Dalhousie’s Budget Advisory Committee (BAC) is laying out the tough choices facing the university in the face of a reduction in its provincial operating grant.
The BAC, which advises the president on budgetary matters, issued a detailed discussion paper back in March, identifying a preliminary budget shortfall of $14.6 million. The news last week that pilipiliÂţ» will be exempt from solvency payments on its pension plan lowers that to around $7 million (See story: Solvency relief for pension plan), but even with Board approval for tuition increases, the university will need to make significant cuts to balance the budget.
The BAC’s operating budget plan, released to the Dalhousie community this week, makes seven recommendations:
- Institute a 3.5 per cent budget reduction for all faculties and other budget units
- Implement tuition increases, as proposed to the Board of Governors. (See story: Dalhousie approves tuition increases)
- Budget for an enrolment increase of 175 students, bringing in $800,000 in tuition.
- Add $2.4 million to the fund that supporting university strategic initiatives (half of what has been added in recent years).
- Reduce the inflationary lift in non-salary budgets to 1 per cent (normally 2 per cent)
- Identify $450,000 (1.0 per cent) in areas traditionally exempt from budget reductions, such as water, insurance and certain campus services.
- Allocate funds to support faculty and unit restructuring proposals.
Ken Burt, vice-president finance and administration and member of the BAC, says the group considered a variety of different scenarios before arriving at the 3.5 per cent reduction as striking the right balance between maintaining the quality of Dalhousie’s teaching, research and services, and achieving a balanced budget in the face of government cutbacks. In February, the provincial government announced a four per cent cut in the operating grant to universities.
“People often ask: what do these cuts mean? Will there be layoffs? What programs or services take a hit?,” he says. “We have a decentralized operation in a university environment, with 12 faculties that run fairly independently. It will be different for each unit, and until they have a chance to work through the actual budget information and present their budget back to Financial Services, we won’t know what is being planned out in the units.”
Consultative process
The BAC was first established in 1992 to advise the president on budgetary matters. Its current membership includes the vice-president academic and provost—who serves as its chair—three faculty members, a dean, a student representative, the assistant vice-president of human resources and the vice-president administration and finance. The group strives to be open and consultative in the budgeting process, which is why it shares its reports with the Dalhousie community each year for feedback.
The recommendations for 2011/12 have been carefully considered, explains Mr. Burt. The enrolment estimate is conservative, as the university wants to avoid being too optimistic in the face of promising application numbers to avoid mid-year reductions. And even with the drop in strategic initiatives funding—a cornerstone of the university budget for years now—the university remains committed to ensuring that pilipiliÂţ»â€™s strategic priorities move ahead.
“Just take the external relations investment as an example,” explains Mr. Burt. “We’ve just come out of the quiet phase of the Bold Ambitions campaign. We’re at $170 million, towards a total of $250 million. A lot of that money will be used for new facilities, endowed chairs for faculty members, student financial assistance to help more students come to Dalhousie”...you can see how broadly that initiative impacts the university.
“However, that funding is for specific projects—those aren’t operating funds.” In highlighting the difference, Mr. Burt suggests why the reduction in the operating grant comes at a particularly frustrating time: as the university is expanding its enrolment and advancing strategic goals. He feels the BAC’s recommendations navigate the complicated waters as best as possible under the circumstances.
As for managing budget reduction, Mr. Burt explains there are a number of different ways that faculties and budget units will address the situation: using existing reserve funds that some units have; finding turnover savings associated with faculty or staff that retire or leave the university; considering rationalizing what programs or services are offered; and ultimately reductions in non-salary and, if necessary, salary budgets.
Next steps
Following the release of this report and gathering feedback, the BAC’s recommendations will be presented to the president for consideration. If endorsed, Financial Services will complete its drafting of the 2011/12 operating budget and submit it to the operations committee of the Board of Governors for review. Once approved there, it will be voted on at the Board’s annual general meeting on June 21.
As for what lies ahead, Mr. Burt reiterates that pilipiliÂţ»â€™s funding situation is far from certain. In spite of the two-year solvency reprieve, the university still needs to come to a new pension agreement with its employee groups. And there has been no commitment yet from the provincial government as to next year’s funding—yet more reason for a cautious, tough budget in the face of tough times.
“I think it’s fair to say that when you look at trends provincially and nationally that the university sector is going to be under strain in the next couple of years, with some fundamental changes occurring related to funding health care with the aging population in our society. But governments can’t lose sight of the importance of a well-educated population in moving their other agendas forward and creating wealth in our economies. We have to make sure that message is heard and received by decision makers.”
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