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Dalhousie University 2020‑21 Fiscal Update
To: The Dalhousie University community
From: Frank Harvey, Provost and Vice-President Academic (Acting)
Ian Nason, Vice-President Finance and Administration
Date: Wednesday, June 24, 2020
Re: Dalhousie University 2020-21 Fiscal Update
On Tuesday, Dalhousie’s Board of Governors was presented with a 2020-21 Fiscal Update [PDF - 200kB] regarding the university operating budget.
Our usual budget planning process was halted at the end of March to fully consider the implications of the COVID-19 pandemic on university operations. The decision to present the Board with a Fiscal Update at this time, instead of a full operating budget plan, reflects the high degree of uncertainty surrounding the COVID-19 pandemic and its impacts, particularly with respect to student enrolment and tuition revenue.
The Fiscal Update is meant to support university-wide budget planning through the summer and early fall until such point that we can return to the Board with a clearer picture of our overall financial situation and approve a complete operating budget plan.
- Sustain our academic mission and support our students through the impacts of the COVID-19 pandemic;
- Anticipate and manage unprecedented uncertainty in student enrolment and its potential for significant impact on resources;
- Work together in creative ways to ensure Dalhousie emerges from this pandemic strong and poised for continued success.
Our fiscal situation
A volatile enrolment situation poses significant risks to our operating revenue
This is an uncertainty all universities are facing at present, and a challenging one — never in our modern history have we seen so many variables at play in trying to anticipate what our enrolment will be this fall. Every effort is being taken to support new and returning Dalhousie students in their continuing studies and should our enrolment situation turn out for the better it will be the result of continued great work across the university. Despite these efforts, there remains many reasons students may elect or be forced to make other choices this fall: travel and border restrictions; public health directives; financial impacts of the pandemic; the decision to move most of our instruction online; and others.
Our detailed scenario planning identifies that revenue declines are likely
For the past several weeks, interdisciplinary teams across the university have been working diligently to develop plausible scenarios for the fall, taking into account where our students come from, health and travel restrictions, information from other universities, ongoing consultation with Faculties and the Registrar’s Office, external research surveys, and other factors.
The scenarios range from a 14% enrolment decline to a 29% enrolment decline. Even with the tuition increase approved in May, the Fiscal Update assumes the potential of a net decline in tuition revenue of up to $37.8 million. We expect a further $12.1 million in lost revenue specific to certain Faculties and units (in specialized programs), and in ancillary revenue (residence, Dalplex, conference services, etc.).
While it is promising at this early juncture, to see relatively stable registration activity in many of our academic programs, we remain cautious given the uncertainty and risks of the pandemic and the consequent impact on enrolment. The full impact of the pandemic will only be fully realized at tuition payment deadlines in the fall. We will therefore be prudent in the fiscal plan for Dalhousie, ensuring we build the real and significant risks to our revenues into our budget planning at this time.
The Fiscal Update is focused on mitigating the impacts of significant revenue decline while also investing in critical areas to support our university community through this pandemic.
Even with significant cost-saving measures implemented, the scenario in the Fiscal Update would still result in a $30.5 million shortfall. In this case, the university would use available reserve funds ($12.2 million) to reduce the operating deficit to $18.3 million. Should revenues decline less than this scenario, reducing and eliminating this deficit will be the top priority.
Below is a summary of the investments and cost-reduction measures outlined in the Fiscal Update:
1. Make critical investments to support our students and academic priorities through the pandemic
We are doubling student bursary funding from $3 million to $6 million, as previously announced, supporting both domestic and international students.
We are continuing to invest in select strategic priorities. A total pool of $6 million will be invested in institutional priorities including international outreach; enrolment/recruitment; equity, diversity and inclusion; legislative requirements; and process improvements. A portion these funds has already been deployed to support the total investment of $1 million Dalhousie has committed to making in technology development, additional online instruction training and increased supports for students.
2. Implement measures university-wide to contain costs
Dalhousie will reduce expenses by nearly $20 million total in the following areas:
Faculties and service unit budget reductions: Each Faculty or service unit will be asked to find 2% in cost savings or in additional revenues, saving $6.1 million.
Campus renewal: Facilities and maintenance projects that can be safely postponed will be delayed, saving just over $10 million.
Equipment and furniture allocation (teaching, lab and technology equipment): This will be cut in half, saving $1.2 million.
Utilities: Lower gas pricing and reduced consumption will save an estimated $2.5 million.
3. Work collaboratively to address compensation costs
Dalhousie’s largest investment each year is in our people: compensation paid to faculty and staff (salaries, benefits and pension payments) makes up nearly 73% of total expenses. Our budget challenge, therefore, is a shared challenge, and we must act together to solve it — all of us doing our part, working together in creative ways, to emerge as a stronger university.
Some of what is currently underway includes:
Senior administration salary freeze: All senior leader salaries (the president, vice-presidents, vice-provosts, AVPs, deans and some others) will be frozen for 2020-21. Further, we will not be adjusting salaries for non-unionized employees (DPMG, etc.) for 2020-21 at this time.
Hiring restrictions: Hiring continues to be limited only to academic and support positions deemed essential, with approval required by the Provost (for academic positions) or the Vice-President Finance and Administration (for support positions).
Collective bargaining: Discussions are underway with all our employee groups regarding our financial outlook as we head into collective bargaining with the DFA and our NSGEU locals.
Pension plan changes: We are aware that there are many structural changes that we can make to our pension plan that will save money in our operating budget while we continue to preserve our strong, indexed defined benefit pension for retirees. We will be continuing to work with our Pension Advisory Committee with a goal to move these important changes forward.
Federal Work-Sharing program: Working closely with NSGEU 99, we are participating in the Federal Work-Sharing program to avoid layoffs and provide income support for Facilities Management staff who are currently working reduced hours.
Talent Connections program: Together with leaders across the university, we’re working to pair under-employed staff with areas of need as a further measure to limit new hiring and avoid layoffs.
Benefit plan contribution holiday: We have been able to reduce payments into some of our benefits plans (for both employees and the university) for the time being without reducing benefits themselves.
The impact of a single-year enrolment decline would be significant, and not just for the 2020-21 budget. The effects would stretch into future years as a smaller-than-usual cohort of students moves through its studies.
It is prudent that we plan for uncertainty this fall, in all that entails. However, we can also take confidence in what we’ve achieved through this pandemic thus far as we’ve come together in new ways to support our students and our mission. And we also hear loud and clear from our students — prospective and current, domestic and international — their excitement for returning to a fully in-person university experience when they are able to do so.
Our objective is not only to sustain our academic mission through the incredible efforts of our faculty and staff. It’s also about how we do so to sustain our students’ enthusiasm for learning, for discovery and for positive impact through the value of education. Working together, we will meet this challenge.
Provost and Vice-President Academic (Acting)
Vice-President Finance and Administration
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