The 2008/09 McMaster consolidated budget approved today by the Board of Governors meets the Board's financial guidelines, while reflecting the continuing budgetary challenges that face Ontario's universities.

“McMaster has achieved the budget goals established by the Board of Governors,” says Brian McCarry, chair of the Budget Committee. “However, the University continues to struggle with consistent and significant long term financial challenges and pressures.”

Last June, the Board directed the University to eliminate the in-year, ongoing operating deficit within three to five years. McMaster expects to end the 2007/08 fiscal year with a small operating surplus, once one-time costs are removed.

“I want to thank the members of the Budget Committee for their outstanding service to McMaster,” says President Peter George. “Their hard work and dedication have resulted in a budget that meets the goals of the Board of Governors. We will continue to rely on their expertise, and the dedication of the entire McMaster community, as we face the challenges and financial uncertainties that lay ahead.”

The 2008/09 budget forecasts modest in-year structural surpluses for each of the next three years, after the Faculties of Business and Health Sciences are excluded. The Budget Committee recommended removing these two Faculties for presentation purposes due to the unique nature of their plans and funding models.

The School of Business has developed a separate financial plan to fund its expansion to Burlington that requires a longer-term fiscal strategy. The Faculty of Health Sciences historically receives slip-year Ministry of Health funding and is expected to be in balance throughout the three-year budget period.

Despite these positive developments, the Budget Committee identifies significant future risks and challenges.

McMaster provides non-pension retirement benefits including extended health, dental and life insurance for most of its full-time employees. McMaster's unfunded accrued benefit obligation is estimated by the actuary to be $223 million*, the third-highest obligation of its kind amongst Ontario universities.

Another challenge is the government's continued practice of designating funds for specific uses.

“It is clear that the recent trend of governments targeting funds for designated uses will continue,” McCarry says. “While we are appreciative of the province's support for specific programs and needs, there is less flexibility as we work to balance the operating budget. The absence of any provincial base funding increase means that once again for the coming year, budget envelopes must absorb all increases in salaries, wages, benefits and merit.”

These ongoing challenges have spurred several initiatives aimed at identifying possible solutions. A task force formed by the Provost to review and evaluate the McMaster budget model continues its work. A separate task force is considering evaluation, accountability and measurement processes across campus, while a third is studying innovation in teaching.

To review an overview of the 2008/09 Budget, click here.

To download the McMaster University 2008/09 Consolidated Budget, click here

* The University currently funds these future non-pension benefits on a cash basis. The cost for the past year was approximately $5-million. Unlike pension plans, funds are not set aside to pay for these post retirement benefits. The Finance Committee of the Board has requested management develop a plan to recommend approaches to manage this cost.