Budget approach for 2024/25

Message sent to UVic faculty, librarians and staff on April 24, 2024

Dear colleagues,

As we embark on the new fiscal year, we would like to provide an update on the development of the University of Victoria’s operating budget. In our February 7 update, we advised that we are preparing the 2024/25 budget and, to balance, we need to undertake difficult, but necessary, budget reductions. As was shared, the overall reduction is approximately $13 million of our $505 million operating budget.

At the outset of planning, several areas were protected from reductions. These include student scholarships, bursaries and fellowships; the Student Wellness Centre; the Centre for Accessible Learning; faculty research grants; and the Vice-President Indigenous portfolio. Further, specific budgets supporting, utilities, licensing and insurance were also excluded, along with our collectively bargained salary settlements. With these exclusions, a $13 million reduction represents approximately 4% of the remaining operating budget.

Through March 2024, a committee comprised of the Vice-President Academic and Provost, Vice-President Research and Innovation, and Vice-President Finance and Operations, working with the input of budget leaders, identified the $13 million in reductions, differentiated by unit, needed to balance the budget. All information provided by budget leaders was considered in the decision-making process. Following several discussions, Executive Council approved the budget reductions in April.

We appreciate the challenge and uncertainty that reducing budgets has on our university community and are thankful to our leaders for their many ideas and suggestions on how to collaborate and support change in their areas and across units. We are also grateful to the BC Government for funding the bargaining mandates for our employee groups, their efforts to quickly address federal study permit changes, and their support as we work together on housing availability and affordability on campus and in our surrounding communities. Most importantly, we appreciate the dedication of faculty and staff in supporting our students, for their commitment to teaching and research, and for their impactful contributions in our communities.

Please join us on May 7 at 12 p.m. for a virtual townhall, hosted by President Kevin Hall. During this session, we will provide insights into the budget process, details, and the outlook for the future. To ensure we address your questions, we encourage you to submit them in advance when you register. We will respond to additional questions during the townhall Q&A that will follow our presentation.

Register and submit your questions: [URL].

We also invite you to visit the budget website for additional information.

Sincerely,

Elizabeth Croft, Vice-President Academic and Provost
Lisa Kalynchuk, Vice-President Research and Innovation
Kristi Simpson, Vice-President Finance and Operations

Message sent to UVic faculty, librarians and staff on Feb. 7, 2024

Dear colleagues,

We are writing to update you on our budget outlook and approach for 2024/25. As many of you will be aware, these past few years have been challenging for Canadian universities with respect to international enrolment in four-year undergraduate programs, and this year is no exception. While our domestic and graduate enrolments are healthy, our international undergraduate enrolment is the lowest it has been in over 10 years, at 11% of overall enrolment.

International students are an important part of our student population, bringing vibrant, dynamic and diverse contributions to our community. Their fees are not subsidized by the provincial government and therefore their tuition has a greater impact on our budget. As a result of the continued decline in our international undergraduate enrolments and associated tuition revenue, we are once again taking the difficult but necessary step to implement base budget reductions for the 2024/25 fiscal year.

For several months, we have been reviewing a range of enrolment scenarios in a frequently changing geopolitical landscape. While we estimate overall enrolments (domestic plus international) to remain roughly stable, the net tuition impact of the decline of international enrolment is significant. As the Provincial Government does not permit universities to run a deficit, and in order to ensure UVic remains on solid financial footing going forward, a base budget reduction of $13 million is required. An increasing number of comparator universities, including in British Columbia, are also implementing budgetary measures to offset the associated decline in tuition income—as they face the same challenges we do—and the Federal Government’s recent changes to study permits create even more uncertainty for the post-secondary sector.

Decision making process for 2024/25

For the 2024/25 fiscal year, UVic will implement differential reductions to our operating budget, totalling 4% overall. This is a different approach from last year—which was an across-the-board 4% base budget reduction—and provides for evidence-based, strategic decision making.

Our principled approach will focus on minimizing disruptions to students and supporting the university’s core mission of education and research. The Vice-Presidents Academic and Provost, Finance and Operations, and Research and Innovation will lead a process to determine those differentiated percentages, which will include discussions with each senior university leader and applying an institutional lens. After meeting with each leader, the three VPs will work to determine the reductions required from each unit to make up the revenue shortfall and balance our operating budget. Following this, leaders will be entrusted to make decisions appropriate to their unit’s mandate.

