Good morning from Maputo, where word has reached me regarding a truly awful piece of government policy emanating from Regina.

Page 14 of the provincial budget briefly suggests that something miraculous has occurred in provincial funding policy:

This budget provides 1.0 per cent operating increases for universities, affiliated colleges and regional colleges and 2.0 per cent operating increases for technical institutes and federated colleges.  Overall, the 2015-16 Budget includes $661.2 million in post-secondary operating and targeted funding, a reduction of $8.17 million from last year’s budget.

Got that?  The budget for operating funding is going up, yet provincial funding is going down.  That’s like magic!  Unfortunately, the finance minister ruined things in the next sentence by explaining the illusion:

That decrease is mitigated by the University of Saskatchewan supporting the 2015-16 expense growth capacity by using $20.0 million from its reserve funds.

“Supporting the expense growth capacity” is an interesting euphemism.  Next time someone mugs you and takes your money, just remember you’re supporting the mugger’s expense growth capacity.

Now, let’s be clear about what happened here.  In the six years between 06/07 and 12/13, operating revenue and expenses at U Sask both grew by about 50%.

Yes, really, they were growing by 7% a year.  In 2012, the university realized this wasn’t likely to continue indefinitely and decided to rein-in the rate of expenditure growth so that it matched the institution’s projected rate of revenue growth (roughly 3.5%).  This is what TransformUS and all those cuts were about, but even with the cuts, U Sask’s budget in 2015 was still projected to be 66% larger in nominal terms than it was back in 2006.

(Go ahead, someone tell me about underfunding.  I dare you.)

Anyways, come 2013-14, U of S came up trumps with its budgeting.  A year or so ahead of schedule, the university hit all its net revenue targets and ended up with a surplus of $21 million – a figure not unadjacent to the $20 million the government just decided to boost from U Sask’s coffers.  Since USask temporarily has the cooties due to the whole Buckingham fiasco last year, it’s an easy mark for a government needing a few bucks to plug holes in its budget.

U Sask should, by rights, be screaming blue murder.  Absent new cuts, its own figures show it will be back in deficit in a year or so (see page 27 here).  Which is why USask’s post-budget statement, which suggested at worst mild disappointment, was so completely baffling.  That $20 million came from a scarring round of buyouts and layoffs.  For the university to shrug and say, “well we didn’t really need that money anyway” is puzzling in the extreme.

But the worst thing here is the precedent being set.  After this, no responsible Canadian university President should ever budget for a surplus.  Only by running deficits can institutions be sure of not getting mugged by their own governments.  Indeed, the new model of responsibility might be UQAM, whose debts briefly touched $380 million a few years ago (they have since come down to a “manageable” $150 million).

This is an awful piece of policy, which incentivizes institutions to make their finances as brittle as possible.  God forbid it become policy anywhere else.