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University of Alberta facing financial issues, plans to cut budget by 4% next year

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The University of Alberta says it is facing significant financial challenges. In a blog post this week, two vice presidents from the university say budget cuts are needed to get their fiscal house back in order. Tom Vernon explains – Oct 26, 2017

The University of Alberta will be cutting its budget by nine per cent over the next three years in the face of some significant financial challenges.

Deans and unit leads are being asked to reduce their 2018-19 budgets by four per cent and plan to cut an additional 2.5 per cent the following year and again in 2020-21.

The school says the economic problems are both external and internal.

READ MORE: What’s in 2017 Alberta Budget for Edmonton?  

“We are keenly aware that the province of Alberta is managing a difficult fiscal situation, which could ultimately impact the Campus Alberta grant,” two U of A vice presidents wrote in a blog posted Tuesday.

“The government is also in the process of a significant review of the funding formula underlying the Campus Alberta grant and the framework for tuition and fees.”

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A government spokesperson said the province dedicated a two per cent increase to post-secondary schools’ base operating grant for the past three years.

The U of A has received funding through the Campus Alberta grant each year. In 2015, it received $578.8 million. In 2016, it received $607.7 million and $624.1 million this year.

Over three years, the university’s Campus Alberta grant has increased a total of $56.7 million, Samantha Power said. In 2015, that increase was $11.3 million. In 2016, it was $28.9 million and $16.4 million in 2017.

READ MORE: Alberta NDP tables fingers-crossed budget, projects $10.3-billion deficit 

The post-secondary institution is also feeling the squeeze internally, especially when it comes to its operating budget.

“We have been allocating and spending more than we have received in unrestricted revenue for a number of years,” the blog reads.

“As a result, a structural deficit has been growing… now reaching almost $14 million for the current year.”

Steven Dew and Gitta Kulczycki explained the operating budget includes the revenues from the Campus Alberta grant and tuition, and the fact that the school has been relying on short-term investment income to keep the deficit to this size.

READ MORE: University of Alberta president outlines historic budget cuts 

While the university is looking at ways to address the challenges, its immediate plan is to eliminate the structural deficit and reduce reliance on investment income.

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For preliminary budget planning purposes for 2018-19, deans are asked to be conservative.

“Given Alberta’s challenging fiscal position and uncertainty regarding the government’s ongoing reviews of the post-secondary education funding model and tuition framework, the university has made the conservative assumptions that there will be no increase to the Campus Alberta grant and no increase to tuition and fees over the next three years.”

Based on those two assumptions, deans and administrative unit leads will be asked to reduce their budgets over the next three school years:

  • 2018-19     4.0% reduction
  • 2019-20     2.5% reduction
  • 2020-21     2.5% reduction