The purpose of this document is to assess the effectiveness of Brock University's 2015-16 Budget Report to help guide the development of future Budget Reports. This review compares Brock's 2015-16 budget report to its 2014-15 report (the fiscal year running from May 1 to April 30). It also compares Brock's budget report to that of McMaster University (an Ontario peer) and the University of Victoria (a Canadian peer). This review also aims to answer the question, "Is Brock allocating funds effectively and efficiently?".
This review was based on a Results Based Budgeting (RBB) Framework, whereby the budget revolves around a set of predefined objectives and expected results. It is this framework that will guide the review's recommendations at the end of this report.
The overall objective of Brock University's Budget Process is to allocate resources in advance for the maximum benefit of stakeholders. "It is a method to authorize spending authority and establish revenue targets of units within Brock University" (Brock University, 2015).
Brock University's 2015-16 budget process (approved by the Board of Trustees in May 2015) was the product of consultation with the following bodies:
The 2015-16 Budget process began with the identification of the following objectives:
In 2014, Brock's Strategic Mandate Agreement was negotiated with the Ministry of Training, Colleges and Universities (MTCU) in response to Ontario's Differentiation Policy Framework (Ontario, 2013). It should be noted that Brock is one of 45 publicly funded PSE institutions that have an SMA agreement with MTCU.
The overall objective of the Differentiation Policy is to improve Ontario's Post-secondary education (PSE) system by helping institutions build on their individual strengths and reduce redundancies in academic programming. This will help address some of the major challenges facing Ontario today, including:
The Differentiation Framework recognizes the lack of efficiency in allocating funds to schools that are all offering the same programs and competing for the same shrinking pool of students. The idea is to get schools to specialize, each attracting a different group of students, thus resulting in a more effective and efficient use of funding.
Brock's SMA agreement highlight's it's key area of differentiation as follows (Brock University, 2014):
Brock University's areas of strength include: Undergraduate teaching excellence with foci on work-integrated, service, and small-group learning; regional partnerships; and continued excellence in research and associated graduate programs, with a special focus on transdisciplinary research hubs highlighting areas of strength that contribute to the social, economic, and cultural development of the Niagara Region.
Overarching provincial priorities highlighted in the Differentiation Framework include: 1) Jobs, Innovation and Economic Development; 2) Teaching and Learning; 3) Student Population (Diversity and accessibility); 4) Research and Education; 5) Program Offerings; and 6) Institutional Collaboration.
It should be noted that any request made to MTCU (i.e. new program approvals), will be responded to based on the goals identified in the SMA agreement. There is also a strong possibility that Ontario's new funding formula for PSE institutions (to be announced in 2016) will have a portion directly tied to performance metrics listed in each institution's SMA agreement.
Brock's Integrated Strategic Plan
In addition to supporting provincial priorities, Brock has it's own set of strategic priorities aligned with it's overall vision, "To make a difference in the lives of individuals in our Brock community, Niagara Region, Canada, and the world". They are:
Table 1: Funding the Budget
|($000s)||Budget 2015-16||Budget 2014-15|
||$150,998 (51%)||$146,224 (50%)|
|Government grant revenue
||$90,998 (31%)||$95,535 (33%)|
||$7,689 (2%)||$6,097 (2%)|
|Other revenue||$47,449 (16%)||$45,484 (15%)|
|Total Revenues||$297,134 (100%)||$293,340 (100%)|
|Other operating costs||($100,847)||($99,376)|
|Total operating costs||($301,071)||($296,561)|
Table 1 shows Brock's projected revenue to be $297,134,000, which is $3,937,000 less than their estimated operating costs of $301,071,000. The Mitigation Target of $3,937,000 means that Brock plans to take actions to reduce the excess expenditures over revenues by the end of the fiscal year (April 30, 2016), in order to achieve a balanced budget.
As highlighted in Table 1, Student Fees (including tuition, ancillary and other fees) account for 51% of Brock's Total Revenue. This proportion is only 1% higher than in 2014-15, largely due to: Lower student enrolment (driven by the decreasing Ontario demographic); MTCU mandated changes to the Teacher Education program resulting in lower enrolment; as well as a system wide tuition fee increase cap of roughly 3%.
3.1.1 Tuition Fees
Tuition fees are set with MTCU's Tuition Fee Policy in mind. Any Tuition charged above permitted levels set in the policy, will be penalized through Government grant reductions.
Tuition Fee Revenue is largely dependent on Brock's forecasted undergraduate (UG) enrolment. For 2015-16, this was estimated by the Registrar's Office to be 16,688, which is down 375 students from Brock's 2014 UG enrolment of 17,063 (The official 2015 enrolment report will not be available until January 2016).
General steps in forecasting Brock's 2015-16 UG enrolment involve looking at the number of applications received (back in January) and comparing this to that of the previous year, to estimate the number of intake students; and then combining this with historic retention/progression rates of students from one year of study to the next, to estimate enrolment for non-intake students.
Forecasted enrolment figures are then translated into full-time equivalents (FTE's) which is, in simple terms, an estimate of the number of full-time students based on courseload. FTE's are then used to calculate tuition revenue.
3.1.2 Ancillary Fees
Most ancillary fees (student life, athletic, recreational, health services, bus pass, etc.) are set by student referendum and the Brock Student's Union (BUSU), although some are system-wide fees that apply to all Ontario University students.
