Government & Policy
22 September, 2004
Projected Operating Deficits in 2004-2008 Business Plans
Outlined below are the results of my quick and dirty review of the latest round of Business Plans submitted by colleges and institutes for the Minister’s approval. The bottom line is clear – almost all of the institutions in our sector have hit the wall, and are projecting large and rapidly accelerating operating deficits in the immediate future, if current funding trends continue. Access funding for new places in high demand areas isn’t going to fix this; it’s going to make it worse.
John Nicholls
Research & Liaison Officer
Alberta Colleges & Institutes Faculties Association
Deficits Facing Alberta Colleges & Institutes
[2004-2008 Business Plans consulted, except where noted. Plans for ACAD and Red Deer College were not immediately available]
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Bow Valley College
Financial sustainability and balancing future budgets is threatened as Alberta Human Resources and Employment plans to further decrease its support over the next four years and future increases to the General Operations Grant are unpredictable. These reductions and uncertainties are occurring at the exact time when demands are increasing...
[BVC 2004-2008 Business Plan, page 4]
- Operating deficits projected for 2005-2006, 2006-2007, 2007-2008
[Ibid., page 23]
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Grande Prairie Regional College
If increases in funding support from the Ministry remain at the current level, GPRC may be faced with continued cutting of programs and services to balance the budget each year. Efforts to increase enrolments while dramatically improving efficiencies will be necessary; however, it will be increasingly challenging each year.
[GPRC 2004-2008 Business Plan, page 15]
The prospect of GPRC offering specific degrees commencing in 2005-2006 will begin a new era. Prolonged funding shortfalls, along with increases in salaries, benefits, utilities and insurance will continue to create escalating financial challenges in the future plan years. Grande Prairie Regional College will need to reinvest in physical facilities, technology, and areas of enrolment growth in order to address the challenges that the College faces.
[Ibid., page 25]
- Balanced budgets are planned, but funding above the assumed 2% increases to the base operating grant will be required to achieve the levels of instruction presented in the College Plan. “If the funding required is not met, programs and/or levels of service will likely be reduced.”
[Ibid., page 26]
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Grant MacEwan College
…many sources of funding previously available to the College have been discontinued. These include: the Performance Funding envelope, Learning Enhancement Envelope, Knowledge Network funding, special one-time infrastructure grants and new Access or conditional funding. For the near future, the only grant increase will be the inflationary increase received on our operating grant. This increase is projected at 2% for 2004/05 and 3% for 2005/06 and beyond. As costs are rising significantly more than this, the College faces an ongoing, structural shortfall in its budget.
[GMC Strategic Plan & Budget Strategies, 2004-05 to 2008-09, page 9]
- Operating deficits projected for 2005-2006, 2006-2007, 2007-2008, 2008-2009
[Ibid., page 23]
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Keyano College
In 2003-2004, grants made up nearly 62 % of Keyano College’s revenue portfolio. Keyano’s primary source of grant funding is Alberta Learning. The base-operating grant for 2004-2005 is 4% and will be 2% per year to 2008. Staffing, utility and insurance costs continue to rise at a greater pace than government grants. Keyano has been working towards increasing revenues wherever possible and reducing expenditures with the least amount of impact on services, students, educational programs and staff reductions.
[Keyano College Business Plan 2004, page 9]
- Operating deficits projected for 2004-05, 2005-06, 2006-07, 2007-08
[Ibid., page 20]
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Lakeland College
Lakeland College is facing significant cost pressures due to a number of factors including arbitrated salary settlements, rising benefit costs, facility maintenance and repair, technology upgrades, program equipment, system upgrades, and professional development. Operating grants and other revenues have not kept pace with the increases in the cost of doing business…
During the past five years, Lakeland College has grown considerably in student numbers. This growth has been largely self-funded from College reserves. That option is no longer possible.
[Lakeland College Business Plan 2004-2008, page 6]
Lakeland College has reached a critical point in 2003-04…As outlined in the budget scenarios, 2003-04 is forecasted to be a small net surplus budget. The following years show that without considerable changes, Lakeland College will forecast a significant deficit.
[Ibid., page 17]
- Operating deficits projected for 2005-06, 2006-07, 2007-08
[Ibid., page 25]
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Lethbridge Community College [2003-2007 Plan Update consulted]
Through the planning and budgeting process, a number of opportunities and challenges were identified that cannot be resourced through existing revenue streams. Many of these issues were identified in previous years and have remained unresolved.
