Dalhousie Budget

MEMORANDUM

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] 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.

Our goals

• 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.

Our approach

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.

Looking ahead

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.

Sincerely,

Frank Harvey
Provost and Vice-President Academic (Acting)

Ian Nason
Vice-President Finance and Administration

MEMORANDUM

To:          The Dalhousie University community

From:     Deep Saini, President and Vice-Chancellor

Date:     Wednesday May 27, 2020

Re:        Tuition, fees and expanded student support for 2020-21

Last week, I shared news of how we are approaching instruction for the fall term. Yesterday, Dalhousie’s Board of Governors met to consider tuition and fees for the upcoming academic year. Tuition and fees are critical to supporting Dalhousie’s most important priorities for this upcoming year:

• The health and safety of our students and community
• Our unwavering commitment to academic excellence
• The reality of financial pressures on our students
• The overall financial stability of the institution

Here is a summary of what you can expect this fall:

Tuition is increasing by 3%. Annual tuition increases are necessary to maintain the high quality of our academic programming — this was true before the COVID-19 pandemic and is even more apparent today as we work to ensure your academic experience this fall is delivered to the highest standards. The Board’s motion approved a tuition increase of up to 3%, and given the investments needed in student support and online instruction — as well as to help manage the significant financial impacts of this current pandemic — Dalhousie will be implementing the full 3% increase for this upcoming year.

We’re providing more financial aid than ever before, recognizing the impact of the current pandemic on the financial means of many of our students. We’re doubling financial aid bursary funding, adding an additional $3 million for domestic and international undergraduate students who need financial support. This financial assistance is above and beyond the scholarships, bursaries and other student assistance Dalhousie offers from the operating budget totalling more than $36 million per year.   

We’re waiving or modifying many student fees. For many students, these savings will offset the tuition increase for the fall.

• Athletics and recreation fees for all students will be waived for the fall term ($110 in Halifax, $75.29 in Truro), as will fees related to the Dalplex Fitness Centre ($90).
• Student Services and Facilities Renewal Fees will be frozen at 2019-20 rates for the upcoming year. Our student services remain available and long-term investments into our facilities remain ever present.
• Faculty-based fees are being reviewed and will be adjusted where possible.
• A decision regarding UPass fees will be made at a later date once more details are available about both on-campus activity and Halifax Transit operations for the fall.

We’re putting more resources into supporting your academic experience. Our costs do not decrease when instruction moves online; in many cases there are new or different costs as we work to ensure courses are delivered with the world-class academic quality you expect from Dalhousie. That’s why we’re spending $1 million on technology development, additional online instruction training and increased online supports for students.

International tuition will increase as planned for students who began their studies in September 2019 or later. As previously approved last year, international tuition for students who started studies at Dal in September 2019 or later is increasing by an additional $1,473 annually through 2022-23 — an adjustment to bring our fees more in line with our Canadian comparators. Dalhousie’s international tuition is still among the lowest of our peer research universities across Canada. International students will receive the same support through the reduction in student fees and increased financial aid

We’re doing our part to reduce costs. Steps are being taken across the university to reduce costs and limit non-essential spending to ensure our overall financial stability during this pandemic. This includes limiting new hiring (except those roles deemed essential to our mission) and other human resources related costs, acting with significant spending prudence, and deferring maintenance and facilities work where possible.

The full operating budget for 2020-21 is still actively in review and will be considered by the Board in June. For more information, visit dal.ca/budget. Recommendations for tuition and fees for 2020-21 were developed and consulted through our usual Budget Advisory Committee process, however, we deferred moving final recommendations forward for approval to our Board of Governors earlier this spring to allow us to fully consider the impacts of the COVID-19 pandemic.

Dalhousie is committed to your success, and we are all here to do whatever we can to keep you safe and help you complete your studies during a very difficult time. Over the past two months, the university has provided emergency financial aid to nearly 1,000 students. Additionally, with the support of generous donors throughour projectDal campaign, we will continue to assist those in need. If you are having challenges, please reach out — there are resources available to you. Learn more at dal.ca/financialresources.

Sincerely,

Deep Saini
President and Vice-Chancellor

Dalhousie's operating budget planning process is coordinated through the Budget Advisory Committee (BAC) — a group chaired by the Provost with membership from senior leadership, faculty, staff and students.

Through a transparent and consultative process, the BAC is tasked with considering Dalhousie’s varied and diverse priorities and interests and making high-level recommendations for allocations of funding across the University. From there, it is up to leadership in each Faculty or service and support unit to determine how best to allocate resources to deliver on their plans and ensure Dal’s strategic goals are achieved.

