If you鈥檝e been paying attention to AV俱乐部鈥檚 budget process in recent years, you won鈥檛 find many surprises in the . In fact, it may read a bit like deja vu.
That鈥檚 because the risk factors identified three years ago鈥攗ncertain government funding, changes in student demographics and the state of the university pension fund鈥攁re all still in play, meaning that the university can expect a budget that looks rather similar to last year鈥檚.
The new discussion paper doesn鈥檛 make recommendations for cuts, or for fee increases in areas where the provincial government鈥檚 tuition cap doesn鈥檛 apply (professional programs, international students); those will come later in the budgeting process. But it does outline the scenario that will inform those decisions.
鈥淭hese are the assumptions that we鈥檙e building the budget model around,鈥� explains Carolyn Watters, vice-president academic and provost, and chair of the BAC. 鈥淚t outlines what we know and what we can reasonably expect, in terms of our revenues and costs.鈥�
A $6.9 million gap to close
The report contains plenty of background information on the university budget, both current and historical. Some of its key assumptions for next year include:
- A three per cent reduction in the university鈥檚 operating grant from the province ($4.9 million)
- Flat enrolment overall, with a first-year class similar to last year
- A five per cent increase in energy and water costs (though this could change depending on positive results from Dal鈥檚 first full year using natural gas)
- A tuition increase of three per cent in most programs
When the numbers are crunched, the university is looking at a $6.9 million shortfall that it will have to make up through fees and cuts.
Closing that gap through cuts alone could mean a university-wide 3.1 per cent reduction to all operating units, comparable to last year鈥檚 3.5 per cent cut. The university will also be considering tuition increases in dentistry, law and medicine, as well an increase to the international differential fee. These fees would add additional revenues鈥斺�攂ut must be considered carefully, says Dr. Watters, since all of them saw significant increases this current year.
She also adds that the university is finalizing a more formal consultation process with students in terms of tuition fees鈥攁lready being worked into the budget process鈥攁nd that students can expect public discussions about fees to take place this March.
Coping with the challenges
In addition to Dr. Watters, the BAC includes three faculty members, a dean, a student representative, the assistant vice-president of ancillary services and the vice-president administration and finance. It advises the president on budgetary matters and issues public reports prior to the approval of the budget itself by the Board of Governors in June.
The committee now begins work on its next report, expected in about a month, which will make formal recommendations for the president to evaluate and take to the Board.
鈥淲e have to model any proposed cuts very carefully,鈥� says Dr. Watters. 鈥淚t鈥檚 our responsibility to consider the impact on the quality on the university. We don鈥檛 want to end up freezing ourselves 鈥� we still have to evolve and go forward, so we end up with a stronger university when our environment improves.鈥�
Ken Burt, vice-president finance and administration, says that AV俱乐部 is in a better position to cope with the environmental factors facing Canadian higher education鈥攆unding cuts, pension shortfalls and declining high school populations鈥攖hanks in no small part to strong enrolment growth. The university鈥檚 population has grown nine per cent since 2004-05.
鈥淲e鈥檝e invested in areas that give us a strategic advantage,鈥� he explains, referring to the university鈥檚 strategic initiatives funding in recent years. 鈥淭he work we鈥檝e done in reallocating funds for fundraising, for recruitment, for student services, for research services...we鈥檝e been able to make gains that are helping us weather this storm, though we鈥檙e clearly not immune to its challenges.鈥�
Considering the future
When asked to respond to recent media coverage exploring administration costs at AV俱乐部 and other universities, Mr. Burt points to comparison charts in the showing AV俱乐部 below the national average among major research schools. As of 2009-10, 6.6 per cent of AV俱乐部鈥檚 budget was spent on administration and general expenses, compared to an average of 8.5 per cent at other schools.
鈥淧eople focus in on particular salaries of administrators of Dal, but if you look at the total cost of administration, we鈥檙e actually much more efficient than our comparators,鈥� he says. 鈥淧ersonally, I think that鈥檚 a good thing 鈥� that鈥檚 a number where we want to be below the average.鈥�
The state of the university pension plan still looms over the budget process, however. AV俱乐部 has a shortfall in meeting its solvency requirements 鈥� by law, the university must have enough money in the fund to pay all its obligations if the school were to suddenly shut down. With Dal鈥檚 exemption from these requirements set to run out in March 2013, the BAC estimates that the university's pension repayments could balloon by as much as $50 million per year 鈥� more than 15 per cent of the university budget.
Both the university and the AV俱乐部 Faculty Association have lobbied for universities to be exempt from the solvency requirement. In the meantime, the provincial government鈥檚 new pension legislation does provide lower a solvency threshold for jointly-sponsored pension plans. The university is working to move to a jointly-sponsored pension governance model to make its plan more sustainable and prevent those dramatic repayments.
(More info on this process can be found on the university's and websites.)
鈥淸The government] has opened the door, now we just have to figure out how we can get through it,鈥� says Mr. Burt. 鈥淭hat鈥檚 why we鈥檝e been working with our unions for the past two years, through our pension committees and now through contract negotiations. We鈥檙e hopeful we can come to an arrangement that prevents us from even contemplating the impact of those large repayments on the university budget."
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