Budget environment

After a challenging two years of the evolving COVID-19 global pandemic, Brock remains flexible to respond to the needs of our community while advancing our strategic priorities. Brock has navigated the global pandemic in a fiscally responsible manner through the selfless dedication of our faculty and support personnel who continued to adapt our academic and research programs through changing public health measures. The development of the 2023-24 budget brought with it a sense of excitement as the campus was again energetic with enthusiastic students supported by in-person academic, research and ancillary activities. The current budget environment is informed by our fiscal framework, enrolment and government policy. Developing the 2023-24 budget demanded attention to detail to address the significant fiscal pressures that remain as a result of the lingering effects of the global pandemic. As a not-for-profit organization, each year our goal is to achieve a balanced budget. Recognizing costs are subject to inflation, our ability to offset these costs with additional revenue is not possible within the confines of current government policy; thus, each year we endeavour to find additional savings or diversify revenues to achieve a balanced budget. Demands on the University impose costs that will always exceed its available resources. Brock University must therefore have some means both of setting priorities among its many possible opportunities, and of planning to enable the strategies it undertakes. As we have done in past years, consultation with the University community has informed budget development. Integrating the feedback received on the budget within our fiscal parameters and guided by the Institutional Strategic Plan, this budget plan provides support for the academic policy of the University in progressive ways. This document outlines the many investments in our students, research, community and future sustainability. This discussion on the budget environment serves to highlight areas that significantly impact the budget development.

Fiscal Framework

The Fiscal Framework update (the Framework) aligns our budget planning strategy with the Institutional Strategic Plan, entitled “Brock University: Niagara Roots – Global Reach.” The Fiscal Framework underwent an update last year with new fiscal guidance weaved into Brock’s budget planning guidance to support areas of strategic growth such as research, and as well provide support for our core academic and student support programs. At the core of Brock’s financial challenge, and in fact the entire Ontario post secondary sector, is the reality that under the current government’s regulations more than half of the University’s revenue is subject to zero per cent inflation. Regulated tuition and grants represent over 50 per cent of the University’s revenue, both fixed at zero per cent inflation. The remaining revenue sourced from ancillary revenues and international student tuition may increase; however, funding inflation on all of Brock's expenses would require more than double the rate of inflation applied to international tuition and ancillary services. This is certainly not a sustainable pricing strategy. Based on longer term inflation targets and without enrolment growth, total revenue is projected to increase at 1.5 per cent. With expenses growing at 2.4 per cent annually, and with 65 per cent of expenses associated with personnel costs, most of which is tied to collective agreements, the University is faced with a budget model that must rely on increasing enrolment revenue to fund base operating expenses. This framework is highlighted in Figure 31.

In the short-term, this model is under even greater pressure with inflation on expenses exceeding the long-term target rate of two per cent. In fact, Ontario’s inflation rate in 2022 reached seven per cent. Strategic enrolment growth is a key ingredient of our Framework to generate additional revenues to offset the inflationary pressures on expenses. The Framework also aligned funding allocations with strategic priorities to ensure investments were protected in student financial aid, capital renewal, our people, strategic initiatives such as Engineering, Professional and Continuing Studies and the Research Enterprise.

Enrolment

Enrolment generates the majority of our revenue; thus, it is a key assumption in our budget planning. As noted in the Framework, Brock relies on strategic enrolment growth to fund a portion of our cost increases. The implications of the global pandemic on domestic enrolment have varied significantly across the sector. International enrolment continues to be an area of risk for the entire sector as the Federal Government VISA processing backlog continues. Estimates of the VISA backlog in the fall of 2022 were upwards of 75,000 applications representing over two and a quarter billion dollars in lost tuition for Canadian post secondary institutions. Brock, like many other small to mid-sized universities in the sector, has faced a disproportionate decline in enrolments, which is impacting our growth trajectory. That said, Brock is experiencing positive momentum in recruitment. While the flowthrough impacts of recent years will continue to impact Brock’s overall enrolment, we are seeing signs of growth return with planned year 1 intake rising to it highest level since 2019-20. This strong intake will improve our enrolment outlook. New programs such as Engineering and new types of students that we plan to attract through Professional and Continuing Studies will aid in our sustainability plan but they do require investments that will initially exceed revenue generating capacity to ensure their future success. Brock and the 2023-24 budget plan also continues to grow our supports in Nursing with increased enrolment and resources allocated to the Faculty of Applied Health Sciences.

