UNIVERSITY COUNCIL
PLANNING AND PRIORITIES COMMITTEE
FOR INFORMATION ONLY
PRESENTED BY:
John Rigby, Chair, Planning and Priorities Committee
DATE OF MEETING:
May 15, 2008
SUBJECT:
Multi-Year Operating Budget Framework 2008/09 –
2011/12
COUNCIL ACTION:
For information only
CONTEXT AND BACKGROUND:
The Multi-Year Operating Budget Framework 2008/09 – 2011/12 is integral to the
Second Integrated Plan, linking resources to planning initiatives throughout the second
planning cycle. The Planning and Priorities Committee has a responsibility to advise the
President on the main elements of the Operating Budget and the Capital Budget and
report to Council. Consideration of the Multi-Year Operating Budget Framework has
been a focus of the Planning and Priorities Committee in its advisory role regarding
operating and capital budgetary matters since January 9, 2008. The Planning and
Priorities Committee reviewed the final version of the Multi-Year Operating Budget
Framework at its April 23, 2008, meeting and subsequently provided its advice on the
framework to the President prior to Board of Governors approval of the framework on
May 2, 2008.
DISCUSSION SUMMARY:
The Multi-Year Operating Budget Framework for the 2008/09 – 2011/12 planning cycle
is a projection of the rate of growth of the University’s operating revenues and
expenditures. In its consideration, the Planning and Priorities Committee has focused on
potential financial risks to the University and the financial relationships between the key
budgetary assumptions, including tuition revenue, investment income, salaries and
benefits, and research activity, among other variables, upon which the framework is
based. The Committee also considered the importance of flexibility within the
framework for strategic academic renewal and support for non-academic priorities.
The Planning and Priorities Committee supports the Multi-Year Operating Budget
Framework for the 2008/09 – 2011/12 planning cycle as a means to achieve the
objectives and academic priorities of the University’s Second Integrated Plan.
ATTACHMENTS:
Memorandum to President MacKinnon on the Multi-Year Operating Budget Framework
2008/09 – 2011/12
MEMORANDUM
TO:
Peter MacKinnon, President
FROM:
John Rigby, Chair, Planning and Priorities Committee of Council
DATE:
April 23, 2008
RE:
Consideration Regarding the Multi-Year Operating Budget
Framework 2008/09 – 2011/12
________________________________________________________________________
On behalf of the Planning and Priorities Committee, I am pleased to provide the
committee’s thoughts regarding the Multi-Year Operating Budget Framework 2008/09 2011/12.
The Planning and Priorities Committee has engaged in ongoing discussion of the MultiYear Operating Budget Framework through its development in conjunction with the
University’s Second Integrated Plan, seeking insight into the complexities of Universitylevel budgeting and the risk factors which apply.
In its review of the Multi-Year Operating Budget Framework, the Planning and Priorities
Committee was reminded the framework applies to the University’s Operating Budget
and that the University generates $340 million in additional revenues, with up to $200
million consisting of targeted research funding. The desired growth of the University’s
research enterprise has significant implications for the Operating Budget, relative to the
capital and human resources supporting the necessary research infrastructure.
Assumptions
We note that Multi-Year Operating Budget Framework makes several key assumptions,
particularly around expected annual increases to the provincial operating grant, tuition
revenues, enrolment levels, investment income, and salaries and benefits costs. The
assumptions stated in the document seem reasonable but by definition are subject to
uncertainty. If the assumptions turn out to not hold the Multi-Year Operating Budget
Framework will, of course, need to be revisited. In this sense, the Budget Framework is a
“rolling” framework, requiring updating each year.
Financial risks
There are financial risks implied in the Multi-Year Operating Budget Framework both on
the forecasted revenue and forecasted expenditures side. These risks primarily flow from
the possibility that the underlying assumptions of the Framework may not hold, as
discussed above. As the Operating budget is quite large, relatively small percentage
changes in forecast amounts can have large impacts in dollar amounts. The Framework
provides examples of the dollar impacts of changing assumptions even marginally (p.6).
