Balancing Act

By Bonnie M. Patterson, President and Vice-Chancellor

This April, as our students hit the books for one last time before exams, administration is tackling books of another sort. It's budget time and the Board's objective is to balance our "books" this year - or, to precisely balance our operating budget.

We have to look at Trent's situation as a small institution where economies of scale, possible for larger schools, are simply not available to us. If we are to thrive in today's competitive environment, we must not only reach a balanced budget, we must maintain that balance.

The challenge I make to all of you is this: What can we do differently? What is it that we can simply no longer afford to do? What tradeoffs must we make?

If you look at the structure of our university's budget, the largest portion of our operating revenue, about 86 per cent, goes to salaries and benefits. This is not a surprise. We are, after all, a knowledge-based organization. This year benefit costs will rise by 12 per cent - over $200,000 a year - adding another pressure to our budget.

Another seven per cent of operating revenues is allocated to scholarships and bursaries for our students. The competitive student recruitment cycle is very clear from March to June when scholarship-eligible students interact daily with staff, as they make their university choice.

The remaining seven per cent of our $42 million budget is what we have left to run this university in every other way, from student service provision to academic support to administrative core services that fulfil other demands such as our reporting and accountability mandate.

This very small portion of our budget is all that is available to respond to ever-increasing costs. Inflation alone presents an enormous challenge for us (over February, Canada's rate of inflation was 2.9 per cent). If we take into consideration things like gas and utility costs that we know have increased 30-40 per cent over the past year, it is easy to see how our revenues do not keep pace with rising expenses.

We have already made significant, and difficult, cuts in a number of areas. We found efficiencies within our five residential colleges in areas of housing and food management - that was a difficult shift for some - but from the point of view of service and cost-effectiveness, we made some gains. There is still much to do. We have clearly under-invested in important areas such as the library's acquisition budget, investment in information technology, and modern digital-based resources. We must work towards some kind of plan that will allow us to address the deficiencies in these, and many more, important under-invested areas.

We did invest in some fundamentals. This year, despite our fiscal challenges, we have authorized 13.5 full-time tenure track positions. Ensuring professors are in the classroom is central to delivering a quality education to our students. Tenure track positions ensure, as well, that our research - the niche that makes Trent stand out amongst smaller institutions - can be sustained. We have invested, through technology, in access to library and learning resource material, in addition to devoting modest resources to print-based acquisitions. We chose to pay down our deficit a little more slowly because the Board realized that some strategic investments in recruitment marketing and promotion were very necessary if we were going to turn our enrolment patterns around.

But we're not yet out of the woods.

Forty-five per cent, nearly half of our operating budget ($19.1-million) comes from student tuition. But growth can't be sustained on tuition alone. (Provincial policy in place for the next four years limits that increase to two per cent annually less a third that must be devoted to student aid). The reality is that we have to look at alternative sources of revenue generation. What these might be and how we might approach them will take creative thought and constructive, sustainable solutions.

Government grants (under any political stripe) have not increased significantly year over year. We are working towards a budget model that would see a two per cent increase in our provincial grant, but we have no guarantee that that will happen. If it doesnıt, our situation obviously worsens.

On the other hand, we are about to enter a growth period beginning in 2003-4. We have an institutional plan, submitted to the government, that will see us grow by 1,295 new students beginning in 2003-4. The flow-through of that group means that 2,400 - 2,500 new students will join us over time.

That growth can't happen unless we secure new provincial government funding. We hope to see in their May budget the first indicator that they are going to fund that growth. It is crucial that the funding happen now as faculty recruitment can take up to two years from search to securing the faculty needed.

The Beyond Our Walls fund-raising campaign has been our life-blood. It provided a source of funds that allowed us to significantly increase our endowment for scholarships and bursaries, which allowed us to be competitive in attracting students. It created a framework through which we have been able to address priorities, such as computer upgrades. It provided matching funds required in numerous federal and provincial government programs. And, it supported a number of departments directly in their priority needs.

While we struggle towards reaching a balanced budget this year, we have to keep in mind that some tradeoffs will be necessary. Our over-riding objective is financial stability. We are doing, and can do, a great deal for ourselves to reach that stability. We will also need help from others. Changes we make to ensure our stability also ensure this university remains an autonomous and independent institution - keeping our incredible success stories on the pages of our books - despite our financial challenges.

[In addition to the annual budget, this April the Board will look at a preliminary budget plan for managing a cumulative deficit of over $8.75 million in the universityıs operating budget. Watch for more on this topic in future issues of the Trent Report.]