Annual ops forecast recognizes funding realities

The forecast, prepared for the provincial government in advance of its budget deliberations, assumes an increase in the university's annual operating grant of just two per cent or $5.8 million next year, plus a 3.2 per cent increase for specific initiative funding. According to Ginger Appel, director of budget strategy and planning in Institutional Planning and Assessment, gone are the days of grant increases north of five per cent.

"In our ongoing discussions with the Ministry of Advanced Education, it's been made clear that a grant increase of more than a two per cent is highly unlikely so instead of asking for more, we are being very realistic in our expectation," said Appel. "At the other end of that reality, of course, is that a two-per-cent increase in the grant will leave us with a projected deficit for 2013-14 of just over $16 million which we will have to address through adjustments to our operations."

It would take a total provincial funding increase of 11.1 per cent in 2013-14 to balance the university's budget.

While recognizing that the grant increase may be only two per cent, university officials make the point in the forecast that while university education benefits individuals in terms of higher earnings and rates of employment, it also serves to boost economic growth, innovation and tax revenues for the province. "The point we want to make quite strongly to the government is that it needs to consider the return on investment in post-secondary education when it thinks about the economic future of the province," said Appel.

A summary of the university's funding request to government includes the grant increase and an additional $26.4 million for targeted initiatives. These include previous commitments related to increasing the number of seats in the College of Medicine, expansion of the nursing program, an academic renal transplant program, library outreach, various other programs and operating costs for Health Sciences.

Looking at other funding sources for 2013-14, the forecast document projects tuition will increase four to five per cent at the U of S, with the average undergraduate rate going up by about five per cent and tuition for graduate students projected to increase by about 3.5 per cent. Appel pointed out the total revenue increase is a combination of higher rates and more students; enrolment is expected to climb by 0.8 per cent in 2013-14.

She added that tuition rates "relate directly to the experience we're able to offer our students and are never set to deal with our short-term needs. In other words, we don't balance the books on the backs of students."

In terms of capital priorities for 2013-14, the university is requesting a cash grant of $63.4 million: $5.5 million for Health Sciences facilities; $3.5 million for health sciences space in Regina; $25 million for the RenewUs program; $14.4 million for ongoing capital renewal; and about $15 million for principal and interest repayment.

Appel explained that the $15 million for principal and interest results from the province granting the university permission to borrow to fund its capital projects last year. The result was additional capital debt of $94.8 million on the university's books. "This puts our debt at a level that's far higher than our peers and just barely within the limit allowed by our own policy," she said. "It also makes it more difficult for us to borrow if we want to take advantage of an opportunity that arises."

The operations forecast also outlines for the government the university's strategy to address its deficit, both in the short and long term. To cut $44.5 million, or 8.5 per cent, from its operating budget by 2016, the university will examine all aspects of its operation, "find efficiencies, narrow the range of what we do, and reduce work by eliminating lowest-priority activities," said the document. "In spite of the rigour of our approach, reduction of 8.5 per cent will mean difficult choices and loss of programs and services."

The complete operations forecast for 2013-14, which was submitted to the provincial government Oct. 24, can be found on the Institutional Planning and Assessment website.