About University Finances
The university’s revenue sources
In 2012-13, our projection for the total revenue for the University of Saskatchewan from all sources is more than $1.1 billion. The university is a complex organization with diverse activities. Sources of revenue at the university include:
- provincial funding (including the annual operating grant);
- federal funding (including funding from federal research granting agencies);
- investment income;
- sales of products and services; and
Revenue is allocated to different funds or accounts as depicted below, similar to how you may manage your personal finances. For example, you may have a savings account, chequing account, TFSA and/or RRSP which are used for different types of activities. On campus, we have numerous different funds that are used to manage university finances, which are grouped by category, including research, capital, student financial aid and operating.
Similar to your personal accounts, the university is not able to move money from one fund to another. This is because many accounts are restricted, meaning the money is provided for specific purposes and we do not have the flexibility to reallocate it for other uses. An example of a personal account that is restricted is your RRSP, which can only be used for retirement savings and cannot be used to pay your household bills. An example for the university would be a research grant that is provided with specific instructions on what the money can and cannot be used for. Another example is capital funds which are provided to support specific capital projects and cannot be used to balance the operating budget.
For more information on the university’s fund structure including definitions of the funds referenced above, please visit the Financial Services Division website.
Funding from the Government of Saskatchewan for operations
Funding from the province is determined annually and announced as part of the provincial budget every March. The university also annually submits a request to government for funding support, through the Operations Forecast. The Operations Forecast represents the annual request to government and is part of the overall financial planning work of the university. In addition, a four-year projection of revenues and expenses is developed to coincide with each institutional plan, and it is referred to as the Multi-Year Budget Framework.
The following table provides a summary of the university’s funding request to the provincial government for 2012-13 compared with what was actually received.
(5.8% increase over 2011-12)
(2.1% increase over 2011-12)
Targeted initiatives (CERC, medical seats, Health Sciences operating, InterVac, etc.)
Capital projects (RenewUs, Health Sciences capital, etc.)
$0 cash grant (shift to permission to borrow of $95 million)
It is important to note that 2012-13 capital funding from the government was not received as cash funding. Instead, the government gave the university permission to borrow $95 million to fund capital projects as follows: $72 million for Health Sciences capital, $14 million for sustaining capital and $9 million for critical infrastructure. In past years, most of our capital funding was received in the form of cash.
This transition from cash funding to debt financing creates concerns for the university about our total proportion of debt relative to our peers. It also restricts our ability to use debt financing to fund future critical projects and strategic opportunities. Principal and interest repayments have not been formally guaranteed by the government, which places the university at risk given exposure to future changes in our environment, including constantly changing economic conditions.
The operating budget
Our current projected deficit specifically deals with the operating budget which is comprised of the unrestricted revenue in the operating fund. The majority of the operating budget (68 per cent) is funded by the provincial operating grant.
Our operating budget has a projected revenue total of $447 million in 2012-13. This is the money we have available to use for the general teaching and outreach operations of the university, including salaries and benefits, utilities and other basic operating expenses.
There are a few other considerations with regard to operating budget revenue:
- Tuition: Unlike many other universities in Canada and North America, tuition is not set to balance the budget. Tuition is set according to a set of principles approved by the Board of Govenors. These principles are: comparability, accessibility and affordability, and enabling quality. This means we will not be using tuition to generate the funds necessary to offset our growing expenses.
- Donations: In times of economic constraint, raising revenue through endowments is difficult. Donors tend to give more one time donations which are unpredictable. Further, these funds tend to be for specific purposes, such as for a specific scholarship or naming opportunity, rather than for general operating or day-to-day expenses.
- Variability in investment returns can have an impact on our revenue. We rely on investment income for our defined benefit pension plan, operating income and endowments.
Operating budget expenses
By far, the largest portion of our operating budget goes towards salaries and benefits. The university’s operating budget expenses in 2012/13 are projected to be $453 million, with $340 million (75 per cent) attributable to salaries and benefits and $113 million (25 per cent) attributable to non-salary expenditures.
The university has robust planning processes that look out over a four-year planning horizon. This allows us to see whether our operating budget expenses, if they continue on the same trajectory as in the past, are aligned with our operating budget revenues. It is important to note that many of our expenses are fixed over the term of collective agreements and other contractual obligations while our primary source of operating budget revenue – our provincial operating grant – is determined on an annual basis.
Our integrated planning process has allowed us to see that, over the current planning cycle, the university is facing a mismatch between growth in our operating budget revenue and growth in our operating budget expenses. Our expenses continue to grow but our revenue is not keeping pace and we do not expect our provincial grant will fully cover all of our costs.
If no action is taken, and our assumption of a 2% operating grant increase for the next three years (in addition to the 2.1% increase in 2012) is constant, our multi-year budget shows that a deficit of $44.5 million annually will arise over the planning cycle due to this mismatch.
As indicated, our salaries and benefits account for 75 per cent of our operating expenses. Some 35 per cent of our operating funds are attributable to faculty salaries/benefits, 33 per cent to non-academic staff salaries/benefits, 4 per cent to senior administrators salaries/benefits, and another 3 per cent to other instructional and research staff salaries/benefits such as sessional lecturers, teaching assistants and research scientists—all of whom we strive to pay according to market-based principles in our efforts to recruit and retain outstanding faculty and staff.
The remaining 25 per cent of the operating budget covers expenses related to the following items:
- Utilities and other expenses related to operating university buildings and grounds
- Funding to colleges and units for non-salary expenses such as classroom, laboratory and office supplies, and employee development and training
- Enhancements related to student services
- Capital renewal (the Renew US program)
- Central support for research and scholarships
- Targeted and directed initiatives (For example: College of Medicine accreditation, launch of a new College of Nursing program, Canada Excellence Research Chair program, International Centre for Northern Governance and Development)
- Funding to leverage strategic opportunities (including the academic priorities fund and library acquisitions fund)
Market fluctuations can and do pose a challenge with respect to projecting these expenses. In recent years, we have not increased the funding to colleges and units to cover many of their non-salary expenses. As these expenses tend to increase annually, the units have taken on more responsibility for funding the costs of some of these items such as classroom, laboratory and office supplies.
For more information on the university’s operating budget, please see the 2012-13 Operating Budget Summary.