Some areas will be protected from the reduction. These include student scholarships, bursaries and fellowships, the Student Wellness Centre, the Centre for Accessible Learning, faculty research grants, and the Vice-President Indigenous portfolio. As well, ancillary services that are required to generate revenue to cover their own operations (such as child care and housing services, among others) will not go through this process. All other academic and non-academic units will go through this process, including executive offices.

Additional information and next steps

We recognize it will be difficult for staff and faculty to learn that reductions are coming this year, especially after UVic went through a budget reduction in 2023/24. We have tried to anticipate questions you may have through online FAQs. If you have a question that’s not addressed, please email budget2024@uvic.ca. We will be transparent about the process and share specifics after we have met with each budget leader and deliberated on decisions.

Steady and reliable enrolments are essential to our education and research mission, to the financial sustainability of the university, and to the wellbeing of our faculty and staff. Leaders from across the university are actively discussing strategies to strengthen enrolment and further diversify revenue. Some of these strategies are outlined on the budget website.

Thank you for your understanding as we navigate this complex time together. We expect to update you again in April or May, after we have completed our process. In the meantime, we will continue to update the budget website to address questions and concerns raised.

Sincerely,

Elizabeth Croft, Vice-President Academic and Provost
Kristi Simpson, Vice-President Finance and Operations

Through their deliberations and in making their recommendation, the committee was guided by the following values and principles:

• Centre and prioritize students, education and research.
• Maintain and deliver high-quality, research-enriched programming that is responsive to student demand and enrolment trends.
• Prioritize student success and outcomes and ensure students can access the courses and services they need in order to graduate on time from their chosen program.
• Look to Distinctly UVic (and other institutional plans) for guidance on strategic and service priorities, including longer-term strategies.
• Continue to advance our pledge to hold ourselves accountable to ʔetal nəwəl | ÁTOL,NEUEL.

In April, we communicated reductions with each budget leader and are supporting leaders through the next steps of the process. Leaders are now taking the time necessary to connect with their teams, manage their reductions and implement strategic changes in their areas. Additional information was shared with faculty and staff at the May 7 townhall.

Our operating budget is tied directly to student enrolments and associated tuition revenue. This year, as with last year, we have experienced a further decrease in our international undergraduate enrolments, which are the lowest they have been in 10 years.

UVic, along with many other post-secondary institutions across Canada, experienced an enrolment decline in international students during the pandemic, but expected international enrolments to recover. The international market has changed now and into the foreseeable future, with fewer international students, particularly from China and India, choosing to study in Canada. With lower enrolments and hence tuition revenue than in previous years, UVic must reduce expense in line with revenue in order to avoid a financial deficit. 

With respect to recruiting international students, we are diversifying both in terms of countries and the programs we are marketing. We have an exclusive Canadian partnership with Kaplan, an international recruitment agency with an expansive network of recruiters and agents in countries all over the world. UVic recruiters are also ramping up efforts, and our leaders are visiting countries like China, India and the United Arab Emirates to make connections and enhance our reputation and profile.

Internally, we are clarifying and speeding up our admission processes for all of our students, with offer letters going out four weeks earlier than in previous years. UVic maintains and controls admissions and standards, and we remain committed to quality. We will also be sensitive to specific grading differences in countries and regions to ensure that we are assessing student achievement accurately.

To reach more learners, we are strengthening pathways through our Division of Continuing Studies for students who do not initially meet English-language requirements. Revisions to the pathway program were approved by Senate on March 1, 2024.

Once a student has applied, it will be essential for our recruiters and faculties to connect directly with that student to ensure they register. We can do this by emphasizing UVic’s value proposition and our welcoming, inclusive environment.

New micro-credentials, degree programs and professional graduate programs will also help to set us apart and attract new learners. For example, we launched a Bachelor of Science in Climate Science last year, which is unique in North America, as well as a new Master of Engineering in Biomedical Systems. We are also exploring possibilities with transnational education, including in Singapore, and developing a framework for other opportunities in Asia Pacific.

