Carleton University’s Board of Governors approved the university’s operating budget planning framework for the 2025-2026 fiscal year at a Dec. 4, 2024 meeting.
The framework, which will shape how Carleton approaches its finances for the upcoming fiscal year, was approved amid the board’s discussion of the university’s growing financial deficit.
The university is projecting a $38-million deficit for the 2024-2025 fiscal year if it does not take action to address financial challenges, according to presentation materials shared at the meeting.
This marks a $12-million increase from the $26-million projection made in May 2024.
“There are serious financial implications for Carleton if we don’t make some large-scale institutional changes going forward,” board chairperson Beth Creary said.
“Significant institutional changes” are necessary if the university aims to avoid depleting its $404-million reserves by 2028-2029, according to the board’s finance committee chairperson, Al Hamdani.
“Without these changes, there’s a lot of risk in the ability for the university to continue operating,” Hamdani said.
The approved budget planning framework is shaped by Carleton’s Financial Sustainability Framework.
“Once the financial crisis passes, and it will, we want to ensure that the institution will remain and emerge still true to its core values,” said university provost Pauline Rankin.
The framework includes four courses of action for the university:
- Cost containment measures, including: the Voluntary Retirement Incentive Program; a “drill down” on scholarships, teaching assistants and contract instructors; a potential hiring freeze and other measures;
- Revenue win-back strategies, including the creation of new academic programs and accelerating enrollment;
- “Breaking the academic cost/quality tradeoff,” in which the university aims to reduce costs while maintaining faculty workload and the student experience;
- “Commitment to organizational excellence and optimization,” where the university will review its administrative services and processes.
“We are looking to identify efficiencies in every corner of the university,” Rankin said.
The action plans will be led by university vice-presidents and deans and “adopt a whole-of-campus approach,” she added.
“We’re making sure that everyone is feeling the pain in an equitable way,” Rankin said.
The changes proposed by the budget planning framework pose risks to Carleton’s operations, according to presentation materials shared at the meeting.
“There are operational risks in terms of a concern about service delivery and potential harm to student satisfaction,” Rankin said.
Hamdani added that the university’s financial projections “are being done at a very challenging time,” with external factors creating a “difficult” framework context for the university and the larger post-secondary sector.
These factors include: stagnating enrollment numbers; a decline in international student enrollment due to the federal government’s international student cap; and the repeal of Ontario’s Bill 124, causing the university to owe retro pay to employees whose wage increases were capped under the now-unconstitutional law, according to university provost Pauline Rankin.
These factors, and the expected additional drop in international students next year, could lead to a projected $70-million deficit for the 2025-2026 fiscal year if the university doesn’t take action, Rankin said.
The university is reducing its spending this year, using reserve money and implementing changes to deal with the financial situation, she said.
However, there is a “limited range of options” for addressing the university’s expenses, Rankin said, as much of it is spent on salaries and benefits.
According to presentation materials shared at the meeting, employee salaries and benefits account for around 77 per cent of the university’s total expenses.
Rankin said the university’s next steps to address its financial deficit depend on the outcome of the Voluntary Retirement Incentive Program, which will provide monetary payouts to eligible employees who choose to retire early.
“Much of what we do subsequently will depend on how many people take that incentive and where those people are located in the institution,” Rankin said. “We’ll be in a better place to decide what measures are next when those numbers come in.”
Eligible faculty and staff have until Jan. 31 to decide if they would like to participate.
The board is expected to meet again on March 18.
Featured graphic by Alisha Velji.
