September 7, 2005 Source: Queen's University:
http://qnc.queensu.ca/story_loader.php?id=431f096e6c308 No cuts, more quality Energy prices the wild card in an otherwise healthy budget By CELIA RUSSELL The 2005-06 university budget contains the best news in years for faculty renewal, academic programming, graduate and undergraduate student aid, and the expansion of research and graduate programs, university officials say. It is also the first time since 1999 that the university has not had to make cuts to its annual budget. “The lack of cuts to department budgets is a significant achievement for this year’s university budget,” Vice-Principal (Operations and Finance) Andrew Simpson said in a recent interview. The impact will differ from department to department. Those that rely solely on public funding based on government grants and tuition fees stand to see the most significant gains. Units that can raise alternate income through initiatives such as private programs, fees for services or deregulated tuition fees have been able to temper the effects. Another positive is that the university will be able to move forward with the recruitment of new faculty, improving quality by reducing faculty-student ratios. The university plans to hire 24 additional faculty members this year. The ability to forecast financing is an incentive for faculty recruitment, Mr. Simpson says. “The improvements to postsecondary funding in the provincial budget and the certainty that it’s provided not only for this year, but also for the next two or three years means there is more certainty for schools and faculties in their own budget planning. This may enable some to free up and fund some positions that had been previously frozen.” What remains uncertain, however, is the effect of energy prices on the university, he says. “As much of the government’s budget was fantastic news for us, we and other universities in the province are struggling to cope with steadily increasing costs of energy.” To combat this, the university is currently constructing a cogeneration plant, scheduled for completion next June. It will help keep a steady electricity supply to Queen’s and Kingston General Hospital during peak periods and provide more energy autonomy for the university. “With so much vital infrastructure and research, the ability to provide our facilities with energy, independent of the province, is a very significant achievement,” says Mr. Simpson. As the province moves to a deregulated energy environment, the result will be very high prices during peak consumption periods during the day. A cogeneration facility will allow the university to generate a portion of its own energy at a muchreduced cost, he says. The Board of Trustees approved the 2005-06 budget at a special meeting via conference call on June 13. The board had opted to wait to finalize the revenue side of the budget until after the province had delivered its own on May 11. In an email to the university community earlier this month, Principal Karen Hitchcock pointed to Bob Rae’s 2005 report on Ontario post-secondary education as “bringing a sense of urgency” to the critical need for investment in higher education to address issues of quality, access and sustainability. It had a profound impact on the province’s decision to make the largest multi-year investment in post-secondary education in 40 years. It will boost total postsecondary education spending to $683 million in 2005-06, rising to $1.6 billion by 2009-10. In addition to operating investments for 2005/06 and beyond, the province transferred $130 million in deferred maintenance funding to universities at year-end (Queen’s share is $9.2 million) to improve the overall quality of the learning environment. It also set up a $100 million endowment for graduate scholarships. Queen’s share of this endowment ($6.1 million) will provide approximately $260,000 in annual graduate student assistance. Universities have been allocated $282 million in operating grants. The provincial budget also includes $19 million for graduate education with future allocations rising to about $220 million by 2009-10. The deferred maintenance funding also extends to painting and cleaning, and the campus community should see some improvement in the quality of their spaces, Mr. Simpson says. The university was able to hire a team of additional custodians to do “blitz” cleaning jobs this summer at the request of units and departments, says Vice-Principal (Operations and Facilities) Tom Morrow. The numbers Queen’s operating budget for 2005-06 is $283.9 million, an increase of $16.4 million (6.1 per cent) over last year. Provincial grants increased by 8.9 per cent, tuition fee revenue increased by 1 per cent (for growth) and other revenue increased by 10 per cent. As per board policy, the budget is balanced. The operating budget supports the university’s core activities and related support services, which are funded primarily by government grants and tuition fees. 2004-05 full-time enrolment was consistent with plans and is expected to increase by about 120 students in 2005-06. Revenue details include: $1 million increase in fee revenue from enrolment growth; no change in tuition revenue from fee increases for operating grant eligible programs (2005-06 is the second year of a provincially imposed two-year tuition freeze); $6.9 million increase in enrolment growth grant funding and top up of previously underfunded enrolment growth grants (graduate and undergraduate); $2.8 million new money from the provincial grant in lieu of tuition freeze; $2.8 million in new revenue from the provincial grant in lieu of tuition freeze; net increase in Quality Assurance funding of $3.2 million for a total of $10.1 million; net increase in other revenue items including funding for the indirect costs of research, Provincial Performance fund,investment and unrestricted donations totaling $2.5 million. Total spending will increase by $18.3 million, with an increase in cost recoveries of $1.9 million for a net of $283.9 million. Compensation continues to be the university’s largest single expenditure, accounting for 71 per cent of its operating budget, or $202 million. Market pressures to attract and retain top faculty continue to affect the operating budget. At Queen’s, entry-level salaries have increased by as much as 50 per cent in the past few years, particularly in the professional programs, and excellent candidates typically have several job offers. The potential elimination of mandatory retirement could also affect the budget, according to the budget report. If the average age of retirement were to increase by 2.5 years, the university could be faced
with both base and one-time only budget pressures. This year, the university will spend $8.5 million more (4.2 per cent)than it did last year to fund salaries and benefits for faculty and staff; $5.3 million will be allocated to support strategic initiatives in academic programs; a $2-million reinvestment fund will be allocated across all major budget envelopes; $1.2 million (5.3 per cent) more will go to student assistance for a total of $23.7 million; $800,000 more is budgeted for utilities cost increases for a total of $12.5 million, and $500,000 more will go to library acquisitions. Capital expenditures for 2005-06 are projected to be $54.9 million, of which $38 million is for new construction, $9.2 million for deferred maintenance and $7.7 million is for all other projects and asset aquisitions. Funding comes from grants, donations and internal resources of $21.4 million. The balance of $33.4 million will be financed through internal loans. The cogeneration plant will be paid for through savings that will be realized in the utility budget over the next 20 years. The other major capital project, the Queen’s Centre, received approval and funding from the board in May, allowing it to move to the design development and construction document stage.
Finance
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