Domestically, experts anticipate a demographic surge in BC, with at least a 30% growth in the 18- to 24-year-old cohort over the next 10 years, and we are likely to see a greater demand from domestic students in the coming years. As research universities in BC are already at capacity with respect to funded domestic enrolments, we are working collaboratively with our other institutions (through RUCBC) to advocate to the Province to ensure there are funded spaces for all learners who meet entrance requirements.

While there isn’t funding for general growth to address capacity, UVic continues to successfully qualify for targeted, Ministry-funded academic expansions, providing more spaces for students within in-demand programs that align with community needs.

UVic's real estate strategy outlines the development of a new mixed-use University District near our main campus, including the Ian Stewart Complex—one that encompasses new housing and supporting commercial uses.

Finally, our 2022/23 budget model review found opportunities for enhancements to our existing incremental model. A Budget Design Committee has been tasked with developing and recommending a new budget model and/or budget model elements for the university.

We recognize it will be difficult for staff and faculty to learn that reductions are coming, especially after having gone through a 4% budget reduction in 2023/24.

Given the size of the necessary budget cut, staff reductions are unfortunately unavoidable in some areas. We have worked closely with our staff unions to manage through the past few years with as few involuntary layoffs as possible and will be engaging unions further to create voluntary options to mitigate the impact of budget reductions. Leaders have been encouraged to minimize involuntary departures through retirements and voluntary departures as well as using vacancies, and we expect involuntary departures to be limited to fewer than 20 staff members. We will ensure these employees are supported and collective agreements are followed. 

Faculty layoffs only occur in accordance with the collective agreement in cases of program discontinuance or under financial exigency which is defined as projected substantial and recurring financial deficits that will affect the continued functioning of the university as a whole, and that will persist for two years or more unless there is a reduction in expenditures. Such is not presently the case. Voluntary faculty retirements and returning vacant faculty positions to the centre can help units manage base-budget reductions.

For planning purposes and to support decision making, leaders in some units canvassed their staff in March or April to assess potential uptake for voluntary departures, including retirements. Final decisions regarding staffing would not be made until after budget reductions were confirmed for each unit.

We've had several questions about how retirements and retirement incentives figure into the budget reduction. Our starting point is always with the relevant collective agreement and any agreement provisions related to retirement and departures. In addition, we have worked with our unions to create voluntary options to mitigate the impact of budget reductions. Retirement and voluntary departure incentives are union and case specific, funded by one-time money, and require sign-off. There is no general program at UVic for retirement incentives, for any union.

Yes, UVic employees will receive salary increases as per their respective collective agreements. The BC Government, through the Public Sector Employers' Council, provides funding to public-sector employers to cover negotiated compensation increases.

Our budget principles for decision making include maintaining and delivering high-quality, research-enriched education, prioritizing student success and outcomes, and ensuring students can graduate on time in their intended program of study.

To support student success, we are protecting some areas from budget reductions, including:

• student scholarships, bursaries and graduate fellowships;
• the Student Wellness Centre; and
• the Centre for Accessible Learning.

Also excluded from reductions is the budget for the Vice-President Indigenous’ portfolio, which includes supports for Indigenous students and initiatives offered through the Office of Indigenous Academic and Community Engagement and are critical to advancing our pledge to hold ourselves accountable to ʔetal nəwəl | ÁTOL,NEUEL. As well, there are some faculty research grants administered by the Office of the Vice-President Research and Innovation that are protected.

There are also costs required for the continued operations of the university that we cannot reduce, including utilities, insurance and the carbon tax.

As ancillary services are self funded and generate revenue to cover their own operations, they are not required to reduce their expenditures through this process. They manage their costs annually in line with fluctuations in their revenue. These include child care, housing and food services, among others. If you would like to learn more about ancillary operations, please refer to the most recent Planning and Budget Framework.

Yes, all executive offices—excluding the Office of the Vice-President Indigenous—will reduce their base budgets. Last year, executive offices reduced their budgets by the 4% expected of all units. This year, the percentage for each executive office was determined through the same process that Deans, AVPs and other senior leaders participated in, taking both a principled- and evidence-based approach while also striving to lead by example where possible.

