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Critique: Mike Gill’s “Build our McMaster”

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There’s a lot to unpack when examining Mike Gill’s plan to “Build our McMaster” in both scope and depth of research, and it’s fair to say that it’s by far the most comprehensive plan in this year’s presidential election.

As a short recap for the unfamiliar, Gill’s biggest platform point is a $75 million plan that extends over the next 30 years. He’s hoping to allocate about $60 million of that towards a brand new building akin to a second student centre, and the other $15 million toward Athletics & Recreation initiatives including a Pulse expansion and a roof for an outdoor field.

Now, with such a detailed financial plan, Gill makes some necessary assumptions.

The first is that the full-time undergraduate student population will grow by one percent each year. Since the number of students directly informs how much the MSU accumulates in student fees, it’s an important quantity to be aware of.

Based on enrolment statistics provided by the university over the past decade, while the exact growth of the student population fluctuates from year to year, one percent is a fair estimate for student growth. Although VP (Finance) Daniel D’Angela did note that post-secondary enrolment over the next several years is expected to slow, a flat student population growth would at most leave a gap of about $4 million.

It’s certainly not pennies, but it’s not a ruinous amount either; tacking on a couple of extra years would solve this as a potential issue.

A second assumption is the inflation rate. Gill applies a two percent inflation rate to the fees collected from students year to year, which is a slight overestimate of the current Canadian inflation rate according to tradingeconomics.com, but is still a reasonable approximation of overall trends.

However, an important, accompanying assumption isn’t detailed in Gill’s financial breakdown: the interest rate collected by the banks through the mortgage made on any kind of building plan.

Gill has noted this in conversation with The Silhouette, explaining that the university “can take out loans at a very low rate, and right now interest rates are really low to begin with, so it’s a good time to do that sort of thing.”

But the $75 million or so that Gill is proposing to use is misleading in terms of today’s real dollars.

As Gina Robinson, Assistant Dean at Student Affairs and Director of the Student Success Centre, puts it in an email, “In borrowing we must pay interest to compensate the lender for the time it will take to pay back the loan. Essentially the amount of money that you have today is worth more than the same money that you are promised at some future date.”

Ultimately, what this means is that while $75 million in capital funding will be accumulated over the life of the plan, if one assumes the mortgage is made in 2020 at a 2.7 percent interest rate, this actually only amounts to about $47 million in today’s real dollars.

Even if one applies a more modest 2 percent interest rate, approximately only $51 million will be available with the proposed funding model to cover both the Student Life Centre as well as Ath&Rec upgrades.

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All of this is said with the understanding that the provided financial breakdown is not meant as a final plan, nor does it ask for students to commit to spending any more than they currently do.

But these rough calculations do raise questions as to whether or not an efficient budget exists for a functional building to be built, and in a good and useful location. While Gill pointed to T-13 as his favourite spot for the new building, D’Angela noted that T-13’s location is not ideal and would need further consideration.

While it might be a bit alarming to see student fees covering costs until 2047, it’s worth noting that this is neither unusual nor irresponsible, according to both D’Angela and Robinson. In fact, Robinson still expressed an enthusiasm for a Student Life Centre based on the proposed budget, and the Living and Learning Centre planned for 2019 will also be using this type of funding model.

But along with the various proposed Ath&Rec upgrades, it’s implausible for all of the various proposals to be implemented; with the current budget, the building won’t nearly match up to the grand expectations it inspires. Based on what students vote for, it remains to be seen if a new Student Life Centre is a building worth building.

 

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Author: Shane Madill

As a graduate of McMaster’s Economics program and the Editor-in-Chief for Volume 88, Shane is a seasoned Silhouette contributor who formerly acted as an Opinion Editor, Online Editor, Online Reporter and Andy Volunteer. A man of many names and talents, his presence and work at The Silhouette is a constant reminder to “be the Shane you wish to see in the world.”