April 17, 2000

A. The 2000-01 Budget Planning Model

B. The March 2000 Grant/Tuition Announcement and Resulting Budget Context

C. The 2000-01 Quality Improvement Plan

1. Student Support
2. Faculty Renewal
3. Expansion of the BACS Program
4. Expansion of ATOP-based Programs
5. Investment in the Faculty of Law
6. Student Recruitment
7. Increase to the Library Acquisitions Budget
8. The Writing Program
9. The CFI and OIT Initiatives
10. Deferred Maintenance and Instructional Facilities
11. Academic Support Initiatives

D. Update on Current Year’s Budget (i.e. 1999-2000)

E. Operating Revenues

1. Government Grants
2. Tuition Fees
3. All Other Revenues

F. Budget Allocations to Faculties

1. Initial Budget Reductions
2. Selective Budget Allocations
3. Provost’s Academic Support Fund (PASF)

G. Scholarships and Bursaries

1. Undergraduate Scholarships
2. Needs-based Undergraduate Student Support
3. Graduate Student Support

H. Budget Allocations to Support Units

I. Corporate Expenditures

J. One-Time Allocations

K. Summary

L. Conclusion

• Table 1: 2000-01 Operating Revenues
• Table 2: Base Budgets for Faculties
• Table 3: Scholarships and Bursaries
• Table 4: Base Budgets for Support Areas
• Table 5: Corporate Expenditures
• Table 6: One-Time Allocations
• Table 7: Summary of Operating Budget
• Table 8: Operating Reserve
• Table 9: Final 1999-2000 Enrolment Contingent Fund (ECF) Allocations
• Table 10a: 2000-01 Tuition Fees for Canadian Students
• Table 10b: 2000-01 Tuition Fees for International Students
• Table 11: Summary of Enrolment Forecast
• Table 12: 2000-01 Provost’s Academic Support Fund Initial Allocations
• Table 13: 1999-2000 Provost’s Academic Support Fund

• Appendix A: Report on the 1999-2000 Quality Improvement Plan
• Appendix B: Weighted Teaching Units
• Appendix C: Revenues, Expenditures, and Tuition Fees by Faculty

The context of the planning process for 2000-01 that began in the fall of 1999 was set by the continuing state of underfunding of Ontario’s university system and the anticipation of an unprecedented increase in demand for university places r esulting from the restructuring of Ontario’s secondary school system, and sustained by demographic shifts in the province. Given the Ontario government’s explicit commitment to ensure a place for every interested and qualified student in the province’s un iversities, and the impending increase in demand, Western’s administration concluded that 2000-01 must see the beginning of a reinvestment period. Chronic underfunding has left Ontario’s universities with a student/faculty ratio over 20% higher than the a verage of the other nine provinces. In the absence of reinvestment, neither educational quality nor accessibility can hope to be maintained. Such considerations had driven the productive discussions of the MTCU/COU Working Group on University Capacity, st retching back almost 18 months. The expectation that 2000-01 would mark a turning point for public funding of Ontario’s universities was bolstered by the growing world-wide acceptance that strong university education and research are crucial to success in the emerging knowledge-based economy.

The substantial expense cutbacks in Faculties and support units in recent years have left Western’s faculty and staff struggling to meet their commitments to our students. In spite of a remarkable level of innovation and commitment, it has become incre asingly difficult for academic and support units alike to respond to emerging new demands or to pursue initiatives that would enhance their service to our students and their contribution to the University’s mission. Additional cutbacks must have a serious deleterious impact across the University. In spite of this clear need for additional investment, Western’s planning model for 2000-01 was based on relatively conservative assumptions of revenue increases stemming from government grants and tuition fee in creases. On the expense side, the model included the current year’s unanticipated increases in some corporate costs, most notably heating fuel, and premium costs for long-term disability insurance, and a provision for increases in employee salaries and be nefits associated with recently completed or anticipated negotiated agreements.

On the basis of this expense/revenue model and the annual planning process, tentative allocation recommendations for the Faculties were announced in January 2000. These recommendations remain unchanged and are accompanied by parallel recommendations fo r other units in this final budget document. In spite of the conservative assumptions of revenue growth for 2000-01, the core of the budget recommendations is an initial unit-level cutback of 2%, followed by modest differential investments for mission-cri tical new initiatives in some Faculties and support units. The recommendations also include a series of broader investments, including a substantial increase in the funding levels available through the Enrolment Contingent Fund (ECF) aimed at those progra ms faced with increased student enrolments/teaching.

The March government announcement on grants and tuition was a great disappointment: the resulting revenue increases for the coming year fall substantially short of those used in the University’s budget planning model; the mechanisms for fund ing are highly problematic; and the announcement provides no indication of an approach to funding that will sustain access and the current quality of university education in Ontario.