The BAC engages with faculty, staff, students and university leadership throughout its planning process. See the full timetable. It produces a draft operating budget plan in February/March, followed by a final plan in late March.

The Board of Governors votes to approve the operating budget at its June meeting. It usually approves tuition and fees earlier, at its April meeting, so they can be incorporated in time for Student Accounts to begin collecting fees for the summer and fall terms.

Dal's operating budget planning process is based on four principles:

• The annual operating budget must be balanced.
• The operating budget recommendations must allow for long term financial sustainability.
• Operating budget recommendations must be driven by Dalhousie’s mission and strategic priorities.
• Operating budget recommendations must be transparent, and the process for making recommendations must be consultative.

Dalhousie’s success depends on our ability to provide excellent programs and to be competitive nationally and internationally. We strive to keep tuition rates competitive with other Canadian universities while reflecting the high quality of the programs we offer.

Addressing rising costs and investing in university priorities requires resources. With costs increasing at a faster rate than government funding, that leaves tuition — which funds 43% of the operating budget — as the only significant means available to balance the operating budget.

Annual tuition increases are necessary to maintain the high quality of our academic programming — this was true before the COVID-19 pandemic and is even more apparent today as we work to ensure students' academic experience this fall is delivered to the highest standards.

How do Dalhousie’s tuition fees compare to other universities?

It varies by program — and where a student is from. Nova Scotia students receive an additional bursary from the Province that lowers their tuition, and Dal's international tuition fees compare very different nationally than domestic tuition. Appendix G of the BAC's draft operating budget plan [PDF] has detailed comparisons of tuition costs between Dal and its peer universities.

International tuition fee increases

Dalhousie’s international undergraduate tuition fees are currently among the lowest of Canada’s U15 group of leading research universities. For Dalhousie to maintain and improve the quality of programs and student support, and to increase the university’s competitiveness nationally and globally, sustainable resources are required.

In April 2019, Dalhousie's Board of Governors approved a four-year plan to increase tuition for nternational students beginning their studies in fall 2019 or later in undergraduate or non-thesis masters programs. These fees will increase by $1,473 annually on top of any general fee increases.

Even with these increases, Dalhousie's international fees remain well below the U15 average.

Following last year’s decision, a Rapid Task Force recommended new investments in international services and supports currently in development. These include: a program manager for international student support; a Mandarin-speaking international student advisor, an additional writing centre advisor; and further new supports for writing, advising, and intercultural competence.

Across all university funds (operating, research, endowment, etc.) Dalhousie spends more than $70 million each year on student assistance, including scholarships, bursaries, student employment, research and external funds. 

Dalhousie spends 7.5% of total operating expenditures on scholarships and bursaries — compared to an average of 5.5% at other U15 universities.

In Fall 2020, Dalhousie is providing more financial aid than ever before, recognizing the impact of the current pandemic on the financial means of many of our students. We’re doubling financial aid bursary funding, adding an additional $3 million for undergraduate domestic and international students who need financial support.

63.2% of the university operating budget is allocated to Deans to manage direct costs of the university’s academic Faculties (including salaries). This allocation is similar to other U15 universities.

Overall, academic budgets have increased by $39 million over the last 6 years — a total increase of 18% or an average annual increase of 3.0%.

While Faculty budgets increase annually, there is pressure on budgets as the funding allocated does not fully cover increased expenditures (driven largely by required increases in compensation for faculty/staff). Dal’s Faculties and service/support units are usually asked to find cost savings to close the gap between rising costs and available resources. The Budget Advisory Committee has made minimizing this gap a priority.  

Dalhousie spends 36.4% of operating expenditures on academic salaries as compared to an average of 32.7% at U15 comparators.

From 2012‐13 to 2018‐19, total career stream academic appointments have increased by 83 or 9.5%. (This excludes growth of 57 appointments related to the merger with the Agricultural College which created the Faculty of Agriculture).

Almost three-quarters of Dalhousie’s operating budget goes to compensation for faculty and staff, and the budget must provide for annual salary, wage and benefit increases as outlined in collective agreements.

The university spends 36.4% of operating expenditures on academic salaries as compared to an average of 32.7% at U15 comparators. In contrast, Dalhousie spends less operating expenditures on non-academic salaries than its comparators.
Just 1.9% of total operating expenditures is spent on senior administrative appointments (individuals reporting to a vice-president, the provost or the president).