Rising costs prompt call for increased gov’t grant
In its annual Operations Forecast, just sent to the Department of Learning, the U of S has told the government it is following through with the strategic initiatives set out a year-and-a-half ago in its Integrated Plan, supported by its multi-year budget framework.
The University is renewing itself by investing in students, teaching and research, and by changing a number of internal structures and processes, says the document.
“We have a sound plan and we are on-course,” Provost and Vice-President Academic Michael Atkinson says.
But at the same time the Operations Forecast says a combination of external factors such as unexpectedly high natural gas prices, changes to the provincial salary pattern, an urgent need for asbestos clean-up on campus, and rising construction costs could threaten the University’s progress.
However, the Forecast argues the recent hike in resource revenues for the province means the time is right for the government to give the U of S an increase in ongoing and one-time grants for key operations and projects. The document was approved by the University’s Board of Governors last week and was to be presented for information to Council Nov. 17.
The U of S notes it has taken tough measures in recent years – including permanent budget adjustments – in order to balance its operating budget and keep some flexibility to fund its priorities.
But facing natural gas price hikes that are beyond its control, and likely higher pay raises for faculty and staff due to the government exceeding its own provincial salary settlement guideline of 0-1-1, the U of S says it must ask for more than the 2.7-per-cent operating grant increase it had projected for the 2006-07 year when it updated its multi-year budget last May.
The University is now asking for a 4.3-per-cent increase to the operating grant for 2006-07. In addition, it requests a one-time payment of $2.2 million for the additional salary costs it will face in this 2005-06 year because the province raised its own salary caps. Also, the U of S wants the province to “provide relief from natural gas price increases that at current prices would require an additional one per cent increase in the operating grant, or $1.8 million”, says the Forecast. And, it wants an assurance from the government that if the province provides capital funds for building new facilities, it will also provide funding in the future for the increased costs of operating the new facilities.
The U of S notes that for 2005-06, the provincial government provided grants to the U of S and U of R to give students a year with no tuition increase. For 2006-07, the University estimates that a four-per-cent average tuition increase will put the U of S at the national norm of tuitions – but it notes that the increases will likely be higher in the professional colleges and lower in Arts and Science. These increases do not take into account whatever grants or initiatives the province may launch based on the study of student access and affordability it is currently conducting.
For capital construction and maintenance, the University feels it is important that funds start to flow to begin construction on the Academic Health Sciences Centre. The province’s commitment was $120 million in 2003 dollars. Now, with construction costs escalating rapidly around the world, that facility is anticipated to cost more than $200 million to build.
The University says a recent asbestos audit found that $43 million worth of asbestos abatement projects are required on campus and comments that “provincial regulations require that the material be removed immediately when it is damaged…”. The audit found material in that condition or worse, posing a high public health risk. The U of S Board of Governors will be asked to approve a plan at its Dec. 9 meeting for an immediate $15-million asbestos abatement program. The University is asking the province to fund this high-priority public-health project.
The Operations Forecast also reports that the U of S has a $126-million backlog of deferred maintenance for its facilities, with $40 million of high-priority projects requiring action as soon as possible.
The University will install an additional chiller unit to meet the campus’ growing need for summertime air conditioning. It is asking the province to fund the $4.5-million cost, and notes the government recently provided funds for a new chiller at the University of Regina.
Finally on the capital budget, the Operations Forecast asks the province to increase its annual capital funding to the U of S to $20.44 million, up $6 million from the usual $14.44 million given annually.
The University notes in the Forecast that governments across Canada “are signalling a willingness to make significant investments in universities”. At the same time, it says, the Saskatchewan government “is much better positioned financially to make a significant investment in post-secondary education than it has been for a number of years. The province is benefitting substantially from increased resource revenues from strong crude oil and natural gas prices.”
The U of S says it has made substantial progress in implementing its multi-year budget and Integrated Plan, and it lists numerous initiatives either accomplished or in progress. It says now is the time for the government to step up and fund both the U of S and U of R on initiatives that coincide with provincial goals and that will help the universities to be real engines for growth in Saskatchewan.
The University notes that it continues to make permanent budget adjustments to balance its operating budget by 2006-07. The multi-year budget addressed a structural deficit of $6.19 million that was identified at the U of S two years ago. A three-year phase-in of adjustments continues as planned in 2006-07, with permanent adjustments required in the Colleges of Agriculture, Commerce, Pharmacy & Nutrition, and to the Facilities Management and Extension Divisions.
The Operations Forecast points out that if the U of S does not receive its projected level of revenue, further permanent adjustments will be required.
As it now stands, the University is projecting total expenditures in 2006-07 of $298.3 million and revenue of $294.0 million, for a nearly $4.3-million deficit – but permanent adjustments of $4.3 million over 2005-06 and 2006-07 will balance the budget in 2006-07. Additional revenue over these two years from one-time measures will generate a surplus to replenish the general operating reserve to the same level as at the beginning of the multi-year budget period.
The provincial government announced Nov. 16 it will commit $100 million this year to the Academic Health Sciences Centre construction project at the U of S.
Learning Minister Andrew Thomson said thanks to an $873-million government surplus this year, funds can now start flowing for this major project. With escalating costs, the original $120-million project may end up costing closer to $200 million by 2007.