Anticipating the provincial budget

This notice is from the archives of The Notice Board. Information contained in this notice was accurate at the time of publication but may no longer be so.

The provincial government is preparing to table its budget on October 24 and I know that our campus community is curious about what this will mean for the University. What we anticipate is a year that will bring both uncertainty and change. This, however, is not new for us. Each year, as part of our budget planning, we operate under considerable uncertainty until we know what is in the provincial budget and the funding details of the Campus Alberta Grant. We have faced challenging budgets in the past and we continue to evolve and grow our university.

We are halfway through the current fiscal year, and due to the timing of the provincial election, have not received a budget agreement from the government outlining what our annual grants will be for 2019-2020. The University continues to operate under an interim budget based on the 2018-2019 Campus Alberta Grant amount. 

When the provincial budget is released, we will have a clearer sense of what the current year looks like and hopefully, what the years ahead look like as well.

The new government has a stated objective of reaching a balanced budget in four years. Given this, we must plan for reductions in funding. A reduction in the current year’s budget is a scenario under consideration – a very challenging situation. Normally, we have to reduce expenses every year as our expenses continue to outgrow our revenues. Our current 2019-20 interim budget is balanced only because we were able to use one-time funds resulting from previous years' savings.  This obviously is not sustainable and will not carry us through further reductions this year or reductions in future years.

We are actively engaged with the government and continue to communicate with the premier, cabinet ministers, MLAs and officials within Advanced Education. In a budget context, we are advocating the importance of the University to students and to the communities we serve. We are stressing the contributions the U of L makes to addressing workforce demand and how we are vital to the economic future of the province. Despite our regular engagement with government, we do not have any concrete details on plans for funding post-secondary education in the coming budget. We do know however what is noted in the MacKinnon Report on Alberta Finances and are using that to anticipate some of the major changes to come. You may also be interested in reading the KPMG: Research & Analysis for use of the Blue Ribbon Panel on Alberta's Finances for more detailed information in the MacKinnon Report.

The MacKinnon Report suggests that government work with post-secondary institutions to decide on future directions and goals; to examine the current and future financial viability of Alberta’s institutions; and to adjust the ways in which post-secondary institutions are funded.

In our context, this means less reliance on government grants and increased dependence on funding from tuition and alternative revenue sources. Currently, the U of L derives 65% of its operating budget from the Campus Alberta Grant. In comparison, the Campus Alberta Grants for the University of Calgary and the University of Alberta, two other Comprehensive Academic and Research Universities (CARU) in Alberta, equate to 57% and 58% respectively, of their operating budgets.  There are a number of historic and structural reasons for this difference but what we expect to hear from the government is that our reliance on the Campus Alberta Grant will need to be reduced. The MacKinnon Report cites levels in BC, Ontario, and Quebec as those the province of Alberta should aspire to achieve. 

We also anticipate change in the area of tuition and fees. Tuition in the Province of Alberta has been frozen since 2014-15.  Tuition in Alberta is now among the lowest in the country and tuition at the U of L is among the lowest of degree granting institutions in the province. Both the University of Lethbridge Students’ Union (ULSU) and the U of L anticipate the government will lift the tuition freeze and perhaps modify the existing regulations that govern how tuition and fees are set. 

Tuition represents 28% of the operating revenue of the University. As our budget is reduced, we must remain committed to delivering high quality programs. It is unlikely we will be able to find enough reductions and efficiencies to make up a budget shortfall without significantly compromising the quality of our academic programs. Our challenge is to avoid placing too much of a burden on our students. We must find alternative revenue sources to help support the University.

We have begun work on a number of initiatives to attract alternative sources of revenue to the University. Many faculty members engaged in research are interested in industrial and business partnerships. We would like to see the number of these partnerships increase. Further, we are ready to move forward with the development of our south campus lands for commercial and residential purposes. This development over the long term can contribute to the revenue of the University.  We have also begun the preparations in Calgary to offer programming directly supportive of the needs of the unique markets we serve in Calgary. This will include a continuing education program, short timeline programs that will appeal to a broader base of prospective students and a continued focus on increasing enrolment at our University, both domestic and international. Finally, we will continue to grow our fundraising capacity – especially with our Deans actively engaged in seeking support for students and programming in their respective Faculties.

Financial Planning and senior administration have been working very hard over the summer with data analysis to prepare for what will likely be difficult budget decisions ahead. We have also revised the University’s Budget Advisory Committee (BAC) to make it more nimble in order to address these budget decisions. The previous BAC consisted of 33 members, which is too large a committee to allow for meaningful discussions and input into the very complex budget process. An update on the budget formation and other budget issues will be a standing agenda item on Statutory Deans’ Council, Provost’s Council and the Vice-President (Finance & Administration) Council. Further consultations with other stakeholders (e.g. students, employee groups, Board of Governors, budget units) will also take place as appropriate. Discussions at these meetings will provide opportunities for communication and discussion between academic and non-academic units, for the identification of shared priorities or opportunities for collaboration, and for increased awareness of each other’s goals, priorities, and challenges. The budget approval process and budget updates can be found on the University's Budget website.

When details of the provincial budget are released on October 24, we will communicate with the campus community as we get them. We will also remain engaged with the provincial government as it transitions its focus to the Spring 2020 budget.

The concern around the upcoming budget is understandable. However, we have weathered such situations in the past and have continued to move the University forward. We are a respected institution amongst our peers and in our community and play a critical role in contributing to quality of life and the continued economic development of southern Alberta. Our record enrolment is a result of being a destination of choice for students. We have built this amazing university together and have done so by pushing forward through challenging situations. I know that we again will rise to the occasion.

Thank you.

Mike Mahon, PhD
President and Vice-Chancellor


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