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D. Financial Planning/Financial Condition (Policy D-05, D-10)
l) Operating Adjustments
D.2 Financial Projections (cont’d)
Cost savings and additional revenues for 2012/13 are included in the Revenue and
Expenditure amounts above to partially offset the excess of expenditures over revenues in
the initial budget for the year and allow for some new developments to be funded. There
are always new initiatives or developments in which the College needs to invest to remain
competitive and dynamic. Included in the proposed 2012/13 budget are a number of new
developments to support improved programming and service delivery across various
departments.
According to the Financial Projections for the next three years, Operating Adjustments will
be required in each of 2013/14 ($4.97 million) and 2014/15 ($11.02 million). Note that the
2014/15 adjustment is compounded from the previous year and represents an additional
$6.05 million beyond adjustments identified for 2013/14.
m) Budget Operating Surplus (Deficit)
An in-year $1 million deficit budget is proposed for 2012/13. Given the volatility of
government grants, the further into the future that projections are made, the more uncertain
they become. At this time, the projections assume an in-year operating deficit of $3 million
for each of 2013/14 and 2014/15 which results in an overall reduction to the Accumulated
Operating Fund Balance but still maintains it at a level in compliance with Board policy.
n) Projected Accumulated Operating Fund Balance
The Accumulated Operating Fund Balance is the difference between all operating revenues
and all operating expenses incurred by the College since its inception. Board Policy D-10
stipulates that the balance of the Accumulated Operating Fund must be greater than zero
but less than 10 percent of operating revenues and that a normal balance for the
Accumulated Operating Fund is considered to be 2 percent of operating revenues. This
balance has been maintained for several years now but will increase again in 2011/12. This
increase provides a hedge against anticipated funding decreases in coming years. The
Accumulated Operating Fund Balance at the end of 2014/15 is projected to be
approximately $4.64 million or 2.3 percent of revenues which is in compliance with Board
policy.
D.3 Risks
Every operating budget contains risks since there are obvious uncertainties when predicting the
future and as such, the College takes a conservative approach with respect to its financial
plans. The following describes the risks associated with the 2012/13 Operating Budget.
1) Operating Grants - In total, it is estimated that the General Purpose Operating Grant from
the Province will be approximately 38 percent of the College’s operating revenues. Due to
the volatility of funding allocations, there is some risk that operating grant projections will not
be achieved. Consequently, a conservative approach to government grant assumptions has
been taken.
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