It’s that time of the year again: U of T has released its proposed balanced budget report for the 2022–2023 school year. 

There are four fund groups that make up the university’s budget — the operating budget, which is based on administrative and teaching activities; restricted funding from donations for specific research; the ancillary budget for residence and food services; and the capital budget for construction and renovation. The operating budget is the largest group and is projected to bring in the most revenue, as it represents U of T’s core service offerings as an academic institution.

The Governing Council met on March 31 to discuss this year’s budget, and it was approved with no objections.

COVID-19’s impact

U of T Vice-President and Provost Cheryl Regehr explained that the university is doing well financially despite the ongoing effects of the pandemic. She explained that the university has been in discussions with student groups about budget priorities whose need has been emphasized by the pandemic, such as student mental health, experiential learning, and financial support.

Despite the positive strides made by the university away from its previous losses, COVID-19 has nonetheless impacted the university’s operations. “As we look ahead, there are challenges that are going to put pressure on our budget, [and] we have very few levers to relieve these pressures,” Regehr said.

Some of these challenges include the declining proportion of government funding, a limit on the number of domestic students that the university is permitted to admit, and the continuation of  the tuition freeze for Ontario students this year after the 10 per cent cut from three years ago.

Regehr said that the university has increased spending on financial aid, and health and safety measures during the pandemic, but she pointed out that this was offset by lower travel and occupancy costs because classes were online. Ancillary units such as residences and food services have also been hit hard due to campus closures, she explained; they are normally self-sustaining but now may require deficit funding to rebound. 

Projected revenues expected to rise

U of T will be working with an operating budget of $3.23 billion this year, which represents an increase of $110 million from last year. 

This revenue comes from a number of sources, with the majority of it coming from tuition. Tuition revenue accounts for $2.2 billion of the operating budget. This part of the revenue has increased compared to last year as enrolment across undergraduate programs has increased by 10.8 per cent. However, more upper-year students have been leaving U of T before completing their degrees than before, which has had a slight offset effect on this enrolment. 

While Ontario students’ tuition will remain frozen for next year, the university’s budget states that it will raise tuition for out-of-province domestic students by three per cent. This rise in tuition will include Canadian students residing outside of Canada. 

International tuition for programs in the Faculty of Arts & Science and the Faculty of Applied Science & Engineering will undergo the standard two per cent increase. “​​Tuition for international students is set at a level that takes into consideration full cost of providing a program and with reference to fees at peer Canadian and US universities,” states the report. 

Twenty per cent of the university’s revenue will come from operating grants from the provincial government. U of T has the lowest proportion of government spending across publicly funded universities in Canada. The budget assumes that these grants will continue to stay approximately the same at around $660 million. These grants formed 21 per cent of the operating revenue budget last year, so the budget represents a decline in the overall proportion of U of T’s expenses to be funded by the grants. 

The university also expects to receive investment income from its short-term, medium-term, and long-term investments of expendable funds investment pool. This investment income represents 1.8 per cent of the total operating revenue, but it is expected to fluctuate in accordance with market conditions. 

Endowment income represents another 2.4 per cent of the operating budget and will be directed to student aid and toward the support of the endowed chairs. The university also expects $136 million from other sources, including application fee revenue, service charges on unpaid fees, and licensing revenue. 


Following the same trend as revenues, expenditures are projected to rise for 2022–2023 by 3.5 per cent, meaning that they will increase to $3.23 billion.

The majority of budget expenditures are being allocated to U of T faculty and staff compensation, taking up 58 per cent of the total budget. Fourteen per cent is being allocated to other expenses and 10 per cent to student aid. The remaining areas include occupancy costs, capital and equipment, and pension risk contingency. 

The total amount that the university has projected for salaries and compensation is $1.98 billion. Faculty and librarians will receive the largest portion of this budgeted amount, at $822 million, while $44 million is allocated to sessional lecturers, and $83 million is set aside for teaching assistants. The remaining amount will be allocated for teaching stipends and other academic purposes.

Bill 124 has also impacted public employees’ salaries, restricting any increases in their compensation to one per cent per year during a three-year period after bargaining, known as applicable moderation periods. The report describes that the moderation period for the various employee groups at U of T will begin when the first renewal agreement created after June 5, 2019 comes into effect.

Campus costs are projected to be $738 million in 2022–2023 and include all occupancy costs, which involve utilities, deferred maintenance, and caretaking. Occupancy costs are projected to be $235 million across the three U of T campuses.

The university has also created a long-range projected budget, from 2022 to 2026, where it has balanced projected revenues and expenditures. It predicts that revenues and expenditures will  steadily increase over the next few years, from $3.123 billion in 2022 to $3.653 billion in 2026.

Investing in student financial aid 

The university expects that the proportion of students graduating with Ontario Student Assistance Program (OSAP) debt will increase back to historical levels of 50 per cent, given the 2019 OSAP changes, which restricted the amount of aid offered to full-time domestic, direct-entry undergraduate students. 

In light of these changes, U of T continued its ‘internal access guarantee’ policy, which states that all students should be able to complete their education regardless of financial needs and is maintaining the tuition fee freeze for 2022–2023. The financial aid budget for the upcoming year will increase to $331 million. According to Regehr, the university invests 53 per cent more in aid per student than any other individual university in the province. 

Last year, 56 per cent of eligible students received support from OSAP, and 25 per cent of the incoming class came from families with annual earnings of under $50,000. The average amount of OSAP debt that students maintained by graduation decreased by nine per cent in real terms, meaning adjusting for inflation, in the past five years. 

For international students, the university’s investment in financial aid meant to create scholarships and reduce tuition for top global applicants is projected to increase more than four-fold, from $14.7 million in 2020–2021 to $84 million by 2026–2027. Awards are designed by each direct-entry undergraduate division based on merit, financial need, and program of study. Individual divisions are expected to designate six per cent of international undergraduate tuition to support scholarships. 

Furthermore, the university allocated $353 million toward graduate student aid in 2020–2021, which included expenses in the university’s operating budget, research incentives, awards, and employment income for teaching assistants. 

Evaluating investments and risks

Every year, the provost allocates a portion of U of T’s incremental operating revenue to academic divisions through the University Fund. This year, U of T is investing $22 million through the University Fund toward five academic priorities that reflect efforts toward diversity, mental health, and sexual violence prevention. 

The university is dedicating approximately 20 per cent of this $22 million to “building inclusive cities and societies.” The majority of this funding will go toward the Diversity in Academic Hiring initiative, which will support the hiring of 30 additional Black and Indigenous faculty members. In addition, approximately one million dollars of the total investments will be allocated to the Sexual Violence Prevention and Support Centre, to support individuals reporting and seeking support for sexual violence on campus. 

Another 5.5 per cent of the University Fund will be directed to “reimagining the undergraduate experience.” This will include half a million dollars dedicated to supporting personalized student mental health services through eliminating wait lists, investing in mental health education, and increasing counselling options. 

Nearly half of the fund will be allocated to driving forward scientific discovery. This funding will primarily support large-scale breakthrough research, which goes along with the university’s reputation for being a leader in academic research. U of T will also invest $5.2 million in its own Defying Gravity campaign and $1.9 million in assisting with funding the priorities of each academic division.

The budget report further addressed some financial risks posed to the university, such as vaccine rollouts, international student enrolment targets, and the rising inflation costs in the current economic climate due to supply constraints.