June 10, 2011
The University’s 2011-12 operating budget is the subject of the latest financial update from Provost and Vice-Principal (Academic) Bob Silverman and Vice-Principal (Finance and Administration) Caroline Davis.
The Board of Trustees approved the financial plan at its May 6 meeting when it was updated on Queen’s current financial challenges and the administration’s commitment to bring an end to deficit budgets this fiscal year.
In 2011-12, the university will run a $3 million deficit. It will be the fourth year of deficit budgets.
“While efforts have been made to limit the size of the annual deficit, it is a situation that cannot continue,” the V-Ps say. “The administration has committed to ending deficit spending, and to presenting the Board with its plan to eliminate the structural deficit at the March 2012 Board meeting.”
To achieve the goal of a balanced budget next year, a further $6.3-million in cost-containment and/or secure alternate or increased revenue opportunities are required.
“Planning is underway to realize this goal, but enormous challenges loom on the horizon,” the V-Ps say. “The $6.3 million is NOT a one-time cost, but must be generated through base funding. That will involve either cuts to current operating funds or finding sustainable sources of alternative funding (a possible but unlikely solution).”
The V-Ps say special solvency payments towards the pension plan are the biggest fiscal issue, starting at $8 million this year but possibly rising to $34 million by 2015.
“We simply do not have the room to absorb charges of that magnitude without seriously eroding our ability to deliver core services,” say Provost Silverman and V-P Davis. “To that end, we have begun exploring all the options available to us in dealing with this challenge. To help fund these payments, there will be an additional charge this year to all unit budgets of 1 per cent of pensionable earnings, rising to 3 per cent next year. In addition, we will need to discuss everything from credit options to early-payment options to selling university assets. This work will continue as a top priority. At the same time we must live within our means, which will require our community working together to make this happen- it won’t be easy.”
The financial update also reviews items in March’s provincial budget that will impact Queen’s operating budget and those of post-secondary institutions, in general.
These include funding for an additional 41,000 university spaces in Ontario over the next five years, (providing potential revenue opportunities from increased enrolment, but bringing with it accommodation and classroom space challenges) and slowed investment for capital projects and deferred maintenance.
A recent audit of the university’s deferred maintenance needs set the backlog at $234 million. The V-Ps say the university must spend $2.8 million on critical projects this year. Funds will be targeted at the high priority items identified in the audit, as well as classroom upgrade priorities.