The following questions were prepared to aide in discussions around the 2017-18 operating budget. They will be updated in the near future to support the 2018-19 operating budget process.
1. Why is Dal considering raising tuition?
The costs of running the university increase every year. To manage those costs and balance the budget, the university has to a) earn more revenue, and/or b) reduce expenses.
Tuition fees are the second-largest source of revenue at the university, accounting for 38.4% of overall revenue. Dal expects its largest source of revenue, government funding, to increase by 1% next year — not enough to cover increased costs.
This is why the Budget Advisory Committee (BAC) is proposing a tuition increase of 3% for 2017-18, in conjunction with a 1.9% reduction to Faculty/service unit budgets to help lower expenses. Without the tuition increase, the Faculty/service unit budget cut would increase significantly, causing greater impact to programs and services.
2. Why is Dal asking departments and units to cut costs?
Costs go up annually largely based on compensation (salaries, benefits, pension) for faculty/staff, as outlined in Dal’s collective agreements with its employee groups. Compensation is the largest line item in the operating budget — 74% of expenses — and, when combined with other inflationary costs, is set to increase Dal’s expenditures by $11.7M (prior to any cuts/reductions).
Additionally, there are targeted strategic areas where the BAC, based on community input, identifies that additional investment is necessary. (See question 8 below.) These would add an additional $2.6 million to Dal’s operating expenses.
Dalhousie expects only a 1% ($1.9 million) increase to its provincial operating grant, which accounts for more than 52.1% of operating budget revenue. Together with the maximum allowed tuition increase (3%) and other small revenue impacts, total revenues are projected to increase by $9 million.
This gap requires the university to reduce costs to balance its budget. To do this, the Budget Advisory Committee is recommending a 1.9% budget reduction be applied to all faculties and service units.
3. Why doesn’t Dal use its reserve fund to avoid tuition increases/budget cuts?
Dalhousie’s operating reserve fund is accumulated when surpluses occur due to higher-than-expected revenues or lower-than-expected expenditures. It’s meant as a source of “one time” funds to address unforeseen budget pressures. It currently sits at $7.5 million.
The reserve fund allows the university to deal with uncertainties and risks without having to make deeper or unplanned cuts that could cause greater harm to programs and services. For example, if enrolment for 2017-18 is less than projected, reserve funds would be used to balance the budget rather than applying a mid-year budget cut.
In recent years, as the university addressed the impact of a significant reduction in government funding (10% between 2011-12 and 2013-14), Dal has used some of its reserve fund to balance the budget. However, its “one time” focus means it is not a sustainable solution for ongoing base budget requirements and needs to be found in subsequent years. This is why the BAC is not recommending the use of reserve funds to balance the 2017-18 budget.
4. How does the university fund its operations?
The operating budget, which funds the day-to-day operations of the university, accounts for 70% of all financial activity.
The university operating budget includes compensation for faculty/staff, student assistance, facilities renewal and other major expenses. It is a lot like a two-income household, as more than 90% of funds coming from just two sources: provincial funding (52.1% of revenue; set by the government, increasing 1% annually in recent years) and tuition revenue (38.4% of revenue; increases capped at 3% by the government).
The remainder of the university’s financial activity is in funds dedicated to their specific purposes, including the ancillary fund (services like housing and the bookstore), endowment fund (donations and financial gifts for scholarships, etc.), capital fund (property, plant and equipment), research fund (targeted research funds) and special purpose fund (other restricted uses).
5. What are the main costs of running the university?
The draft budget plan for 2017-18 balances university revenues and expenditures at $413.4 million.
Nearly three-quarters of the university operating budget (74%) is spent on salaries for faculty and staff. Other major expenditures include student assistance (8%), facilities renewal (6.8%) and utilities (5.3%).
The university spends 62.1% of its budget in academic areas (Faculties, including Graduate Studies and Continuing Education), 31.3% on service and support areas, and 6.6% on administration.
6. How do Dal's administrative costs compare to other universities?
As a percentage of the overall operating budget, administrative expenses at Dal (6.6% of the budget) are below the average of Canada’s U15 group of research universities (average: 9.5%) and below the Nova Scotia average as well (average: 11.8%).
