University approves billion-dollar budget

The University of Alberta Board of Governors has approved its first billion-dollar budget. And, while the books show an overall excess of revenue over expense, administration wanted board members not to forget the university continues to face severe financial challenges.

"The hard question is how to present such an amazingly complex organization that reflects the hard choices we are making on the operating side while we're showing an overall positive balance at the level of the consolidated budget," said Carl Amrhein, provost and vice-president (acheademic), who led the budget presentation.

At slightly more than $1 billion, the university's consolidated budget - which includes operating, capital and research expenditures - shows an excess of approximately $13 million.

"That's the number the provincial government is interested in," said Amrhein, "but it's the operating budget that the deans and I have to grapple with."

At $466 million, the 2004-05 operating budget is what pays salaries and benefits, keeps the lights on, the buildings heated, the mail moving, the snow cleared. For the third year in a row, administration received permission to run a deficit - this year in the order of $3.8 million (compared to $6.1 million for 2003-04).

But that dip is deceiving, Amrhein warned. To show an operating deficit of $3.8 million, the university will employ one-time funding of approximately $5 million - revenue that may or may not be there next year. More importantly it includes funding reallocations of four or 4.5 per cent for faculties and operating units throughout the university. And there's another $6.5 million in new revenue the university has to find over the next year.

Taken together, Amrhein says the true reflection of the challenge is a "revenue gap" of $28.7 million. "That's the number we've been talking about for the past few months. That's the number we will continue to talk about," he said.

The greatest strain on the operating budget continues to be the combination of salaries, benefits and utilities costs. Together they make up close to 90 per cent of the total operating budget. "There isn't a whole lot left after that we can work with," Amrhein said. "This is a very hard budget. Faculties and units are dealing with either four or 4.5 per cent reallocations; that is the reality."

Phyllis Clark, vice-president, (finance and administration), reinforced Amrhein's remarks, adding, "there's no question these reallocations won't happen without a great deal of dislocation around the academy. It is a comment on how resilient we are as an institution that we will cope without sacrificing our fundamental commitment to the classroom.

"Overall we are on a strong trajectory," Clark said. "We're on track for a balanced operating budget by 2006-07."

The board also voted to approve the university's capital budget of $139 million for 2004-05, well on the way to a capital program approaching $1 billion, said Don Hickey, vice-president, (facilities and operations).