Operating Budget Town Hall - November 29, 2023

Across our sector, Ontario universities face similar pressures resulting from declining operating budgets in inflation adjusted dollars due to the domestic tuition freeze and the lack of increases over many years in provincial operating grant funding. We are in a stronger position relative to many of our peers, but as we have explored, our current trajectory is not sustainable without some changes to funding coming in, or our spending.

We will explore a number of cost saving and efficiency measures before considering workforce reductions. Actions we are considering that will restrain operating fund budgets include budget reductions and budget saving initiatives, restrictions on hiring, and process efficiencies. Workforce reduction would be a last resort after we have exhausted other options.

Other efficiency initiatives include:
 

• reducing procurement spend
• digitizing and automating processes
• improving roles and structures
• optimizing space
• reducing energy use
• rationalizing programs and courses
• collaborating on sector shared services
• building sustainable international recruitment
• collaborating on joint housing

We have been actively involved in advocacy, including submitting recommendations to the Blue-Ribbon Panel through the Council of Ontario Universities. Since the Blue-Ribbon Panel report was released, we have joined other Ontario universities in calling for the government of Ontario to implement the panel’s recommendations, including:

• Implementing a three-year tuition fee framework in the Fall of 2024, starting with a 5% increase for general programs
• Immediately boosting operating grants by 10% and index over time

The Ministry has noted that they would like to see PSE institutions streamline and reduce costs before the province will act on the tuition and funding increases. The Blue Ribbon report points out levels of efficiencies institutions have already achieved – according to the report, salary and benefit costs in Ontario’s universities per full-time equivalent student are lower than in almost every other province.

Our advocacy efforts will be focused on demonstrating that universities have already done our part and will continue to do our part.

The Integrated Planning and Budgeting model that is being developed will be a foundational support to effective decision-making as we define the rolling, multi-year planning that is necessary to identify operational, strategic, and financial priorities that will require resources. It’s imperative that we collectively support the integrated planning and budgeting processes.

Currently the budget allocated to each unit is determined by the Provost and takes into account a number of factors.

Each unit leader has budget accountability to ensure that their unit spending is within approved budgets, is efficient, meets business requirements and priorities, University policy and guidelines. Following the University expense policy and guidelines also address additional requirements that the University must meet as a member of the Ontario broader public sector and as a registered charity.
 

• Other unit expense signing authorities and unit financial officers also take on roles in contributing to and ensuring this within their units.

Market rate salaries are considered for all employee groups and all levels of employees. In general, Waterloo is in line with other top universities in Ontario for executive compensation.

The pension plan is a separate entity from the University (a trust with employees/pensioners as the beneficiaries). The Pension & Benefits Committee and the Board of Governors oversee the funding and sustainability of the pension plan. No changes are being proposed to the pension plan at this time.

The Bill 124 salary adjustments were negotiated separately with each employee group.  The conclusions from these negotiations provided an in-year salary adjustment for staff and faculty which provides additional salary on an ongoing basis. Entering into these reopener negotiations contributes to considering market rate salaries for all employee groups and levels.

• Underway and very costly. Housing unit revenues as an ancillary is accountable to cover the costs of residence renewal.
• Clarification if needed: housing unit revenues don’t come into the operating budget.

Changes to funding model. There must be shared responsibility between government, students, and institutions to address financial sustainability.

The tuition setting process ensures the following factors are considered, and that the proposed tuition fee increases are appropriate to the current financial environment:
 

• Changes to provincial policies, in particular the provincial tuition fee framework, changes to provincial operating grant support, and any related policy changes,
• Overall institutional operating costs including inflationary pressures and compensation agreements,
• Waterloo’s rates compared with similar programs offered at other institutions within Ontario, and beyond,
• The value of a Waterloo degree, both overall and in specific program areas, and
• The demand for Waterloo programs nationally and internationally.

All units will contribute to balancing the budget.

We will continue to support our academic and research missions, and other strategic priorities, to the best of our ability. The University will use central operating reserves to cover the cost of the increased salary for the Bill 124 reopener in the current fiscal year, which will allow us to maintain the current state of operations. However, depleting these reserves will affect other commitments to which these funds are dedicated, such as IT systems, infrastructure and maintenance initiatives, and others.

Savings from other initiatives, and ongoing restraint allows these initiatives continue.

• Current facts differ greatly from the facts that enabled the mid-1990’s early retirement program.  At that time, the pension plan itself offered significant funding for the early retirement program.  Pension regulations have changed since then.
• No early retirement incentives are currently being considered.
• If this were to be considered in the future, it would potentially require University operating resources to fund; however, we have not currently designated any University resources for this purpose.

• Salary agreements between the University and its employee groups are arrived at through established negotiation/salary discussion processes.
• These established processes will guide the discussions, consistent with the approach for previous salary negotiations/discussions.
• The goal of these established processes is to provide fair compensation rates informed by market rates for all employee groups and all levels of employees.
• Salary negotiations take into account market salary data/comparators, inflation data and affordability. Our work to address the budget gap will need to take into account the salary scale increases with employee groups that are negotiated through these established processes.