Financial forecast

Final preparations for Carleton’s 2004-2005 operating budget have been delayed because of provincial funding uncertainties.

Until the new provincial government presents its budget this spring, universities in Ontario won’t know whether they will continue to receive full funding for additional students through the Accessibility Fund, what will happen to the Quality Assurance Fund (QAF), and whether there will be a tuition fee replacement grant. Although a tuition freeze has been announced, the new government has not indicated what the implications for universities will be in terms of compensation for lost fee revenue.

For planning purposes, the administration is assuming Accessibility Funding for new students will be at 90 percent rather than 100 percent, and that the QAF will be frozen at current levels. The Tories had promised the QAF would increase to $200 million by 2005, but we do not think it is realistic to expect this from the new government.

Other planning assumptions are that the student-faculty ratio will increase by two percent each year and that unfunded inflationary and compensation increases will amount to more than $9 million annually.

As long as the provincial funding formula is driven by increasing student enrolments without any money for inflation, it is inevitable that the student-faculty ratio will continue to rise.

Another area of uncertainty is the Pension Plan. For the past several years the Plan had been in a deficit position and the University had set aside $10 million in a reserve fund to protect the non-reduction clause. However, recent improvements in the equity markets and negotiated changes to the Plan means there is no longer a deficit and the $10 million could be released for other purposes.

While the University’s current financial situation appears healthy, it is expected that enrolment will stabilize in the next year or so. As a result, our income, which is based on tuition and government grants, will also level off. This means we must take a very conservative approach to long-term planning and keep a tight reign on base expenditure increases.

However, for next year there will be some fiscal money available that can be spent on one-time projects. The Board of Governors will decide on where this money will be allocated.

It is expected that the University’s operating budget will be presented to the Board in late May or June. In the meantime, departments will receive allocations based on our 2003-2004 budget.

Duncan Watt
Vice-President (Finance and Administration)

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