The University of Western Ontario

1999-00 Budget Indicators

For Information:

Review of Four Budgetary Indicators

Each spring our annual Operating Budget contains references to four important indicators: the Carryforward Reserve, the Operating Reserve, Operating Revenue, and Student Aid, along with preliminary estimates of those figures for the fiscal year just ending. As part of our first quarter report to Property & Finance, Table 1 shows the final values for these indicators for 1999-00, and historical data back to 1983-84. These are presented to the committee for information, and to allow for any questions which members might have on the data.

(1) Carryforward Reserve

Each year resources are allocated to the individual Faculties and Support Units, with no requirement that they be spent in the year in question. Unspent funds are carried forward into the next budget and appear in the Carryforward Reserve, shown in column (1) of the Table. There is no Board target for the size of this reserve, which reflects a great many individual decisions in our decentralized budgetary environment. The Carryforward Reserve grew sharply from 1988 to 1992, at a time when real operating spending was also growing. The reductions in real operating spending since 1994 have been associated with a sharp fall in the Carryforward Reserve from 1996 to 2000, as units have spent the funds in the Reserve. At April 30, 2000 the Carryforward Reserve had a negative balance of $1,579,000.

(2) Operating Reserve

For the period 1984 to 1998, the Board recommended a target level of 1% of operating revenues for the operating reserve. As column (2) shows, from 1984 to 1996, this target was achieved once (in 1986), and from 1989 to 1996 the reserve was in deficit position. In 1997 the operating reserve achieved the target of 1%, and in 1998 the reserve exceeded the target by $1.8 million. For 1999 and 2000 the operating reserve target level was set at $2.5 million. At April 30, 2000 the operating reserve was $.4 million above the anticipated deficit of $.9 million and approximately $3.0 million below the target level recommended by the Board.

(3) Student Aid

Increasing student aid is vital at a time of rising tuition. As column (4) indicates, Student Aid grew by approximately 400% from 1994 to 2000, in part because of government mandated transfers of tuition revenues to the student aid budget. During these same years Total Operating Revenue (column 3) grew by 14.5%.

(4) Real Operating Revenue Excluding Student Aid

This measure, shown in column (7), is one indicator of the budgetary stress the University is experiencing. The years shown can be divided into two periods: from 1984 to 1993, Real Net Revenue grew by 24%, while from 1993 to 2000 Real Net Revenue fell by 1.4%.