University executives estimate operational deficit of $8.3 million
Bridget Stringer-Holden // Associate News Editor
Although Capilano University (CapU)’s official budget was approved on Jan. 28 by the CapU Board of Governors, much of the budget needed to be re-evaluated in light of the COVID-19 pandemic. “Originally, we were going to do a revised budget, but based on discussions with the board and the ministry we decided to use [the previously approved budget] as an [outward-facing] forecast, and [continue] use it internally as a budget,” said Tally Bains, Director of Financial Services. Since forecasting estimates the amount of revenue while budgeting accounts for expected revenue, CapU decided that this was the best course of action.
As the Director of Finance, Bains is responsible for developing and monitoring the budget; as well as financial services and activities, such as payroll, accounts payable and student financial accounts. Since post-secondary institutions will be allowed to request to run in a deficit, CapU estimates an operating deficit of $8.3 million.
The estimated impact on tuition revenues was calculated and compared to the original budget, as well as to the updated numbers from other auxiliary operations such as the childcare centre, parking fees and the bookstore. “We did go through a process where we tried to use estimates on what the impacts would be on enrollment numbers, so we looked at it by faculty and by program area,” said Bains.
Each dean created three scenarios based on historical trends and program specific information. They were called Scenario 1-Optimistic, Scenario 2-Moderate and Scenario 3-Pessimistic. Those were reviewed by CapU’s executive leadership team who decided to add a fourth scenario, referred to as Scenario 4-Pessimistic Plus, which aligned with the budget principle of conservatism. This scenario planned for an additional 8 percent decrease in enrollment in the fall and an additional 7 percent decrease in the spring compared to Scenario 3. This would be an overall decline in revenue of 5 percent for both domestic and international tuition revenue.
“Budgets go off of a number of assumptions and we take into account student enrollment projections for the following year,” said Oscar Blue, former Chair of the CapU Senate Budget Advisory Committee (SBAC). SBAC acts in an advisory capacity and provides initial input on financial results from each quarter that are supplied by Bains and Jacqui Stewart, former vice-president of Finance and Administration. Now, with COVID-19, “many of the core assumptions used to draft the budget [are] no longer accurate,” explained Blue.
Normally, post-secondary institutions aren’t allowed to be in a deficit position. However, since fall enrollment numbers won’t be finalized until Quarter 2 (Q-2), the Ministry of Advanced Education, Skills and Training will be requesting a deficit approval from the Minister of Finance on behalf of post-secondary institutions. This request will be based on Q-2 forecast submissions due to the unprecedented circumstances surrounding COVID-19.
CapU will create their Q-2 forecast once fall enrollment numbers are finalized, allowing them to more accurately predict their deficit. “We are really in unprecedented times and things are gonna continue to change daily and weekly and so what’s going to happen is there is going to be quarterly forecasting instead,” said Blue. Post-secondary institutions that have accumulated surplus will be allowed to use it to fund their operations and to work with other institutions that need help staying afloat.
“We’re not too sure what’s going to happen until after the fee payment deadline but we are closely monitoring [the situation] and looking to see what we can do to minimize the deficit,” said Bains, citing travel restrictions and online classes as some possible threats to enrollment numbers. “Right now, there might be some cost containment in some areas, but there still will be expenditures in areas where we’re going to be advancing the university’s priorities forward.”
Projects were also reprioritized—such as pushing back administration-related projects in IT Services—in order to prioritize student learning that reflects the new reality.
“We also looked at the areas where we needed to do further investments to support a remote adapted learning education model,” said Bains, adding that she is keeping a close eye on fall enrollment numbers in order to make sure that the university recovers from the pandemic. Although there is a large focus on reducing expenditures and containing the deficit, CapU is still focused on their Envisioning 2030 strategic plan goals and ensuring that students are supported during the transition toward online learning.