3.1.3 Other Fees
Other fees include the Student International Recovery Fee (in response to MTCU enforcing a grant reduction of $750 per international student in 2013) as well as program-specific fees such as co-op fees and English as a Second Language (ESL) fees.
Brock's Government grant revenue for 2015-16 accounts for roughly 31% of Brock's total revenue. This is down 2% from 2014-15. To understand this decrease in funding from the government, it's important to get a basic understanding of Ontario's PSE Funding Model.
Grant revenue is broken down into the following categories:Operating Grants
Specific Purpose Grants
Most of the reduction of Government Grant Revenue (2% decline from 2014-15) is driven by lower domestic student enrolment, directly affecting allocation amounts for the Undergraduate Accessibility Grant, Graduate Expansion Grant and Nursing Grant.
Internal Chargebacks account for roughly 2.5% of Brock's total revenue. This is revenue received by units within Brock University for providing services to other units within Brock University. These services include: Utility charges to the Department of Residences; Printing and Digital Services; Information Technology Services; Facilities Management Services; Central Receiving and mail Services; Parking Services; Recreation Services; Machine and Electronic Shop Services (Faculty of Math and Sciences); Health Services; and Marketing and Communication Services.
Brock has 4 areas of other revenue that account for roughly 16% of its total revenue. These include:
Areas of growth and new investment highlighted for 2015-16 budget include:
These allocations are relevant as they all address Brock's budget objective of providing new investment where critically needed in order to maintain business continuity. It is noted, however, that investments towards objectives highlighted in Brock's SMA agreement toward's the province's PSE differentiation goals (service learning, work-based learning, small-group learning), have not been addressed.
Areas of New Investment:
UVic begins their Budget Report by setting the context in terms of challenges faced ahead. This includes the decreasing demographic of 18-24 year olds over the next 15 years, the continuing decline of provincial operating grants for PSE institutions, the restrictions on tuition fee increases (which cannot exceed inflation changes), and contractual obligationsrelated to salries and rising costs associated with utilities and library acquisitons (due to the falling canadian dollar).
In response to these issues, special focus was put on recruitment efforts and retention and engagement of existing students. UVic also aligned itself with the provincial government's top priority of economic development (which will eventually require that 25% of the universities operating grant be spent towards programs that support a priority set of occupations). Special investment was allocated towards programs linked to the the top 60 jobs in the province projected to have the highest number of opening by 2022, as well as programs that are feeling pressure from rising international numbers (Engineering, Business, and Economics).
New investments for 2015-16 were framed around the three pillars of UVic's
Pillar 1: Building on Excellence in Education for Undergraduate and Graduate Students
Pillar 2: Building on Excellence in Research, Scholarship and Creative Activity
Pillar 3: Building on Strengths in People: Recruitment, Retention and Engagement of Faculty and Staff
Similar to UVic's Budget Report, Brock's Budget Report begins with an Executive Summary that sets the context by stating challenges faced ahead (System-wide declining enrolment, reduced funding from province, MTCU enrolment restrictions, etc.). The overarching goal defined here is to work towards a balanced budget.
As noted in section 4.0 of this report, Brock's key areas of investment are relevant in that they are connected to the second Budget Process objective of Providing new investment where critically needed. There are no investments highlighted under the first objective: Support the Integrated Strategic Plan and Strategic Mandate Agreement. This is justified by the overarching goal for 2015-16 to balance the budget, however, it is recommended that future budget reports increasingly focus on highlighting investments that drive progress towards the province's goals of differentiation and Brock's strategic priorities, as budget issues decrease through the years and become stabilized. It is also important to note that discussions around the ministry's current redesign of the funding model suggests that as years progress, funding will be increasingly tied to performance outcomes identified in each institution's unique SMA agreement with MTCU.
As long as Brock's Budget report increasingly highlight investments tied to driving performance outcomes identified in the unversity's SMA and strategic priorities, overall effectiveness will also increase. The 2015-16 budget report is only effective in achieving a balanced budget and maintaining business continuity and workplace safety. Its important to remember there are many other institutional objectives that need to steer the budget process in the future. Similar to McMaster's budget report, future budget reports should highlight areas of investment under each institutional support department and academic faculty that drive progress towards overarching strategic and SMA goals. These investments should point to other supporting documents that show actual metrics that prove the effectiveness of such investments over the years.
Efficiency is about allocating funds in the most economic way and reducing redundancies wherever possible.
Ex. With respect to improving Service Learning outcomes (which is one of Brock's key areas of differentiation as highlighted in their SMA agreement): Rather than allocating investments in the various faculties to meet the same overarching service learning objective (as seen in McMaster's report), investment can be made for increased centralized support in the Centre for Pedagogical Innovation. This could be for the development of a training program to help all professors/instructors in all academic units adapt their courses to a more service learning approach (which can be as simple as integrating into each course, a small-group project that solves a real-world problem and is presented to a real-life stakeholder). A common misconception among faculty is that a service learning course must involve volunteer work in the community. Training needs to be provided to promote awareness on what service learning actually means.
Efficiency can be achieved by first looking at investments in programs that can be centrally administered and applied across all academic faculties, and then looking at investments that address the unique needs of the different academic faculties.
By using a Results-Based Budgeting Framework as recommended above, Brock can ensure that budget allocations are aligned with anticipated results and that progress is being made towards these anticipated results. Ultimately, this will result in increased confidence and support from stakeholders like the Board of Trustees and MTCU, and increased funding for future growth.