$32 million: Progress made in operating budget adjustments

As the university’s financial team reviews 2013-14 results, they have also been calculating progress made towards closing the projected gap between our annual expenses and revenues. Based on actions taken in 2012-13 and 13-14, about $32 million in permanent budget adjustments has been achieved through a combination of measures, with about $12.5 million remaining, based on our original projections, to be achieved through either additional net revenue or expense reductions, or a combination.

Savings in the first two years of operating budget adjustments (2012-13 and 13-14) are a result of:

  • Workforce planning actions: $9.8 million
  • Projected net savings from the incentive plan for retirement for faculty, after strategic faculty reinvestment : $7.6 million
  • Changes to our investment strategy and increased reliance on investment revenues in our operating budget: $6.6 million
  • Changes in institutional practices and other initiatives, such as two up one down (temperature control) and non-salary cuts: $8 million

Given the progress that has been made to date, changes in university leadership and the concerns raised about the pace of the change process, university leaders are taking some time over the summer to determine next steps. The president and vice-presidents will spend this time working with deans, executive directors, associate vice-presidents and unit leaders to assess which actions will proceed right away and which require further discussion or consultation. More information on next steps will be provided in the fall.

In the meantime, I will be using the blog over the summer to continue the discussion on financial sustainability, to accept feedback, and to provide information. If there is a topic you would like to hear about, please let me know.

Although the past few years have been challenging, and change is never easy, the university has achieved real progress due to the hard work of many on our university campus. I want to thank you for your patience as we determine what more is needed to ensure the ongoing financial sustainability and renewal of our university.


The university’s financial planning and reporting process

In both June 2012 and 2013, we presented preliminary year end results and the upcoming year’s detailed operating budget to the campus community. Staff in our Financial Services Division and the office of Institutional Planning and Assessment are working through our current financial position to be able to provide this annual update to the campus community in the near future. In advance of its release I thought it would be a great time to go over the elements that make up our key financial planning and reporting processes, so you are better informed of the role each plays.

The university’s detailed operating budget, which represents about 50% of the consolidated budget, outlines the operating revenue we expect to bring in and the operating expenses we are planning for in the upcoming year. Our budget year runs from May 1, 2014 to April 2015. Our budgeted revenue is based on an approximate 2% increase in our provincial operating grant (announced in March), along with projections for tuition/enrolment and investment income. Our budgeted expenses are approximately 75% personnel, along with additional targeted expenses, utilities, etc. This information is expected to be shared later this month.

The annual financial report looks back to the most recent year (in our case, May 1, 2013 to April 30, 2014), including what we actually achieved in respect to our 2013-14 detailed operating budget. In spring 2013, we released a detailed operating budget for 2013-14 indicating a $3 million budgeted deficit based on plans to continue with budget cuts. At this time we are confident that, between operating budget adjustment actions taken to date and favorable actual results primarily driven by investment income, we will achieve a surplus for 2013-14. Although we have preliminary year end information, the official audited results will be available in the early fall.

The operations forecast represents the university’s funding request to the Government of Saskatchewan’s Ministry of Advanced Education. This document is prepared and submitted each summer in advance of the provincial budget announcement in March of the following year. This document is key in outlining our priorities to government and the resources needed to fund these priorities. We expect to share the 2015-16 operations forecast with the campus community this summer.

At the beginning of each planning cycle (the current cycle is 2012-2017), a multi-year operating budget framework is developed to support the university’s integrated plan. This framework is based on a number of key planning parameters, such as assumptions for the operating grant from the province, the level of tuition rates and student enrolment, salaries and benefits costs, and a number of other costs such as the operation of new facilities, utility rate increases, software and systems upgrades, and compliance costs associated with legal and regulatory changes. This framework is currently being reviewed to determine the progress made since its last release in 2012, allowing us to update our projected gap between revenue and expenses by 2017. This review is scheduled to be completed by fall 2014.

We are currently reviewing our progress against our original $44.5M operating budget adjustments target. The results of this review will be released shortly.

Links to the most current versions of each of the documents listed above can be found on the “Resources” tab at usask.ca/finances. I encourage you to use this blog to ask any questions you have regarding these financial documents—it’s important for each of us to understand the role these tools play in our work towards financial sustainability.

Please continue to visit this blog and the finances website for updates on our finances in the coming weeks.