The provincial government’s financial struggle has put the University of Toronto’s credit rating at risk. U of T, as well as other public institutions across the province, has been affected by the government’s growing fiscal deficit due to reliance on funding.
On December 18, 2011, The Globe and Mail published that U of T’s credit outlook has gone from “stable” to “negative,” as reported by Canadian credit agency, Moody’s. This credit score highlighted the link between the public sector and government finances. As such, institutions offering education and health services will need to proceed with private methods of financing in order to counteract increasing debt.
“Moody’s links their rating of U of T to their rating of the province of Ontario, in part because the province provides a significant amount of the university’s funding,” explained Laurie Stephens, U of T director of media relations and stakeholder commuications.
JENNY KIM/THE VARSITY
“The University of Toronto is currently on a sound financial footing but the big provincial deficit will have negative implications for funding of all universities and colleges.”
Currently, U of T’s pension plan has been most affected by the provincial credit crunch. According to the Globe, the pension plan is experiencing a deficit of approximately $1 billion.
Nonetheless, U of T has begun addressing the pension deficit with a plan that it hopes will decrease any debt.
“The university has already begun to fund the pension deficit over a multi-year period in accordance with provincial regulation, primarily via lump-sum payments and increased annual operating budget allocations,” said Stephens. “[U of T] has successfully negotiated increased employee pension contributions with its largest staff unions and is in active negotiations with other unions and the faculty association,” she continued.
However, the province of Ontario will not be providing funding to tackle the pension plan deficit.
“It would be very sensible for the province of Ontario to follow the example of some others and exempt universities from solvency tests that apply best to corporations, not public institutions. But they have declined to do so,” said Stephens. “The province is not providing funding to help resolve pension plan deficits for Ontario universities.”
Although U of T must resolve its deficit, it must also act within the constraints of limited government funding and regulated tuition increases, according to UTSU vice-president external Shaun Shepherd.
“We’re seeing across the board, especially in the public sector, a number of different cuts, and although the university and the province have to tighten the belt a bit, at the end of the day the cost of that debt cannot be downloaded onto students as we have seen time and time again,” said Shepherd.
Stephens replied that programs designed to counteract the university’s deficit will not intrude on student life and that “any tuition increases will be within the provincial government’s tuition framework.”
“Our planning to deal with the pension deficit takes into account our commitment to invest in facilities, programs and the student experience as well as our commitments to current and future pensioners,” said Stephens.
Furthermore, Stephens highlighted that U of T has launched a $2 billion fundraising campaign to support academic programs but stated that it will not be pursuing other fundraising efforts in regards to the pension deficit.
