UNIVERSITY COUNCIL
PLANNING AND PRIORITIES COMMITTEE
FOR INFORMATION ONLY
PRESENTED BY:
Jay Kalra, Chair, Planning and Priorities Committee
DATE OF MEETING:
May 21, 2009
SUBJECT:
2009/10 Operating Budget and Budget Planning
COUNCIL ACTION:
For information only
CONTEXT AND BACKGROUND:
Consideration of the university’s financial situation in light of the global downturn in
investment markets has been a particular focus of the Planning and Priorities Committee
throughout the year, with the committee receiving regular updates from members of the
university’s senior administration.
DISCUSSION SUMMARY:
The university’s operating budget and multi-year operating budget framework are
integral to the university’s planning efforts, linking resources to planning initiatives.
In light of the present global economic uncertainty, the university’s financial and
planning offices have determined that updating the Multi-Year Operating Budget
Framework for 2009/10 – 2012/13, as would normally occur in the university’s planning
cycle, would be premature. Rather, a detailed analysis of the university’s finances under
a number of financial risk scenarios has been prepared to inform the presentation of the
university’s 2009/10 Operating Budget to the Board of Governors for approval on May 8,
2009.
The Planning and Priorities Committee has a responsibility to advise the President on the
main elements of the university’s operating and capital budgets and report to Council.
The attached memo to President MacKinnon provides the Planning and Priorities
Committee’s response to the financial planning leading up to the university’s 2009/10
Operating Budget and the budget allocations for 2009/10 and continuing.
ATTACHMENTS:
Memorandum to President MacKinnon on the University’s 2009/10 Operating Budget
and Multi-Year Operating Budget Framework
MEMORANDUM
TO:
Peter MacKinnon, President
FROM:
Jay Kalra, Chair, Planning and Priorities Committee of Council
DATE:
April 23, 2009
RE:
Consideration Regarding the University’s 2009/10 Operating Budget
and Multi-Year Operating Budget Framework
________________________________________________________________________
On behalf of the Planning and Priorities Committee, I am pleased to provide the
committee’s thoughts regarding the University’s 2009/10 Operating Budget and MultiYear Operating Budget Framework.
As outlined in recent university communications, the current economic recession has
impacted investment income, endowments and pensions. Although operating reserves
will be used to cover the budget shortfall created by declining returns on investments in
2008/09, the Planning and Priorities Committee recognizes that permanent measures are
required to address the approximately $10 million budgetary shortfall anticipated for
2009/10 in order to present a balanced budget. In response, the Planning and Priorities
Committee has engaged in ongoing discussion of university finances, and struck an adhoc subcommittee to explore in depth the university’s financial situation in light of the
current economic downturn and projected budgetary reaction. The subcommittee has
been presented with detailed information on the financial risk scenario analysis
undertaken, including the university’s pensions and other key areas of risk. The
subcommittee commends the university’s Vice-President Finance and Resources and
Financial Services Division for providing relevant, timely, and detailed financial
information.
Supporting Strategic Planning
The Planning and Priorities Committee recognizes the complexity of university-level
budgeting and the balancing of risk factors against areas of investment. In its response to
the 2009/10 Operations Forecast, the committee stated that a key message within the
document was that the University’s Integrated Planning provides a robust model,
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supported by a multi-year operating budget framework, with resources reallocated
internally through the Academic Priorities Fund. The committee believes the decision to
delay updating the multi-year operating budget framework within the present global
economic uncertainty is a prudent decision at this time, but the committee continues to
emphasize the importance of multi-year planning and the Academic Priorities Fund as
vehicles through which to support strategic choices.
The Academic Priorities Fund was created with modest operating funding set aside to
leverage fundamental change and launch important new initiatives even while the
university addressed and eliminated its structural deficit. In order to achieve the
objectives and academic priorities of the University’s Second Integrated Plan, the
committee supports the continuation of this philosophy, with the APF continuing to
provide for the possibility of significant one-time funding as well as permanent funding
for academic initiatives as they are identified throughout this second planning cycle.
The committee further supports the principle that any budget adjustments made at any
level in response to budgetary shortfalls be consistent with the priorities of the institution.
