presidents workshop 01.2012

University and College Financial Outlook, 2012

CAUT President’s Workshop

David RobinsonAssociate Executive Director

robinson@caut.ca

January 15, 2011

Overview

• The fiscal and economic climate• Key PSE revenue drivers:

– Federal cash transfers & provincial operating grants

– Sponsored research funding– Enrolment

• Key PSE expenditure drives:– Focus is on salaries, but this hasn’t been a

major cost driver

Fiscal and Economic Climate

Net gov’t debt (% of GDP)

0%

20%

40%

60%

80%

100%

120%

Canada US Germany UK France I taly J apan

2007 2010

Government deficits, 2011 (% of GDP)

0%

5%

10%

15%

Germany I taly Canada France UK US J apan

Net debt as % of GDP

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

AB SK BC MB PE NB Fed. NL ON NS QC

2007 2011

Budgetary balance as % of GDP

-6%

-4%

-2%

0%

2%

4%

6%

AB SK BC MB PE NB Fed. NL ON NS QC

2007 2011

And now the bad news

• Weakening economic outlook, but austerity not counter-cyclical stimulus is the order of the day

• Federal gov’t to limit total program spending growth to 2.2% per year

• Total $15 billion in cuts over 4 years ($4 billion more than anticipated)

• And….continuing global economic uncertainty

Weakening growth

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Budget 2011 TD CIBC RBC ScotiaBank BMO PBO IMF

2011 2012 2013

Fiscal impact

• Decline of $10 billion (0.5%) of nominal GDP = drop of approx. $1.5 billion in federal revenues

• 2012 forecast downward revisions = approximately $4 billion in reduced revenues

• What impact on PSE finances?

Uneven exposure to Euro crisis

0%

2%

4%

6%

8%

10%

12%

14%

16%

NL NS PE NB QC ON MB SK AB BC

% exports to Eurozone

University Revenues

Federal PSE Cash Transfers ($ billions)

2.44

3.23 3.33 3.43 3.54 3.65

0

1

2

3

4

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Federal PSE Cash Transfers (% of GDP)

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

University Revenues, $2008

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

00

0's

Operating Revenues, $2008

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

00

0's

Operating Revenues ($2008)

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

00

0's

Provincial operating grants Tuition fees

University enrolments 2010-11(% change)

Undergraduate Graduate

Canada 3.6 4.0NF and Labrador 0.7 4.8PEI 3.0 17.6Nova Scotia 3.4 6.2New Brunswick 1.0 1.9Quebec 4.4 3.2Ontario 3.8 3.6Manitoba 1.8 1.0Saskatchewan 1.8 6.6Alberta 2.8 4.4British Columbia 4.5 5.8

Research Funding

Federal research grants, $2008

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

00

0's

Sponsored research funding, $2008

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

00

0's

SSHRC NSERC CIHR CFI

Federal Research Funding

Granting Council Base Funding, 2007-2012 (constant 2010 dollars, millions)

2007-08 2008-09 2009-10 2010-11 2011-12 % change(2007-12)

SSHRC 383.7 358.1 350.4 342.5 342.6 -10.7%

NSERC 1057.9 1051.8 1070.6 1050.7 1044.8 -1.2%

CIHR 1017.8 989.8 1001.8 980.8 976.3 -4.1%

Indirect Costs

327.8 335.7 330.9 322.4 325.9 -0.6%

Total 2787.2 2735.4 2753.6 2696.4 2698.6 -3.2%

University Expenditures

Academic rank salaries as % of operating expenditures

25%

27%

29%

31%

33%

35%

37%

39%

41%

Operating expenditures by category (% of total)

0% 10% 20% 30% 40%

Academic rank salaries

Utilities

Other instruction

Student assistance

Benefits

Capital

Staff and adminsalaries

Other

1998 2009

% change in op. expenditures, 1998-2009

80.0%

92.2%

99.3%

101.9%

113.7%

118.7%

160.5%

176.5%

342.4%

556.9%

0% 100% 200% 300% 400% 500% 600%

Academic rank salaries

Utilities

All salaries and wages

Other

Staff & Admin salaries

Total Operating

Benefits

Other instruction

Student Assistance

Capital financing

Net balances FY 2009 ($000s)

-70000

-60000

-50000

-40000

-30000

-20000

-10000

0

10000

20000

Alber

ta

Que

en's

SFU

Regin

a

Tren

t

Nip

issing

Leth

brid

geUN

BW

LU

Win

npeg

SMU

Wat

erlo

o

Long-term debt per FTE student

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Expendable resources per FTE student

-$6,000

-$5,000

-$4,000

-$3,000

-$2,000

-$1,000

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Some concluding thoughts

• Wide variation in financial health of institutions

• Governments and employers using the broad fiscal and economic climate to push austerity and roll-backs

• Need to really investigate the fine print of your institution’s specific financial situation based on the broad range of drivers: operating grants, tuition revenues, debt, and expenditure choices