Dalhousie University will likely raise tuition for undergraduates by the maximum three per cent, but it still faces financial shortfalls.

Ken Burt, the Halifax-based university's vice-president of finance, said the fees will rise in part because of the provincial NDP government's decision to cut three per cent of its operating budget.

Every Nova Scotia university faces the same cut as the Dexter government shaves $10 million from funding for the 2011-2012 academic year. It also capped tuition rises at three per cent.

"The shortfall right now is just under $7 million — $6.9-million," Burt said Monday.

Dalhousie will have a proposal to make the full savings within a month, he added. The university is also negotiating new collective agreements with its unionized workforce of 2,000 people.

Faculty negotiations faltering

That includes the 870 faculty represented by Anthony Stewart. He said negotiations are not going well.

Faculty start conciliation talks with the university on Wednesday.

"We've been frustrated by the lack of progress made at the table so far. We hope that with the help of outside eyes, maybe we will be able to make some progress," Stewart said.

Dalhousie has set aside $6.5 million for compensation, including any raises.

"There is some provision for salary increases in 2012. We're at the bargaining table. We have to put something on the table," said Ken Burt.

Dalhousie also has an underfunded pension plan. It wants its unions to share the cost of plan shortfalls. Burt said that may be even more important than the provincial budget cut.

"Three per cent is not a big step up. If we don't solve the pension problem next year, we may be looking for a ... 15 or 16 per cent cut. That will be quite uncomfortable for everyone," he said.

Graduate students and international students could face even greater tuition raises, as the three-per-cent cap does not apply to them.