Operating Budget Town Hall - November 18, 2024

Around 80 per cent of our budget is allocated to salary and benefits, and salary costs will almost certainly continue to rise over the next several years. It is a reality that we will need to reduce the overall number of jobs at Waterloo to accommodate rising costs.

We would like to find ways to achieve this reduction without involuntary job losses. This is part of the reason we have introduced a hiring freeze. However, we can’t rule out the possibility that faculties or units need to make difficult decisions in the next few years. If we do need to move to involuntary job losses, we will follow the requirements of our policies, memorandums of agreement and collective agreements.

As we recently announced, the University has implemented a hiring freeze which means that all hiring for faculty and staff positions must stop now with very limited exceptions. Externally funded positions will be exempt from the hiring freeze. There will continue to be careful review of required positions for ancillary services and positions funded through student fees.

More information about requests for exemptions can be found in the memo shared on November 19.

To clarify, we will be reviewing the communications and marketing, finance and IT functions across the University (and not just individual departments), as these are functions that exist across departments and units. Our goal with these functional reviews is to look at the work that needs to be done to support our mission and the processes, people, and resources that help us get that work done most efficiently.

You can expect updates from leaders in the coming weeks with more information on the organizational and functional reviews commencing soon.

Salaries are set through collective agreements and agreements with the Staff Association and FAUW. The University will honour the obligations in current agreements and continue good faith bargaining processes for future agreements.

Your pensions are secure. The quarterly pension risk management dashboard, prepared by Aon, the pension actuary, and reviewed by the Pension & Benefits Committee last week, shows that the pension is in a surplus position on a going concern basis as at September 30, 2024 (the market value of investments is greater than the estimated actuarial liabilities). 

The registered plan that holds the investments is a separate entity from the University and it is governed by Ontario pension legislation. Assets are invested to meet the pension obligations. Both the pension investments and the pension obligations are monitored regularly and overseen by committees with a fiduciary responsibility to act in the best interests of plan members and retirees to ensure the financial health and stability of the pension plan. 

As changes happen, we will all need to work together in creative ways, and change the way that we work. Leaders and teams will have discussions about work priorities and evaluate what work is being done and why it’s being done. We need to look critically at our work and challenge ourselves to find new ways of doing things. Sometimes, this will mean stopping things we have always done or changing the way things have been done.

We also need to work across units to manage some of the vacancies. Some units have been more affected than others with recent retirements, leaves, and absences. Sharing the load across our operational units will be key to achieving efficiencies.

We’ve already been making progress toward working more efficiently together. We have a clear vision in Waterloo at 100 that lays the foundation for rediscovering unconventional approaches and prioritizing collaboration. The Provost’s Advisory Committee on Building a Resilient University offered constructive suggestions for long-term sustainability, emphasizing that resilience requires coherent "One Waterloo" structures. The Employee Engagement Survey also indicated a strong desire as a community to enhance collaboration and improve operational efficiencies. These efforts and initiatives will continue to help us as we navigate change and budget constraints.

The values at the University of Waterloo prepare us well for these difficult situations. We need to continue to think differently, act with purpose, and work together. We encourage leaders to have open conversation with their teams.

Supports are available from the Employee and Family Assistance Program (for employees) and  Counselling Services (for students).

We also need to be kind, patient and supportive of one another throughout this process. We’ll be dealing with a lot of change. It will be so important to stay closely connected to your colleagues and look out for people who are dealing with multiple stresses in their lives.

For years we have been carefully managing funds set aside for planned activities like systems and infrastructure upgrades. Over the last few years, we have specifically designated ”Risk and Transition” funds to help manage budget pressures that were emerging. 

As we will need to use some one-time funds to cover operating deficits and manage budget transitions, there are projects that will be deferred or not completed—capital projects, infrastructure/systems upgrades and replacements, and strategic priorities. 

These funds could have been used to address things like essential maintenance for our older buildings, such as fixing leaking roofs or replacing heating and cooling equipment. We have several major upcoming IT projects (such as replacing our student information system before the underlying technology is decommissioned) that are being delayed as a result of limited funds being available. 