With much uncertainty from the enrolment environment, Brock has developed an investmentoriented budget plan for 2023-24 that recognizes the need to invest in future revenue-generating programs. Figure 32 outlines our updated enrolment plan and highlights the positive trend in new year one intake that will begin to improve our overall enrolment trajectory in 2023-24 and beyond. The next few years will require thoughtful allocations of resources as we endeavour to regain enrolment growth to meet our fiscal needs.

(1) ‘All-in’ enrolment includes letter of permissions, non-degree students, auditors, additional qualifications, and certificates.

(2) Source: Brock's Strategic Enrolment Planning tool.

(3) Source: PowerBI Admissions on March 30, 2023.

Government Policy

Brock continues to appreciate its strong and collaborative relationship with the Province of Ontario through the Ministry of Colleges and Universities (MCU). Despite the Province’s fiscal constraint, it continues to fund important programs at Brock.

On March 23rd, the Ontario Finance Minister Peter Bethlenfalvy delivered the provincial government’s 2023 Spring Budget, called Building a Strong Ontario. Postsecondary education sector expenses are expected to increase by $800 million in 2023-24. The increased investment is focused in areas of medical/ nursing education capacity expansions. Notably, Brock is benefiting from this with a budget for an additional 200 funded nursing students as compared to the 2022-23 budget. The budget also increased funding for capital and facilities renewal. The government announced $124 million allocated to universities in 2023-24 for infrastructure, up slightly from $121.8 million announced in the 2022 Budget. Brock has increased the funding in the Facilities Renewal Program grant by $0.9 million to reflect the anticipated increased funding from the Province. To the detriment of the sector’s sustainability, the Province has continued with a domestic tuition rate freeze for a fourth year following the historic ten per cent tuition rate reduction mandated for 2019-20. The Province is however allowing for some increases for domestic out of province students and up to three programs where Brock identifies tuition rates fall significantly below the provincial average. This is welcomed flexibility, albeit much less than needed for long-term sustainability. The budget includes a nominal increase representing less than half of one percent of total revenue to account for this flexibility.

The Province has also tied grant funding to labour market outcomes beginning with the Strategic Mandate Agreement 2020-25 (SMA3), which took effect in 2020-21. As initially established, this updated funding model includes tying a larger portion of funding to metric performance through the Differentiation Envelope. This proportion started with a system average of 25 per cent in 2020-21 and is ramped up to a system average of 60 per cent of total MCU operating grant funding by 2024-25. Figure 33 details Brock’s proportion of the Differentiation Envelope. Brock, along with our peers across the province, have 10 metrics used to determine funding allocations. As detailed in Figure 34, six metrics are aligned with priorities in skills and job outcomes and four metrics are related to economic and community impacts. Brock’s Institutional Strategic Plan aligns our strategic priorities well with the government. It should be noted that during 2020-21, the MCU announced that the metrics tied to the Differentiation Envelope would not impact the grant funding for 2020-21 due to the significant impact of the global pandemic on the sector, and this pause carried forward through 2022-23. Our goal within the context of our budget is to achieve our target metrics and maintain our grant funding at current amounts while capitalizing on strategic growth areas where government is providing special-purpose grant opportunities. It is anticipated that performance metrics will play a role in operations for 2023-24 with the Province signaling that the pause in this model due to the global pandemic is ending.

Skills and outcomes metrics:

• Graduate employment earnings

• Experiential learning

• Skills and competencies

• Graduate employment

• Graduation rate

• Institutional strength/focus (negotiated metric)