Although all units have unique circumstances which impact upon their operations and
interests, an overriding purpose is the mandate of the university as a whole. All areas
will need to work together to seek innovative and collaborative means that contribute
towards the betterment and advancement of our university at this time. The university is
well placed not only to weather the current recession but to take advantage of
opportunities not available to other institutions. Our ability to be successful in this regard
will depend upon collectively identifying and investing our resources in those areas
where our financial circumstances place us at a comparative advantage over others.
Tuition and Scholarships
The Planning and Priorities Committee anticipates being an important consultative body
regarding the university’s tuition policy in discussion with the Provost’s Steering
Committee on Tuition Policy. As part of the development of a tuition policy, the
committee proposes that a careful analysis of undergraduate and graduate student tuition
be prepared. As such a tuition policy is developed, the committee continues to support
the principle that the University of Saskatchewan’s budget shortfalls should not be offset
simply by raising tuition.
The 2009/10 provincial grant was made with the province’s expectation that the
university would increase tuition by approximately 3%. The committee believes this to
be a reasonable expectation, but advocates that immediately upon the finalization of the
university’s 2009/10 operating budget, consideration of any potential tuition increases for
2010/11 be undertaken, and that the university develop a comprehensive tuition policy as
soon as possible. In order to provide clarity for our students as we face a changing
economic climate and the expectation of tuition increases at other post-secondary
institutions, the committee recommends that the university’s tuition policy be structured
within a multi-year framework, which gives consideration to student access and
affordability.
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The committee also re-emphasizes the importance of student scholarships and financial
aid and believes every effort should be made to increase scholarship funding. At a time
when declining student enrolment has been identified as a risk and our scholarship
funding lags behind that of other post-secondary institutions, a commitment towards
sustaining and increasing scholarship funds, bursaries, and other student financial aid is
critical to ensuring the viability of our student population. The university should consider
a strategy to communicate the impact of the current recession on scholarship and
financial aid opportunities for incoming and current students.
Specific issues
In recognition of Council’s mandate over academic matters, the committee urges that
budget and planning processes within colleges recognize the importance of faculty
positions in supporting the integrity of the university’s academic mission. In order for
the university to emerge from the global economic downturn in a comparatively stronger
position, a strong faculty complement is critical. The ability to recruit exceptional
faculty will be greatly enhanced in this economic climate. Our capacity to develop
innovative academic programming and research, which in turns attracts students and new
resources, resides within our faculty complement. The implication of any reduction in
faculty positions as an expedient means to address the university’s current financial
situation should be very carefully considered.
Communication
The University’s operating reserve, coupled with other measures, has been sufficient to
deal with the one-time budget shock for 2008/09 as a result of the downturn in world
markets. The university’s senior administration is to be commended for the transparent
and consultative manner in which it has addressed the projected deficit within the
university’s 2009/10 operating budget. The realistic assessment is that the budget
measures requested are not one-time, but permanent. In ongoing communication with
the campus community, it is important to highlight the fact that the required budget
adjustment for 2009/10 is in addition to the projected deficit for 2008/09, and that this
adjustment is anticipated to persist over the next several years, requiring further
budgetary adjustments.
In summary, the Planning and Priorities Committee affirms the careful and detailed
approach to the budget scenario analysis project undertaken and supports the deferral of
the updating of the multi-year operating budget framework, while continuing to uphold
the use of the Academic Priorities Fund for strategic initiatives. The Planning and
Priorities Committee also signals its support for the strategy outlined within the Second
Integrated Plan to implement a resource allocation model, in conjunction with the
university’s information strategy initiative, designed to improve the quality of
institutional data in support of planning and decision-making. Notwithstanding the
economic recession, consideration of and exploration of new resources is urged, so that
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not only are existing resources applied to the university’s highest priorities, but new
resources and increased efficiencies continue to be sought. Diversification of the
university’s revenue streams will create financial flexibility and better enable the
university to withstand future economic stress.
Jay Kalra, Chair
Planning and Priorities Committee of Council
c B. Fairbairn, Provost and Vice-President Academic