Over the week of February 19, President and Vice Chancellor Mary Preece and Wayne Steffler, Vice President, Finance and Administration and CFO, held a series of rotating town hall meetings across Sheridan’s three campuses. The purpose of these meetings was to share with the community a high-level perspective of what our present and future holds based on priorities, budget challenges and external pressures; and together think about how we might build a sustainable future for Sheridan.
To access the slide deck from the presentations, please click here.
A video recording of one of the sessions will be available in a future edition of the Insider.
Recap of the Presentations:
Mary began by updating the community on the subtle but important changes to Sheridan’s vision and mission statements, noting their revision as of May 2017.
Sheridan’s Mission: Sheridan delivers a premier, purposeful educational experience spanning a range of career-focused credentials that engage students in active learning, theory, applied research and creative activities to drive economic outcomes and foster social innovation.
Mary noted that the new mission statement reflects Sheridan’s intention to continue offering a broad range of credentials, and recognizes the integral role that applied research and creative activities play in our students’ education. These pieces are critical components of the criteria for potential Universities Canada membership.
Sheridan’s Vision: Sheridan Polytechnic, a university celebrated as a global leader in career-focused, applied education.
The vision statement has been reworded to clarify the kind of institution Sheridan aspires to be. The new Polytechnic terminology reflects the distinguishing applied education and broad range of credentials recognized in our mission statement, and focuses on valuing what makes us unique while continuously striving to improve.
Maslow’s Hierarchy of Needs:
Mary presented a visual to illustrate the point that some colleges in Northern Ontario and rural areas are currently focused on preserving their day-to-day survival due to external pressures beyond their control. Mary confirmed that Sheridan’s present situation is healthy, but that our capacity for creativity and innovation (our higher order needs) only works if our basic operational needs continue to be taken care of effectively.
Strategic Drivers and Priority Areas of Focus:
Mary provided an overview of Sheridan’s three strategic drivers and priority areas of focus as we navigate external pressures in the short and long term:
Our Academic Plan is fundamental to who we are as an academic institution; all our strategic decisions should support effective delivery of the plan.
Operational sustainability is about putting the proper infrastructure, systems and processes in place so we can make informed decisions about our priorities based on reliable data.
Our People make Sheridan truly special. Supporting them and providing them with the tools they need to be successful is critical.
Wayne Steffler, Vice President, Finance and Administration, and CFO then provided an overview of Sheridan’s current revenue, expenses and reserves and the implications going forward, including the impact of the Fall 2017 academic strike.
Revenues & Enrolment Trends
Our revenues were $332 million in 2017/18.
Enrolment growth in the past few years, largely from international student enrolment, has resulted in a surplus since about 2015/16.
This surplus has been primarily invested in capital needs and special projects such as building and infrastructure upgrades, which largely depend on surplus funds in order to move forward.
The portion of revenues represented by government grants is now very close to the portion represented by international tuition. Our government grant accounts for 32% of Sheridan’s revenues, while some smaller Northern and rural colleges may receive grants that account for 70% of their revenues. The imperative of the Provincial Government is to keep all 24 colleges operational. Therefore, it is possible that the larger colleges may receive less to support the smaller ones. In the past, the size of our government grant has been tied to domestic enrolment growth. This changed somewhat with the Province’s new corridor funding model in 2017.
Going forward, our government grant will remain at the same amount regardless of domestic enrolment growth and can only be increased through discussions with the Ministry at the time that our next Strategic Mandate Agreement is negotiated. It is possible the grant will decrease if we continue to grow our international student population, as projected. This is based on the Province’s policy which generates a claw back of $825 to the Ministry for each international student enrolled. A more holistic approach to internationalization at Sheridan is in the works, which includes revisions to international enrolment.
It is projected that our domestic enrolment will trend downward until 2023, consistent with demographic changes throughout the province.
This trend is becoming a concern for many Ontario colleges, and is a system-wide challenge.
Expenses
Our biggest costs are salaries and benefits (64%), followed by non-salary operational costs (32%), and then capital expenditures (4%), which vary from year to year.
Our expenses may be impacted in the near future by:
Inflation – rising cost of living, reflected in negotiated increases in collective agreements
Impacts from Bill 148 to benefit costs, part-time salaries, paid public holidays for part-time staff, etc.
Our strategic priorities – the areas we need to invest in to stay competitive and productive
Deferred maintenance needs, to keep our capital and equipment current and in good shape
Reserves
Sheridan’s reserves are good in relation to the rest of the college system.
We expect to have about $24.5 million remaining in our reserves at the end of the 2017/18 year.
Most of these funds have already been committed to maintaining our operations through equipment and building renewals, strategic initiatives, and contingencies.
The amount of our reserves available for contingencies is only $4M, which amounts to approximately 1% of our overall operating budget, which is a very small, and concerning amount.
2017 Strike Impact
In some cases, strikes result in savings from salaries.
However, in longer strikes such as the one we experienced in 2017, these savings turn into costs.
At Sheridan these costs included part-time faculty salary costs during the strike; settlement costs for full-time faculty; student withdrawals, and ancillary costs.
As such, the strike resulted in net losses of about $4M at Sheridan.
This may increase based on the total cost of the student relief fund, which will be known at the end of the 2018 winter term.
Long-term forecast – potential assumptions
For the 2017/18 fiscal year, we could break even or show a small deficit.
We are forecasting that our deficit will begin to outgrow our surplus in the coming years.
This projection is based on a frozen government grant and limits on raising tuition annually, but continuously rising costs.
While we are in a fairly healthy financial position in relation to the sector, this is still a concern and it is important that we recognize this challenge to our long-term sustainability.