The planning model described above assumed a 3% increase in base grants and a 5% increase in regulated tuition fees in 2000-01. As explained in later sections of this document, the net effect of the grant and tuition announcement will result in a short fall of $2 to $3 million relative to this model. Rather than attempt to reduce planned expenditures for 2000-01 to adjust for this shortfall, these final budget recommendations for 2000-01 reflect the unit allocations that were based on our original plann ing model. Regrettably, however, we must acknowledge that this approach only delays the need to decrease unit allocations and adds substantially to the budget planning challenges for 2001-02.

The government announcement included two new operating grant envelopes -- the Accessibility Fund and the Performance Indicators Fund -- with a total value of $16.5 million each.

• The Accessibility Fund will be distributed according to enrolment growth (measured in total undergraduate BIUs) that takes place in 2000-01, but universities will only be eligible to access this fund if their admissions to first-year entry-level progr ams in fall 2000 are equal to or greater than those for fall 1999. Preliminary calculations indicate that funding from this envelope will provide approximately 40% of the estimated full funding rate per BIU (i.e. the weighted enrolment count).

• The Performance Indicators Fund will be distributed on the basis of institutional performance on three indicators: the graduation rate of 1991 new first-year students; the six month employment rate of 1997 graduates of undergraduate programs; and the two year employment rate of 1997 graduates of undergraduate programs.

In addition to these primary funding mechanisms, the government announcement also included the following:

• A decision to "redistribute" the pay equity grant in a manner that reduces Western’s share by over $660,000. In the early 1990s, Western responded to the government’s pay equity initiative, resulting in significant ongoing costs. The recent redistribu tion sees Western lose a substantial share of these grants to the benefit of other universities that did not respond to the pay equity initiative to the same degree, or at all.
• The final phase of the Fair Funding Grant which was introduced in 1998-99. Western’s share of this fund is only $320,000 – or about 1% of the total amount of $29 million.

The March announcement included a policy that effectively removes the University’s ability to increase substantially revenues from tuition fees. For the next 5 years, tuition fee increases in regulated programs must be limited to 2% in each year. Net o f the requirement to set aside 30% of increased revenues to student aid, the maximum additional revenues from the regulated programs will be only 1.4%. Given that these regulated programs contain about 75% of the University’s enrolments, the 5-year tuitio n fee announcement is a major setback to our operating budget and thus to our ability to offer a high quality education to our students. In combination with the grant announcement, and given the effect of the unprecedented budget reductions of the past fi ve years, it constrains the University’s degrees of freedom for planning to a very narrow range indeed.

Government underfunding remains the fundamental financial problem at Western, as at all Ontario universities. For our students, the 5-year tuition announcement will soon be seen as a hollow accomplishment if public funding to universities is not increa sed. Ontario’s undergraduate students pay among the highest tuition rates in the country and yet are taught in institutions with the worst student/faculty ratios. Western’s students understand that the value of a university education is ultimately determi ned by its quality, not its price.

Given what is effectively a freeze in tuition rates, the necessary investment must come from the provincial government. An additional investment of more than $500 million would be required simply to bring Ontario universities up to the national average in government grants per student; Western’s share of those additional funds would be over $50 million. With only a fraction of those funds in 2000-01, we could begin replacing the hundreds of faculty and staff positions lost during the past decade (Figur e 1), substantially enhancing the experience of our students.

Over the last two years, the University’s total revenues have increased, largely as a result of substantial increases in tuition fees and targeted government programs such as the province’s Access to Opportunities Program (ATOP). Note that funds associ ated with such programs do not address the essential problem of underfunding because they are associated directly with the acceptance of additional students in high-cost programs, such as Engineering Science and Computer Science. The recently announced go vernment funding for 2000-01 brings a very small (and still uncertain) increase in grants and tuition fees. For the coming year, therefore, the University must look to other, one-time funding sources, and, failing some change in government funding policy, to anticipate the need for further base cuts in 2001-02. Figure 2 shows a history of changes in Adjusted Real Operating Revenues expressed in constant dollars, excluding student support funding, self-funded programs, and funds transferred from the operat ing budget to the capital budget.

The cumulative impact of inadequate government funding and the unavoidable increases in on-going expenses cannot be counterbalanced by an uncertain ability to draw from investment funds or further substantial reductions in personnel expenses. Beyond th e pressures of inflation in basic non-salary areas, substantial expense increases will continue to arise from the need to improve and expand existing academic and instructional facilities, the rising costs of library acquisitions, the costs of the impleme ntation and development of an entirely new information system across campus, major deferred maintenance costs, and anticipated increases in faculty/staff salary rates.

These inevitable expense increases occur in a context in which the full force of the major cutbacks of recent years is now being felt across campus. Academic and non-academic units are operating at, and in some cases beyond, the limits of their resourc es — Western’s traditional large operating budget carryforward has disappeared. Vital new initiatives in teaching and research have already been impeded by budgetary reductions; continuing real cuts to academic and support units place increasing pressure on the budgetary planning process.

