As markets continue to crumble, U of T holdings are falling with them.
“The endowment has at this point lost the cushion needed to sustain payouts in the absence of a recovery,” reads a Nov. 19 memo from U of T VP and provost Cheryl Misak and VP Business Affairs Cathy Riggall. The memo says that U of T will look for alternatives to meet its payments from the endowment, promising, “We will meet our commitments.”
“The value of the endowment and the value of the pension fund have both declined,” Riggall told The Varsity in an email. Final decisions on how to handle the situation won’t be reached for some time, said Riggall.
“Faculties and division are currently engaged in preparation of budgets for the next five-year period, and are advised to plan for cuts and restrain any non-essential spending,” reads Riggall’s memo. She said next year’s budget is being drafted now, but won’t be final until March or later.
U of T’s assets amounts to some $5.5 billion, which include $2.8 billion in pension funds and $2 billion in endowments. Payments from the endowment go towards scholarships, bursaries, and research projects.
University spokesperson Laurie Stephens said that employee pensions will not be affected despite the downturn, as the university is obligated to pay them in full. So far, no hiring freezes are planned at U of T, unlike the six-month freeze at Waterloo. Stephens said that student bursaries would be the last to go. “If it continues to worsen, whatever we do will have the least impact as possible on students and faculty,” she said.
Allison Webb, secretary to the Planning and Budget Committee, said she could not predict if there will be significant change to next year’s budget as a result of the financial downtown. In the meantime, all eyes are on the market.
