News Articles
Major Budget Shortfall Looms
University's projected structural budget deficit is $19.7 million
U of G, like most Ontario universities, is in an extraordinarily difficult situation with its 2007/2008 Ministry of Training, Colleges and Universities (MTCU) operating budget and is facing a significant budget shortfall.
President Alastair Summerlee says there is still much uncertainty surrounding the budget because of incomplete information from the provincial government about revenues for 2006/2007 and no information about the 2007/2008 allocation.
But based on current knowledge of enrolment, funding, tuition income and operational expenses, the University's projected structural budget deficit is $19.7 million.
“Guelph is certainly not alone in this,” says Summerlee. “Nearly every other university in Ontario is facing a similar funding gap, but that isn't much of a comfort. Dealing with this will be an incredible challenge and involve every area of the University.”
U of G is moving forward with a plan to address the pressing budget challenges, while proceeding with multi-year strategies as part of the integrated planning effort.
“It's highly unlikely that we'll be able to solve this problem in one year,” says Summerlee. “We must take a multi-year approach.”
The immediate plan includes the University presenting a first-ever deficit-financing proposal to Board of Governors this spring. There are also proposed tuition fee increases for next fall, ranging from four per cent for most continuing undergraduates to eight per cent for new graduate students and new international students.
Assuming no change in student population, the University would receive about $3 million more in revenue from the proposed tuition increase, says Summerlee, but that still falls far short of the projected $19.7-million revenue gap.
The budget shortfall is due to a number of factors, including lower-than-anticipated grants from the province, provincial monies allocated for quality improvements being converted to deal with accessibility, and no government funding for inflation, says John Miles, assistant vice-president (finance).
The University is also dealing with higher pension costs; operating expenses such as deferred maintenance and utilities; student aid, debt costs and enrolment costs; and an $11-million increase in the costs of salaries and benefits, he says.
Guelph must also pay $47 million a year from the operating budget to its pension fund under provincial valuation requirements.
“Appeals have been made to the province to change pension regulations for public institutions like universities,” says Summerlee. “Many other jurisdictions have made changes to the regulations governing pension plans, but for some reason, the Ontario government refuses to do so. This alone has severe implications for the University, but it's just one of a number of problems we're facing.”
Longer-term budget goals include finding ways to eliminate the structural deficit, including increasing revenue and reducing costs, says Prof. Maureen Mancuso, provost and vice-president (academic).
She notes that universities are facing greater competition for undergraduate and graduate students. With the “bulge” of the double cohort graduating, U of G must look at focusing on recruiting undergraduates in programs that allow the University to maximize revenues, she says.
In addition, Guelph must increase its graduate student enrolment to access government funding earmarked for graduate student growth, says Mancuso. “If we are to receive this funding, it is absolutely essential that we meet our graduate student enrolment targets.”
Other approaches to reducing costs include looking at compensation structures, including pensions and benefits and the faculty and staff complement; energy consumption; and more effective space management, including removing buildings with excessive deferred maintenance.
Mancuso says the next steps will also include re-examining revenues and expenditures and moving ahead with integrated planning, which identifies priorities and decision frameworks aimed at helping the University meet its mission now and in the future. Through this process, all departments have already started contributing two per cent of their budget towards helping fund salary and benefit increases.
In addition, academic departments have contributed an additional two per cent to the Priority Investment Fund to address key University initiatives.
The president and provost have begun holding budget discussions with U of G colleges and expect to address various town hall gatherings, including one on April 17, the day before the next B of G meeting.
Because of the uncertainty about government funding, the preliminary MTCU budget won't be presented to B of G until June. But tuition proposals will be presented in the context of provisional budget assumptions at the board's April 18 meeting to provide an opportunity for discussion about tuition while most students are still on campus.