This picture of insufficient funding and threatened performance is painted on a canvas that includes only our current students. The much-discussed increase in demand for entrance to Western and Ontario’s other universities has already begun. The first students to graduate from Ontario’s secondary school system in four rather than five years entered grade 9 in September 1999; these same students are part of the echo of the baby boom that will see the university-age cohort expand by 25%-40% in the next f ive years. The SuperBuild Growth Fund initiative will go a long way towards providing the physical facilities necessary to accommodate additional students, but we urgently need a commitment by the Province to a specific framework for operating funding to provide the resources necessary to support essential new faculty and staff. The March 14^th government funding announcement failed to address this issue. If this announcement reflects the approach that the government intends to take towards univ ersity expansion, the quality of education in Ontario universities is certain to decline.

The 2000-01 planning process which began early in the fall of 1999 identified a number of educational priorities, many of which were established in previous years. Following a well-established planning cycle, and following consultation in th eir Faculties, Deans and budget unit heads constructed annual plans. Understandably, the primary focus of the planning process was the need for additional faculty and staff to maintain and expand the quality of our scholarly and educational activities. Th e central place of our members of faculty in supporting our educational and research mission is obvious, but this year’s planning process also underscored the detrimental impact of dramatic reductions in non-academic staff on our academic programs. The ne ed to sustain faculty and staff resources, therefore, provides the context for many of the recommendations for 2000-01.

The 2000-01 Quality Improvement Plan builds on the model established in Western’s 1999-2000 Plan, set out in Appendix A, and reflects the academic priorities identified through the planning process:

Figures 4a and 4b summarize the changes in the 1999-2000 operating revenues and expenditures -- i.e. the variance between the 1999-2000 revenues and expenditures approved by the Board of Governors in April of 1999, and current estimates of r evenues and expenditures for 1999-2000.

• Last April, when the 1999-2000 budget was approved, we did not have clear information on the flow of ATOP start-up funds. These one-time funds amounted to $1.7 million and were transferred in mid-year; the funds were directly targeted at ATOP infr astructure and start-up expenditures.
• One-time government funding (about $800,000) for special needs-based bursaries (e.g. bursaries for disabled students and for part-time students) was made available in mid-year. These are targeted funds and flow directly to the intended purposes.
• Tuition revenues are $1.8 million higher than the amount projected in last year’s budget; total enrolment was 500 FTEs higher than the projected figure, resulting from a higher actual first-year intake and improved retention. Most of the revenues from the higher enrolments flowed to our Faculties through the Enrolment Contingent Fund (ECF).

• $1.7 million in one-time ATOP funds were targeted directly at ATOP infrastructure costs.
• The $800,000 one-time government funding for special needs-based bursaries were transferred to the student support budget.
• The higher-than-projected enrolments resulted in increased teaching activity and costs within our Faculties and departments. Over $1.4 million in incremental ECF funds were flowed to our Faculties.
• As a result of the requirement to set aside 30% of incremental tuition revenue for student aid and an increase in the number of scholarship-eligible students, the student aid budget was increased by about $500,000.
• Physical Plant utilities costs increased substantially (by $1.3 million) as a result of increases in natural gas prices.
• Employee Benefit costs increased by $1.9 million, primarily due to increases in the premiums associated with our Long-Term Disability coverage.

Note that the net negative $2.5 million revenue/expenditure variance was more than accounted for by unanticipated increases in utilities and benefit costs.

• Affiliate Service Fee revenues are expected to increase because of higher enrolments in the Affiliated Colleges.
• The University’s investment portfolio has generated significant returns over the past year and these returns have made it possible to transfer a total of $8.5 million to the Operating Budget again in 2000-01 (Table 1, line 26). Of this total, $2.5 mil lion is specifically allocated as the University’s matching fund commitment to the CFI/OIT programs.

• The projected growth in administrative fee revenue (line 34 in Table 1) arises from levies on Full-Cost-Recovery (FCR) program fee revenues. As revenues from these programs increase, the FCR-transfers also increase.
• Western’s ancillary units generate substantial revenue to the University Operating Budget by way of direct contributions and charges for facilities and services. The increase in Direct Ancillary Contributions is due to the commitment from the Division of Retail Services to transfer anticipated increased revenues from private sector partnerships directly to the University Operating Budget.

Table 2 presents a summary of the base budget allocations for Western’s Faculties in 2000-01.

As indicated in column b of Table 2, the budget recommendations begin with an initial reduction of 2.0% to all Faculties (except Business: MBA). This initial budget reduction is necessary to cover increasing costs in salaries and inflation. The abs ence of any central recovery of retirement savings in recent years increases the probability of the need for such an annual budget reduction, even given modest increases in revenue.

