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Budget forces tough decisions

April 2, 2009

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Reduce spending and increase income.

Those are the sobering options confronting SFU during one of the worst budget crunches in its history, in the midst of the worst global economic meltdown since the Great Depression.

The university is struggling to balance its $390.6-million annual operating budget, as required by provincial statute, in the face of funding levels that don’t keep pace with inflation, investment losses, and shrinking returns on its endowment funds.

At the same time, university expenses are increasing due to debt servicing for recent capital projects and renovations, maintenance of information technology systems, more buildings to operate, and extra funding requirements for research support.

Even the abolition of mandatory retirement is taking its toll as fewer faculty members retire. And while student enrolment is increasing, SFU expects the province to again cap 2009-10 student-fee increases at two per cent. Thus rising enrolment is under-funded.

In past years, SFU covered its deficits by carrying forward prior-year cash reserves while implementing across-the-board budget reductions, says Pat Hibbitts, VP-finance and administration. But this time the reserves have all been used up.

So what’s a university to do?

First, reduce 2009-10 expenses by $11.4 million through further cuts to travel, external consulting, and even excess photocopying, as well as hiring freezes and a voluntary exit incentive plan for faculty, which 23 members have accepted for an annual saving of $2.8 million. The university will save an additional $2.8 million by eliminating 13 vacant faculty positions and 31 vacant staff positions. A further 23 staff positions, worth $1.1 million annually, are subject to elimination.

The overall impact means slightly larger classes, less course selection, less student financial support and fewer new programming initiatives.

VP-academic Jon Driver says a reduction in services across the university will likely take the form of longer line-ups or wait-times for services and shorter opening hours due to understaffing.

However, he notes that financial support for graduate students will increase, and maintenance of undergraduate student financial support is a priority.

"Although we have slowed recruitment of new faculty, we will still hire in areas of high student demand, in programs already under development, and in critical research fields," he says.

At the same time, the university is contemplating ways to increase income.

Currently, SFU offers many services for free or below-market cost to the external community, such as room rentals and non-credit courses. "We expect these areas could bring significant additional new revenue to SFU," says Hibbitts.

Another plan is to encourage faculties to generate new fee-for-service programs and then the university will share those revenues with them as an incentive.

"In our budgeting strategies, we have tried, as much as possible, to minimize harm to student learning and programs," says Hibbitts.

One positive note: The provincial government recently announced some new funding to cover an additional 110 full-time equivalent students at SFU. Says Hibbitts, "We’ll hold that money over to cover next year’s inflation costs so that the budgeting process won’t be as onerous as this year’s."

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