May 18, 2007
The 2007-08 operating budget is balanced, and operating reserves are at about two percent of expenditures, confirming the University has met the financial objectives established three years ago.
“This budget is confirmation, that we were able to meet our financial targets,” according to Jim Spinney, director of budget planning in the Integrated Planning Office.
The operating budget, approved by the Board of Governors May 8, shows a 7.4 per cent increase over 2006-07, to $315.8 million from $294 million. A jump in the provincial operating grant, to $208 million, means the University will be able to hold tuition at 2004-05 rates for the third consecutive year.
The largest percentage increase in revenue – 41.7 per cent – is in income from investments, which is projected to reach $8.5 million in 2007-08. Spinney said good market conditions plus a change in investment strategy that saw the University move from short to longer-term investments and increase the amount of equity investments have combined to show good results. While the changes are not without risk, he said it is a risk the Finance and Investments Committee of the board is willing to take.
In terms of other revenue sources, tuition from both credit and non-credit courses is expected to dip by about 0.7 per cent, to $80.9 million from $81.5 million last year, reflecting a lower enrolment projection than a year ago.
On the expense side, salaries and benefits are the single biggest cost in the budget at $227 million. That is a 4.7 per cent increase over the previous year, due mainly to higher than expected settlements with various bargaining units. Spinney said those higher costs are offset to some extent by the increase in the annual operating grant from the province.
Spinney went on to point out other highlights in the budget, including an additional $1 million to the Academic Priorities Fund. He said that fund will be used to support various academic priorities of the University that will be identified in the next planning cycle.
The University Learning Centre/Library Transformation project will receive $400,000 this year. That money would typically have been used to increase the Library acquisitions budget, which will now remain the same as last year at $7.8 million. Spinney said an appropriate increase in that amount will be considered as the new multi-year budget framework is developed.
In response to last year’s Huskie Athletics external review, the University has committed an additional $542,000 annually to that program. Of that total, $165,000 will go to the Championship Fund to cover costs associated with sending teams to regional and national final competitions. As Spinney said, “the more successful you are, the more money it costs, and our teams have been very successful.”
The remaining $377,000 of the permanent allocation will go to general operations. He added the University will wipe out the Huskie Athletics accumulated deficit of $1.13 million in the 2006-07 fiscal year.
The budget also includes a one-time allocation of $1.17 million for various centennial celebrations including hosting Congress 2007.
Turning to capital expenditures, Spinney pointed out the provincial government increased the University’s annual capital grant by $3.06 million for 2007-08, which allows for some additional allocations including $1 million to campus core revitalization. The money will be used to address renovations and an overall space deficiency. An additional $1 million a year for 10 years will be directed to short term space relief, including leasing space off campus. These funds would normally be used to pay the premiums on the University’s long-term disability plan.
Spinney explained that the self-funded plan has accumulated a significant surplus so the University is taking a 10-year holiday from paying the $1.9 million annual premium. That payment will be divided into two parts - $630,000 as permanent annual savings that will be used to support a new integrated Health and Wellness Resource Centre as well as other operating budget priorities, and $1.27 million per year for 10 years divided between space relief ($1 million) and the Academic Priorities Fund.
The decision to suspend the premium payments will be reviewed periodically, he said, and when they resume, it is expected the annual payments will be about $1.27 million a year.
Other capital funding increases include an additional $1.6 million for minor capital projects (alterations, grounds, utility infrastructure and asbestos abatement), bringing the total minor capital allocation to $6.8 million annually.
The budget also calls for $1 million to be spent on funding capital equipment for new faculty, a $300,000 increase over last year. Spinney said the University has eliminated that fund’s accumulated deficit of $970,000 and “the intent would be that at $1 million per year, the faculty capital start-up fund will now be sustainable.”
Now that the budget is complete, the University moves directly into preparation of its Operations Forecast for 2008-09 and development of the new multi-year budget. Spinney said both must address continuing financial pressures in areas like student recruitment and retention, funding academic priorities, the ongoing space shortage, increasing the activity levels in University Advancement, and investment in communications and technology.
Office of Communications, University of Saskatchewan