Update on budget planning for 2025-26

Concordia Budget 2025-26

We are writing to share important information regarding the planning of the university’s budget for Fiscal Year (FY) 2025-26. Given Concordia’s ongoing financial challenges, we believe it is critical to communicate transparently and to do so earlier in the budget cycle than we have in the past.

Concordia’s financial challenges remain significant. However, we have developed a framework with clear, achievable targets that will ensure the university meets its financial obligations while also maintaining the teaching, research and innovation strengths that make Concordia one of the world’s best young universities.

Strong progress, stark projections

As we approach the end of the fall semester, the financial picture for next year is gradually coming into focus.

In accordance with the university’s official financial recovery plan (plan de redressement), we achieved our approved deficit of $29.1 million in FY2023-24, and we are on track to reach our approved deficit of $34.5 million for FY2024-25. As a reminder, the recovery plan, which was approved by both the Board of Governors and the Ministere de l’Enseignement superieur, aims to return Concordia to a balanced budget by FY2028-29.

According to the recovery plan, Concordia must close FY2025-26 with a deficit of no more than $31.6 million.

Here is the budget outlook as it now stands: the $34.5 million deficit from FY2024-25 will carry forward. We also anticipate an additional shortfall of $44.9 million due to a decline in enrolment, government changes to the funding formula and rising expenses from salary increases and the indexation of service contracts. In total, we are forecasting a starting deficit of $79.4 million for FY2025-26.

It is critical for Concordia to reach its deficit goals each year. Failing to adhere to the recovery plan would result in a downgrading of the university’s credit rating, compounding our financial challenges by increasing the cost of borrowing as well as leaving it open to further government intervention.

Results of community efforts so far

The significant reductions to operating budgets over the past two years have been difficult for us all. Every sector has had to review its operations, streamline processes and leave positions unfilled.

While each unit has felt the effects of the cuts, the overall efforts may not be visible to the whole community. As outlined below, the university has reached its mandated deficit through a range of initiatives, including:

Total payroll management: We have limited growth of the total payroll through a freeze on staff hiring, by fully pausing faculty hiring for the past two years and through strategic attrition. Units have closed approximately 80 positions since May 2024. Currently, more than 180 roles remain unfilled.

Cost reduction: Units have cut budgets by decreasing or eliminating non-essential expenditures, such as on travel and translation by external contractors; proactively managing banked vacation and other credits; and exploring pilot projects to share services. In some cases, we were able to reduce interest costs on borrowing. We also lowered the costs associated with the management of the university’s benefits without changing the offerings.

Slowing or pausing initiatives: We scaled back central funding to standalone projects and units, such as the District 3 Innovation Hub and KnowledgeOne. In the case of KnowledgeOne, we ended its external commercial activities to focus on eConcordia’s online course delivery. We also introduced a moratorium on research-support programs like the Concordia University Research Chairs and the Horizon Postdoctoral Fellowships, which can benefit from external funding for researchers.

Operational efficiencies: We have reviewed the software portfolio and decommissioned unnecessary programs. We also updated IT ticketing systems and automated other processes. At the same time, we have modified schedules and services related to transportation, cleaning and security. Finally, in support of both our financial and sustainability goals, we have shut down some HVAC systems during off-peak hours, adjusted building temperatures and secured grants for energy savings.

Increased revenue: Self-funded units and ancillary services, including Hospitality, Residences, Parking, and Recreation and Athletics, generated additional funds through their operations. A favourable market and strong portfolio management resulted in increased returns on university investments.

Key avenues for FY2025-26

Maintaining the hiring freeze

As noted above, we are forecasting a starting deficit of $79.4 million in FY2025-26. To achieve the $31.6-million deficit mandated by our recovery plan for next year, Concordia needs to hit challenging, but attainable targets for reducing costs and increasing revenues.

The most efficient means of cost reduction is limiting the growth of the university’s total payroll, by far its largest expense. The hiring freeze and, wherever possible, the closing of vacant positions through attrition will remain in place for FY2025-26. However, given the significant number of faculty retirements across the university, we will undertake some strategic recruitment of faculty next year to ensure the sustainability of certain areas of teaching and research. At the same time, Concordia will use its Strategic Directions as a framework to review our priorities and develop a plan to ensure the university has the staff and resources needed to realize our institutional vision.

Thanks to the community’s commitment, we realized $15 million in total payroll savings for FY2023-24. We aim to generate $12 million in additional savings, or 80% of that benchmark, by continuing the hiring freeze during the next fiscal year.

Stabilizing enrolment

The greater challenge, however, will be to stabilize Concordia’s overall enrolment.

Due to the high uncertainty created by the Quebec government’s tuition changes and the Canadian government’s new visa restrictions, Concordia lost roughly 1,400 students, or 3.4% of the student population, this academic year — the largest decline in its history. With additional restrictions on international students recently imposed by the Quebec government, we are seeing a significant drop in application numbers for January 2025 as well as for summer and fall 2025 entry. As a result, the university must compensate for the drop in this year’s entering class by successfully recruiting an additional 1,000 students for the next academic year.

We want to be completely clear on this final point. It is critical for Concordia to stabilize its student population. Reaching this goal will require maximum effort across the entire university to recruit and retain students at both the undergraduate and graduate levels.

Still more to do

By generating $12 million through total payroll reductions and by achieving our goal of recruiting 1,000 additional students, Concordia will lower its forecasted deficit to $53.4 million, down significantly from the starting deficit of $79.4 million and on our way to the $31.6-million deficit mandated in the recovery plan for FY2025-26.

Over the course of the fiscal year, we will still need to realize $21.8 million in additional savings and increased revenue, which is the equivalent of 3-to-4% of the university’s overall operating budget of $665 million.

This is no small task. But, if we are successful, the impact of our current financial situation on individual units will be significantly lower than in the previous two fiscal years.

Remaining flexible, focused and determined

We are communicating about our planning for FY2025-26 earlier than normal because we want to give units across the university time to find and implement the budget solutions that work best for them.

However, sharing this information before the provincial government releases its budget in March means we are building our projections with partial information. For example, we do not yet know the exact amounts of government grants or the percentage increases in tuition for next year. As a result, we may need to adjust our forecasts and targets for FY2025-26 in the spring. We appreciate the community’s ongoing flexibility on this front.

Finally, we extend our thanks to everyone for your tireless efforts toward helping Concordia overcome one of the most challenging financial situations in our 50-year history.

Through what has been an extremely difficult process, we have made significant progress toward ensuring the long-term financial stability of the university. Together, we will build on our successes from FY2023-24, see our plans for the rest of FY2024-25 through to the end, and prepare for the challenges of FY2025-26.

We invite you to learn more, share your feedback and continue the discussion with us at our regular Budget Conversations in January.

Anne Whitelaw
Provost and Vice-President, Academic

Denis Cossette
Chief Financial Officer