Developing Budget 2023-24

After reviewing this information, we hope you will gain a deeper understanding of where money comes from (revenues), where it is spent (expenses), and why revenues and expenses may change from year to year.

Like many post-secondary institutions, Northwestern Polytechnic develops a three-year rolling budget that is revised annually. In this type of continuous budget, Year One provides a detailed prediction of revenue and expenses, while Years Two and Three are high-level estimates and do not include detailed projections.

As we consider our goals and the future, NWP’s main focus is to support the delivery of NWP’s Strategic Plan, the Master Academic Plan and seamless operations across our campuses.

Funding Facts

NWP’s Consolidated Budget includes the full amount of restricted and unrestricted money we receive. Put simply, restricted funds include things like research or capital dollars. These items are reserved for a specific purpose and aren’t as flexible as other inputs. The unrestricted funds, or Operating Budget, is where we tend to spend the most time. This is because many important components need to be carefully considered.

In 2023-2024, in addition to the allocations in the Operating Budget, the province provided $11.3 million in funding for the design and construction of a Power Engineering & Instrumentation space on the Grande Prairie Campus. In 2023-2024 NWP will receive $2 million and in 2024-2025 NWP will receive an additional $9.3 million, totalling $11.3 million. The design, build and commissioning of the Power Engineering & Instrumentation facility will likely span three years.

As part of the budget process, the Board of Governors passed a motion to use almost 15% of Reserves, 3.581 million, for capital upgrades and CEE development on the Fairview and Grande Prairie campuses. This motion will require approval of the Minister of Advanced Education. The money will be spent over a three-year period only after a plan is reviewed by Executive Council, Core Leadership Team, and the Board of Governors.

Budget Build

Provincial Investment Management Agreements (IMA)

The Base Operating Grant for Northwestern Polytechnic is $37,117,089. When the province implemented IMAs, a portion of the Base Operating Grant became tied to “performance.” These funds are adjusted in subsequent years if the IMA is not met. In 2021-22 there was a single metric, Work Integrated Learning (WIL). 80% of our programs needed to provide the opportunity for students to pursue WIL. In December 2022, Advanced Education indicated 100% of our programs have a WIL opportunity. If we did not achieve our 2021-22 WIL, our 2023-24 Base Operating Grant could be impacted by as much as 15%. Each year the IMAs are negotiated, and the potential impact on the Base Operating Grant is also increased. We believe we have set realistic IMA targets for the next 3 years.

• 2022-23 Base Operating Grant could be impacted by up to 15%.
• 2023-24 Base Operating Grant could be impacted by up to 25%.
• 2024-25 Base Operating Grant could be impacted by up to 40%.

New IMA metrics will be introduced in the 2023-2024 year. NWP will need to negotiate the metrics with Advanced Education and in May 2023, the new metrics will ultimately be approved by the Board.

How do we Estimate Budget Changes Each Year?

Each year, the revenues and expenses that make up our budget change. A revenue or expense might change for many different reasons, which we call considerations or pressures.

We begin by considering big-picture factors, such as:

• Provincial and federal finances and funding.
• Trends in the post-secondary sector.
• The polytechnic’s long-term financial health.
• Legislative and other changes (such as carbon tax and collective agreement steps and increases).

Considerations & Pressures 2023-24

Revenue Considerations

• Provincial government revenue is not expected to change for three years.
• Overall tuition and fees were increased by 5.5%. Tuition increases will be limited to 2% in Year Two and Year Three.
• Investments are high quality, and by Year Three, we should have a net spend rate of up to 4%, or $1,000,000 a year.
• Student enrolment is budgeted to increase by 2% in Year Two and a further 2% in Year Three.
• Targeted Enrolment Expansion Grant and micro-credential programs remain cost-neutral.
• Program investments will require either additional government funding or program changes.
• Investment Management Agreement (IMA) targets will be met.
• Property lease and land lease will provide income, but no in a significant way and will reflect actual operating costs.

Expense Pressures

• Alberta Blue Cross benefits will increase by $250,000.
• Utilities will cost an additional $375,000 in 2023-24, and carbon tax will increase every year by $50,000 a year. Annually we spend ~$2 million on utilities.
• Budget 23-24 reflects upcoming step and wage increases for staff; in 24-25, step and wage increases will cost an additional $927,000.
• Step and wage increases are estimated to cost 1.7 million; in 24-25, step and wage increases will cost an additional $927,000.
• A new custodial contract will lower costs by $115,000 annually. Annually we spend ~$1 million per year on custodial services.
• Residence's annual loss is estimated to be $235,000, 50% less than 2022-23. Occupancy is returning to normal.
• Food Services' annual loss is estimated to be $100,000, 50% less than 2022-23. Work is ongoing to eliminate the loss in Food Services.

Strategic Investments

• Two new degree programs, Business and Computer Science, offered in 2023-24. The degree programs require NWP to enhance the Learning Commons materials.
• Ongoing expansion of Nursing, Practical Nurse, and Health Care Aid programs.
• Enhanced support for students: Mental Health & Accessibility.
• New micro-credentials offerings.
• Funding for program development for sustainable enrolment growth.
• Web design and renewal.
• CEE Leadership funding

Increasing domestic and international student enrolment is still the greatest opportunity to grow the institution and positively impact the budget. We continue to examine other ways to increase revenue, including land leases and capitalizing on the change to the investment policy.

Ongoing Ways to Manage Costs

We will continue to reduce energy costs by using Capital Maintenance and Renewal (CMR) funding to modernize newer educational spaces. Over three years, this will include replacing boilers, installing additional LED lighting, upgrading electrical switching, replacing windows, and installing heat recovery in our facilities, especially our trades facilities. We also look forward to the recommendations that will come forward in the Campus Master Plan as we look to use our existing space more efficiently and modernize existing facilities.

Operating Revenue

Over time, up to 30% of our revenue should come from tuition if we achieve our aspirational goals outlined in the Strategic Plan.

Operating Expenses

How do we plan our budget for the next three years?

We can’t know for certain how our budget will change ahead of time. But by looking at pressures on our revenues and expenses, we can make educated predictions about what will likely happen. We call these assumptions.

We then put all our assumptions together to create a set of planning parameters - a big-picture look at how much money we will likely have in the years ahead. Our parameters also allow us to set budget targets for the future increases or reductions in spending, to get us where we want to be.

The Final Step: Approval

After all these steps are completed, the President, Vice Presidents, Deans and Directors prepare a budget for their respective departments. The polytechnic prepares a consolidated budget for our annual report to the Government, subject to Board approval. The final budget is approved by the Board of Governors in March 2023 and forwarded to the province.

Budget 2023-2024 approved by the Board