A series of very substantial selective additional allocations results in an overall allocation to the Faculties that is very nearly the same as in 1999-2000 (see line 21 of Table 2).

A Brief History. The ECF is now a well-established feature of Western’s annual budgeting process and over the past three years has had a substantial differential impact on the allocation of funds across Faculties as a result of shifts in underg raduate teaching and graduate enrolment patterns across campus.

The ECF was introduced in 1997-98 to respond to shifts in enrolment/teaching across the University and to recognize efforts by academic units to attract and accommodate students in their classes, irrespective of their programs of registration. The ECF provides annual funds to the academic units based on growth in Weighted Teaching Units (WTUs) over pre-established baseline WTUs for each Faculty. The baseline for each Faculty is the lower of: (a) the average of the 1994-95, 1995-96, and 1996-97 WTUs or (b) the 1996-97 WTUs. In recognition of recent enrolment/teaching patterns within the Faculties of Arts and Social Science, the ECF baseline for these Faculties was further reduced, providing them with a greater opportunity to receive ECF.

Weighted Teaching Units (WTUs) capture overall teaching activity within the Faculties. WTUs incorporate graduate enrolments from programs residing within each Faculty, undergraduate enrolments in professional Faculties, and undergraduate teaching – whi ch is measured by course registrants, irrespective of the students’ Faculty/program of registration. The specific weights assigned to the various enrolment categories are:

The following self-funded and full-cost-recovery programs are excluded from WTU calculations: MBA, Executive/Video MBA, International Medical Residents, Faculty of Medicine’s Malaysian Exchange Program, National Dental Examining Board Qualifying Progra m, Additional Qualification Enrolments in the Faculty of Education, and all non-credit programs/courses.

An important feature of the ECF is recognition of cross-Faculty teaching by individual members of faculty. If a course offered by a program in Faculty A is taught by a member of Faculty B (i.e. cross-Faculty teaching), the WTUs will be credited to Facu lty B and an additional 20% of the WTUs associated with the course will be credited to Faculty A.

ECF Allocations in the Current Year (i.e. 1999-2000). Table 9 shows ECF allocations for 1999-2000. Note that the ECF allocations shown in Table 9 are based on a value of $1,250 per incremental WTU.

Conversion of ECF Funds to Base Budget. It has been our intention from the outset that, where changes in enrolment patterns stabilize at higher levels, ECF funding be converted to base operating allocations; such conversions were made in 1999-20 00, as follows: $750,000 for Health Sciences, and $250,000 for Engineering Science.

For 2000-01, it is being recommended that an additional $1.75 million of ECF funding be incorporated into Faculty base budgets, as follows:

Column f in Table 2 shows the $1.75 million dollars in ECF funds which are being incorporated in Faculty base budgets. With this conversion of ECF funds to base budgets, there will be a corresponding increase in the ECF baselines for the appropr iate Faculties. In interpreting column f, it is important, therefore, to remember that in all cases base budget transfers will be offset by a reduction in ECF for 2000-01 relative to that which otherwise would have been allocated; in some cases these base budget transfers may reduce ongoing ECF funding in 2000-01 below the 1999-2000 level. Current estimates of 2000-01 enrolments and the associated ECF funds indicate that such an offset will occur in four Faculties: Health Sciences, Information and Media S tudies, Music, and Science. As line 17 of Table 2 shows, the estimate of ongoing ECF for 2000-01 (excluding the amounts converted to base budget) is $4.5 million, about $400,000 more than the amount in 1999-2000. In line 21, which adds ECF and SFRI to the Faculty base budgets in line 16, total Faculty budgets decrease by about $34,000.

An Increased Unit Value in 2000-01. The mechanism used to allocate ECF funds was consciously designed on a "rough justice" model, i.e. it is understood that the real costs of expansion in enrolment varies substantially across courses, ranging fr om a low cost where capacity exists in class sections already mounted to the much higher costs of opening additional sections of courses that include laboratories or small groups with essay grading requirements. Since the ECF program was first implemented , many Deans have argued on behalf of their Faculties that this approach did not provide adequate recognition of expansion at the higher cost end of this spectrum. These arguments were raised once again in the current planning cycle. Rather than wrestle w ith the inevitable and endless debate that would be involved in establishing a differential ECF value across courses, it is being recommended that the ECF value for all courses/programs be increased by 20% to $1,500 per incremental WTU. Given that every F aculty more or less experiences enrolment shifts across the full cost spectrum of courses, this increase should provide the increased funding for expansion in higher cost courses sought by many Deans, Chairs, and Directors.

Enrolments and Teaching Activity. Enrolments, teaching activity, and WTUs have changed at very different rates over the past decade. During the severe budgetary stringency of this period, all Faculties have been hard-pressed to manage their budg ets and teaching requirements. The graphs in Appendix B show changes in WTUs over the last decade. The Faculties are distributed into four groups according to the value of WTUs in 1999-2000, shown on the vertical axis.

