2015/16 Budget update

The University of Manitoba’s budget process continues, with ongoing input from across the institution. The Budget Advisory Committee (BAC), which held its first meeting on Feb. 26, will meet again to review both budget submissions made by faculties and units across the University as well as other supporting materials. The BAC is advisory to the President; its members include senior administrators, faculty members, Board of Governors representatives, support staff, University of Manitoba Students’ Union representatives, a University of Manitoba Faculty Association (UMFA) assessor and other resource supports. The BAC will meet again in April to discuss and review draft budget and financial plans and to advise on how best to allocate funds in order to meet strategic objectives. Decisions will be directed by our strategic plan, which focuses on the needs of our students, staff, and faculty and researchers.

Decisions regarding unit budget reductions, reallocations and fiscal only allocations will not be finalized until the provincial grant is announced on April 30, 2015 concurrent with the timing of the provincial budget. In the meantime, options are being considered and will be discussed over the weeks to come with the BAC as well as with deans, directors and other senior executive leaders. Input has also been gathered from the wider U of M community via town halls and Senate and Board of Governors meetings, where attendees were encouraged to ask questions, provide feedback and share ideas.

The challenge is significant. To balance funding levels, including provincial funding and controlled tuition fee rates with increasing costs, all areas of the University must work together to identify more sustainable ways of aligning expenses with revenues, while maintaining the commitment to our institutional priorities, our students, faculty and staff.

 THE FISCAL CONTEXT: U Of M Budget Realities

• Operating expenses for 2015/16 are expected to increase by 3.1%

– The primary drivers are salary and benefit increases, library acquisitions inflation, which is impacted significantly by the U.S. exchange rate and non-salary inflation

• Operating revenues from all sources are projected to increase by 0% to 1.3%

– Eighty percent of our revenue is beyond our control, with 56% from the province of Manitoba in the form of a base grant and 24% from regulated tuition fees

• Domestic tuition fee rates are the third-lowest in the country and our international tuition fee rates are the lowest in the country
• Tuition fees in line with those of University of Saskatchewan would result in more than $45.2 million in additional annual revenue

• The actual 2015/16 budgetary shortfall will be dependent on the level of the provincial base grant increase, which is projected to be between 0 and 2.5%

– Our best-case scenario would be a $10 million budget shortfall

– In the event of a 0% grant increase, the shortfall may reach as high as $20 million

– As the 2014-15 fiscal year draws to a close, the 2015-16 revenue and expenditure projections are being fine-tuned to ensure they are based on the most current information

 Financial accountability and commitment

• The University of Manitoba is mandated to deliver a balanced budget in accordance with provincial legislation
• The University of Manitoba is committed to being fiscally responsible and transparent
• The University of Manitoba financial statements are prepared by professionals, in accordance with Canadian public sector accounting standards, and receive an unqualified audit report from the Auditor General of Manitoba
• According to 2012/2013 Canadian Association of University Business Officers (CAUBO) comparative data, U of M administrative costs and external relations costs are below those of other U15 Canadian universities
• The University pension plan has been managed so as not to be vulnerable to the extent of other university pension plans; in 2008 after the economic crash, the U of M was able to fulfill its pension plan obligations and continues to make it a priority to maintain the long-term sustainability of our plan
• The U of M is committed to developing a process for determining and ensuring program sustainability
• Budget decisions will be guided by our strategic plan, which focuses on the needs of our students, staff, and faculty and researchers

Ongoing investments in support of students, faculty and staff

Infrastructure and upgrades

• The Active Living Centre is an example of a capital investment into the campus experience, a remarkable upgrade to the fitness and recreation facilities on campus, creating a culture of active living for our community
• Investments to classrooms, labs and IT: classroom technology: $1.3 M in 2014/15; wireless technology: $1.8M in 2014/15; teaching laboratory renewal: $5.1M in 2014/15

Student financial support with an emphasis on graduate students: Since 2010, the University redirected $4.9 million to increase graduate student financial support and an additional $940,000 for undergraduate scholarships

Outstanding student experience and success: The U of M has invested in and continues to invest in: increasing opportunities for experiential and service learning; enhanced counseling services, including a campus mental health strategy and services; a separate career services office; and additional academic support services

Strategic allocations

Reserve funds

• The U of M is not considering using reserve funds to balance the 2015/2016 budget
• Current reserve funds are almost completely specifically allocated either by external restriction or by internal decision
• Repurposing of reserve funds would result in revoked commitments

Capital projects

• $43 million net revenue is prior to net transfers to other funds; it is not a surplus
• Capital support from the Province of Manitoba Department of Education and Advanced Learning has been insufficient for the U of M’s approximately $2 billion in assets — resulting in a deferred maintenance backlog of $312.1 million
• $40 to $50 million is spent annually on capital from operating funds because of decades-long static government funding that does not fully cover the University’s capital requirements
• Inter-fund transfer entries processed to offset capital expenditures recorded against operating funds in 2013/14. Money spent:

– Library acquisitions $9.9M

– Capital asset acquisitions (computers and related hardware, scientific and research equipment, AV equipment, vehicles/farm equipment, maintenance equipment etc.) $6.3M

– Land and building acquisitions $5.4M

– Total $21.6M

• Net Inter-fund transfers to the Capital Fund for deferred maintenance, capital construction projects and emergency capital purchases totaled $20.5M, of which $12.3M was transferred from unit budgets at the request of deans and directors; these funds may not have been fully spent prior to March 31, 2014 but were fully committed to approved capital projects
•  Total Inter-fund transfers to capital (spent and committed): $42.1M
• Funds allocated to capital but not yet spent: $22M; there also many other miscellaneous construction and renovation projects in addition to these.

 – Tache Hall

– Active Living Centre

– Department of math and department of statistics renovation (3nd floor, Machray Hall)

– Medicine Centre for Health Care Innovation

– Deferred maintenance

– Boiler replacement

Jobs

January 2011 and January 2015 comparative data

• AESES permanent positions: 1,926 in 2011; 2,098 in 2015 = an increase of 172
• UMFA positions: 1,070 in 2011; 1,130 in 2015 = an increase of 60

Throughout the budget process, University of Manitoba staff and students have been asked to provide their input and recommendations on how the institution should address the budgetary challenges. Some of the recommendations received can be seen here. See the 2015/16 Budget FAQ for more information.