How does the U of A plan its budget?

The University of Alberta uses a rolling 3 year budget plan—we always plan 3 years ahead, but we revise the plan every year. How does it come together?

We need to understand where our money comes from (revenues), what we spend it on (expenses), and how much our revenues and expenses may change from year to year.

We also need a tool to distribute revenue to each faculty and unit.

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How much money do we start with?

Not all of the money that we receive can be used freely. Some of our funding is restricted—that is, it’s set aside for a specific purpose (like research or capital projects).

The full amount of money we receive—restricted and unrestricted—is the consolidated budget.

But when it comes to planning the university’s budget, we’re really talking about how we plan to use the unrestricted money: our operating budget.

Arrow Click chart for budget breakdown
Budget Pie Chart Special Purpose(restricted)7%Capital(restricted)7%Research (restricted)23%Ancillary(self-funding)5%Operating Budget58%

Consolidated Budget

Status Bar Consolidated BudgetOperating Revenuesand ExpensesRevenue andExpense PressuresTuition BudgetAdvisory CommiteePlanningParametersAncillary FeesBudget Approval

Where does our money come from, and how do we use it?

As a public university, most of our revenue comes from government funding. Our second largest source of revenue is tuition and fees.

We use that money to operate the university—it pays for salaries and benefits, materials and supplies, and the other costs of running our campuses.

Arrow Click to toggle revenues and expenses
Operating Revenue 30%58%9%2%1%Provincial GovernmentTuition and FeesSales of Services and ProductsInvestment IncomeOther
Operating Expenses 75%10%5%4%3%3%Salaries and BenefitsMaterials Supplies and ServicesAmortizationUtilitiesScholarships and BursariesMaintenance
Status Bar Consolidated Budget Operating Revenuesand Expenses Revenue andExpense Pressures Tuition BudgetAdvisory Commitee PlanningParameters Ancillary Fees Budget Approval

How do we estimate budget changes each year?

Each year, the revenues and expenses that make up our budget change. A revenue or expense might change for many different reasons, which we call considerations or pressures.

We begin by considering big-picture factors, such as:

  • Provincial and federal finances
  • Trends in the post-secondary sector
  • The university’s long-term financial health
  • Legislative changes (such as carbon tax and minimum wage)
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Revenue considerations

Coin Changes in government funding Coin Tuition changes Coin Strong or weak returns from our investments Coin Donations and private funding

Expense pressures

Coin Changes to utilities prices Coin Negotiated salaries and benefits increases Coin Increased costs ofbenefits Coin Costs of maintenance
Status Bar Consolidated Budget Operating Revenuesand Expenses Revenue andExpense Pressures Tuition BudgetAdvisory Commitee PlanningParameters Ancillary Fees Budget Approval

How do we set tuition and fees?

As we mentioned earlier, tuition and fees are our second largest source of revenue.

Each year tuition and fees are set through consultation with the Students’ Union and Graduate Students’ Association. Any changes must also follow provincial regulations.

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4 groups at the table Provost and Vice-President (Academic)Vice-President(Finance andAdministration)Students’ Union Graduate StudentsAssociation
Status Bar Consolidated Budget Operating Revenuesand Expenses Revenue andExpense Pressures Tuition BudgetAdvisory Commitee PlanningParameters Ancillary Fees Budget Approval

How do we set residence and meal plan rates?

Residences and meal plans are ancillary services, and they operate only on the revenues that they generate themselves. Other operating funds cannot be used to support these services.

Much like tuition, residence fees and meal plan rates are set through an established consultation process with the Residence Advisory Committee.

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Students’ Residences

Meal Plan Rates

The Residence Advisory Committee includes

Ancillary Services

Students' Union

Graduate Students' Association

Nine Residence Associations

Status Bar Consolidated Budget Operating Revenuesand Expenses Revenue andExpense Pressures Tuition BudgetAdvisory Commitee PlanningParameters Ancillary Fees Budget Approval

How do we make plans for the years ahead?

We can’t know for certain how our budget will change ahead of time. But by looking at pressures on our revenues and expenses, we can make educated predictions about what will likely happen. We call these assumptions.

We then put all of our assumptions together to create a set of planning parameters—a big-picture look at how much money we will likely have in the years ahead.

Our parameters also allow us to set budget targets for the future—increases or reductions in spending to get us where we want to be.

Plans for the years ahead Current yearYear 1Year 2Year 3Scenario 3Scenario 2Scenario 1
Status Bar Consolidated Budget Operating Revenuesand Expenses Revenue andExpense Pressures Tuition BudgetAdvisory Commitee PlanningParameters Ancillary Fees Budget Approval

The final step: approval

After all of these steps are completed, the president, provost, deans and vice-presidents prepare multi-year budget and accountability plans for their respective units and faculties. The university also prepares an institutional budget for the Comprehensive Institutional Plan (CIP), our annual report to government.

The final institutional budget, along with the CIP, is approved by the Board of Governors.

Status Bar Consolidated Budget Operating Revenuesand Expenses Revenue andExpense Pressures Tuition BudgetAdvisory Commitee PlanningParameters Ancillary Fees Budget Approval

Glossary of Terms

The full amount of money we receive, including restricted and unrestricted sources of funding.

The sum of unrestricted funding we use to operate the university (e.g. pay salaries and benefits, purchase supplies, etc.). When it comes to planning the university’s budget, we’re really talking about the operating budget.

The gradual expensing of a major one-time cost over a number of years. For example: rather than budgeting $50 million for a new building in a single year, the university may budget $10 million for the building each year for five years.

Anything that might cause a revenue or expense to increase or decrease over time, such as changes to government funding or utilities prices.

Educated predictions about particular expenses or revenues. Assumptions are based on what we know about the pressures on those expenses and revenues.

A collective set of budget assumptions. Planning parameters bring together our assumptions about the years ahead to give us a big-picture look at how much money we will likely have.

Increases or reductions in spending that help us maintain a healthy budget. We develop our targets using the budget projections that flow from our planning parameters.

A tool that helps us determine how much money each faculty and unit needs, and allows us to distribute money across the university. The budget model does not affect the overall size of university’s consolidated or operating budget—it only helps us allocate money to faculties and units within the university.