Faculty of Arts. Western’s Faculty of Arts maintains its position among Canada’s foremost teaching and research units and is working determinedly to restore enrolment levels in its fine undergraduate programs.

The Richard Ivey School of Business. The final phase of the MBA transition to full-cost-recovery status takes place in 2000-01. As approved in last year’s budget, the HBA program has been expanded by an additional section. The new section will r each steady-state in 2000-01. The Ivey programs continue to hold a leadership position in business education as evidenced by Ivey’s ranking as Canada’s best business school and 19^th among the world’s best business schools in the recently-releas ed rankings by the Financial Times of London.

Faculty of Education. The Faculty of Education’s B.Ed. enrolment increased substantially in 1999-2000, and was supported through additional base budget allocations. The Faculty has also expanded its graduate program offerings through the introdu ction of a stand-alone Ph.D. program and is collaborating with three other Ontario universities on a joint Ph.D. program in Educational Studies.

Faculty of Engineering Science. The Faculty continues to expand as a result of the government’s ATOP initiative — increased funding is provided through direct ATOP grants as well as ECF. Engineering has also been successful in early CFI/OIT comp etitions and is expected to submit additional applications to the upcoming competitions.

Faculty of Graduate Studies. The Faculty of Graduate Studies oversees all graduate programs at Western and has played a leadership role in the strategic expansion of enrolment at the graduate level in recent years. Additional administrative load in FGS is being met by funds arising from a variety of sources, including the administrative component of the 30% student support tuition set-aside and interest on national scholarship funds now administered locally.

Faculty of Health Sciences. Enrolments in the BHSc program, introduced in 1997-98, continue to approach steady-state levels. The Nursing program was also expanded in 1999-2000 and continues to attract high quality students. Substantial ECF funds are being allocated in support of the growing enrolments. The Faculty of Health Sciences also has been successful in early CFI/OIT competitions and is expected to submit additional applications to the upcoming competitions.

Faculty of Information and Media Studies. Enrolments in the MIT program, also introduced in 1997-98, continue to approach target steady-state levels and are being supported by substantial allocations from the ECF. The Faculty is also in the proc ess of introducing new graduate courses in distance format.

Faculty of Law. Western’s Faculty of Law is among the national leaders in legal education, as evidenced by its high rankings (number 2 in Ontario and number 6 in Canada) in the recent ratings by Canadian Lawyer magazine. The recommended budget i nvestment of $270,000 in 2000-01 recognizes the need to invest in the Faculty, especially in view of investments in other Ontario programs with funds arising from increasing tuition fees. This investment will provide Western’s Law school with a solid foun dation from which to sustain and promote its programs.

Faculty of Medicine & Dentistry. The School of Dentistry is continuing with a five-year plan which includes revenue generation through increases in international student enrolments, clinic activities, and continuing education offerings. As p art of this five-year plan, $80,000 in base budget funds is being allocated to support faculty appointments.

As indicated in the University budget document for 1999-2000, Western’s Faculty of Medicine & Dentistry is among our most important cornerstones in resource-intensive research and professional education. As tuition fees for its programs increase, i nvestment is necessary to sustain the quality of its programs and its competitiveness in the province and the country -- the proposed selective allocation of $200,000 in 2000-01 responds to this imperative and will be used to support the Faculty’s success ful initiatives in early CFI/OIT competitions and to enhance future proposals in upcoming competitions.

Faculty of Music. The Faculty of Music is a national leader in music education, offering a full range of undergraduate and graduate programs, attracting high quality students. Recent increases in enrolments and teaching activity are being suppor ted by ECF and the conversion of ECF to base budget.

Faculty of Science. The Faculty’s teaching responsibilities continue to increase substantially -- primarily due to the ATOP expansion in Computer Science and Engineering. These expansions are being financially supported through direct ATOP grant s as well as ECF. The Faculty of Science has also been successful in early CFI/OIT competitions and is expected to submit additional applications to the upcoming competitions.

Faculty of Social Science. The introduction of new streams in the BACS program and its conversion to a four-year program have played a central role in enhancing enrolments/teaching in the Faculty — the increased teaching activity is being suppor ted by substantial allocations from the ECF. The Faculty is planning to introduce a new stream of the BACS in distance education format. A sum of $100,000 in base budget funds is being allocated to support this new initiative which will further enhance th is successful program.

The PASF continues in 2000-01 and is being allocated to specific instructional and research initiatives within the Faculties. Table 12 outlines the initial recommended 2000-01 PASF allocations, which are all one-time funds. Other academic initiativ es will be considered for PASF funding during the year. For information, a detailed accounting of the PASF for 1999-2000 is shown in Table 13.

