AV俱乐部鈥檚 Budget Advisory Committee (BAC) is laying out the tough choices facing the university in the face of a reduction in its provincial operating grant.
The BAC, which advises the president on budgetary matters, issued a detailed discussion paper back in March, identifying a preliminary budget shortfall of $14.6 million. The news last week that AV俱乐部 will be exempt from solvency payments on its pension plan lowers that to around $7 million (See story: Solvency relief for pension plan), but even with Board approval for tuition increases, the university will need to make significant cuts to balance the budget.
The BAC鈥檚 operating budget plan, released to the AV俱乐部 community this week, makes seven recommendations:
- Institute a 3.5 per cent budget reduction for all faculties and other budget units
- Implement tuition increases, as proposed to the Board of Governors. (See story: AV俱乐部 approves tuition increases)
- Budget for an enrolment increase of 175 students, bringing in $800,000 in tuition.
- Add $2.4 million to the fund that supporting university strategic initiatives (half of what has been added in recent years).
- Reduce the inflationary lift in non-salary budgets to 1 per cent (normally 2 per cent)
- Identify $450,000 (1.0 per cent) in areas traditionally exempt from budget reductions, such as water, insurance and certain campus services.
- Allocate funds to support faculty and unit restructuring proposals.
Ken Burt, vice-president finance and administration and member of the BAC, says the group considered a variety of different scenarios before arriving at the 3.5 per cent reduction as striking the right balance between maintaining the quality of AV俱乐部鈥檚 teaching, research and services, and achieving a balanced budget in the face of government cutbacks. In February, the provincial government announced a four per cent cut in the operating grant to universities.
鈥淧eople often ask: what do these cuts mean? Will there be layoffs? What programs or services take a hit?,鈥� he says. 鈥淲e have a decentralized operation in a university environment, with 12 faculties that run fairly independently. It will be different for each unit, and until they have a chance to work through the actual budget information and present their budget back to Financial Services, we won鈥檛 know what is being planned out in the units.鈥�
Consultative process
The BAC was first established in 1992 to advise the president on budgetary matters. Its current membership includes the vice-president academic and provost鈥攚ho serves as its chair鈥攖hree faculty members, a dean, a student representative, the assistant vice-president of human resources and the vice-president administration and finance. The group strives to be open and consultative in the budgeting process, which is why it shares its reports with the AV俱乐部 community each year for feedback.
The recommendations for 2011/12 have been carefully considered, explains Mr. Burt. The enrolment estimate is conservative, as the university wants to avoid being too optimistic in the face of promising application numbers to avoid mid-year reductions. And even with the drop in strategic initiatives funding鈥攁 cornerstone of the university budget for years now鈥攖he university remains committed to ensuring that AV俱乐部鈥檚 strategic priorities move ahead.
鈥淛ust take the external relations investment as an example,鈥� explains Mr. Burt. 鈥淲e鈥檝e just come out of the quiet phase of the Bold Ambitions campaign. We鈥檙e at $170 million, towards a total of $250 million. A lot of that money will be used for new facilities, endowed chairs for faculty members, student financial assistance to help more students come to AV俱乐部鈥�...you can see how broadly that initiative impacts the university.
鈥淗owever, that funding is for specific projects鈥攖hose aren鈥檛 operating funds.鈥� In highlighting the difference, Mr. Burt suggests why the reduction in the operating grant comes at a particularly frustrating time: as the university is expanding its enrolment and advancing strategic goals. He feels the BAC鈥檚 recommendations navigate the complicated waters as best as possible under the circumstances.
As for managing budget reduction, Mr. Burt explains there are a number of different ways that faculties and budget units will address the situation: using existing reserve funds that some units have; finding turnover savings associated with faculty or staff that retire or leave the university; considering rationalizing what programs or services are offered; and ultimately reductions in non-salary and, if necessary, salary budgets.
Next steps
Following the release of this report and gathering feedback, the BAC鈥檚 recommendations will be presented to the president for consideration. If endorsed, Financial Services will complete its drafting of the 2011/12 operating budget and submit it to the operations committee of the Board of Governors for review. Once approved there, it will be voted on at the Board鈥檚 annual general meeting on June 21.
As for what lies ahead, Mr. Burt reiterates that AV俱乐部鈥檚 funding situation is far from certain. In spite of the two-year solvency reprieve, the university still needs to come to a new pension agreement with its employee groups. And there has been no commitment yet from the provincial government as to next year鈥檚 funding鈥攜et more reason for a cautious, tough budget in the face of tough times.
鈥淚 think it鈥檚 fair to say that when you look at trends provincially and nationally that the university sector is going to be under strain in the next couple of years, with some fundamental changes occurring related to funding health care with the aging population in our society. But governments can鈥檛 lose sight of the importance of a well-educated population in moving their other agendas forward and creating wealth in our economies. We have to make sure that message is heard and received by decision makers.鈥�
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