Update on 2023-24 budget
Dear members of the Concordia community,
These are not easy times at Concordia or for higher education institutions generally. Like us, many universities are facing a perfect storm of political and financial pressures.
The Government of Quebec’s recent announcement of tuition increases for rest-of-Canada students and changes to the funding formula for most international students has caused immense uncertainty and confusion with dire implications for future recruitment and massive consequences for our operational budget.
As you know, the three anglophone universities presented an historic proposal to the Premier and the Minister of Higher Education on November 6. We declared our commitment to assist at least 40 per cent of non-francophone, rest-of-Canada and international students to attain intermediate proficiency in French before they graduate, which will support their integration into Quebec culture as well as equip them to contribute to society and the economy in the future.
Since then, the three universities have had further exchanges with the Minister. Together, we have reiterated our commitment to francisation. However, we have also made it very clear that it will not be possible to go forward with that bold initiative unless the government reverses its decision on tuition for the rest of Canada and works with the entire university sector to examine the structure of international student fees.
In the meantime, regardless of the outcomes of those discussions, we are already in a very difficult financial position because of the deficit we’ve accumulated during the past three years. Last May, we presented a budget to the Board of Governors that aimed to close this fiscal year with a deficit of $19.4 million. That deficit is essentially the result of three convergent factors: an unprecedented year-over-year decline in registrations coupled with a significant loss in tuition revenue and in the associated government grants linked to enrolment; lingering financial impacts of the pandemic and sharp growth in new types of expenses, such as digital transformation and cybersecurity; and a lack of major reinvestment by the government in the higher education sector. At the same time, inflation — as we know all too well — has driven up the costs of goods, services and borrowing for the university.
Unfortunately, at this point, halfway through the fiscal year, we are seriously at risk of not reaching our deficit target of $19.4 million. Our actual current deficit is closer to $35 million. Furthermore, when we forecast our final 2022-23 results to future years — taking into account salary increases, inflation, a reduction of the number of students, an increase in interest rates and other external factors — we estimate that the future structural challenge facing Concordia will be in the magnitude of $65 million to $75 million.
We have already implemented many stringent measures to reduce our costs, but it’s clear we must immediately introduce an additional series of painful cost-cutting measures if we are to have any chance of reaching our objective. These measures will be outlined soon in a second message from the university’s Budget Review Working Group, which captures our full analysis of this year’s enrolment numbers and the associated revenues.
One thing is very clear: unlike when Concordia has been in deficit positions in the past, we can no longer rely on increased enrolment to compensate for the growth of our expenses. Our enrolments declined three years running, and the Government’s announcements regarding tuition will drive down those numbers even further in 2024.
Moreover, our challenge is not for this year alone. Under Quebec law as it applies to public institutions, Concordia must now present and have approved by the Ministry of Higher Education a credible recovery plan to balance our annual operating budget within five years. Should we fail to deliver a sound plan and execute it, we risk becoming subject to more intrusive government oversight, a situation we must avoid.
It’s also important to understand that the challenge of returning to equilibrium in our operating budget is a different issue from the problem of accumulated debt that confronts Concordia and most other public institutions. The accumulated debt of the university, which stands at approximately $272 million, represents the amount of money we have borrowed to undertake major projects throughout the university’s history and/or the interest on that borrowing. In Concordia’s case, the amount of the accumulated debt is reasonable vis-à-vis the value of our assets. However, the interest costs alone represent an annual expense of $24 million that we also need to cover from our operating fund. Failing to do so could cause our accumulated debt to grow exponentially. The result would be a rise in interest rates and a drop in our credit score, which could ultimately jeopardize the university’s cash flow. As such, we must closely monitor our accumulated debt.
Inevitably, the scope of the budget challenge ahead of us means that, as a community, we will need to review our priorities and many aspects of our operations. This includes making difficult decisions about what programs and activities we can no longer afford or must delay. However, this doesn’t mean that there won’t be any support for new or existing projects. On the contrary, investments in some strategic priorities, such as our Canada First Research Excellence Fund project, Volt-age, and other sustainability initiatives, will be vital to maintaining momentum, meeting our commitments and identifying new sources of revenue.
We have a very tall order in front of us, and time is of the essence. Together we need to imagine how we can co-create the next chapter of our university’s story by prioritizing investments in areas with the greatest impact on Concordia’s mission, strategic priorities and international reputation.
I’ve been part of this university for over 40 years and know firsthand that there have been other massive challenges that we’ve had to confront. What pulled us through was the fundamental pride we share in Concordia, the collective belief in our values, and the conviction to deliver our academic and research missions to support our students and bring positive change to the world.
I ask every Concordian for their support, patience and understanding as we navigate these difficult times. Together, we have a responsibility to ensure that Concordia remains equipped to train tomorrow’s leaders, generate game-changing research and build more just and prosperous communities for everyone in Quebec, across Canada and around the world.
President and Vice-Chancellor