7. Why does the budget need to be balanced?
Dalhousie's Board of Governors requires that the university budget be balanced. Any gap between revenue (how much money Dal brings in) and expenditures (how much money Dal spends) must be addressed by increasing revenue, reducing expenditures or some combination of both.
8. Why has the BAC chosen select areas for additional investment?
There are several areas where the Budget Advisory Committee (BAC) believes additional strategic investments are necessary, based on input from the Dal community:
- Student assistance: An increase of $400,000 in operating budget funds for scholarships, bursaries and student employment. This will increase the amount of new student assistance available next year to $892,000.
- Facilities renewal: Dal’s aging infrastructure requires maintenance and upkeep; 40% of buildings have a facilities condition index or poor or very poor. The draft plan increases facilities renewal funding by $1 million.
- Information Technology: Dal faces significant challenges with renewal and upgrade of technology infrastructure, including demand for network services, instructors requiring more online content in classrooms and ever-evolving risk of cyber attacks. BAC is recommending a $600,000 investment for network capacity and infrastructure requirements annually for the next three years to set up a stable fund.
- Strategic Initiatives Fund: Dal’s Strategic Initiatives Fund (SIF) supports key initiatives that will have a positive impact on teaching and learning, research, service, and infrastructure at the university, as articulated in the strategic priorities. The BAC is recommending maintaining total SIF funding at $2.1 million for 2017-18, which requires a $581,000 investment.
9. Why is Dalhousie spending more money on facilities?
Dalhousie’s aging infrastructure requires continued investment for it to continue to support teaching and research. Dal has a deferred maintenance backlog of approximately $371 million, with 40% of buildings having a facilities condition index of poor or very poor.
10. Is Dalhousie spending less on academics?
Dalhousie is committed to maintaining a balance between academic, support and administrative functions within its operating budget. About 62% of Dalhousie's budget is spent in academic areas. That places Dal above the average of Canada’s U15 group of research universities (60.7%) and well above the Nova Scotia average (54.8%).
In the early 2000s, Dalhousie began a concerted effort to bring its balance of expenses more in line with the average of other major research universities in Canada. This was to address important, unmet needs in areas like research services, student services and others.
Recognizing that all institutions are different the BAC has deliberately not identified a target profile for the breakdown of expenses between the three categories (academics, services & support, administration) but will continue to monitor the distribution of resources between these categories annually.
11. How does Dalhousie set its operating budget? Who does the university consult with in making its decisions?
Dalhousie has an open and transparent budget process led by the Budget Advisory Committee (BAC). The BAC engages with faculty, staff, students and university leadership throughout its planning process. See the full timetable.
This year, the university expanded engagement with its internal community by adding in-person town hall sessions in December and a community survey, which engaged 1300 respondents. View the feedback in Appendix B of the latest BAC report.
Further feedback is sought upon release of the draft budget report each February. The BAC submits its final recommendations to the president and the Board of Governors in April. Tuition and fees are approved at the April Board meeting (so they can be implemented in time for the upcoming academic year) and the Board approves the final budget in June.
12. How much does Dalhousie spend on scholarships, bursaries and other student assistance?
Across all university funds (operating, research, endowment, etc.), Dalhousie spends $66.1 million on student assistance. Over the past five years, this number has grown by $9.1 million.
A total of 7.3% of Dal’s operating budget is devoted to student assistance — well above the U15 average of 5.3%.
In addition to the operating budget, Dal’s endowment fund — which contains funds from gifts and donations to the university — is also a significant source of student assistance. Dal’s endowment has grown under the university’s effective stewardship over the past several years, enabling Dal to provide this additional support for student assistance, alongside other programming costs.
Total student assistance is set to increase by $892,000 in 2017-18. This includes:
- A BAC recommendation for a $400,000 increase in operating budget funds for student assistance.
- $125,000 more in endowment fund support for students
- $367,000 increase in funding for graduate students through the Nova Scotia Graduate Scholarship program.