In this Q&A, McGill University Provost Christopher Manfredi discusses the University’s current financial challenges and the steps being taken to address them. McGill is projecting a deficit of nearly $15 million for the 2025 fiscal year; deficits would be expected to grow significantly over the next few years in the absence of corrective action. To bring the budget into balance, McGill will need to make substantial adjustments.
While immediate cost-cutting measures are necessary, Manfredi emphasizes that McGill will continue to prioritize the recruitment and retention of top faculty and staff and protect student financial aid. The Horizon McGill initiative will be key to streamlining operations, improving administrative efficiency and ensuring McGill remains a leading institution.
What is the projected deficit in McGill’s operating budget for the current fiscal year and for the next three fiscal years?
The projected deficit for Fiscal Year 2025 [ending April 30] is just under $15 million. Without corrective action, annual deficits will grow to $44 million in 2026, $61 million in 2027 and nearly $75 million in 2028.
To balance the budget, McGill must make a $45 million correction for Fiscal Year 2026, followed by $30 million in adjustments for the following two years.
What are the potential consequences of consecutive operating deficits?
Consecutive deficits would trigger a requirement from the Quebec government that McGill create a plan de redressement, a concrete plan to restore balance. Such a plan would have to be approved by McGill’s Board of Governors and submitted to the Ministère de l’Enseignement supérieur for monitoring.
Failure to balance the budget could result in additional measures, including the loss of the subvention conditionnelle, a portion of McGill’s annual grant representing close to $40M. Not adhering to the recovery plan could also lead to further restrictions and an erosion of McGill’s autonomy.
What role do international students play in McGill’s revenue generation?
International students contribute significantly to McGill’s tuition revenue. However, their numbers are declining across Canada due to geopolitical factors and government restrictions.
Recent tuition policy changes, announced in October 2023, have compounded this. The Quebec government has regulated international student tuition and is clawing back about $5,000 per international student.
How much of our current situation is due to Quebec government measures?
Some of our challenges are self-inflicted, such as failing to meet international student enrolment targets and allowing expenses to outpace revenue growth.
However, government measures over the past year and a half have worsened the situation. These include changes to tuition for Canadian students outside Quebec, clawbacks on international student fees and adjustments to the funding formula.
Additionally, the Quebec government is limiting international student numbers and reducing the domestic tuition indexation rate for next year, further deepening the financial strain.
Is McGill exploring alternative revenue sources?
The $45-million budget correction can be achieved through various means, but finding significant new revenue sources takes time, so the immediate focus must be on reducing expenses.
In the long term, McGill has opportunities to generate revenue by offering new programs or delivering existing ones in different formats, such as online, and expanding global initiatives. However, these revenue streams will take time to have a meaningful impact.
What percentage of the budget is allocated to student financial aid and scholarships?
Student financial aid and scholarships account for about five per cent of the operating budget, or nearly $60 million annually, with an additional two per cent for student salaries, totalling almost $80 million in operating expenses.
How will the deficit affect tuition rates, student fees and other costs for students?
Domestic tuition is regulated by the Quebec government and indexed annually. For international students (excluding exempt students), where fees are partially deregulated, McGill has raised tuition in some programs.
Under McGill’s cohort tuition model, an international student’s tuition remains fixed throughout their program. Recent changes to tuition for Canadian students from outside Quebec allow for increases beyond the current $12,000. Some programs, like law and dentistry, have room for increases, as McGill’s tuition is below that of other top Canadian universities.
A portion of any tuition increases will be allocated to additional student aid.
Can we reduce student support to help pay down the deficit?
We are reluctant to cut student aid, as an important part of McGill’s DNA is providing good financial support for students. It’s crucial that McGill remain an elite university without becoming elitist.
How will this deficit affect faculty recruitment and retention?
McGill aims to continue recruiting, retaining and rewarding top talent, both among faculty and staff. While we may recruit at a lower rate and not replace positions on a one-to-one basis, we will ensure McGill remains an attractive place to work.
We’ve been through tough financial times in the past. Why does McGill have to cut jobs?
The bottom line is that 80 per cent of our expenses are tied to salaries, so any significant cost reduction will require cuts to the salary mass, meaning fewer staff. While natural attrition – such as retirements and departures – will help, it won’t be enough.
How will McGill manage staff reductions?
Each faculty and unit have been given a financial target and must decide how to meet it, prioritizing their most important needs. If proactive decisions are necessary, they will be applied equitably, in compliance with policies, regulations and agreements. Our objective is to ensure fair and dignified treatment for everyone who is affected.
Will layoffs be accompanied by restructuring or changes to university services, programs or administration?
Restructuring will be necessary. With fewer staff, we cannot maintain the same operations.
The Horizon McGill project, starting with fiscal year 2026’s budget compression, focuses on recalibrating administrative support services to match our staffing levels.
The project is led by the VP (Administration and Finance) and the Provost, with oversight from an executive and academic steering committee. Working groups will review various administrative and support functions, including procurement, financial services and HR.
A key component to Horizon McGill is the UniForum program, which will assess service satisfaction and costs, and benchmark them against similar institutions.
We will also review academic programs – assessing their relevance, course offerings and program architecture – and consider discontinuing low-enrolment programs.
Streamlining operations is essential to create a stronger McGill with the financial flexibility to invest in our core mission.
What steps are being taken to maintain McGill’s reputation and relationships with external partners, including donors, research collaborators and other academic institutions?
I don’t think anything we’re doing now is going to put those relationships at risk.
Many universities across Canada are facing similar challenges and will also need to adjust. McGill has strong ties with donors and research partners, and when we emerge from this process, we will be an even stronger and more valuable partner.
Looking ahead, how do you see McGill in the next three to four years?
I see McGill coming out of this process as a stronger university with a greater capacity to deliver on its academic mission of excellence in teaching and research. I think McGill’s reputation will increase and that we will be an even more important university globally.