Education at the University of Alberta could become much more expensive to cope with a budget shortfall. (CBC)

The University of Alberta is trying to avoid layoffs in response to a $59-million budget shortfall that provost Carl Amhrein describes as a potential "nightmare scenario."

"We're not dealing with an actual deficit," Amhrein said Wednesday. "We're dealing with the estimates for the April 2010 budget, and right now the revenues and the expenses don't match. We still have to close the budget gap."

Amhrein, who is responsible for academic leadership and overall institutional planning, said the goal is to try to avoid or minimize layoffs by raising revenues and reducing expenses.

"The university is defined by faculty, staff and students," he said. "If you take away faculty, staff and students you have a whole bunch of empty buildings."

Amhrien blames the shortfall on estimates in the last budget that didn't take into account the plunging government revenues from natural gas that helped reduce an expected three per cent funding increase to zero.

Tuition increases are also an issue. By law, they are tied to the consumer price index. With the slowdown in the economy, the university can only raise tuition by 1.5 per cent next year, rather than the forecast 3.2 per cent.

One possible source of new revenue is an increase in the "base rate," the foundation for tuition fee structure that varies from university to university. Amhrein said the University of Alberta is now studying those rates at institutions across the country.

"Two faculties are already at the top of their charts [nursing and rehabilitation]. All of the others are part of the discussion that started yesterday," he said.

If increases in the base rate are approved, the cost for some programs could rise more than the legislated 1.5 per cent. But Amhrein said it's too early to speculate on programs that might be affected.

"I'll know much, much better in five or six weeks how much of that gap we can close through those three sets of activities," he said. "If nothing works, then we still have to close the budget gap, and that begins in a nightmare scenario to start pointing to layoffs."