The president of the University of Alberta told a packed audience of student, faculty and staff recent budget cuts and layoffs will prevent the institution from becoming one of the world's best.

"We are not backing away from our ambition to be one of the world's great public universities," said Indira Samarasekera during her state of the university address.

 But the president would not deny the provincial funding cuts has affected the university. The university must chop $56 million from its budget this year and since April has laid off 143 people.

"We've let go employees of talent and skill and the U of A is diminished by their departures," she said

While speech was meant to provide some reassurance, the challenges still remain.

For students and faculty it's unclear what lies ahead.

"It's sort of a new experience for us," said first year student Brayden Power. "We are not quite sure what to expect and what the cuts actually mean for us."

Student's Union president Petros Kusmu fears students will get a inferior, but more expensive education.

"Our large worry is about tuition increases, beyond that is just the quality of the classroom itself," he said. "The availability for our profs is less and resources to our students not as high as they used to be."

Samrasekera, who has just returned from a trip to China with Alberta business leaders and Premier Redford, said she made it clear to the premier what's at stake.

"We have projected labour shortages over the next 10 years," she said. "We've got to to increase access.

She said she understood it completely. That's why I think she said, 'Give us the time and we are going to be working on that.'"

With files from CBC's Tashauna Reid