Bringing stability to budgets and improving the carryover process

A five-year review of the University of Manitoba’s budget model and budget processes resulted in several recommendations to evolve the current model.

The most significant recommendations include revisions to the allocation of the provincial grant and how subvention – or grants from the university to academic units – is used, providing more stability and predictability to unit budgets.

Another key recommendation is to revise the policy governing the carryover of unspent funds.

The implementation of these recommendations is being overseen by two committees, and will be included as units begin their 2025/26 budget planning process.

More stability for academic unit budgets

The budget model revision committee reviewed and advised on the proposed changes to the current budget model.

“Many of these changes focused on making academic unit budgets more stable from year to year,” says Diane Hiebert-Murphy, Provost and Vice-President Academic. “Smoothing fluctuations in the allocation of the provincial grant will reduce budget variability from year to year, providing greater predictability and more closely aligning the allocation of resources to academic units with how the university receives its funding.”

The changes include:

• Providing a base operating grant to each unit. This is a move away from allocating the provincial operating grant based on performance drivers such as enrollment and research expenditures. In future, the provincial operating grant – which makes up 55% of UM’s operating revenue – will form a base portion of an academic unit’s budget and will be adjusted annually to reflect changes in grant funding and domestic tuition rates.
• Reducing the tax on revenue that funded the subvention grants to other units.
• Simplifying the allocation of central costs to academic units, while maintaining academic unit oversight of support unit costs and priorities.
• Maintaining the allocation of tuition revenue to academic units based on enrollment, incenting units to maintain their enrollment at capped levels or grow, depending on the faculty.

Revising the carryover process

The carryover committee reviewed the recommendations from the budget review and advised on changes to the existing carryover-of-surplus process.

Currently, the carryover process allows faculties and units to retain 100% of any unspent funds in a year.

Given the increase in accumulated carryover funds at the faculty and unit levels, along with changes to the budget model aimed at smoothing year-over-year financial fluctuations for faculties, the committee recognized the need to revise the carryover process.

“The new carryover process will strike a balance by allowing faculties and units to proactively save for key initiatives and maintain reasonable reserves for unforeseen circumstances, while encouraging timely use of funds in support of the university’s mission.” says Naomi Andrew, Vice-President (Administration).

The revised process will cap unallocated carryover at 10% of a unit’s annual operating budget and define and monitor specific circumstances under which a unit can plan to save for multi-year expenditures or capital projects.

Any funds in excess of the cap will be pooled and allocated to support institutional priorities by the Provost based on input from an advisory committee made up of deans, faculty members and others.

These improvements to the budget model and the carryover process will be implemented as units begin their 2025/26 budget planning process.

Find out more about the university’s budget model and the budget cycle by visiting the budgeting website.