Zero-based budgeting is a method that requires all expenses be justified for each new budget period, starting from zero. At our University, it will mean all faculty/unit budgets go back into a pool and everyone’s budget effectively starts at zero. The starting point will be for fixed/unavoidable costs, including tenured faculty, essential staff, debt payments, insurance, license obligations (i.e. systems, library contracts, cyber security, etc.), utilities and other facility maintenance requirements, collectively bargained commitments, and other required fees and costs. Other categories of cost will be funded from the least-to-most flexible. Finally, we will provide for discretionary budget spending. Allocation decisions will be made centrally to expedite action and prioritize University-wide priorities/initiatives.
Like most Canadian universities, our University is dealing with severe financial challenges resulting from geopolitical tensions, international enrolment caps, and rising personnel and operational costs. We are facing a structural deficit and budget shortfall and must identify at least $30 million in cost savings for fiscal 2025/2026. Zero-based budgeting will be key to this process, allowing us to strategically and quickly reallocate and reimagine resources in alignment with our strategic priorities and long-term fiscal sustainability.
Budgets for units and faculties will effectively start at zero, with programs and expenditures reviewed line by line — from least flexible to most. Decisions will be made centrally, based on justifications for each item.
Budgeting will account for fixed and unavoidable costs that exist across faculties/units (e.g., tenured faculty, debt repayment, insurance, IT licenses, cybersecurity, library contracts, utilities). Variable costs tied to volume or services will be assessed based on current operational status/need. Discretionary spending, as the lowest priority, will be budgeted last.
Faculties/units that exceed their assigned budgets will have the overspent amount deducted from their next year’s allocation and will be subject to increased oversight and controls moving forward.
Discretionary spending may include office, teaching and lab supplies, computers, cell phones, travel, events, and professional fees. Faculties and units should scrutinize and reduce expenses in these areas, while also maximizing the use of PDF funds, trusts, and other available resources.
Revenue growth will continue to be incentivized. Faculties that exceed domestic enrolment or VISA targets may receive one-time funds, future base investments, or access to frozen carry forwards. Faculties that actively promote and achieve faculty retirements will be more likely to secure replacement hires.
We remain committed to prioritizing students. Student services will be adjusted where they are volume-based and aligned with current needs.
The ABB model is a budget allocation method that ensures resources are distributed where revenues are generated, encouraging growth. However, it is not agile enough to quickly address cost changes. We believe in and support the model's principles but are pausing it for two years while we take financial management steps to right-size the institution. During this pause, we will run shadow ABB calculations while using zero-based budgeting. The results of the calculations will be published in the annual Operating Budget document.
No, under the zero-based budgeting model, previously allocated funds cannot be repurposed to create a new position. No new positions may be created.