UAT Update: Board Approves Revised 2021-22 Budget

Bill Flanagan - 18 March 2021

Last Friday, the Board of Governors met to discuss and approve the revised 2021-22 institutional budget. As I shared with you last month, we had initially planned for a Campus Alberta Grant reduction of 10 percent ($53 M). We moved quickly to revise the budget in light of the actual 11 percent reduction ($60M) to our Campus Alberta Grant announced in the provincial budget. 

Due to careful planning in advance, we were able to make the additional $7M reduction to our budget without any additional layoffs beyond those already announced. There will also be no increase in the originally anticipated reductions to faculties’ and units’ budgets. Likewise, we are planning for a third and final year of cuts next year, expected to be in the range of another $54M. As previously announced, this will involve staff reductions, but we have no intention of declaring a financial emergency that might lead to faculty layoffs. 

Over the last several months, we have taken a proactive approach to address our immediate financial challenges and longer-term changes to the post-secondary funding model that the government announced in 2019. Through the implementation of U of A for Tomorrow, including SET, we are making impressive progress. We will reduce our annual administrative costs by $95M by the end of this year. At the same time, we also continue to add new funding to student financial aid, setting aside 15% of domestic tuition increases and 7.5% of international tuition. We must ensure that rising tuition does not become a barrier for our students.

The changes we are making are significant and they are challenging. I want to thank everyone for your continued efforts and patience as we move through implementation. These changes will ensure the university’s long-term financial sustainability and resiliency. They will also lay the groundwork for future reinvestment and growth in our core academic mission of teaching, research, and community engagement.

Growth

In a positive trend, we are seeing increasing student demand for our programs, with our applications up almost 10% this year. 90% of our high school applications come from Alberta students. This growth in demand reflects the young demographics of the province and, we hope, a growing participation rate in post-secondary education. In participation rates, Alberta currently lags significantly behind BC and Ontario (24% in Alberta versus 30% in BC and 32% in Ontario.)

When announcing the budget cuts in 2019, the Government of Alberta was clear that it wanted us to reduce our administrative costs and move to a level of provincial funding more in line with the national average. We are now well on track to meet our goal to reduce our administrative costs by $127M by 2023. In 2017/18, the U of A enjoyed the highest per-student funding in the U15. By 2023, we estimate our per-student provincial funding will be at or below the U15 average. With our ambitious level of administrative and academic restructuring, we will meet the Government’s target while preserving the academic mission of the university. 

We have demonstrated our ability to reduce our costs and sustain our operations with a reduced per-student provincial grant. We now need to engage actively in discussions with the Government of Alberta about the need to fund enrolment growth at the U of A, particularly in the areas of highest student and employer demand. We urgently need to expand our capacity to provide post-secondary opportunities to Albertans. This will be key to building Alberta’s future. 

Deconsolidation is of equal importance to the university’s growth agenda. Deconsolidation would involve removing the university’s financial statements from the Government of Alberta’s Public Accounts. This would untie the university’s hands to generate more external revenue, spend carry-forward funds for strategic investments and manage our assets more effectively. It would place the U of A on a level playing field with the other U15 universities, most of which are not constrained by consolidation with provincial budgets. It would unleash U of A’s full potential to be a key partner in restarting the Alberta economy and building the province's future prosperity. We continue to press the Government of Alberta on this point, and we remain optimistic that deconsolidation will be one outcome of the Alberta 2030 review. 

As a university and as a province, we cannot simply cut our way to a new future. We must also build and invest. In particular, we must invest in the future of the province by investing in its youth. I look forward to continuing those discussions with the province.

Bill Flanagan
President and Vice-Chancellor

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