Alberta's online university is facing a financial crisis, but the president is reassuring students that the institution will not be closing down.

According to an internal report, Athabasca University (AU) will be insolvent in two years. The report was prepared by a task force struck by Peter MacKinnon, the interim president of the university.

Peter MacKinnon

Peter MacKinnon, the interim president, says Athabasca University is not going to close down. (Athabasca University)

Enrolment demographics are behind the university's troubles, MacKinnon said.

Provincial funding has dropped from covering 80 per cent of operating expenses at Athabasca to closer to 30 per cent. The rest comes from student tuition. And with more and more universities offering online learning, there is even more competition for students.

"We've not been able to make the investment in informational technology that we need to make in order to remain competitive," he said. "It's not seen as capital in the way buildings are seen as capital at traditional campus-based institutions. We simply have not had the resources."

The report also lists the remote location of the university's headquarters, union contracts, and the provincial rules on tuition fee increases.

Cloud hangs over convocation

For many faculty and staff, the fiscal situation is a cloud is hanging over convocation.

MacKinnon is reassuring students that the situation will be addressed.

"Athabasca University is not going to close down, but Athabasca University will have to do some business differently in the future."

The task force report is the start of an important discussion, he said. It includes several options to solve the problems, such as only offering courses to Albertans and joining forces with a bricks-and-mortar Alberta university.

"I'm perfectly hopeful. This university does have a unique place in Campus Alberta," he said. "We are an open university. We reach a lot of people for whom it would be enormously difficult to go to university at a traditional campus, if not impossible."

Union calls Athabasca 'financial mess'

Dougal McDonald, co-chair of the CUPE local, says the university plays an important role in educating students in remote areas and is a major economic driver in northern Alberta.

"We strongly disagree with much of what the report claims," he said in a press release.

"President MacKinnon points the finger at government, employees and even the community for AU's financial mess, but the government needs to examine the financial management and decisions made in recent years."