Concordia president explains 2013-14 budget decisions
On June 7, Concordia’s Board of Governors approved a balanced budget for the university for 2013-14, based on total revenues of $394.8 million. I am writing to provide you with more information on our budget process and fiscal outlook.
I thank Provost Lisa Ostiguy and Chief Financial Officer Patrick Kelley for their tremendous work in leading our budget review process. In preparing Concordia’s 2013-14 budget and the forecast for the two following years, they consulted extensively with our community and collaborated with section heads across the university. Our objective throughout the budget process has been to do everything possible to protect our academic mission and student experience.
Over the past few years, Concordia has been successful in meeting its goal of a balanced budget. Concordia was again on target to balance its budget in its current fiscal year, which ended April 30, 2013. This was before the Government of Quebec announced cuts in university operating grants, which total $26.4 million for Concordia for fiscal years 2012-13 and 2013-14.
As a result, Concordia incurred a deficit in 2012-13. Within the current financial landscape, we also need to reduce costs in 2013-14 to meet the mandated cut, and to prepare for the years ahead. The cost reductions for 2013-14 represent 2.5 per cent in the academic sector and 6.6 per cent in all other sectors.
The government is permitting universities to absorb up to 50 per cent of the 2012-13 cuts as a deficit, but with a clear plan to pay down the deficit amount over a specified time frame. The government has also implemented relief measures that allow universities to spread the 2013-14 cuts over a seven-year period.
Nevertheless, these are real funding cuts that are in contention with a range of key costs that continue to rise. It is important that we continue to manage our finances prudently so we can make the strategic investments needed to support and advance our academic mission.
Four key factors
Four key factors affected our budget decision-making process for 2013-14:
1. Repaying the 2012-13 deficit and spreading the government mandated $13.2 million in operating cost cuts for 2013-14 over several years.
2. Balancing revenues with rising year-over-year costs for salaries, benefits and pensions, as well as other key inputs such as utilities.
- It is noteworthy that only a portion of annual salary increases are compensated for under cost-of-living increases incorporated into teaching and other grants we receive from the Government of Quebec.
- In addition, there is no indexation for utility charges.
3. Adjusting to the end of the Government of Quebec’s temporary relief measures for funding deficiencies in pension plans. This is a challenge faced by the vast majority of public organizations and municipalities in the province.
- The relief measures, which the government put in place because of the global financial markets crisis of 2008-09, end on December 31, 2013. As a result, we will need to allocate $14.2 million annually from our operating budget to cover these costs, beginning in 2014-15.
4. Reducing our reliance on enrolment growth to balance the budget.
- Our revenue expectations must be tied less to enrolment growth and more to strong demand for our program offerings flowing from our commitment to academic excellence and innovation in teaching and learning.
- Our 2013-14 budget anticipates enrolment growth of about one per cent.
A balanced approach
Some of our cuts in costs will be immediate and others will be phased in during the next few years. Measures include a careful review of hiring plans and the number of course sections, with a focus on vacant staff and administrative positions, reducing administrative costs, and revising travel and event funding options.
In striving to achieve these goals, one strength will continue to be Concordia’s prudent management of its finances. This is recognized by independent agencies such as Dominion Bond Rating Service (DBRS), which recently confirmed the university’s debt rating of “A” with an outlook designated as stable. A stable credit rating is important in maintaining the university’s financial flexibility, particularly in keeping our interest costs as low as possible.
As Concordia continues to build on its strengths, we are focusing on our academic priorities. This includes new initiatives for undergraduates to engage in research. We also want to facilitate the strategic hiring of faculty and provide more comprehensive training opportunities for teaching assistants.
Next year, Concordia will host two important events that recognize our university’s importance in the world of research — the 2014 Congrès de l’Association francophone pour le savoir (Acfas), and the Encuentro conference and festival.
This a pivotal time in Concordia’s development. The careful steps we are taking now will best ensure our university’s prospects in the years ahead.
• 2013-14 Budget