The total average for executive offices this year was 5% (PRES, VPAC and VPFO were 6%). The VPAC Office implemented their 6% reduction by, in part, disestablishing the Associate Vice-President Faculty Relations position following the incumbent's retirement.

Additional details were shared at the May 7 townhall.

Sponsored research funding, including funding from the granting councils, is separate from our operating budget and is therefore not impacted.

We are also protecting faculty research grants administered by the Office of the Vice-President Research and Innovation from the operating-budget reduction.

No, international undergraduate students pay 5 times more in tuition than domestic students because their education is not funded by the provincial government. Government provides funding to public universities for domestic undergraduate students and graduate students only, and sets those targets. Any additional domestic and graduate students we enroll are funded by tuition fees only and their tuition does not cover the full cost of their education.

We are graduating more international students than we are able to recruit due to many contributing and ongoing factors beyond the travel restrictions and lockdowns that occurred during the pandemic.

Firstly, Immigration, Refugees and Citizenship Canada (IRCC) experienced a significant backlog of study-permit requests in 2022 and delays in 2023, leaving many students without study permits before the start of their fall term. Some students deferred, while others chose institutions outside of Canada.

Recently, the federal government announced a number of changes to study-permit requirements, with respect to new financial requirements, limits to hours worked in a week, and limits to online studying. These changes create uncertainties for students. On January 22, 2024, IRCC paused the processing of study permits for undergraduate students, reducing the number of study permits available by 35% and requiring a provincial attestation letter process be put in place. The Province of British Columbia worked quickly to put the system in place, and we have begun sending attestation letters to students who have paid their acceptance deposits, which then enables them to apply for a study permit from IRCC.

Secondly, there is increased competition globally. Many of our principal source countries, including China and India, are now offering more on-shore domestic opportunities for students limiting the number of students choosing to study in Canada. Countries such as Australia, the United Kingdom and the United States remain the top destinations for most international students, but other countries such as Japan, Hong Kong and Singapore are becoming increasingly popular. These countries continue to aggressively pursue international enrolment.

Finally, geopolitical factors and diplomatic disputes may be impacting international interest. At UVic, we are experiencing a significant drop in applications from India—one of our longstanding top three recruitment countries.

These factors, among others, contributed to international enrolment shortfalls across the sector starting in 2022/23 and will continue into 2024/25 and beyond. International enrolment declines have an outsized impact on tuition revenue and, subsequently, our operating budget.

UVic has a practice of incorporating a contingency into its budget planning to cover unexpected budget fluctuations.

When, in 2023, we did not achieve our international enrolment target, we needed to fully draw on this enrolment contingency fund to address the tuition revenue shortfall and avoid a further budget cut and institutional deficit in the 2023/24 fiscal year. This was communicated to campus on Oct. 27, 2023.

We do not plan to raise tuition or fees to offset the decrease in tuition revenue from having fewer international students, and the Board of Governors is supportive of the standard increases proposed last year. As per our typical year, domestic undergraduate and graduate tuition will increase in 2024/25 by 2% (the province of BC’s annual limit on domestic tuition fee increases) and international undergraduate tuition will increase by 6.75%, which reflects actual cost increases.

In 2023/24 student scholarships were increased by $2.5 million. To support student success, we are protecting the following areas from budget reductions, including:

• student scholarships, bursaries and graduate fellowships (current budget of $21.5 million);
• the Student Wellness Centre (current budget of $2.7 million); and
• the Centre for Accessible Learning (current budget of $760,000).

UVic also has ancillary services that are self funded and generate revenue to cover their own operations, and so they are not required to reduce their base budgets through this process. These include child care, residence services, food services, and the bookstore, among others.

To support student success, we are protecting the student health and wellness centre and central supports for academic accommodations. We are also working with academic leaders across campus to centre students, academics and research in our approach to budget reductions, and minimize disruptions to students.

Ensuring students can complete their degrees on time and without disruption is a principle of our decision making. High-quality, research-enriched academic programming is the foundation of our university, and our promise to students is valuable experiential learning opportunities that prepare students for academic and career success.