Board approves 2015-16 operating budget

Board approves 2015-16 operating budget

May 14, 2015


The Queen’s Board of Trustees has approved the university’s operating budget for the 2015-16 fiscal year. The Board was presented with the $513-million, balanced budget at its May 8 meeting, along with budget projections for the following two years.

“The university is committed to ensuring its continued financial sustainability while protecting its transformative student learning experience and research prominence,” says Daniel Woolf, Principal and Vice-Chancellor. “Queen's budget for 2015-16 is especially tight.  In addition to the pension deficit, static or declining government grants, and a need for infrastructure renewal across campus, the hold-harmless payments reach a maximum of more than $15M this year, after which they diminish year by year until they are completely eliminated in 2019-20.”

Highlights of the 2015-16 operating budget:

  • Protects the university’s academic mission while addressing financial challenges
  • Balanced after draw-down of carry forward and cash reserves
  • 95% of revenue linked to enrolment through tuition and government grants
  • Assumes increase in 2015 student intake in line with the Senate-approved enrolment targets
  • Provides additional funds for student financial aid to support increased intake
More information about the budget process, including a glossary of budget terms, is available on the Provost's website.

Pension payments to increase

Among the most significant features of this year’s budget is a legally required increase in the university’s pension payments, once it files an updated actuarial valuation of the Queen’s Pension Plan this summer. Beginning in September, payments on the plan’s $175-million deficit calculated on a going concern basis (assumes the plan continues to operate) will be $20.7 million annually, up from $14.4 million annually over the previous three years.

Queen’s, like all Ontario universities operating a defined benefit or hybrid pension plan, is also required to pay down its pension deficit calculated on a solvency basis, a hypothetical scenario that assumes Queen’s closes its doors and terminates the pension plan. On a solvency basis, the deficit sits at $285 million and would add an additional $12.7 million in annual deficit payments for 10 years, if the university were to begin those payments in September.

However, Queen’s recently received stage two solvency relief and has opted to defer payments on the solvency deficit for three years and then pay down the entire balance over the following seven. During the three-year deferral period, the university will build a reserve fund to offset the impact of the solvency payments that will begin in 2018.

“All units at the university will have an additional charge on their budgets, beginning in September, to cover the additional pension deficit payments,” says Alan Harrison, Provost and Vice-Principal (Academic). “The university continues to look at all options to mitigate the full impacts of the pension’s solvency deficit, including possible participation in a multi-employer, jointly sponsored pension plan (JSPP) that has a permanent exemption from solvency payments.”

Among the pension options the university is looking at are the possible participation in a new JSPP for the university sector in Ontario, or a merger with CAAT, the JSPP for the college sector. Any changes to the university’s pension plan would be subject to collective bargaining with employee groups and would follow the Ontario government’s legislative framework for employee and retiree consent.

“Pensions that are already being paid are guaranteed never to be reduced,” says Caroline Davis, Vice-Principal (Finance and Administration).

The 2015-16 budget was developed under the direction of the Provost and Vice-Principal (Academic) with the input from the Principal, all faculties, schools and shared service units, and with the advice of the Provost Advisory Committee on the Budget. It is the third prepared under the new activity-based budget model, which provides greater transparency and encourages innovation, revenue growth and efficiency.