Each year the University of Alberta spends approximately $1.9 billion in support of its teaching, research and community services mission. The funds for this spending come from numerous sources and go towards thousands of costs, from salaries to software.
This is a guide to where the university's money comes from, where it is spent, who decides where it is spent and what rules are applied to guide these decisions.
Sources of revenue
- The university is a public institution, so its largest investor is the Alberta taxpayer. Approximately 52 percent of the university's funding comes from the provincial government.
- Tuition and fees -- the revenue from students -- represents the second largest source of revenue, at approximately 17 percent. This includes non-instructional fees for things such as athletics and health services.
- Revenue from the sale of services and products represents 11 percent of the institution's revenue. This revenue comes from such things as parking, residence fees and the bookstore, as well as cost-recovery programs within faculties, such as summer camps.
Other revenue comes from the federal government and other funding agencies (such as research funding), grants and donations, and investment income.
Not quite as simple as it seems: restricted funds
One might imagine that the budget is a single pot of money that the university can simply draw upon to apply to the priority of the day. It’s not that simple, however: many millions of those dollars can only be used for specific purposes that are spelled out by the individuals and organizations that provide the money. Those dollars are referred to as “restricted funds.” Around 43 percent of the university’s total revenue is restricted funding. Examples of restricted funds include:
- New university buildings: Individual buildings, which can cost up to hundreds of millions of dollars, are paid for primarily by the provincial government. Funds provided for a specific building must only be used for the construction of that particular building.
- Research revenue: Governments and other agencies provide money to the university to carry out research in specific areas. A grant is typically provided to a particular researcher to carry out particular research. That money shows up as university revenue, but it cannot be used, for example, to fund a new academic program or to repair an aging building.
- Philanthropic donations: The institution benefits from thousands of individuals and organizations that make philanthropic gifts to the university and members of its community. In most cases, such as those involving student scholarships and research grants, the giver of the gift specifies how the money can be used.
Unrestricted operating budgets
42 percent of the university’s consolidated budget is restricted. The unrestricted portion, 58 percent, constitutes the general operating budget, which the university can deploy as required. Note, however, that even among the general operating budget there are “non-discretionary” costs, such as the costs of electricity, heating and cooling, and insurance.
Where the money is spent
The consolidated budget of $1.9 billion is spent in several primary areas:
- Salaries and benefits represent the most significant expenditure. Of the $1.9 billion, just over 60 percent goes toward salaries and benefits.
- The next most significant expenditure, at around 16 percent, is for materials, supplies and services. These provide essential support across the university, from information technology to insurance, from libraries to teaching lab supplies.The remaining areas of expenditure include amortization of capital assets (the gradual expensing of an asset over a fixed number of years), utilities (heating, lighting and cooling), and scholarships and bursaries.
Proposed New Budget Model
Historically, the University of Alberta has employed an incremental budget model to distribute funds internally. In incremental budgeting, budgets from the previous year are used as a starting point and the current year budget is adjusted up or down relative to this starting point according to the change in available resources.