Faced with rising cost pressures and an ongoing deficit, the University of Alberta is introducing budget reductions over the next three years as part of a new fiscal strategy.
The university announced today a four per cent preliminary budget reduction target for 2018-19, followed by 2.5 per cent projected reductions in each of the following two budget years. The targets will apply to all university faculties and administrative units.
"The university faces significant financial challenges that must be addressed for our long-term financial sustainability," said Steven Dew, provost and vice president academic. "Failing to act would not only deepen these challenges, it would compromise our ability to pursue our strategic goals at the institutional and faculty level."
Gitta Kulczycki, vice president of finance and administration, said the U of A's financial challenges are influenced by internal and external pressures. Internally, utility costs and contractual commitments have steadily outpaced the university's growth in revenues. Tough economic conditions have been a challenge across the province while a review of Alberta's post-secondary funding model adds another element of uncertainty to future budgets.
The university has built several assumptions into its budget planning framework, including no increase to the Campus Alberta grant and a cap on tuition and fees for the next three years.
The budget reductions would eliminate the $14-million structural deficit in the university's operating budget. Kulczycki said the deficit has existed for some time but has been exacerbated by rising costs and flat revenues. The university has relied increasingly on investment income to help balance the budget-a practice that is unsustainable, particularly given market volatility.
Over time, instead of using investment income to offset the deficit, the university will use that revenue for strategic teaching, learning and research priorities, in accordance with the U of A's strategic plan, For the Public Good. The university might also use the funds to apply for government grant programs that require matching dollars.
A new multi-year budget planning and accountability process has been developed to assist faculty deans and senior leaders of administrative units in achieving budget reduction targets. Preliminary budget parameters were shared and discussed at the Oct. 18 Dean's Council and details will be reviewed and discussed with each dean and unit head in November and December. One of the goals is to ensure faculties and units still have the flexibility and decision-making authority needed to pursue local priorities and strategic initiatives.
"All members of the senior leadership team recognize that achieving these budget reductions represents a serious challenge for faculties and administrative units," said Kulczycki. "This is a challenge we have to face together, as a community, to ensure the university is on a sustainable path."
The budget reductions will not affect the university's infrastructure improvement program, which is part of the capital budget.
The university community will have a chance to learn more about the budget process at a campus forum on Nov. 9 at noon. The event is open to all faculty, staff and students.