Our current and forecasted position does not have to be our long-term fate. We have some lead time to put strategies in place to respond.
Our Six Priorities for Adjusting our Revenue to Expense Ratio and Preserving Operational Sustainability Going Forward:
A focus on Strategic Enrolment Management – taking a data-driven approach to better enrolment targets (both domestic and international) and enhance student satisfaction and retention
Exploring a new Activity Based Budgeting (ABB)/Responsibility Centered Management (RCM) Budget Model –empowering our faculties and departments to make better-informed decisions about their expenses and opportunities to grow revenues
Integrated planning – integrating high-level strategic plans with our institutional master plans and those of our faculties and departments to ensure we are all aligned
Space Optimization – ensuring we’re using space effectively and making informed decisions about creating new spaces
Enterprise risk management– performing assessments of our top risks and formulating plans to manage them
HR and Finance upgrades to ensure our reporting systems are efficient, accurate, and effective
Where do we go from here?
Mary explained that these projections and their implications are a call to action we need to heed – and an opportunity for our community to work together to map our course for a sustainable future. It is time to be bold and courageous. It is not about layoffs or closures of programs or spaces. However, business as usual will not enable Sheridan to thrive in the long run. We need to mobilize our collective knowledge, intelligence and sense of stewardship for Sheridan so we can do things better.
Charting this course together as a community is key! We want to avoid top-down decision making. We have entered the ‘divergent’ phase of creative problem solving – generating lots of ideas – and we are inviting our innovative, knowledgeable employees to recommend effective solutions and get involved. No idea is too small or too trivial.
To submit your ideas, comments and questions, please contact:
Jessica Hinchliffe, Office of the President – jessica.hinchliffe@sheridancollege.ca
Amanda Pike, Director, People & Organizational Development – amanda.pike2@sheridancollege.ca
Sara Rumsey, Director, Sheridan Integrated Planning – sara.rumsey@sheridancollege.ca
Christine Szustaczek, Associate Vice President, Communications, Public Affairs and Marketing – christine.szustaczek@sheridancollege.ca
If you prefer to send in your ideas anonymously, click here to access our collector form.
Next steps:
In April, the President’s Coffee Chats will resume, where employees will have the opportunity to bring forward their ideas and concerns to Mary in smaller groups.
In May, we will present the 2018/19 budget to the Board of Governors.
Throughout the remainder of the 2017-2018 year, the Finance team will continue finalizing their review of capital infrastructure and working on revenue generation and costs models to inform our long-term discussions on operational sustainability.
Details regarding formal sessions to evaluate and ‘converge’ the ideas submitted by our community will be forthcoming.
The following is a compilation of questions asked throughout the week’s session:
What is the cause for decline in domestic enrolment?
This trend was predicted and it is a province-wide issue. The decline is due to shifting domestic demographics. Domestic numbers are expected to increase again but not until 2023/24 onward.
Will international enrolment increase as a way to increase revenues?
Our Risk Management project is examining this possibility. For now, we will stay on the conservative side until we have a more defined strategy (i.e., if we continue to grow without a strategy, we are placing ourselves at risk. Capacity is an issue (more buildings would require more capital reserves). We also know that domestic enrolment will eventually increase again, and we need to plan for this. Additionally, we receive full grant funding for domestic students, so all of this has to be taken into consideration.
Are all of our classrooms being used at capacity?
We’re currently in the process of a Space Optimization study and the first part of that study is an audit of our current state in terms of classroom usage.
What information will be provided to us on which programs are generating revenue and which are costing us money?
This information will be a key part of our strategic discussions going forward. However, there are always programs that may not generate much revenue, but are part of Sheridan’s identity.
Would Activity Based Budgeting (ABB) drill down to costs associated with support areas?
Yes, it looks at direct and indirect costs and allocates them based on the drivers of the activities.
I’ve read that Humber is now a Polytechnic. What was their journey and is it the same as Sheridan’s journey?
Humber like Sheridan aspires to be a polytechnic but no Ontario institution has been officially granted polytechnic nomenclature.
Our hiring strategy has been to hire PhDs. Will this change now?
The hiring of PhDs is driven by the Postsecondary Education Quality Assessment Board (PEQAB) rules, and is entirely related to degrees. They tell us what the credentials need to be, so we will continue to meet those requirements.
Can feedback be shared anonymously?
We are being open and transparent with our presentation and we hope that our community will do the same. Trust underpins all of our conversations. When sharing feedback with our identified contacts, it helps us to know who generated the idea, in case we have follow up questions. However, Sheridan respects people’s desire for anonymity. Click here to access a form that collects people’s feedback anonymously.
How many students withdrew from the strike?
Sheridan had 2,000 students withdraw due to the strike, with approximately 50% of them re-enrolling for the winter term. A number of them also indicated that they plan to re-enroll for next September, however it is too early to know final enrolment for Fall 2018.
Could we make money by renting out space here at HMC to U of T?
These are certainly the types of suggestions we want you to think about. Space allocation is being looked at. We may need space at HMC for Sheridan – Davis is at full capacity.
How are we able to fund the third building coming to HMC?
The building is a partnership between Sheridan and the Student Union. There are student levy fees involved. We are also taking a loan. Other capital projects under consideration were halted to allow this project to move forward.
Is there a possibility that things will change based on what political party is in place following this year’s provincial election and has forecasting been done to reflect this?
We haven’t heard anything from the parties about where the colleges sit. If things stay the way they are now, it is possible that the GTA colleges may be asked to financially assist those smaller colleges in the north, for instance, who are at high risk for closure. No political party wants to see a college close. The government views all 24 colleges as one system.
Can students participate in the idea generation?
Yes, this is an example of a great idea to put forward. Please give some thought as to how we can best make this happen.