By Jon Roe
In two years, the University of Calgary could be facing a deficit situation–if the provincial government commits to a yearly grant increase of less than the promised six per cent per year.
The university is in the process of developing their four-year business plan and they’re projecting a deficit past the 2008-09 academic year. Currently, the university receives a six per cent increase annually to their base-operating grant from the provincial government. The government committed to a six per cent increase each year up to and including the 2008-09 year in 2006.
“We don’t have the information in the later years of the business plan, so we’re putting in figures that we think are conservative and these figures are less than the current budget support we get from the province,” said U of C vice-president finance and services Mike McAdam.
The recent decision to stop allowing credit cards as payment for tuition was unrelated to the projected deficits, McAdam noted.
McAdam wouldn’t disclose the size of the deficit the university is projecting before the Fri., Apr. 11 board meeting, when the four-year business plan will be presented to the university’s Board of Governors.
The provincial government will not be releasing what the operating grant increase will be for the later years of the U of C’s business plan until mid-Apr. or early May when the provincial budget is announced.
Advanced Education and Technology assistant director of communications Donna McColl explained that the government develops budgets in three-year cycles that are revised quarterly.
The government first committed to a six per cent increase to the grant in 2005 and renewed the commitment in 2006. Previously, the university received a four per cent increase per year.
“Where they go in the future and whether [the increase is] sustainable–[post-secondary educational institutions] have been encouraged to use more reasonable increases in their forecasts,” said McColl.
McAdam noted the university is making their case to the provincial government for an increase of six per cent per year or greater.
“They understand our dynamic,” said McAdam. “It’s the same message being delivered by every post-secondary educational institution in the province.”
Students’ Union president Julie Bogle explained she hopes the U of C’s commitment to increase the quality of education with the recent tuition increase is not in jeopardy.
“The fact they are projecting deficit budgets is of great concern to the student experience and to students in general,” said Bogle. “Our future students should [never] be compromised by the fact that there isn’t appropriate government funding, or whatever the reason may be [for the deficits].”
The university is not allowed to submit a deficit budget. If it were to enter a deficit situation, it would have two options, according to McAdam: increasing other sources of revenue or cutting expenses. However, the U of C has limited control over it’s revenue. Government of Alberta grants, determined by the provincial budget, made up 44 per cent of the U of C’s revenue in 2006-07 and tuition made up 15 per cent. Tuition can only increase to a maximum of inflation indexed to Alberta’s June-to-June consumer price index.
The U of C can also cut expenses. Salaries made up 51 per cent of the U of C’s expenses in 2006-07, but McAdam noted any salary cuts would be made as a last resort.
“The budgetary authority for [cutting expenses] is in the hands of the deans and other senior budget officers,” said McAdam. “It doesn’t necessarily lead to cuts in any positions.”
Regardless of what the university needs to do to balance the budgets, McAdam doesn’t think it will be the same sort of drastic cuts that the university has faced in years past.
“The fiscal situation in Alberta, and indeed the support of post-secondary education has changed dramatically in the last five-year time frame,” he said. “There’s no reason, given our economy, to speculate that we’d head back severe budget cutting eras we faced in the early and mid-90s.”
The university threatened to make a four-year cut–20 per cent of the budget–in four years in the fall of 2004. The government guaranteed a base operating grant increase of six per cent per year for three years with their 2005 budget the following Apr., a commitment which was renewed for another year in 2006. The university then cancelled their plans to cut the budget beyond the 2005-06 year.