Base budget allocations for student support are shown in Table 3. Overall student support funding is being increased by over $1.5 million for 2000-01. The cumulative impact of this 7% increase in funding is shown in Figure 5, and reflects We stern’s continuing commitment to the financial support of graduate and undergraduate students. Total student support funding has increased from $4.9 million in 1992-93 to $24.1 million in 2000-01.

The base budget for undergraduate scholarships is being increased by $150,000, reflecting the projected increase in scholarship-eligible first-year students.

Funding for needs-based student support, generated through the 30% required set-aside of tuition, is expected to increase by over $890,000 in 2000-01 to a total of about $8 million. These funds will be allocated to students in financial need throug h the University’s work/study program and direct needs-based bursaries.

The needs-based student support funds resulting from the tuition set-aside will be supplemented by other funding sources, including donations and special programming funding from the government – and will be distributed by the Financial Aid Office acco rding to prescribed criteria.

Under the government’s guidelines for the disposition of tuition set-aside funds for student financial aid, 5% will be used to cover the administrative costs of the service.

There will be an addition of over $320,000 to overall graduate student support as a result of allocating 75% of graduate student tuition revenue (excluding self-funded programs) back to graduate student support. Total graduate student support now a mounts to over $11.6 million.

Base budget allocations to support units for 2000-01 are shown in Table 4. The allocations reflect differential decisions involving investment in areas of priority. It is important, however, to recognize that this flexibility indirectly deri ves from the initial budget cuts made to the support units. The need to adjust to this initial reduction will place additional pressures on staff members who already are carrying a workload that has increased substantially as a result of the budget reduct ions of the past decade and that cannot be sustained indefinitely.

• A sum of $55,000 in base budget funds is being allocated to Information Technology Services, to allow for additional staffing in support of IT/instructional innovations through the Instructional Technology Resource Centre.

• The Libraries operating budget is being increased by $45,000 in 2000-01 in support of a University Archives initiative. Further funding will be provided in the following two years.

• The $200,000 addition to the Registrar’s Office budget is to cover increased postage costs and to maintain staffing levels.

• The $90,000 increase to the Office of Institutional Planning and Budgeting is to provide additional staffing in support of incremental responsibilities, including management of instructional facilities, and the PeopleSoft information system.

• New initiatives such as the CFI/OIT, SuperBuild, ATOP, and our fundraising campaign have placed increased workload pressures on the Division of Financial Services. The base budget for Financial Services is being increased by $65,000 to hire add itional staff.

• The Human Resources base budget is being increased by $100,000 to support new costs in the area of labour relations, staff development, and occupational health and safety.

• A sum of $30,000 in base funds is being allocated to Physical Plant in support of the Emergency Preparedness Program.

• The subsidy to Animal Care and Veterinary Services is being increased by $100,000 to increase staffing necessary to provide higher levels of disease monitoring, control, and containment.

• The $175,000 base budget addition to the Office of the President and Vice-Presidents is in support of new senior staff positions in the areas of faculty relations and government relations.

Table 5 summarizes Corporate Expenditures, which are central operating expenditures that extend across all areas of the University.

• Corporate Contingency is being set at nearly $770,000 – which is 0.25% of Operating Revenues.

• Library Acquisitions continue to be a University priority, and the acquisitions budget is being increased by 5%.

• Adequate funding for Student Recruitment initiatives is necessary to ensure that Western attracts high quality graduate and undergraduate students. The base budget of $350,000 continues in 2000-01.

• As recommended in the University’s Strategic Plan, the operating budget commitment to the capital budget in support of Deferred Maintenance is being increased by another $750,000 – bringing the total allocation in 2000-01 to $4.25 million. The University’s ancillary units also provide additional support to deferred maintenance projects, as shown in line 12, Table 5. Overall expenditures on deferred maintenance in 2000-01, which includes funds from sources other than the University’s operating b udget, totalling $9 million, is detailed in Table 15 of the Capital Budget.

• Physical Plant Utilities costs increased substantially in the current year; further increases are projected for 2000-01, primarily due to increases in the costs of natural gas.

One-time allocations for 2000-01 are shown in Table 6 and amount to a total of over $11.8 million. These allocations include targeted funding for specific initiatives critical to the functioning of the University.

• The commitment to invest operating budget funds to improve and expand facilities in the Medical Sciences Building and the Dental Sciences Building requires the transfer of funds to the capital budget.

• Tuition revenue from students in the National Dental Examination Board’s qualifying program for 2000-01, is estimated at $648,000; these funds flow directly to the Faculty of Medicine & Dentistry.

• Tuition revenue from International Post-Graduate Trainees for 2000-01, is estimated at over $1.2 million; these funds flow directly to the Faculty of Medicine & Dentistry.

• Again in 2000-01, it is recommended that funds be allocated, through the Vice-President (Research), to support the commercialization of intellectual property. These funds finance the cost of legal protection of intellectual property by means of patent and copyright, and support some of the requirements for early-stage commercialization activities, such as proof-of-principle, market evaluation, and prototype development.