Change will be needed across every part of the University to reimagine the way that we work, and to think critically about what work we do and for what purpose.

It's clear that everyone is committed to working more efficiently and finding savings while focusing on the work and experiences that make a Waterloo education special.

We will continue to prioritize work central to our mission and maintain our quality of education while finding operational and organizational efficiencies. This does not mean that everything will stay the same as it is now – in fact, the decisions we make may mean some services and activities will stop.

Unfortunately, there is going to be erosion in the quality of what we do, from larger class sizes, to longer waits for essential services or an impact on the quality of the campus experience.

Our job is to preserve the core of what makes coming to Waterloo a fulfilling student experience while we make these changes.

Implementing budget controls and reductions does not mean that we stop making the necessary investments to help us meet our goals for the future. That’s why we continue to build Math 4 and why we are working on developing a new Campus Plan, which will provide the long-term vision for land use and physical planning. The plan is expected to reflect a balance of new developments and renovations, and the renewal of spaces to optimize the use of existing facilities.

Math has been, and will continue to be, an important area of growth for academic and professional programs that have the potential to bring new revenue. Having adequate and modern space for such programs is essential for the future. We have a number of aging residence buildings which will need to be closed in sequence to be renovated and modernized – the new residence building will provide essential swing space for that process.

The new buildings we are working on now are the results of many years of planning, fundraising, and setting aside funds. We are not planning for any additional large capital projects until our Campus Plan is complete next year.

Equity, Inclusion, and Indigenization remain priorities for the University. It’s important to make sure that everyone who comes here to live, learn, and work can feel like they belong here. We haven’t made any decisions as of yet about specific roles, but no matter what organizational changes are made, our commitments to EDI and Indigenization remain the responsibility of our entire community.

Any new roles and appointments have been carefully thought out and identified as necessary to University business. In many cases these roles will also support increased coordination and collaboration across the institution, and will help us create opportunities that will generate additional revenue. In many cases, these roles will also support increased coordination and collaboration across the institution and will help us create opportunities that will generate additional revenue. The position of Associate Provost, Campus Support and Accessibility is an example of the integrated planning that is underway, helping to reduce duplication and enhance the coordination of important campus services in wellbeing for both students and employees.

Moreover, the government continues to add increasing external accountability requirements, despite their unwillingness to invest. This increasing requirement for external accountability is driving some of the need to have appropriate roles to oversee and lead these new accountabilities.  

For months now we’ve been working on changing the way that we do integrated planning and budgeting. The first important change is to bring those two functions together, asking leaders to align their planning and budgeting into the same time frame and into the same process across campus. This is giving us all much better visibility into how budget has been allocated, and why. Secondly, with a better focus on integrating planning and budgeting, we will be able to bring the budgeting cycle forward which will make planning for the next budget cycle more effective.

All of this process is happening now – six months before the next budget year starts, and much earlier than in previous years. Leaders are working through forward-looking plans and matching budgets to those plans. We’ve also asked each leader to consider the impact of further reductions on their budget so we’re able to see an entire University picture of the results that the proposed reductions will have.

In the New Year, we expect to finish our analysis of these budgets and impact assessments so that we can make the best decisions about how and where to allocate budget reductions next year. We’ll have more to share as we go through the budget approval process in March and April.

We recognize that some of the limitations of previous budget models have arisen because our budget processes were not optimal. The past versions of our budget model suffered because our integration, transparency, oversight, and thorough budget planning processes were incomplete or inadequate. We have been working very hard on improving our budget planning processes, and this is where our efforts for the past year, and now ongoing, have been focused.

Conversations about the budget model – the way revenues and costs are assigned to the faculties – are ongoing, and we plan to move ahead with updates to the budget model in the very near future.

This year there are two factors that seem to have contributed to a small increase in tuition revenue compared to the initial budget estimates: slightly more continuing students than budgeted and slightly higher new student intake domestically. However, lower than expected international student intake this term more than offsets this for future years. The additional domestic students do not draw government grants because we are above our corridor set by the provincial government.

More than 70 people joined our voluntary retirement program for employees over 65 with at least 10 years of service. At this time, we don’t anticipate running additional voluntary retirement programs.