[LCC Business Plan 2003-2007 Update, page 8]
- Based on assumptions of 1% annual enrolment growth and 3% annual increases in grants from Alberta Learning, balanced budgets are projected for 2005-2007, with a deficit projected for 2008.
[Ibid., page 23]
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Medicine Hat College
Balancing the budget is a challenge each year as expenses increase faster than revenue generating opportunities. The financial plan also demonstrates a need for provincial funding to increase, as deficit financing will occur into future years in order to meet the needs of a growing institution.
[MHC 2004-2008 Business Plan, page 30]
- Operating deficits projected for 2005-2006, 2006-2007, and 2007-2008.
[Ibid., page 31]
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Mount Royal College
Mount Royal College continues to operate in a fiscal environment in which government priorities and funding practices have a significant influence on the institution’s development. While comprising less than half the total revenue for Mount Royal, government grants remain the institution’s primary funding source. In addition, tuition and other fees, an increasing component of the institution’s revenue base, are regulated under the new tuition fee regulations set by the Province of Alberta….One of Mount Royal’s greatest challenges is the budget shortfall the institution faces each year. This is a structural problem, as expenditures to sustain current operations grow at a faster rate than new revenue. Mount Royal’s four-year business plans show this to be a long-term problem and suggest that, without changes to the revenue and/or expenditure projections, current levels of programs and services to students, faculty and staff will be very difficult to sustain.
[MRC Business and Budget Plan, 2004/05 – 2007/08, page 15]
The Budget Plan contained within this document presents a balanced budget for 2004-05 only. Maintaining the current structure at the campus would result in a budget shortfall for years two, three and four of this Plan.
[MRC Business and Budget Plan, 2004/05 – 2007/08, page 17]
- Operating deficits projected for 2006-2007, 2007-08.
[Ibid., page 19]
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NAIT
Base Government grants – The financial forecast for 2005/06 projects an operating deficit of $2.5 million, increasing to $4.2 million in 2006/07 and $6.3 million in 2007/08.
[NAIT Business Plan, 2004/05 to 2007/08, page 8]
- Operating deficits projected for 2005/06, 2006/07, and 2007/08.
[Ibid., page 37]
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NorQuest College
We continue to be challenged to balance operationally deficient budgets when incremental grant increases and limited tuition increases are unable to keep pace with actual operating cost increases…NorQuest’s grant per FLE is substantially below other Alberta colleges…With one of the lowest operating costs per FLE in Alberta, further cost savings will have to be generated by reductions in program and service quality or by reductions in learner access. Both options will have serious negative implications for learners, which will directly and indirectly impact the Alberta post-secondary system and the Alberta economy.
[NorQuest College Business Plan 2004-2008, page 7]
- Operating deficits projected for 2004/05, 2005/06, 2006/07, 2007/08.
[Ibid., page 24]
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Northern Lakes College
The College’s financial projections forecast decreasing net assets and looming deficits. Announced grant increases of 2% and expected cost increases of 4-5% will severely limit program and enrollment growth. This is further aggravated by the College’s lack of reserves…..To balance the 2003-04 operating budget the College had to abolish several program, service and supervisory positions, to close two campuses, and to further restrict travel. Restricting travel in a multi-campus system means that students and employees at the community campuses receive less direct support. To balance future operating budgets, the College must receive regular grant increases of 4% or further reduce positions and campuses.
[NLC 2004-08 Business Plan, page 8]
- Operating deficits projected for 2005/06, 2006/07, 2007/08.
[Ibid., page 18]
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Olds College [2002-2006 Business Plan consulted]
- Balanced budgets projected for 2004/05 and 2005/06…
[Olds College Four-Year Business Plan, 2002-2006, page 26]
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Portage College
Overall government-funding constraints on operating revenues pose special challenges for smaller institutions that have limited access to resources, staff and services. Overhead costs represent a larger proportion of total spending that could go to programming…Future student growth will be difficult to achieve, and more likely, current levels of post-secondary seats will be threatened if funding arrangements do not change.
[Portage College, Business Plan, 2004 - 2008, page 6]
- Deficits are projected for 2006/07 and 2007/08.
[Ibid., page 21]
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SAIT [Business Plan, 2003-07 consulted]
Faced with the twin pressures of running a balanced-book operation, and not having sufficient core funding to meet basic costs, SAIT will have to cut costs even further. This act to reduce costs is solely to address maintaining operations, to remain flat, and there is no provision for expansion to meet the needs of Alberta business and industry…
[SAIT Business Plan, 2003 – 2007, page 10]
- Deficits are projected for 2004/05, 2005/06, and 2006/07
[Ibid., page 28]