• Also in the area of research, the University will continue to compete aggressively for funds from the Canada Foundation for Innovation (CFI) initiative. As indicated earlier, an additional $2.5 million is being earmarked as matching funds for the CFI program.

• The need for professional development opportunities for staff continues to be a priority; $100,000 is recommended to support training programs for individual staff members, and for supervisory training for managerial personnel. The University is cogni zant that a new work environment will require flexible and creative approaches to issues affecting support staff in all areas.

• Funding is included to support Western’s 125^th Anniversary Fundraising Campaign. The $1.45 million shown in Table 6 derives from an administrative fee on endowments and donations (shown as fundraising revenue in Table 1, line 28) and not fr om general University operating revenues.

• The University Library System is being provided with $75,000 in one-time funds to purchase compact shelving for increased and more efficient storage of books.

• Additional one-time funds of $150,000 are being allocated to support new student recruitment initiatives.

• Transfer of one-time infrastructure funding associated with the Government’s ATOP initiative will be completed in 2000-01. The funds will be used to equip new computer labs and upgrade existing labs. Corresponding revenues are shown in line 6, Table 1 .

• A total of $1,800,000 will be allocated in support of the PeopleSoft information system in 2000-01. The conversion of the University’s corporate databases to PeopleSoft Systems continues, with the development of new functionalities. In addition, the F inance System and the Student Records System will be upgraded to a new version of PeopleSoft by the end of the calendar year. The new development and upgrade processes will continue to require significant additional temporary staff resources.

• $70,000 in one-time funds is being allocated to upgrade the outdated communications system used by University Police.

• In 2000-01, the Human Resources Division will be developing an employee communications program, supported by $50,000 in one-time funds.

• Special bursaries, totalling $806,758, targeted towards disabled students and part-time students in need of financial aid is provided annually by the government as one-time funds. The corresponding revenues are included in line 10, Table 1.

Table 7 provides a summary of the University’s Operating Budget for 2000-01. Line 7 shows the provision of an additional $5.5 million in support of anticipated cost increases. This amount is the net result of provision for employee salary in creases and benefit cost variations.

The projected year-end positions for 1999-2000 and 2000-01 are shown in line 15. In the current year (i.e. 1999-2000), a deficit of $1.4 million is expected – primarily due to unanticipated increased costs in the areas of employee benefits and physical plant utilities. The year-end projection for 2000-01 is a surplus of $3 million, which is required to offset the previous year’s deficit and to replenish, in part, the Operating Reserve. The Operating Reserve, summarized in Table 8, is projected to be at $2.1 million in 2000-01, $400,000 below the Board-mandated level of $2.5 million.

Two worrisome aspects of this budget must be underscored. First, the revenue from the Accessibility Fund (shown in line 3 of Table 1) will not materialize if Western’s first-year intake in the fall of 2000 does not equal the high-water mark of fall 199 9. In the absence of this revenue, the projected 2000-01 Operating Reserve will be reduced to $700,000 from the $2.1 million shown in Table 8. Restoring the Operating Reserve to $2.5 million will add to the challenges of the 2001-02 budget planning proces s. Second, the projected Operating Reserve of $2.1 million is achievable only as a result of the exceptional one-time appropriation of $2.5 million from our investment funds (shown in line 27, Table 1). This step is a one-time solution to a base budget sh ortfall that will need to be addressed in the 2001-02 operating budget, most likely by way of additional reductions to the allocations to Western’s Faculties and support units.

Finally, it should be noted that, in 1999-2000, the University operating budget units collectively overspent their budgets by about $2 million. Figure 7 shows historical carryforward/overspending patterns. The overspending in 1999-2000 reflects the cum ulative impact of budget reductions over the past decade.

The annual planning process for 2000-01 included both a sharp focus on the immediate challenges of the year 2000-01, and the opportunities and challenges of the longer term. As documented here, at least for the present time, the government f unding/tuition announcement can only leave us with a sense of disappointment regarding the short-term, and of mounting anxiety concerning Western’s ability to maintain quality and access in the longer run. Our only course must be to accept the sincerity o f the Government of Ontario’s commitment to maintain access to the province’s universities for every qualified and motivated student, and to assume that the government understands that such access is meaningless unless the quality of our programs can be m aintained and enhanced.

It goes without saying this challenge of quality and access is brought into stark relief by the anticipated unprecedented increase in demand for university places in Ontario. The recent funding/tuition announcement makes it clear that we have failed to communicate effectively our message to the government. Western cannot expand to meet this demand on the basis of BIU funding for additional students that is a fraction of that which has left Ontario’s universities with student/faculty ratios that are ove r 20% higher than the average in all other provinces, and that excludes graduate students. Our objectives overlap with those of the Ontario government -- to maintain access to a quality education. We are not adversaries in pursuit of this common goal and we must redouble our efforts to reach a common understanding of both the public policy objectives that are at stake here, and of the approach necessary to achieve those objectives.

