U of A pulls $15 million in reserves to cover provincial funding cuts

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The University of Alberta is digging into its approximately $50 million in non-endowment investment income and reserves to help cover an approximately $79 million cut to its provincial funding this year.

The U of A board of governors approved a one-time transfer of $15 million from the reserves to the 2019-20 operating budget at its last meeting of the year on Friday.

“This will help us deal, on a one-time basis, with our budget reduction,” said vice-president finance and administration Gitta Kulczycki at the meeting.

The institution’s Campus Alberta grant was slashed by $44 million — or 6.9 per cent — in the October budget tabled by the UCP, and $35 million in infrastructure funding at the university was also cut on a one-time basis.

“The minister was very clear with our institutions that they are to look first at administrative costs and overheads, when determining funding reductions, to lessen any potential impact on students,” said Laurie Chandler, press secretary to Advanced Education Minister Demetrios Nicolaides, in a Friday emailed statement to Postmedia.

“Surely university administration can look at its own expenses to find savings.”

This year, around $14.9 million in savings have been found by cancelling some infrastructure projects, $2 million in additional tuition from enrolment growth, and a budget contingency fund of about $2.3 million, vice-president academic Steven Dew said Friday.

With the reserve funding, that leaves just over $45.1 million still to be cut this fiscal year. Faculties will shoulder part of the burden with one-time 4.7 per cent cuts across the board and eight per cent reductions for support units.

Dew noted in the meeting that reductions were first made at the institutional level before cuts to funding that most directly impacts students were made in order to protect the research and teaching functions of the university.

Potential increases to tuition in 2020-21 have not yet been decided, but could see fees rise by seven per cent on average and up to 10 per cent in some programs, the maximums allowed by the province now that the five-year tuition freeze has been lifted.

U of A Students’ Union President Akanksha Bhatnagar said the union opposes any increase to tuition “outright” but recognizes the university has to make “really difficult” decisions.

“It is likely that we’re going to see tuition increases in 2020 and we are working really collaboratively with administration to ensure that the costs are that the impact on students is as minimal as possible,” said Bhatnagar on Friday.

“We are having those conversations, very preliminary, about how we can ensure that student financial aid is coupled with any potential increases in tuition.”

Chandler said a new funding model, which Nicolaides has said will be more closely based on performance and enrolment metrics, will determine funding starting in 2020.

While there is “not much certainty” about what this could mean for the U of A, Dew said the university is expecting additional cuts of five per cent annually for the next three years, totalling about $130 million — or nearly 22 per cent — by 2023.

“A small amount of that will be able to be offset by allowed tuition rate increases, but that’s still going to leave us with a very large budget challenge,” said Dew.

mwyton@postmedia.com

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