UBC Okanagan sees $16M deficit due to decrease in international students, inflation

UBCO's $16-million deficit

UBC Okanagan is projecting a $16-million deficit this fiscal year, due in part to decreased international student tuition and inflation.

During the monthly UBC Okanagan senate meeting held Thursday, UBC Okanagan's Associate Vice-President of Finance & Operations Rob Einarson presented the university's current operating budget, outlining the financial challenges the school has been facing.

For the second year in a row, tuition revenue is lower than planned due to reductions in international student enrolment.

International students are sought after by universities due to the much higher tuition fees they pay compared to domestic students. While tuition varies by programs and course load, a year of full-course load in a science undergraduate program costs just under $6,000 for domestic students, while an international student pays more than $48,000.

During the 2023/24 fiscal year – which runs from April 1, 2023 to March 31, 2024 – 2,582 international students were enrolled on the Okanagan campus, a 3% decrease from the previous year. Meanwhile, new-to-campus international undergraduate enrolment dropped by 8%.

Less than projected

Last March, the school had projected $88 million in revenue from international student tuition and fees for this fiscal year, but based on its most recent projections, actual tuition will be about $6 million less than that.

“For the second year in a row we have seen targets that have been difficult for us to achieve and we have had to make some in-year adjustments to be able to make sure that we can stay as structurally sound as we can,” Einarson said during Thursday's meeting. “There will be reductions in certain areas.”

These “reductions” will likely include the firing of some administrative staff, although Einarson said that will be a last resort.

“Our approach across all the [Associate Vice-Presidents], including myself, was for the preservation of people wherever possible,” he said.

“This doesn't mean that there's going to be, necessarily, a whole raft of layoffs. We're trying to work through this doing through attrition, through retirement, through resignations, and trying to minimize the impact on any people that we possibly can.”

Einarson also added that “inflation continues to be a pressing issue for us.”

Despite the financial challenges the university faces, capital expenditures was increased by $11 million compared to last year due to the university's investment in the construction of the downtown Kelowna campus building.

Einarson noted the provincial government has stepped up to help the university, providing $18 million more in grant funding compared to the previous fiscal year, for a total of $106 million.

Additionally, the school's board of governors has approved a tuition increase for next year, increasing international tuition rates by 5% and domestic rates by 2%. This is expected to only "partially offset anticipated growth in expenses" though.

The university has also dipped heavily into its reserve funds this fiscal year, using $15.9 million of its $64.5 million reserve it started with back in April 2023.

Federal cap on students

In January, the federal government imposed a cap on international study visas in Canada, citing pressure on housing and social services from the growing number of foreign students in Canada. In B.C., about 50,000 approved international undergraduate study permits will be granted in the province, down from about 60,000 in 2023.

In a statement Friday, B.C.'s Minister of Post-Secondary Education Lisa Beare said the province is working to mitigate any negative impacts of the new cap on post-secondary institutions in the province, but that “the federal cap doesn't take British Columbia's unique environment into account.” Premier David Eby has said public institutions will be able to maintain their current level of foreign students allocation, while private institutions will not.

UBC Okanagan's budget document notes the impacts of the new federal cap are unknown.

“Any further reductions to [Fiscal Year 25] tuition would require significant cuts, and Okanagan leadership would need to consider which activities/services would be eliminated,” the document states.

Einarson noted that international enrolment in “very difficult to predict.”

UBC President Benoit-Antoine Bacon was in attendance during Thursday's meeting, and he closed by saying there's “no reason to panic” about decreasing international tuition, and that he's “cautiously optimistic.”

“It would not be responsible to say no concerns at all, given that the last two years have been very difficult,” he said. “To cap the numbers of visas will unclutter the processes, that's the silver lining in all this.”

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