A message from Gitta Kulczycki, Vice-President Finance and Administration
The current labour disruption involving the Dalhousie Faculty Association (DFA) is raising a number of questions about the university's finances.
It is the sign of a diverse and healthy university community to have significant debate over budget priorities. This is why we have an open and consultative budget process, and why the president, the provost, myself, and other senior leaders have spent considerable time and energy this past year discussing our financial challenges and explaining how significant changes to our cost structure are necessary to return to a balanced budget ($75M in cost reductions over the next three years).
I would like to address a few significant misconceptions about Dalhousie's finances that have arisen over the last few weeks. The finances of a large, complex organization like Dalhousie are not simple or straightforward. I want to make sure we're working to find common ground founded in shared understanding.
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MISCONCEPTION: Dalhousie is choosing to build an arena instead of paying more for faculty salaries.
FACT: No ongoing operating funds are being used to build the new event centre, and none will be used to operate the event centre.
The Oulton-Stanish Centre is under construction on Studley Campus. When completed later this year, it will include a hockey rink (Dalhousie has been renting ice time at the Halifax Forum for more than a decade) and a new, larger-capacity home for the Dalhousie Physiotherapy Clinic.
Construction of the event centre has no impact on our capacity to pay faculty and staff compensation. No ongoing operating funds have been allocated for its construction, and no operating dollars have been leveraged with donor dollars to pay for construction.
The only operating revenues at all that have been spent relate to a one-time allocation in 2021-22, when Dalhousie had an operating surplus. That year, the operating surplus of $6.4M was committed to support multiple important capital projects, including the Collaborative Health Education Building (CHEB), Sexton Campus renewal, the Dentistry clinic, the student success centre in Truro, and the event centre. ($1.75M was spent on the event centre.)
Once the centre is open, facility rentals and fees will cover operating costs and debt service payments. No facility operating costs will be funded by Dal's operating budget. In short, the event centre has no impact on our capacity to pay faculty and staff.
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MISCONCEPTION: Dalhousie has a $55M surplus that it could be spending on faculty salaries.
FACT: Dalhousie has an operating deficit and the surplus shown in our financial statements does not reflect funds that could be used to pay faculty and staff.
Universities have operating funds, which pay for the day-to-day costs of running the university (including employee compensation), and come mostly from provincial funding and student tuition and fees. Dalhousie also has other funds dedicated to distinct purposes. These include grants for researchers, capital funds, ancillaries (self-funding operations like residence, for example), and the university's endowments.
Some of these other funds do help support university operations. For example, $46.3M comes from the endowment fund, based on investment returns from long-term gifts made by donors. But most of Dal's other funds are not available to support operating costs, whether by law, by policy, or simply because they are already allocated. Dalhousie can't, for example, take donations or research funding meant for a specific project and then choose to spend it on something else. These restricted funds account for a portion of the surplus that appears in our audited financial statements. The majority of that surplus relates to the accounting for facilities renewal projects (more about that in the next section).
Because of these different rules and restrictions, Dalhousie can show a surplus in our audited financial statements and still have an operating deficit. Dalhousie's audited financial statements for the year ending March 31, 2025 reported a total surplus of $55M. That same year (2024-25), the university reported an operating budget deficit of $6.8M. This resulted from an 18.0% decline in international enrolment, offset somewhat by higher domestic enrolment. Expenses were held under budget by $6.3M allowing the operating deficit to be contained to $6.8M.
When it comes to determining faculty and staff compensation, what matters is the state of the operating budget because these are funds that are actually available for the university to pay employees.
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MISCONCEPTION: Dalhousie is putting money into capital projects instead of faculty.
FACT: Dalhousie does pay for important facilities renewal projects from operating funds projects that directly benefit teaching and learning.
Dalhousie allocates funds each year towards facilities renewal. In recent years we have allocated approximately $43 million annually.
Dalhousie has been around for more than 200 years. A majority of our buildings are decades old. Eventually, building components reach their end of life, or various building systems will fail. Additionally, the use of some buildings has shifted over time to include more research activities. Research involving labs and sophisticated equipment requires different kinds of building infrastructure than a building used purely for classrooms and offices. This means we need to adapt and/or replace building systems to be able to accommodate the research needs of our faculty and students. Our backlog of deferred maintenance is hundreds of millions of dollars.
To better understand how facilities renewal projects are reflected in our audited financial statements, I will highlight two current facilities renewal projects underway, both funded by the $43M annual facilities renewal budget:
- Exterior envelope renewal of the Marion McCain Building (Faculty of Arts and Social Sciences). The McCain building hosts classrooms, auditoriums, language labs, and offices for the Dean's office and departments in Arts and Social Sciences. This was a multi-year project with a budget of approximately $15M that is nearing completion. It was a priority project because the sandstone masonry cladding had reached its end of life, and most of the building's windows were no longer operational. The cladding, insulation, and substructure needed to be completely removed and replaced. The goal of the project is to upgrade the building's envelope (i.e. the features that separate the interior and exterior) to improve the working and teaching environment for students, faculty and staff and put in place a robust envelope that will last another 30-50 years.
- Fire and life safety upgrades in the AL MacDonald (D) Building (Sexton Campus). The MacDonald (D) building is home to the Department of Civil and Resource Engineering and the Centre for Water Resources Studies. The $12M project upgrades a facility built in 1953 as a teaching building for engineering and surveying, but which now hosts a range of faculty and student research for which it wasn't originally designed. We are installing a new sprinkler system throughout the building, fire and smoke dampers in fire-rated partitions, emergency shower and eyewash facilities, fume hood sash controls and alarms and other important upgrades.
The accounting for projects like these can be challenging to understand. In the case of the McCain envelope, for example we've "bettered" an asset by making it last 30-50 years longer. We fund this via the Facilities Renewal allocation in our operating budget. For purposes of our audited financial statements, it is reflected as an asset, and not as an expense, because we've extended the life of an asset (the building). This is as required by generally accepted accounting principles. Hypothetically, if the McCain envelope were our only facilities renewal project undertaken in a single year, our operating budget were balanced that year, and all of the $15M contributed towards creating a long-term asset (versus repairs), our audited financial statements would show a $15M surplus. Do we actually have $15M to spend elsewhere? No. We have spent it on the building. But we have increased the value of our capital assets by $15M. And, over time, this accounting surplus is balanced out, because we report amortization of the building betterment over its useful life in our audited financial statements.
The same applies to the MacDonald (L) Building. Where that $12M is spent in repairs, it's reflected as an expense in our audited financial statements. But to the extent we've bettered the asset, making it last years longer into the future, that portion of the dollars is reflected as capital in the audited financial statements. If it were all capital, it would appear as a $12M surplus to our audited financial statements. As before, there is not actually $12M more to spend. We have spent it. But we have added $12M in value that is reflected in our assets in the audited financial statements and amortized over time as an expense in the audited financial statements. Amortization expense has no bearing on our operating budget.
We have had many other similar facilities renewal projects underway, particularly in the last two budget years. This is because facilities renewal projects necessarily slowed during the pandemic years and we've been catching up on our deferred maintenance backlog. We protect the $43M allocation each year so that if it is not entirely spent in one year, we will carry it forward to the next. It is often the case that such renewal projects span more than one year. With such a significant deferred maintenance backlog these expenditures are essential to maintaining our teaching and research environments.
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If you want to learn more about Dalhousie's budgets, I encourage you to spend some time reviewing our budget documents and plans, all of which can be found here.
Gitta Kulczycki
Vice-President Finance and Administration
