University of New Brunswick Budget Board of Governors April 18, 2013

Transcription

1 University of New Brunswick Budget Board of Governors April 18,

2 Comprehensive Integrated Budget Proposal Capital Operating Operating Endowment Spending Residence 2

3 Budget Submission is for Board Review Approval Assumptions Risks Fiscal Responsibility Sustainability Alignment with Strategy 3

4 Preparing the Balanced Budget was a Challenge Sluggish economic environment Low funding Increasing costs Enrolment concerns Uncertainties in key areas Longer term issues/risks Previous cuts left fewer options 4

5 Budget Strategy was Executed Management developed a strategy to balance the budgets on both campuses that: Used reasonable assumptions Required tough decisions Involved limited use of one time funds 5

6 Basic Approach to Budget Strategic integrated approach linking operating, capital, residence and endowment budgets together Tight expense management Disciplined approach Protecting prior investments Selective Strategic Investment Reserves for future risk/investments 6

7 University of New Brunswick Operating Budget 7

8 Operating Budget Key Items Balanced Low revenue growth.1% Expenses reduced by $3.8 million, or 2%, resulting in a net 1.7% growth 8

9 Low Operating Revenue Growth 0.1% $(000 s) $1,386.1 $(1,420.2) $158.7 Growth in Alternative Sources of Revenue Tuition Fee Proposals Enrolment Decline $124.6 change 9

10 UNB Budgeted Revenue Growth in is the Lowest in the Last 7 Years 4.00% 3.50% 3.6% 3.8% 3.00% 2.8% 2.50% 2.00% 1.50% 1.00% 0.95% 2.0% Average 1.93% 0.50% 0.00% 0.24% 0.1%

11 Provincial Grant/Tuition Base grant frozen for second year 60% of funding One time funding of $1.8 million continued in $150, or 2.56%, Increase to tuition $175 last year $200 year before 11

12 The 10 year Average Increase in the Base Provincial Operating Grant is 2.2% and were both Frozen Average 2.2% 12

13 Student Enrolment is Budgeted to Decrease by 219 FTE s (2.3%) and Significantly Lags Targets in the Strategic Plan University of New Brunswick Student Enrolment (FTE) 11,500 11,250 11,000 10,750 10,500 10,250 10,000 9,750 9,500 9,250 9,000 8,750 8,500 8,250 8,000 7,750 7,500 7,250 7,000 6,750 6,500 6,250 6,000 9,961 10,494 11,117 11,054 11,048 10,496 10,090 9,559 9,428 9,449 9,677 9,586 9,493 10,068 9,275 9, B 10,364 10,364 10,364 10,364 9,114 9,064 9, /FA 2002/FA 2003/FA 2004/FA 2005/FA 2006/FA 2007/FA 2008/FA 2009/FA 2010/FA 2011/FA 2012/FA 2013/FA 2014/FA 2015/FA 2016/FA 2017/FA Actual Budget Pro forma Target 13

14 $3.8 million, or 2%, Expenses Cut from the Budget $(millions) Campus 2006/ / / / / / /13 Total UNBF $1.8 $2.3 $1.4 $2.0 $1.8 $3.2 $3.2 $15.7 UNBSJ $1.2 $1.9 $1.0 $1.0 $0.6 $0.3 $0.0 $6.0 Total $3.0 $4.2 $2.4 $3.0 $2.4 $3.5 $3.2 $21.7 Cum $3.0 $7.2 $9.6 $12.6 $15.0 $18.5 $ Targets $2.3 $0.6 $2.9 $ Actual $2.9 $0.9 $3.8 $

15 The main sources of budget reductions were from attrition based reductions in faculty, non salary budget freezes, lower energy costs 26 vacant faculty positions eliminated with an add back of between 5 and 9. 15

16 Operating Expense Growth was Limited to 1.7%, including Investments $(000 s) Academic and Research Proposed Budget Increase (Decrease) Dollars Percent Faculties and Departmental Costs $97,800.3 $2, % Academic and Student Support 31, % Sub total 128, , % Administration and Support Services Administration and Development $28, % Maintenance and Utilities 21,604.2 (755.8) (3.4)% Sub total 49, % Total Operating Expense $178,775.4 $3, % 16

