Notice Board

Robert Cooney
robert.cooney@uleth.ca
Univ Adv - Communications
September 16, 2013

September 2013 Budget Update

As we begin this new academic year, our focus is on our students, our academic programs, and our research activities. There is much anticipation about the year ahead and also considerable energy and excitement. At the same time, we must maintain our focus and attention on the work that began on March 7 with the release of the provincial budget and the accompanying 7.3% cut to the U of L Campus Alberta Operating Grant. Our task to reduce our University operating budget by $11.8 million in response to the 2013/2014 Operating Grant cut is ongoing.

In the spring, much work was done to achieve reductions of $8.5 million. Major components of these reductions included the Academic Staff Voluntary Retirement program, an increase in student fees, and an increase in revenue from our ancillary services operations. These strategies are more fully described in our public Community Updates and previous budget messages: http://www.uleth.ca/budget-finance/

Over the course of the summer, 9 budget advisory committees began their work to identify additional savings, revenue opportunities and efficiencies. Their reports have been received in draft by President's Executive. When the reports are finalized, a summary of the recommendations that are accepted will be released and implementations will begin in the weeks that follow. While we expect savings to come from these recommendations over the next year, many will require a change in how we conduct some activities at the University and thus will take time to implement.

A significant percentage of the operating budget of the University (83%) is represented by compensation costs for those who work here. A commitment has been made that all employment groups will be treated respectfully and fairly through the budget reduction process. At the outset, APO staff, Exempt Support Staff and senior administration had their compensation frozen at the 2012/13 level. Over the course of the summer, activity with the University of Lethbridge Faculty Association (ULFA) continued and very recently, with the aid of an Arbitrator, a tentative economic benefits agreement was reached. However, no details of this agreement can be released publicly until the agreement is ratified by ULFA members and the Board of Governors of the University.

Compensation related discussions have also continued with representatives of the Alberta Union of Provincial Employees (AUPE). The end date on our collective agreement with AUPE is June 30, 2014 and thus the provisions of the existing contract must be adhered to, including a cost of living adjustment of 2% to all AUPE members and merit increases between 0 to 4% if the AUPE members are not at the top of their salary range maximum.

As a result of the reduction in our Operating Grant, the University chose to apply the collective agreement and gave AUPE members notice of eleven layoff days, spread through the year for all AUPE members at the University. The decision to follow this path was of course difficult but our guide in making this decision was to ensure all employee groups contributed to the necessary budget reductions and to limit the number of staff who would potentially be permanently laid off if an alternative solution was not found. As well, by spreading the layoffs over the year, it is felt that the personal financial impact felt by AUPE staff would be reduced when compared to the alternative of having to endure loss of pay over consecutive days. Significantly, the implemented strategy will lessen disruption to our students. AUPE has disagreed with the Board's interpretation and implementation of the collective agreement concerning the layoff days, and has filed a grievance against this action, which is within their right to do so. This grievance may take some time to resolve and the outcome will have implications on the budget and our continuing efforts to reduce our deficit.

As you can see, there has been a lot of budget activity over the summer but there remains much to be resolved before we can confidently say we have completed our necessary budget reduction work. Adding to our challenges, we must also begin our development of the 2014/2015 University operating budget. In developing this budget we will be assuming no operating grant increases from the government and a very limited tuition increase. Given this scenario, we expect another challenging budget process that sees our University in a continued deficit position. Our expectation however, and that of our Board of Governors, is that the University will submit a balanced 2014/2015 operating budget to the Provincial Government.

Based on preliminary projections by Financial Planning, our deficit to be overcome for 2014/2015 is between $7 million and $8 million, consisting of approximately $3 million remaining from 2013/14 and an additional $4 million-$5 million anticipated for 2014/15. This deficit combines our continued need to overcome the 7.3% operating grant cut and the fact that most of our costs have inflationary increases, including items like compensation and utilities, while our main revenue source, the Campus Alberta Operating Grant is not increasing at all.

As has been outlined in prior communication, our ability to address budget deficits is primarily restricted to the use of operating funds received through tuition and fees, ancillary services revenue and the Campus Alberta Operating Grant. Other funds received by the University - like the one time allocation of $12.8 million for the planning of the Destination Project and infrastructure maintenance funds must be used for the purposes for which they were received. There are no options for re-directing the purposes of these project specific funds to the operating fund.

I know that as a University community we are both frustrated and fatigued by these budget issues. Yet I maintain a great amount of optimism that the future of the University of Lethbridge is very bright. Our planning for the Destination Project continues. Our enrolment is stable, our programs are resilient and of high quality, our faculty members are among the best in their respective fields and their research is meaningful and impactful, and our staff is committed and professional. By all measures we are a University whose star continues to rise. We must allow our thoughts and imagination to look beyond our immediate budget related concerns and continue to drive our institution forward.

On October 10, 2013, at 3:00 pm in the University Theatre, I invite you to join me at the annual Fiat Lux address. While budget is an inevitable part of my address, I will focus on the future of the University and those initiatives and activities that we must pursue to continue the march forward of the University.

As a community we will overcome the budget challenges that have been imposed on us and I am confident that by working together we will continue to move the U of L forward to a secure and celebrated future.

Dr. Mike Mahon
President and Vice Chancellor