U of T’s financial forecast for the current fiscal year ending April 30, 2017 reports a projected net income of $178 million and projected net assets to be approximately $4.7 billion. This projected net income has decreased by $32.2 million from 2016, while the forecasted net assets have seen an increase of $347.7 million.
These numbers were presented in Chief Financial Officer Sheila Brown’s report, Financial Forecast to April 30, 2017 as at January 4, 2017.
The report will be presented at the Business Board meeting on January 23. It lays out the university’s projected revenue, expenses, net income, and changes in net assets from January to April 2017.
The university also projects a deficit of $93.9 million, which is an increase of $41.9 million from last year’s figure of $52 million. This increase is largely attributed to additional internal debt which is reported to be financing capital expenditures under the university’s debt programme.
U of T is also forecasting $3.13 billion in revenue for the fiscal year, with the largest source of income being student fees at about $1.39 billion. Based on the projected figures, this means that the tuition fee revenue for this fiscal year will have risen $14.8 million.
The growth is primarily attributed to an increase in international undergraduate tuition revenues.
Expenses have been forecasted to be $2.96 billion, which implies an increase of $257.2 million from 2016. The bulk of the expenses will be going towards salaries, at about $1.36 billion; $234.3 million will be dedicated to scholarships and bursaries.
The university is assuming a projected investment return of 6.8 per cent, which is based on the actual return from May 2016 to November 2016. The endowment payout is expected to be $81.1 million for the year ending April 30 2017, while the projected endowments are expected to total about $2.2 billion. This represents an increase of $98.5 million from endowments last year.
The financial report also forecasts an increase of $101.4 million in divisional and central general reserves and $37.7 million in future divisional capital expenditures. The university acknowledges that investment returns are uncertain and that they only have interim information on divisionally-controlled revenues and expenses.
The debt report
The university’s annual Debt Strategy Review will also be presented at Monday’s Business Board meeting. U of T sets its debt burden ratio at 5 per cent, meaning that debt and interest must be within 5 per cent of total expenditures. At this ratio, the total debt policy limit has been set at $1469.0 million. Of this, $350 million is internal debt and $1.12 billion is allocated for external components.
The university’s actual outstanding debt has surpassed $1 billion and is now at $1.02 billion; $715.8 million is external long-term debt and $304.1 million is internal debt. Of the internal debt, $150 million comes from pension funding. Of the external debt, 99.2 per cent is made up of unsecured debentures.
The university’s credit rating has gone up slightly from last year. Moody’s Investor’s Service gave the university an Aa2 rating, and Dominion Bond Service assigned a rating of AA, both unchanged from a year ago.
The grade from Standard & Poor has improved a letter grade from AA to AA+. These ratings are considered ‘investment grade.’
The report also states that last year’s debt policy limit projection for 2021 of $1.75 billion has been raised to $1.8 billion, which shows a $46.2 million increase.
Editor’s Note: An earlier version of the article incorrectly stated the name of U of T’s Chief Financial Officer.