2019–2020 Budget Planning Well Underway

This fall marks the second year in which the university has employed its new multi-year planning and accountability process. In this…

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This fall marks the second year in which the university has employed its new multi-year planning and accountability process. In this process, budget planning involves estimating revenues and expenditures for the next three years, completed through a close examination of various fiscal factors both internal and external to the university. These estimates are by nature provisional; as new information becomes available over the planning cycle, plans may be adjusted. Only when we receive final word from the provincial government on the annual grant each year can our provisional plans be finalized.

Each fall, at the beginning of the planning cycle for the next year, our three-year planning targets are reset to the actual revenues and expenditures of the past year and an updated assessment of the current fiscal situation is completed in order to adjust our three-year planning parameters and targets to any changes in circumstances.

By using the longer-term planning horizons of the multi-year planning and accountability process, the university’s units and faculties can be more strategic about how to achieve their teaching and research missions. Ultimately, having tools that help us anticipate and weather changes in our financial circumstance means that we can also better manage the long-term resource needs associated with ensuring the success of new teaching and research initiatives.

In this two part blog post, we first want to report on the outcomes of our 2018–2019 planning and then outline plans for the next three years.

Last year, when planning for 2018–2019 budgets, the university set three-year targets of -4% in the first year and -2.5% in 2019–2020 and 2020–2021. We set these targets on the assumption that there would be no increase to the provincial grant and no tuition backfill. We also needed to budget for increasing costs and correct an internal deficit in the operating budget, created because we were allocating out to units and faculties more dollars than we were taking in. It was also important that we reduce our reliance on short-term investment income — which is subject to market fluctuations — to fund base operations.

Thanks to the efforts made across all faculties and units over the past few months to reduce expenditures by 4%, we have made significant headway in dealing with these challenges. In addition, the receipt of a 2% increase in the Campus Alberta grant and tuition backfill was confirmed in our Campus Alberta grant for the current year. These combined factors have put the university in a much healthier financial position than a year ago.

How has the university used the revenues from the 2018–2019 2% increase to the provincial grant and tuition backfill? These increases total $16.9M, of which $16.75M has been allocated on a one-time basis for this year (2018–2019). The one-time allocations include:

  • $9.5M for program and learning spaces development in faculties (determined by the Provost through submission process)
  • $2M for student safety and security infrastructure
  • $1M for new For the Public Good initiatives (including experiential learning, signature areas, professional and leadership development )
  • $0.5M for special hires (spousal hires, deans, etc.)
  • $0.25M for student mental healh
  • $3.5M to partially cover benefit cost increases

Overall, the goal has been to direct these funds to support the re-organization and redevelopment of existing programs as well as the renovation of space to better fit the teaching and learning needs in faculties.

As we begin a new planning process for 2019–2020, we start from the actual revenues and expenditures of the past year, and do a new assessment of the current internal and external fiscal situation. Then, we adjust the planning targets as needed for the next three-years.

This fall, an assessment of various factors indicates that we are planning in a period of significant uncertainty. On the one hand, we are in a better financial position thanks to our collective efforts this past year at addressing internal financial challenges. The Government of Alberta has also provided stable funding to post-secondary education over the last three years. The 2% increase to the Campus Alberta Grant and the tuition backfill received in the 2018–2019 will be incorporated in the university’s base budget in the 2019–2020 budget and how these funds are allocated has yet to be determined.

However, on the other hand, we are also aware that the provincial government’s fiscal challenges continue to be significant and these could affect future budget decisions. There is also the uncertainty that comes with every election cycle. Internally, we continue to face key fiscal challenges: 1) to maintain the quality of the university’s physical learning environment, we urgently need to address the backlog of deferred maintenance which has received important, but not sufficient, government funding; and 2) over time, we need to reduce the accumulated institutional debt.

Looking ahead, changes to provincial tuition regulations (Bill 19) are currently moving through the Alberta legislature and these will affect future revenues. Until 2020–2021, domestic tuition and mandatory non-instructional fees will remain frozen. Then, after that point, domestic tuition will be capped at Alberta’s consumer price index and mandatory non-instructional fees and international tuition will be regulated as per a new tuition framework that is expected soon.

Given these factors, the university is taking a prudent approach in 2019–2020 three-year budget planning. Within the institution at the faculty and portfolio level, we will budget assuming no (0%) change in operating revenues for 2019–2020 (this includes the 2% increase received in 2018–2019). In 2020–2021 and 2021–2022, we will plan for a reduction of 2.5% in each year. All deans and vice-presidents, along with the president and provost, have begun to plan for the next three years based on these projected parameters. Other annual budget planning processes have also started, including consultations with students on proposed changes to international student tuition, residence fees, and meal plan rates.

As noted above, these preliminary budget planning targets are provisional. They may change if further information becomes available prior to the Board of Governors’ approval of the university’s budget in March 2019.