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We are pleased to be able to provide a financial update to the McMaster community. For those who are interested in additional information, the full budget can be found here.

The budget summary can be found here.

2009/10 Budget

The budget numbers for 2009/10 are being finalized. However, it is clear that the impact from higher than expected provincial funding and increased tuition and other revenue combined with reduced spending significantly strengthened the University's year-end position. The projected Operating Fund is balanced before one-time expenses. These one-time costs are covered by existing reserve funds within the budget envelopes.

This positive budget position would not have been possible without the difficult decisions made by budget managers to lower costs which in a number of areas mean significant reorganization and staffing reductions.

2010/11 Budget

At June's Board of Governors' meeting, the Board approved the 2010/11 Consolidated Budget. Operating expenses are expected to increase by $18 million due almost entirely to growth in the cost of compensation and benefits. Total sources of funding are expected to increase by about $22 million due primarily to growth in tuition revenue and provincial funding.

The 2010/11 budget is balanced, after the University covers a significant number of one-time costs by drawing down budget envelope reserve funds. Although these funds allow key projects to move forward, the funds are being depleted over time. Over reliance will put at risk the University's flexibility and ability to respond to opportunities as they arise.

The year 2010/11 will see an investment of $4.5 million to begin implementation of the University's Technology strategy. McMaster's technology systems are sorely out of date and this level of investment will be needed over the next several years.

While great progress has been made in the University's financial planning, risks continue to exist. Government funding is not assured. Pension and post-retirement benefit issues continue to add significant costs to the operating budget. Without relief from future pension solvency payments, additional expenses of between $27 and $35 million will need to be funded in the budget each year beginning in 2011/12. The provincial compensation restraint act will bring some budget benefits over time, but continuing to manage compensation across all employee groups will be critical to McMaster's ability to continue to deliver on its core teaching and research missions.

Our thanks to the Budget Committee and the many others who have worked so diligently over the past year to keep our budget decisions focused on our strategic goals.

The budget process is complicated and is not always easy to understand. We continue to encourage all members of the McMaster community to stay informed about our financial position. Together we have built a great university and it is only by working together that we will be able to continue to strengthen McMaster.

Yours sincerely,

Peter George
Ilene Busch-Vishniac

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