U of G in Solid Fiscal Health, Budget Plan Presented to Board of Governors

Facebooktwitterpinterestlinkedintumblrmail

University of Guelph entrance wallThe University of Guelph is fiscally solid, with the resiliency and ability to address current budgetary challenges and maintain financial stability, the Board of Governors learned today.

“Understandably, the University’s financial state is on many people’s minds as we continue to deal with the multiple effects of the global pandemic,” president Dr. Charlotte Yates told the Board during its April 21 meeting.

Like most universities, U of G lost revenue and incurred higher costs because of COVID-19. The resulting budgetary challenges have been shared and discussed during public town halls and other meetings with the University community, said Yates.

Recent media reports about restructuring amid insolvency at Laurentian University leading to faculty layoffs and program closures have heightened concerns.

“We want to assure the Board, our faculty, staff, students, alumni and supporters that U of G is in strong fiscal health and has a history of financial resiliency,” Yates said.

“We have the capacity to brace against the changing landscape and global implications of the pandemic while maintaining our commitment to teaching, research and the student experience and moving toward fiscal sustainability.”

U of G is in a solid overall fiscal position due to prudent financial management and planning, with strong financial indicators and healthy reserves, said Sharmilla Rasheed, vice-president (finance and operations).

“This has preserved the ability of the University to offset unforeseen situations and meet its obligations and strategic priorities now and in the future.”

The University tracks various indicators of fiscal health — benchmarks used in monitoring capital debt levels and the costs of servicing debt.

As well, the University is currently transitioning to a multi-employer University Pension Plan July 1, which will eliminate the need for  special solvency and guarantee fund payments. U of G’s Heritage Fund, which is earmarked for important strategic or long-term financial objectives, also remains strong.

Board members learned that U of G has both short- and long-term plans for balancing the budget.

The University is projecting an operating budget deficit of $25.4 million in 2021-2022. The deficit is not unusual or unexpected, said Dr. Gwen Chapman, provost and vice-president (academic).

COVID-19-related costs account for about $13 million of the forecasted in-year operating budget deficit and projected to be $3.6 million in fiscal 2021-2022. The global pandemic caused sudden, wide-ranging, unanticipated financial implications for U of G, Chapman said. The University lost tuition and ancillary revenue due to decreased enrolment and fewer students, faculty, staff and visitors being on campus.

At the same time, U of G experienced higher costs associated with the transition to alternative forms of teaching, and with enhancements and increased services and costs incurred to ensure safe campus facilities.

Even before the pandemic, campus expenditures had outpaced revenues since 2018-19, mostly because of changes to the provincial tuition framework. In 2019-2020, domestic tuition fees were reduced sector-wide by 10 per cent and then frozen for three years. Tuition and government grants make up more than 70 per cent of revenue supporting the University’s core mission.

At the same time, expenses (primarily salary and benefits) continued to increase with inflation and the University had to make significant and necessary investments in its aging IT infrastructure.

“The University has an articulated path to deal with the projected deficit over the next few years that involves increased efficiencies and targeted revenues,” Chapman said.

“Already, we have changed our approach to budget planning and processes to make them more dynamic and responsive, which allows us to better navigate current and forthcoming challenges, while improving accountability and transparency.”

For example, cost containment strategies undertaken in 2020 helped to reduce the University’s projected 2020-21 operating budget deficit to $17 million from $29.6 million.

“We are aware of the vital importance of undertaking immediate action while laying the ground for continuous improvement in how we operate,” Chapman said.

Short-term budget plans call for the University to continue to identify additional revenue streams and cost efficiencies, implement and upgrade information technology systems, and increase international enrolment. U of G also plans to undertake strategic and careful faculty renewal, organizational reviews, changes to user fees, more flexibility in units and staffing, and digitalization of operations.

“The University is well positioned for the future, including building on rapid changes we have already made that were necessitated by the global pandemic,” Yates said.

“We can leverage what we have learned about the use of technology, about flexibility in work, teaching and learning, and about enhancing accessibility and inclusion to help us improve efficiencies and ensure financial sustainability.”