A message from the co-chairs of the Budget Review Working Group

Dear colleagues,

Earlier this week, Quebec Minister of Finance Éric Girard presented the Quebec budget for 2024-25. It is disappointing, although not unexpected, that there was no new funding for universities and no reinvestment in the higher education sector. In the coming weeks, we will learn through the Régles budgetaires how the Ministry of Higher Education plans to allocate its budget for 2024-25 and what those allocations will mean for Concordia.

In the meantime, we are writing to update you on Concordia’s budget as we approach the end of Fiscal Year 2023-24 and to share our forecast for FY2024-25.

Where we are now

Last November, we forecasted a deficit of $35 million for FY2023-24, significantly above the $19.4 million approved by Concordia’s Board of Governors in May 2023. We also communicated that the future structural deficit facing Concordia would become much worse if we did not rapidly adjust our spending.

In addition to implementing immediate measures like the hiring freeze, we appealed to the community to think objectively and creatively about how to help us achieve a 7.8 per cent reduction to the university’s overall budget.

All sectors of the university stepped up, reducing their spending through a range of one-time actions and structural adjustments to their activities. As we finish the third quarter of our fiscal year, we are confident we will achieve our deficit target of between $32 million and $35 million for FY2023-24, as stated by President Carr at Senate in February.

Thank you for all your efforts to help us address the university’s financial outlook, both now and in the future.

What we can expect for FY2024-25

Unfortunately, our financial challenges will continue to be very significant in the next fiscal year and for the three years that follow.

On one hand, our ability to raise additional revenue appears limited. During this recruitment cycle, we have seen declines in applications from:

• Prospective students affected by the Government of Quebec’s changes to tuition fees for Canadian students (-23 per cent) and international undergraduates (-12 per cent)
• Prospective students from India in course-based graduate programs, due to geopolitical tensions (-44 per cent)

Meanwhile, the demographic decline of Quebec students that started in 2021 continues to affect all universities.

As a result of these factors, at this point in the recruitment/registration cycle we are bracing for a reduction of approximately 1,000 to 1,200 students for 2024-25 (roughly 3.5 per cent of our total student population) on top of the decreases in previous years. Furthermore, the Quebec government’s decision to claw back tuition fees for undergraduate and non-research international students will further reduce our revenues, even as we prepare to assume significant increased costs related to the new francization measures that we will be required to implement.

In tandem, our expenses — most of which are salaries — continue to grow and are exacerbated by rising inflation that inevitably drives up our operating costs in areas like cleaning, facilities management, IT and payroll. We will also incur legal fees related to various court challenges, and our cost of short-term borrowing will increase following the recent announcement from Moody’s that our credit rating, while remaining strong, has been reduced because of the government’s tuition policy changes.

Taking all these factors into account, we are currently projecting a deficit for FY2024-25 that will be greater than $35 million, which is the maximum deficit allowed under the recovery plan approved by the Board of Governors and submitted to the Ministry of Higher Education.

How to limit our deficit to $35 million

Reaching the deficit target for FY2024-25 will require a concerted, coordinated effort across the university. Actions to generate new revenues and decrease our expenses include the following:

Increasing revenue

• We need everyone to continue working tirelessly to achieve the best-possible conversion rates for qualified incoming students in this recruitment season and to maximize the retention of current students.
• We must actively pursue potential academic opportunities, such as micro-programs and specialized training for industry partners.
• We will benchmark local market conditions to ensure that we are charging appropriately for ancillary services, such as parking, catering, hospitality and residences.

Reducing expenses

• Because salary costs represent 70 per cent of Concordia’s total spending, the hiring freeze on staff positions will remain in place for FY2024-25 as a critical first step to address the masse salariale.
• Except for commitments related to Canada Research Chairs and the Canada First Research Excellence Fund, no new tenure-track positions will be approved.
• We will undertake a full review of activities and programs across all sectors to focus on how we can optimize support for our core academic and research mission while also providing our students with the next-gen education that made them choose Concordia.

Finally, it is important to note that our continued management of the deficit will not affect the pension plan, which is a separate legal entity from Concordia.

Conclusion

Our financial challenges are extremely serious, and we will have to make hard decisions in FY2024-25 as well as over the next several years to return Concordia to a balanced budget.

We also need to recognize that some of the most important challenges we are facing — enrollment trends and government policies — are structural. The rapidly changing post-secondary environment that we and other universities in Canada and internationally are experiencing is creating a dramatically different set of operating conditions from what we knew in the past. Over the next six to 12 months, Concordia will need to design a future-focused business plan that reflects this changing reality. Once again, we will ask you to contribute your best ideas and creative thinking.

Concordia has deep roots and a history of overcoming adversity. Working together and drawing on the best of our community, we will stay strong and surmount these difficult times.

Thank you for your continued patience and support.