• Table 1: 2000-01 Operating Revenues
• Table 2: Base Budgets for Faculties
• Table 3: Scholarships and Bursaries
• Table 4: Base Budgets for Support Areas
• Table 5: Corporate Expenditures
• Table 6: One-Time Allocations
• Table 7: Summary of Operating Budget
• Table 8: Operating Reserve
• Table 9: Final 1999-2000 Enrolment Contingent Fund (ECF) Allocations
• Table 10a: 2000-01 Tuition Fees for Canadian Students
• Table 10b: 2000-01 Tuition Fees for International Students
• Table 11: Summary of Enrolment Forecast
• Table 12: 2000-01 Provost’s Academic Support Fund Initial Allocations
• Table 13: 1999-2000 Provost’s Academic Support Fund

The University of Western Ontario

Since 1998-99, the Ontario government has called upon universities to report annually on the manner in which tuition fee increases enhance the quality of education for students and provide for expansion in areas of high student demand. Last year’s oper ating budget document included a section on Western’s Quality Improvement Plan. This appendix provides an update on that plan, using the same categories as last year’s budget document.

• Instructional Technology Initiatives in Business, Engineering, Education, Health Sciences, Medicine, Music, and Science

• Laboratory Upgrades

• Faculty Development Initiatives

• New Course and Program Development (e.g. diploma in Ethics, course development in Surgery)

The University of Western Ontario

The graphs below summarize revenues, expenditures, and tuition fees by Faculty using the basic methodology developed in Looking Forward (April, 1996). The details of the methodology have been revised considerably since the 1996 version, as follo ws:

• Attribution of indirect costs (i.e. non-Faculty budgets) have been refined. In the 1996 version, indirect costs were attributed using "share of Faculty base budgets". In the current version, indirect costs are attributed using many variables, includin g enrolments, number of faculty and staff, space, number of alumni, and base budgets.

• Costing of cross-Faculty teaching (i.e. teaching of undergraduate students from other Faculties) has also been revised. In the 1996 version, a cost of $200 per full-course-equivalent course registrant was assigned. In the current version, the figure h as been doubled to $400 per full-course-equivalent course registrant. This equates to $28,000 for a full course of 70 students, which we believe is a fair allocation for cross-Faculty teaching. If the rate was doubled again, to $800 per full-course-equiva lent course registrant, the allocation for a full course of 70 students will be $56,000. Our analysis has used the $400 figure.

In the analysis below, revenues include tuition and the grant revenue which can be attributed to each Faculty by the MTCU’s BIU system of grant allocation. Figure A compares expenditure less revenue, by Faculty, for 1995-96 (shown in grey patter n) with data for 1998-99 (shown in black). The Faculties shown in the graph are Arts; Science; Social Science; the subtotal of those three Faculties; Business; Medicine and Dentistry; and the total of the following six Faculties: Education, Engineering, H ealth Sciences, Information & Media Studies, Law, and Music. Because Western does not subscribe to the BIU system of weights, we do not aspire to an equality between expenditure by Faculty and the revenues which can be attributed by the BIU system.

Nonetheless, these figures in Figure A are important because it is sometimes asserted that universities with "professional" schools use revenues from those schools to "subsidize" the liberal arts and sciences, and that therefore grant funds should be t ransferred from those universities with significant professional schools to the other universities. This assertion has no foundation, as Figure A indicates. Using the BIU system to allocate grant revenue, in 1995-96, there was a net transfer from Arts, Sc ience, and Social Science of $22.5 million to the other Faculties; in 1998-99 that net transfer has declined to $5.6 million, because of differential changes in tuition fees and budget allocations.

Those in our province who argue that "professional" schools "subsidize" the liberal arts and sciences are simply wrong. If there is such a "subsidy", it goes from the liberal arts and sciences to the other disciplines, and while that impl icit "subsidy" has declined over the last two years at Western it is still quite large. Any suggestion that MTCU should tax the grant to Western on the grounds that our professional schools are subsidizing the liberal arts and sciences is entirely unaccep table.

Figure B shows tuition as a percent of cost, by Faculty, for 1998-99. The figures range from a high of 48.3% for Social Science to a low of 11.7% for Medicine. Because of differential changes in tuition fees and budget allocations, these figures have also changed since 1995-96.

It has been suggested that the cross-Faculty teaching cost allocation (i.e. the $400 per full-course-equivalent course registrant or $28,000 for a full course of 70 students) is inadequate. Even if the service teaching cost were to be doubled, to $800 per course registrant, the impact on the data in Figure B is minimal – with Social Science dropping to 46.9% and Medicine increasing to 12.2%.

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jchien@julian.uwo.ca