Students walk on the campus at the University of Calgary. The school ended 2008-09 with a deficit of $14.3 million. ((CBC))

The University of Calgary will lay off up to 200 people by this fall, according to an internal memo obtained by CBC News.

The staff reduction is necessary to balance the budget, said university president Harvey Weingarten in an email sent to staff on Tuesday.

"A significant portion of the university budget, approximately 60 per cent, pays for the salaries and benefits of our employees," he wrote. "Given this reality, there is simply no possibility of ensuring that a balanced budget, once achieved, is sustainable unless we reduce our staff complement."

Weingarten said up to 200 people could lose their jobs by this fall, with more staff and faculty cuts likely to follow.

Colleen Turner, vice-president of external relations, told CBC News where the cuts are expected to take place. "At this point the staff reductions will come largely from our support service units. Those are areas such as human resources, information technologies, finance, administrative supports," she said.

Turner said the possibility of asking staff for a wage rollback has not been discussed.

"By looking at the books and by attempting to balance the budget, it was decided that strategic reductions needed to occur," she said.

The school ended the 2008-09 year with a deficit of $14.3 million, which resulted primarily from poor returns on its endowment funds — used for scholarships and other programs specified by donors.

To mitigate the financial woes, the school is increasing enrolment, but is being forced to make "difficult decisions," said Weingarten. All departments will have to cut their budgets by three per cent.

"I wish that the budget news was better, but it is not," he wrote.

The 2009-10 budget will be "adversely affected" by a larger hit to the school's Universities Academic Pension Plan due to poor market performance, added Weingarten.

The news comes one day after 30 term positions were cut in the City of Calgary's development and building approvals unit. The unit is funded mainly by permit fees, which have dipped as the economy has slowed.

About half the workers affected will be out of work, while the other half will be moved to vacant positions within the city.