17 Elevated Risk Levels Now Likely more Later Strategic Operational Financial 17

18 Key Strategic Risks Broad economic context pervasive Revenue growth of 0.1% is well below target of 4% annually Enrolment budget is a decrease, Strategic Plan calls for growth These factors will impact pace of Strategic Plan implementation 18

19 Key Operational Risks Low revenue growth has spurred on expense reductions $25.5 million, 14%, over 8 years means little room left to adjust for current operations Reset process 19

20 Key Financial Risks Budget contains ongoing structural shortfall of $3 million Salary and Pension provisions Impending negotiations assumptions Deferred maintenance growth Multi year outlook low revenue growth enrolment 20

21 A Structural Shortfall of $3 million Means Ongoing Revenue is Less Than Ongoing Expenses. To Correct this Would Entail: 470 more students An additional 5% in tuition fees 2.8% increase in provincial grant 30 less faculty 60 less staff CAUTION 21

22 Current Estimates Illustrate Potential for a Large and Growing Funding Gap Pro forma $ millions $67.4 million cumulative GAP $26.2 million Total Costs Total Revenues 22

23 University of New Brunswick Capital Budget 23

24 Capital Budget is Modest in Comparison to Recent Years $80.0 $70.0 $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 $0.0 $(millions) $67.0 $62.0 $20.8 $16.6 $

25 Capital Budget is a Mix of Deferred Maintenance and Classroom Upgrades Central Heating Plant boiler $4.0 million Classroom improvements $1.6 million Window replacements (UDMP) $0.8 million Ganong Hall classrooms + HVAC $0.47 million 25

26 In Spite of Creative Leveraging of Resources Deferred Maintenance Grows $(millions) $20.00 $19.5 $15.00 $10 million Deferred Maintenance Funding Gap $10.00 $5.00 $9.5 $5.0 from Special Sources $4.5 from Recurring Sources $0.00 Annual Spending According to Guidelines Budget 26

27 University of New Brunswick Endowment Spending 27

28 Universities are Lowering their Endowment Spending Rates as Earnings Expectations Have Lowered Canadian University Median 5.0% 4.0% TBD UNB Rate 4.5% 4.25% 4.0% 28

29 Estimated Total Spending on Undergraduate Scholarships and Student Aid will Increase in due to More $ In Hand and Backstop $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $7.45 M $7.70 M

30 University of New Brunswick Residence Budget 30

31 Residence Budget Key Revenue Items Occupancy Rate % 95.0% 90.0% 85.0% 80.0% 75.0% 70.0% 65.0% 60.0% 55.0% 50.0% 85.60% 83% UNBF % UNBSJ 90% 31

32 Residence Budget Key Revenue Items UNBF Rate Proposals UNBSJ Average 2.5% Room 3% Apartments 3 3.8% 32

33 Residence Budget Key Financial Items Net Cost $(1,091)M $(897)M Capital Renewal $863 M $1,460 M 33

34 Summary 4 th year of a balanced budget no accumulated deficit 4 th year of a balanced budget no Concerns accumulated deficit Economy Revenue Structural imbalance Risks Importance of a Reset 34

35 Questions/Discussion 35

36 University of New Brunswick Supplemental Information 36

37 University of New Brunswick Compared to Canadian Average General Operating Expenditures Instruction and Non Sponsored Research UNB All Canadian Universities Source: CAUBO 37

38 University of New Brunswick Compared to Canadian Average General Operating Expenditures Academic Ranks as a % of General Operating Expenditures UNB All Canadian Universities Source: CAUBO 38

39 University of New Brunswick Compared to Canadian Average Administration and General as a % of General Operating Expenditures UNB All Canadian Universities Source: CAUBO 39

40 University of New Brunswick Compared to Canadian Average General Operating Expenditures Other Salaries and Wages as % of General Operating Expenditures UNB All Cdn Source: CAUBO 40

41 UNB Summary of Recent Gross Operating Budget FTE Reductions Year Total UNBF UNBSJ UNBF UNBSJ UNBF UNBSJ UNBF UNBSJ Total % Faculty % Staff % Total % Attrition 100% 95% 67% 41

42 UNB Budget Reductions A 3 Year History FTE Position Reductions # % Ongoing Salary Mass Proportions Faculty 41 56% 60% Staff 32 44% 40% % 100% 42