How Will The "Pre-Pandemic Budget" Play Out?

budget

The late-September meeting of the college’s Board of Governors (BofG) might prove to be one of the most interesting in St. Clair’s history.

It will represent the fiscal mid-year (the college’s, like the provincial government’s, fiscal year runs from April 1 to March 31) – and, therefore, will show how accurately predictive the pre-pandemic-approved, 2020-21 budget has been …

… Or, alternatively, how the effects of the pandemic have thrown the school’s financial projections completely out-of-whack, requiring perhaps drastic mid-year adjustments.

The 2020-21 budget was approved by the BofG during its March 24 meeting. That was just days after the college shut down all campuses due to the COVID-19 outbreak, and switched the final few weeks of the winter semester to on-line curriculum delivery.

And the bulk of the budget, of course, was prepared weeks before, based upon analysis and projections that bore no inkling of the impact of the pandemic.

The financial plan, therefore, largely disregarded these new “facts of life”:

• Enrolment may be negatively affected by the pandemic. Both domestic (Canadian) and international students might have lost the employment they needed to pay for school. Further complicating the situation of international students is that air travel and visa-issuance restrictions may prevent them getting to Canada for the next several months. Also, if students aren’t especially thrilled about the significant quantity of on-line course delivery that might dominate the fall semester (at least), they might postpone their enrolment until the pandemic eases sufficiently to again permit in-person attendance;

• Might provincial grant funding of the Ontario-wide college system be reduced even further, given the huge expenses the government has had to bear to battle the pandemic?;

• Even a partial re-opening of the college during the year – to allow students to at least attend some of their hands-on labs, clinics and workshops – may entail substantial and unexpected new expenses for the college to ensure appropriate social distancing and group-gathering limitations: architectural alterations, scheduling changes for longer operational hours (and, thus, more salaries), the provision of personal protective equipment, etc.;

• Some non-academic, profit-making enterprises will be lost. For instance, parking revenues will probably decline, as will locker rental fees, banquet and event bookings at the Centre for the Arts, etc..

As written and presented to the BofG by Chief Financial Officer Marc Jones, the 2020-21 budget was probably a realistic one, in pre-pandemic terms.

At the time of its presentation, Jones was still anticipating that the college would conclude the 2019-20 fiscal year with a budgetary surplus of just over $11 million, based on revenue last year of $209.5 million, and expenditures of $198.4 million.

In the coming year, despite a decline of almost $4 million in provincial grant funding, Jones still projects that revenue will jump by 28 percent ($58.3 million), to $267. 8 million.

The lion’s share of that forecasted increase – $44.8 million of it – is newfound tuition revenue. Total tuition, the budget suggests, will jump from $112.9 million in 2019-20 to $157.7 million in 2020-21.

The financial numbers indicate that the college is anticipating a slight increase in domestic enrolment, continued strong growth in international students studying at the Windsor and Chatham campuses (tuition revenues for those jump from $68.75 million to $79 million), and colossal growth in tuition revenue from public/private college partnerships (from $17.9 million to $51.6 million).

About the latter category:

Public/private college partnerships include St. Clair’s half-dozen-years-long “sister school relationship” with the Toronto area’s Ace Acumen Academy. That is a private college, providing English language training to immigrants. Upon their graduation from that instruction, Ace Acumen students can then enrol in a half-dozen postsecondary programs at campuses in North York and Mississauga which are authorized and overseen by St. Clair – and which ultimately grant the college’s credentials. St. Clair anticipates $18.7 million in revenue from Ace Acumen in 2020-21, up from $7 million last year (it has added another campus).

Also included in the public/private college partnerships category are schools around the globe with which St. Clair has “sister school” relationships: using St. Clair-licensed curriculum, and granting St. Clair-endorsed credentials.

In a nutshell, as has been the case for the past several years, tuition from international students is expected to be – by far – the single largest revenue source for the college. The 2020-21 budget projects a total of $130.6 million from that source (plus Ace Acumen’s $18.7 million in other revenues). All of that accounts for approximately half of the college’s total anticipated revenue.  

Also during its March meeting, the BofG received a report from the administration, showing a break-down of enrolment projections for the next five years – by domestic and international, by campuses, by programs, and including the public/private partnerships. Here is the graphic from that report:

enrolment mix

Back to the budget …

On the expenditure side, the financial plan for the coming year anticipates $242.4 million in total spending, up from $198.4 in 2019-20.

Salaries and benefits for full- and part-time administration, faculty and support staff are estimated at $97.5 million … but “contracted educational services” (non-unionized, temporary instructors, and those involved with public/private partnerships) add another $56.5 million to that general category.

The difference between the budgeted revenues of $267,759,000 and expenditures of $242,292,000 equal a projected 2020-21, fiscal year-end surplus of $25,366,000.

Indeed, Jones’ preliminary forecast for the subsequent two fiscal years (2021-22 and 2022-23) suggest similar annual surpluses in the $25 million-plus range.

Again, however, it is important to emphasize that all of the 2020-21 numbers were predicated on a “normal”, non-pandemic-influenced year …

… And, so, again, the mid-year review in September should be fascinating. By that time, too, the Registrar’s Office will have fairly firm enrolment numbers in-hand, showing how many students actually showed up – or logged on – to start the fall semester, which may have to be largely on-line in nature.

If the current spring/summer semester (offering about 15 programs) which commenced in May is any indication, enrolment for the remainder of the year may – surprisingly – not be inordinately disrupted. During the BofG’s May meeting, President Patti France reported that most international students (Windsor/Chatham, Ace Acumen, and other “sister schools” around the globe) carried out their educational intentions, and the usual spring/summer enrolment stayed stable at approximately 5,900. Many are still in their homelands, studying on-line, awaiting the time when they can make their way to Canada.

Stay tuned for details about the pandemic’s effect on fall enrolment – and the budgetary projections – when the BofG convenes in September.