Yesterday, the University of Lethbridge released a statement outlining budget challenges they’ll be facing in the 2020–2021 budget year.
Some of the information within the statement is based on a letter sent to administration from the minister of advanced education on 1 June 2020, as well as a local town hall held on 20 May 2020 (which I’ve included below).
The good news is that, according to the University of Lethbridge’s statement, the minister has postponed performance-based funding.
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The bad news is that the expenditure targets that were to accompany performance-based funding will still be in place.
For the University of Lethbridge, this means an expenditure limit of $209,411,484, which is slightly more than the $203,312,120 they thought they were going to be limited to. But it’s still not enough for what the University of Lethbridge needs to manage their programmes and services effectively.
In 2019–2020, for example, total expenditures were $225,364,000. That is about $10 million more than what it was in 2018–2019, but that’s primarily because of the new science building, with its operating expenses and amortization making up the bulk of the additional expenses.
Even if you account for that, they’d still be left with about $215 million in expenses, which is still $6 million more than the expenditure limit imposed by the provincial government.
Nancy Walker, the vice-president of finance and administration, mentioned in the town hall that there’s pressure from Advanced Education to reduce expenses significantly, citing the MacKinnon Report’s claim that Alberta postsecondary institutions spend $10,000 more per student than institutions in BC, Ontario, and Québec.
Despite the expenditure limit being higher than expected, it’s not as high as needed, and the U of L expects to reduce their expenditure budget by $8.6 million in the 2020–2021 budget year. That’s in addition to the budget cuts they already made during the last fiscal year.
On top of that, their operating grant is being reduced by 6.6%. There was also a 3.16% drop in the operating grant in the previous budget year.
Once you include the operating grant reductions of 5.11% next year and 5.38% in the following year, the university expects a cumulative reduction of 18.8%, which amounts to a combined loss of over $20 million between 2019 and 2023.
Walker reported that the reductions given to postsecondary institutions are based on ability to pay and the programmes each institution provides.
She also indicated that Advanced Education expects postsecondary institutions to reduce their dependence on provincial operating grants. In the previous budget year, operating grants made up about 65% of operating revenue for the University of Lethbridge. This budget year, it’ll be 60%. By 2023, Advanced Education wants it down to 40%.
That means that within the next 3 years, the University of Lethbridge must find a way to get non-public funding covering 2 out of every 3 dollars of their operating revenue. That could be fund-raising, increasing tuition and fees, providing paid community programming, increasing revenue-generating programmes, and so on.
Outside the operating grant, the University of Lethbridge had its Infrastructure Maintenance Grant restored to 2018–2019 levels, which was $4.2 million. Unfortunately, it was at $0 for 2019–2020, so functionally, it’s really only a $2.1 million per-year increase over the last two years.
The provincial government recently lifted a 4-year tuition freeze implemented by the previous government. Tuition increases are capped at 7% per year, and because of the pressure from the reduced operating grant, the U of L has chosen to implement the maximum increase each year, which will increase tuition for students by a cumulative 22.5% between now and the end of the 2022–2023 academic year.
Advanced Education has demanded that postsecondary institutions submit their board-approved budgets by the end of this month, demonstrating that not only will they meet the expenditure limits given to them but how they will, in detail, find savings over the next 3 years.
Any institutions not meeting the 30 June deadline will have their operating grant further reduced, as soon as next month.
Where does this leave the U of L?
Walker outlined that in the worst-case scenario—which she labelled “catastrophic”—the University of Lethbridge must cut nearly $30 million from its budget between now and the 2022–2023 budget year. In the statement released yesterday, the university claims that the worst-case scenario is the one they’re dealing with for their budget.
As mentioned above, for the current budget year, that means a budget reduction of $8.6 million. Again, that’s on top of all the cuts the U of L implemented last year.
Given the reduction in operating grants, tuition increases won’t be enough to cover expenses. More expense cuts are coming.
Since last November, the university has eliminated 83 positions, which amounts to about 7% of their total workforce. This does not include the temporary layoffs implemented during the COVID-19 pandemic.
Cutting nearly $9 million from this year’s budget will be impossible without further position reductions, given that 80% of operating expenses are salaries and benefits. That’s $8.2 million in salaries and benefits in this budget year alone.
And unless the ones making 6 figures are the ones the university lets go, this could potentially result in dozens more workers laid off this budget year.
Once again, budget cuts are job cuts.