University budget coping with the "perfect storm"
Faced with what University of Lethbridge officials describe as a ‘perfect storm’ of financial challenges, members of the University community are being asked to re-examine the way they do business to address a significant budget shortfall in coming years.
As described at a recent Town Hall meeting, the University is currently operating within its approved budget for 2009 – 2010, which is $147.5 million and includes a six per cent operating grant increase from the Alberta government – but that money only goes to support the current fiscal year of operations while the University, and other affected educational institutions across the province, formulate plans to address deficits expected in future years.
“The government has indicated that there will be no grant increases for the 2010–2011 or the 2011-2012 budget year,” Karen Clearwater, associate vice-president, financial planning, says.
“We are also faced with declining investment earnings because of the changes to the national and international economy, as well as static enrolment levels and the combined effects of provincial salary settlements with our union and faculty association. These factors come together to see the University facing up to $5 million budget shortfall in 2010-2011, and an additional $6 million shortfall in 2011-2012.”
Clearwater says the looming question, of course, is how to deal with a deficit and maintain services to the campus community?
“Since early January of this year, we’ve been preparing for the next two years as part of our regular budget planning process. The Board approves a three-year ‘rolling budget’ so we know in advance if there are any challenges facing us.
“In this case, the challenge is very large, and even with one year of advance notice it puts a real sense of urgency to our next two years of budgeting.”
The University is required by law to present a balanced budget, so over the next two years budget reductions are expected to be 4.3 per cent and 5.6 per cent. Over the past few months Clearwater says University officials have been meeting with executives of AUPE, the Faculty Association and other employee groups on campus to inform them of the challenges and to provide information to share with their front-line employees.
“Those meetings are continuing, and meetings such as the Town Hall are designed to encourage people to learn more about how this budget process works, and to offer us any suggestions they can think of as to how we can do business differently, and where we can achieve cost savings or revenue generation,” Clearwater explains.
Clearwater says the Board of Governors has requested preliminary budget scenarios prepared for September 2009, at which time they will be assessed.
“Just because we’ve asked for a reduction in a particular area doesn’t mean we’ll make it if there is some adverse affect to the operation of the University or our services to students,” Clearwater says.
“We will continue to invest in strategic areas that support our sustainability and student population and we have a three-stage plan that we are working with to bring some consistency to this process. First of all, we are asking all units to create their own three-year budget plans, with these reductions factored in, so all our planning is consistent with the request brought to us by the Board of Governors. Secondly, we move into to what we are referring to as ‘university mitigation’. That means position reductions through retirements, attrition or not filling vacancies, and realizing savings and revenue generation from university-wide ideas. Finally, we would move to reduce the budget shortfall – and after a thorough review – by asking units to reduce their budgets through reductions to positions, programs or non-essential services.”
Clearwater reinforced the concept of asking for input from all areas of the university community as a way to examine not just the numbers, but the process by which the University spends money and generates revenue.
“We know that information flows in many different directions on campus, and we are very interested in hearing from people at all levels of the university community. When you have a situation forced on you by circumstances that are out of your control, it makes people think differently. We all have a lot at stake here, and we all want to ensure that the University can be a sustainable place for not only our students but our employees.”
People with ideas can submit them to Karen Clearwater directly through interoffice mail (anonymous submissions are welcome) or e-mail at firstname.lastname@example.org.