May 21, 2014
The 2015-16 budget planning process is now underway, beginning with the shared service units over the summer and then with the faculties and schools in the fall. This year, both shared service and academic units will need to plan for additional pension payments as a result of the solvency deficit in the Queen’s pension plan and the need for additional going concern payments.
|Provost Alan Harrison|
As it stands, the university is required to begin paying down the $292 million solvency deficit over a period of 10 years, beginning in 2015. Current estimates pin the additional pension expense to the university at $22 million annually. This will bring the total University pension expense to $62M annually.
This year’s budget planning guidelines ask shared services to prepare their budget submissions under two scenarios: one involving no additional funding to offset the additional pension payments, and another that provides funding to completely offset the payments.
“The purpose of the two scenarios is to solicit the information required to determine the potential impact of the additional pension payments, and there is no presumption that either scenario will be applied to any unit,” says Alan Harrison, Provost and Vice-Principal (Academic), who is responsible for the university’s budget. “While we must ensure the shared services have the resources required to meet the needs of the university, we must also ensure our financial sustainability by allowing as much revenue growth as possible to flow to the faculties and schools in support of continued revenue growth and diversification.”
The university faces a number of financial challenges in addition to the pension solvency deficit, including static or declining government grants and a $242 million deferred maintenance backlog, making revenue growth and diversification, as well as cost containment, priorities for the university. Provost Harrison says that the university is committed to balancing its budgets.
“The approved 2014-15 budget is balanced, but only after a drawdown from cash reserves. Since some of this drawdown will fund ongoing expenses, the budget isn’t yet structurally balanced,” says Harrison. “The university is committed to achieving a structurally balanced budget to help ensure our financial sustainability so that we can continue to protect and advance our academic mission.”
You can read more about the 2015-16 budget process in a report to the university community from the Provost, in his role as chair of the Provost’s Advisory Committee on the Budget.