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Campus Bulletin

May 29, 2007

Budget Update

U of G will devote all of the surprise one-time money that it received from the province last month to offsetting the $15-million structural deficit to the operating budget, president Alastair Summerlee said Monday.

The decision essentially gives the University a year to solidify plans for tackling the structural deficit, Summerlee says. He stresses that it is only one-time money and that the deficit will remain unless the province decides to put the funding into the base budget.

“We still have a permanent problem, but now we have one more year to figure out how to make the necessary cuts and adjustments to address it,” he says.

“That is good news because it’s impossible to make a very large budget cut all at once; it must be done in stages over a number of years.”

The last-minute one-time funding from the province was part of the $365 million announced in the government’s 2007 budget for colleges and universities at the end of the fiscal year. In April, U of G received word that its share would be $11.9 million.

Guelph is also receiving $1.4 million in one-time funding from the province to expand graduate programs. In addition, the University is proposing to use the one-time stabilization fund of $6 million to eliminate its one-time restructuring deficit, freeing up $2 million in repayment funds that will also be used towards the structural deficit.

Even so, there is still approximately a $1 million budget shortfall for 2007/2008, which will be included in the preliminary Ministry of Training, Colleges and Universities (MTCU) operating budget that will go to the Board of Governors next week.

Earlier this year, the University feared the structural deficit might be as high as $19.7 million, but new tuition rates, increased enrolments, and changes to various government funding envelopes brought the deficit closer to $15 million, which still needs to be addressed.

“We’ve bought ourselves one year’s time, that’s all,” says Summerlee.

The one-year relief period will also give U of G time to determine how it will be affected by ongoing discussions between the federal and provincial governments over future increases in federal transfers to the province in support of higher education announced in the 2007 federal budget.

In the meantime, the University is moving forward with a plan to address the pressing budget challenges, while proceeding with multi-year strategies as part of the integrated planning effort, Summerlee says. Long-term budget goals include finding ways to eliminate the structural deficit through a combination of actions that include increasing revenues and reducing costs and cost increases.

The structural deficit is due to a number of factors, including lower-than-anticipated grants from the province; provincial monies allocated for quality improvements being converted to deal with accessibility; no government funding for inflation; higher pension costs; increased operating expenses such as deferred maintenance and utilities; student aid, debt costs and enrolment costs; and an $11-million increase in the costs of salaries and benefits.

The operating budget and the structural deficit was discussed at both the “Rumour Mill,” a series of open public meetings designed to give members of the University community a chance to ask the administration questions about campus issues, and at the Senate Committee on University Planning (SCUP) on Monday. The proposed budget with comments from Senate will be presented to the Board June 7.