Budget Reductions

Financial Ratios

In order to balance the budget each year, the university implemented general budget reductions across all portfolios. A number of items such as energy, taxes, library holdings, graduate fellowships, entrance scholarships, etc. are protected from the general budget reduction. The general budget reductions were necessary to cover the budget shortfall due to the general government grant reductions.

In 2016-17, the Government of Newfoundland and Labrador announced a total reduction of $6.0 million in the annual grant to be realized through attrition. Reductions of $3.0 million were implemented in each of 2016-17 and 2018-19. Portfolios were allocated an attrition target based on their share of the total budget of the centrally funded permanent positions.

Memorial’s Voluntary Retirement Program (VRP) provided approved academic and non-academic staff members with a lump sum payment of one month of salary per year of service up to a maximum of 12 months of payment if they retired on or before Dec. 31, 2018. VRP enabled Memorial to better manage longer-term financial challenges while enabling an investment in the academy. Consideration was given to non-academic staff whose positions could be eliminated or filled in an alternate way that would result in substantive savings and contribute to the overall position reduction for the university. The VRP was a one-time program that has now concluded.

These two financial ratios are based on the audited consolidated financial statements and may be used to measure the acquisition of, and use of, resources to achieve the university’s mission.

Net Income/Loss ratio measures the percentage of the university’s revenues that actually contribute to its net assets. It indicates trends in the university’s net earnings.

What does it mean to Memorial? In 2016 and 2017, expenses exceeded revenues, but in the other years revenues exceeded expenses, thereby contributing to net assets. Total expenses does not include post employment benefits.

Viability Ratio measures the availability of expendable net assets* to cover long term debt** should the university need to settle its obligations as of the balance sheet date. It is an indicator of debt affordability and financial sustainability.

What does it mean to Memorial? As the university’s long term debt increases, without a significant increase in expendable net assets, this ratio will decrease.

* Expendable net assets does not include net assets restricted for endowments, re-measurement gains/losses and post employment benefits liability.

**Long-term debt includes bankers’ acceptance notes.