms Haeck: This Thursday?

The Chair: This Thursday at 10 o'clock. We have discussion listed on the sheet and we would fill it with the ministry. Can the ministry be back then too? Excuse me, committee. Did you wish to have the deputy minister here as well or was it simply adequate to have Mr MacKay and Mr Lyon?

Mr Hope: We wanted the deputy.

The Chair: He would be the person who would be most knowledgeable. What is your wish, committee?

Mrs Cunningham: When do we put our recommendations together, Thursday?

The Chair: After we finish with the deputy minister. What would you like?

Mrs Cunningham: Well then, preferably the deputy.

Ms Poole: I would prefer if the deputy minister can attend, if available.

The Chair: All right. Ms Poole has said the deputy minister. Would he be available, do you know?

Mr MacKay: I am not sure, but we will certainly try.

The Chair: If he is available. If not, certainly you two gentlemen will be here in any event. We stand adjourned until 10 o'clock tomorrow morning.

The committee adjourned at 1615.