President Loreman’s Wednesday Update – Budget edition. March 3, 2021.Posted on: Mar 3, 2021
Dear CUE Community,
As the Wednesday update last week was written I would typically provide this week’s update via video, however, the topic I would like to address today is much more conducive to the written form.
As a result of the Provincial Budget handed down by the Government of Alberta on Thursday, February 25, CUE received a 1.1% cut to our Campus Alberta grant for 2021-22. Any funding cut is challenging and unwelcome, however, we are committed to working with what we have and to helping the Ministry of Advanced Education address challenges identified in the Alberta system.
Following the Provincial Budget news, CUEs Board of Governors approved our operating budget for the 2021-22 financial year, which runs from April 1, 2021, to March 31, 2022. We managed to balance our operating budget and avoid projecting a deficit. In Operating Budget 2021-22 we anticipate $40.3 million in expenses and only slightly more in revenues, for a projected surplus of around $25,000. This is an exceedingly small projected surplus for a budget of our size, and we will need to be very careful in the current year.
Preparing Operating Budget 2021-22 was particularly challenging. We adopted a very conservative approach, building into our assumptions anticipated revenue losses and increased expenses in areas including but not limited to employee salaries, necessary hiring, and the costs of new programs. We saw budget requests relating to expenses increase, while at the same time our revenues have decreased mostly due to:
- Covid-related reduction in revenue from international students.
- Reduction in campus-related revenues including but not limited to facilities rentals, residence fees, parking fees, food service, event attendance, etc.
- Covid-related downturn in new student enrolments compared to recent years (although overall our numbers are up).
- A 1.1% cut to our Campus Alberta Grant from the Government of Alberta.
As we prepared the budget, we placed a focus on trying to retain front-line services to students. This resulted in the following outcomes:
- All institutional travel for the 2021-22 budget year has been cancelled, with the exception of a small but necessary budget for recruitment of students and faculty.
- Approved hiring of 5 new full-time faculty members, while postponing other approved faculty hiring requests for at least 12 months.
- The postponement of a number of approved support staff hires for varying periods of time.
- Permanent closure of the School of Music. Some of the musical ensembles will likely continue to operate on a self-funded basis, while others will cease to operate.
- Significant reductions to the budgets of our various research and innovation centres where revenue raising will be increasingly emphasized as we move forward.
- A reduction in our marketing and CUE 100 celebration budgets.
- Campus Recreation will undertake some changes to programming through collaboration with the CSA and GSA, and will put various protocols in place to, we hope, safely reopen the fitness centre in Fall 2021.
- A significant reduction in our Athletics budget. Moving forward our Athletics Department will place a stronger focus on revenue generation for future budget scenarios.
Students will naturally be interested in what tuition increases have been approved. This is complicated. CUE is not implementing a percentage increase to tuition in 2021-22. Full-time students taking 15 credits per semester at CUE will, however, see an increase in what they pay because we are changing how we charge for our programs. In time this change will bring us generally into line with practice at post-secondary institutions across Alberta, but it requires a little explanation.
To this point in our history CUE has capped tuition charges at 12.5 credits for undergraduate students. This means that undergraduate students taking a full 15-credit course load have only paid for 12.5 of those credits, essentially receiving a discount compared to those taking 12 credits or less. No other university does this. We are removing this cap/discount and implementing a system whereby students pay for all credits they take. This will be implemented incrementally over the next 3 years.
- In the 2021-22 academic year undergraduate students taking 15 credits will be charged for 13.5 credits as opposed to the current 12.5 credits ($298 increase per term or $596 increase per year).
- In Operating Budget 2022-23 we will be proposing that undergraduate students taking 15 credits will be charged for 14.5 credits ($298 increase per term or $596 increase per year).
- In Operating Budget 2023-24 we will be proposing that undergraduate students taking 15 credits will be charged for all 15 credits ($149 increase per term or $298 increase per year).
Similar to the situation with our undergraduate students, our international students also benefit from an international fee cap at 9 credits. In the 2021-22 academic year tuition for existing international students will increase from paying for 9 credits to paying for 12 credits if they are taking 12 or more credits ($375 increase per term or $750 per year). In Operating Budget 2022-23 we will be proposing that international students taking 15 credits will be charged for the full 15 credits they take ($375 increase per term or $750 per year). Medical insurance fees and repatriation fees have remained the same.
Mandatory fees will remain the same as this past year for all students, with the exception of the technology fee which will increase by 15% as result of increased demand of technological needs. We have reduced the athletics fee by 10% as we are unable to guarantee use of the gym and workout facilities.
In addition to our operating budget, there is another type of budget that the Board of Governors approves each year. That is our capital budget. Capital budgets can be looked upon as a plan for spending what is in our savings account (or loans, if required). Capital budgets generally include big ticket items such as new buildings, major renovations, or expensive pieces of equipment and it is good practice to keep them entirely separate from operating budgets. Looked at in household terms, your operating budget is what funds your daily purchases of groceries and pays the gas bill. The capital budget is used for purchasing that new car. Just as you don’t want to spend your grocery money on that car purchase, it is not a good idea for a university to blur the lines between operating and capital budgets. It is not sustainable. Capital Budget 2021-22 allows for approximately $3.7 million in expenditures which will permit us to continue the work towards our New Academic Building and student Quad, carry out maintenance, invest in new technology, and pursue an additional potential opportunity.
The increases in cost to undergraduate students taking a 15-credit course load and international students taking more than 9 credits are regrettable but necessary if we are to bring our tuition regime into line with a more logical and defensible system such as they have at other universities. We hope that not implementing an additional across-the-board percentage increase to tuition at CUE will help to alleviate the impact of this change. Operating Budget 2021-22 contains some necessarily deep cuts and painful changes, but has been designed with an eye to preserving the quality and availability of our front-line services to students.
Stay home, stay safe, and stay healthy,
Tim Loreman, PhD.
President and Vice Chancellor.