Given that, as is normal with all universities, such a large proportion of the University of
Saskatchewan’s expenditures are fixed, the Planning and Priorities Committee would
encourage senior administration, and the Board, to monitor the forecasts quite closely
over the entire four year planning period encompassed by the Multi-Year Operating
Budget Framework. The difficulty that we see is that much of the strategic flexibility of
the University lies in these percentage points of revenue and expenditures at the margin.
In the view of the Planning and Priorities Committee, even a small percentage negative
imbalance between revenues and expenditures would have a disproportional dampening
effect on the significant strides the University of Saskatchewan has made in the last
decade.
Flexibility
The Planning and Priorities Committee notes with approval that, notwithstanding the
possible financial risks implied, the Multi-Year Operating Budget Framework includes
explicit budget lines intended to create strategic flexibility. For academic strategic
initiatives the Academic Priorities Fund has been replenished with the addition of $4.5
million, for the second planning cycle, and the Framework provides for the building of
the Fund for the third planning cycle. The Fund will provide the possibility of significant
one-time funding as well as permanent funding for academic initiatives as they are
identified throughout this second planning cycle. In addition, the Framework includes a
total of $5.486 million in permanent funding to fund non-academic priorities such as
ongoing support for Huskie Athletics and a permanent allocation to support fundraising
initiatives, among other priorities. The Planning and Priorities supports this allocation
noting that it addresses some longstanding funding difficulties related to renewal for the
initiatives involved. Of the budget moneys set aside for non-academic purposes we note
from conversations with the Director of Budget Planning that approximately 75% has
been committed in the Framework with approximately 25% to be allocated during the
time period.
In considering financial flexibility, the Planning and Priorities Committee also notes the
policy of the Board of Governors that a general operating reserve of between 1% and 4%
be maintained. The Multi-Year Operating Budget Framework ends the period with that
reserve set to 2% or approximately $6.7 million dollars. This is a prudent policy and will
allow the University to withstand mild one-time financial shocks. It is not, of course,
sufficient to deal with major one-time shocks or with significant permanent changes to
necessary expenditures or permanent declines in revenues. Nonetheless, the Planning and
Priorities Committee supports this policy, believing that budgeting for all possible
eventualities would involve setting aside such a great proportion of our resources that
current strategic goals would be compromised.
Specific issues
There are three specific issues that we would draw to your attention. The University of
Saskatchewan was following a National Norms Tuition policy prior to the University
cooperating with the provincial government through the tuition management program. It
seems likely that with the recent change in government, the tuition management program
will be revised or discontinued. The Planning and Priorities Committee looks forward to
engaging in discussion relating to the University’s tuition policy.
The second is the Library Acquisitions Budget. It is extremely important that our Library
has sufficient resources to continue to maintain and improve our collections. We note,
though, that over the second planning cycle the Library will be allocated additional
acquisition resources that approach what is being set aside for the Academic Priorities
Fund for the third planning cycle. The Planning and Priorities Committee recommends
that as a matter of policy the Library’s acquisition budget be considered from the
perspective of its buying power rather than simply a flat percentage increase. Our
impression is that most of the Library’s purchases are denominated in U.S. dollars. We
are concerned that at times when the Canadian dollar is falling against the U.S. dollar the
acquisition budget might be under-resourced. Alternatively, when the Canadian dollar is
rising, an automatic percentage increase in the acquisitions budget may overstate the
resources necessary to maintain our collections. The Library, of course, is just one
among a number of possible examples. More generally, the Planning and Priorities
Committee looks forward to continued discussion around the broad issue of resource
allocation.
Thirdly, we note that $500,000 has been allocated to student recruitment and retention as
part of the budget line, “Other investments” which we understand will be directed to
Student Enrolment Services Division. The Planning and Priorities Committee applauds
this commitment but would encourage that future expenditures, through partnerships
between SESD and colleges, also consider and support student recruitment and retention
at the college level.
In summary, the Planning and Priorities Committee supports the Multi-Year Operating
Budget Framework for the 2008/09 – 2011/12 planning cycle as providing a prudent and
responsible framework within which to achieve the objectives and academic priorities of
the University’s Second Integrated Plan.
John Rigby, Chair
Planning and Priorities Committee of Council
c E. Barber, Acting Provost and Vice-President Academic