Operations Forecast asks gov't for hikes to capital project funding
'Realistic' operating-grant projections put at 2.5%
By Lawrence McMahen
The U of S is asking the provincial government for a 2.5-per-cent operating-grant increase for the post-secondary education sector in 2005-06 and a substantial hike in spending for capital construction and maintenance over the next few years.
In its annual Operations Forecast, the University also asks the province to agree to provide funding for the additional operating costs of new buildings built on campus in the future.
In its request for the provincial operating grant – which provides less than 60 per cent of its total annual operating budget of more than $260 million – the U of S is asking for less than half of its previous years’ request, thanks to a more realistic projection of what the government will likely provide. In past years, the operating grant has increased by a modest amount (1.52 per cent in 2004-05), while the University’s request has been in the five- to seven-per-cent range.
“Clearly we cannot continue to request sums which the government cannot or is not willing to provide,” says Provost and Vice-President Academic Michael Atkinson.
“We are hopeful this more modest approach, based on realistic projections, will be funded,” Atkinson adds.
The lower grant request comes in spite of the fact that the University will run a deficit this year and has applied budget cuts to a number of colleges and units.
The Operations Forecast proposal for 2005-06 is the result of a shift in approach, based on the University’s new more stable and planned multi-year approach to its academic, administrative and financial affairs. As a result, this year the U of S is asking government for the funding level it actually expects to receive next year, based on a variety of credible indicators. It then suggests what that amount of funding received will mean for operations and programs.
“We are now projecting revenues and expenditures using a multi-year timeframe,” Atkinson says. “It is not realistic to project provincial support at a higher level, given recent funding levels provided by government. This is not a kind of fishing expedition – it’s an attempt to be realistic and responsible.”
Using this new approach, the University projects a hike of 2.5-per-cent in the 2005-06 provincial operating grant for higher education. After formula adjustments, that would give the U of S a 2.1-per-cent grant increase for next year – taking it to about $161 million.
The Board of Governors approved the Operations Forecast at its Nov. 10 meeting. Atkinson was scheduled to present it to University Council’s Nov. 18 meeting for information. Council’s Planning and Budget Committees had input into the document this fall, and in his report to Council, Budget Committee Chair Bernard Laarveld says his group was pleased to see that many of its recommendations are in the Operations Forecast. He says his committee supports the document.
The Forecast tells the provincial government that the University is hurting as the result of low operating-grant increases in recent years. It details how in 2003 the U of S identified a growing structural deficit caused by the gap between rising costs and low funding increases. To address the deficit, in its first multi-year budget framework approved in May the University applied $6.2 million in adjustments to budgets across campus, to be phased-in over three years. These included selective adjustments to the Colleges of Agriculture, Commerce, Nursing and Pharmacy & Nutrition, and the Extension Division and Facilities Management Division, as well as a one-per-cent cut to the budgets of other colleges and administrative units.
“The University of Saskatchewan is actively engaged in making permanent reductions to its operations based on the funding available. This is occurring at a time when other, similar universities in Canada are growing and expanding. This trend will have a negative impact on the province in the years ahead,” the Forecast states.
It adds that a 2005-06 operating-grant increase below the projected 2.5-per-cent would hurt the quality of education that students receive – limiting their program choices, increasing class sizes, giving them less access to student services, and causing a lack of proper computer technology in classrooms, labs and libraries. It states that the 2.5-per-cent is considered the minimum grant increase needed, and “we would expect the operating grant to be favourably adjusted should the economic circumstances of the province continue to improve.”
The Forecast projects that the University’s national-norms policy for setting tuition fees will mean an overall average four-per-cent increase in tuition revenue next year, taking it to $83.8 million, up from $80.8 million in 2004-05.
It also projects that salary settlements on campus in 2005-06 will be in line with the provincial government’s announced public-sector wage guidelines.
In its Forecast, the U of S says that over the next year it will develop a comprehensive multi-year capital plan, detailing its ideas about new buildings, renovations, maintenance, equipment, and information and communications technology. It will also suggest the funding sources for these projects, including the provincial government, federal government and the University. The University’s contributions could include cost-recovery projects and funds it raises from private sources.
The Forecast says the planned new Academic Health Sciences Centre remains its priority as a major capital project, but it asks the province to broaden its view of this project from the $120-million building envisioned a year ago when Premier Lorne Calvert pledged his government’s support. Instead, the U of S says it prefers to consider four projects as one overall “Health Sciences Initiative” worth a total of $240 million. This would include the Academic Health Sciences Centre, an expansion to the Western College of Veterinary Medicine, the planned biomedical beamline at the Canadian Light Source synchrotron, and the planned International Vaccine Centre. The University is asking the province to pay $161.1 million towards to $240-million total, with the federal government asked to provide $48.1 million and the U of S providing $30.8 million – some from its current $100-million fundraising campaign.
As part of the overall Health Sciences Initiative, the Forecast proposes that the province begin to provide some of the pledged $120 million so the University can buy St. Andrew’s College and renovate it to become the new consolidated home for the College of Nursing. That project would cost an estimated $15 million.
The Forecast makes the point that inflation must be taken into account when these projects are considered. For example, while the Academic Health Sciences Centre was a $120-million project when the commitment was made just over a year ago, it is a $137-million project in today’s dollars.
The Operations Forecast also suggests that instead of providing capital funding for all projects on a project-by-project basis, the province start to increase annual capital funding and allow the University to direct it towards a variety of building and maintenance projects, depending upon annual needs.
For the past seven years the province has given the University an annual $14.4-million capital grant. While the U of S says in the Forecast that its annual capital requirements are closer to $39 million, for 2005-06 it proposes that the government increase its annual capital grant by $3 million, taking it to $17.4 million.
Much of that would go to ongoing renovations, equipment, and information and communications technology upgrades and replacement, and to some of the huge amount of deferred maintenance on buildings and facilities. Some would also go to a number of capital projects the University is now referring to together as Campus Core Revitalization. These proposed projects include:
And finally, in a key request this year, the University asks for agreement in principle by the province to provide funding for the additional annual operating costs of new buildings built on campus. The U of S says the additional operating costs of two major new buildings - Kinesiology and the Thorvaldson project - contributed to the structural deficit on campus.
Now, the Operations Forecast says, the University must have assurance that there will be adequate funding support for the costs to operate new buildings before it goes ahead with the construction.