U of T’s planning and budget committee has faced an onslaught of external challenges this past year:  new labour agreements for staff increasing compensation for staff, Ontario’s surprise announcement to continue its tuition freeze for in-province students, the federal government’s decision to cap international student visas, rising costs of living for university staff, persistently inflating costs in general, and a growing backlog of building maintenance requests. 

And yet, none of these challenges have managed to disrupt the budget committee’s perennial declaration that U of T remains in a “strong financial position.” The university’s planning and budget committee set next year’s balanced budget at $3.52 billion in total, up 4.9 per cent from this past academic year. The budget also includes guidelines for longer-term budget planning beyond the year ahead. The Governing Council voted to pass the budget at its April 4 meeting.

Here are some of the budget’s highlights. 

Labour developments and government regulations cut deep

Beginning last summer, the U of T’s Faculty Association and various trade unions have secured retroactive pay increases to correct for the limits imposed by Ontario’s Bill 124. This bill attempted to limit all public sector workers’ wage increases to one per cent per year, before a court declared it unconstitutional in 2022. 

More recently, successful negotiations from CUPE3902 units 1 and 5, along with CUPE3261 have increased members’ salaries, wages, and benefits. “It will take several years to fully absorb [these increased labour costs] into divisional budgets, reducing the funding available for other priorities,” said Vice-President & Provost Trevor Young at the April 4 meeting.

On the flipside, recent provincial decisions will continue to keep U of T’s operating budget extremely tight. Ontario recently announced that it would continue to freeze in-province domestic undergraduate students’ tuition rates at 2019 levels, despite strong recommendations to end it from U of T and the provincially commissioned Blue Ribbon Panel.

Ontario has also announced that it will allocate an additional $1.3 billion toward the province’s post-secondary institutions over the next three years, which includes increasing operating grant funding across the province by seven per cent in total. However, Ontario has still not confirmed how it will allocate this increased funding between post-secondary institutions; U of T is currently assuming a seven per cent increase to its own operating budget, which falls short of the 10 per cent increase that the Blue Ribbon Panel recommended. 

U of T President Meric Gertler noted at the April 4 meeting that this will be the first time in 16 years that Ontario will increase the number of dollars-per-student it allocates U of T in its operating grant. However, since average costs in Canada have inflated by about 42 per cent since 2008, Ontario’s increased operating grant will still represent far less real purchasing power than it has historically.

“[the Ontario government] has never offered up an explicit rationale” for why it has frozen U of T’s operating grant for the last three years, Gertler further noted. “But they have encouraged us to take full advantage of other opportunities… primarily the international student enrolment growth that we have seen,” he said, emphasizing that U of T has been more responsible in supporting this growth of international students compared to other universities in Canada.

“Only 20 per cent of our revenue now comes from operating grants, so we are the lowest publicly funded university in Canada,” said Young, at the Academic Board meeting on March 7. 

Improved student enrolment is a big priority for the university

The planning and budget committee has projected U of T’s revenue growth to slow down significantly over the next four years, in contrast to a previous decade of more significant revenue growth. This is primarily due to student enrolment and tuition rates — 67 per cent of U of T’s revenue comes from student tuition. Consequently, meeting enrolment targets is a big priority for the university, although this has recently been challenging. 

For the second year in a row, the budget notes, the number of new undergraduate students that U of T enrolled fell below the expected number — falling 2.3 per cent below the university’s planned rate in Fall 2023. U of T is also observing slow enrolment growth in its graduate programs. At the same time, the committee found that fewer-than-average upper-year students have been leaving prematurely, meaning that overall enrolment for the past year was 1.1 per cent higher than planned. 

The driving factor behind the slowing growth this year has been changes in the number of international students at U of T. In fact, while international student intake increased by 158 students in fall 2023 compared to fall 2022, this number was still 11 per cent below the university’s plan. The operating budget points to “geopolitical issues” as one potential factor here, specifically noting Canada’s relationships with India and China. Applicants from India for the 2024 year fell 41 per cent compared to last year, and applicants from China fell seven per cent. 

These shortfalls pose a financial issue — meeting international student intake targets is crucial to fund undergraduate programs. International students comprise only 31.1 per cent of the student body but contribute about 42 per cent of the university’s total revenue.

Meanwhile, domestic tuition has made up a smaller proportion of the university’s revenue since the 2016–2017 academic year, which places even more importance on international student tuition.

To combat slowing revenue growth from student tuition, the university hopes to increase the number of students enrolling at U of T while also increasing tuition for specific programs. The budget calls for non-Ontario domestic tuition fees for undergraduates to increase by five per cent, and tuition fees for specific Master of Applied Science programs to increase by 7.5 per cent — programs that are not affected by the ongoing tuition freeze. 

Over the next five years, the university also aims to expand domestic student enrolment by 2,500 students, and international student enrolment by 1,200 students — despite new restrictions following the federal government’s study visa cap. 

U of T’s enrolment of international students who require new student visas is now restricted to 5,320 spots — the same number it enrolled in direct-entry undergraduate programs this past fall. Crucially, though, the Academic Board noted that this restriction does not apply to non-resident students currently studying in Canadian high schools, or enrolling in graduate programs after an undergraduate program at a Canadian university. The Academic Board confirmed the university has the spots to “meet existing enrolment needs.”

At current tuition fee levels, the planned five-year increase in international student intake alone would increase the university’s revenue by $72 million by the 2028–2029 academic year. On the other hand, the planned five-year increase of 2,500 spots for domestic students would increase U of T’s revenue by approximately $15.3 million over the same time period. 

Expenditures on student aid

Overall, the university will allocate 62 per cent of its total revenue to compensating staff and faculty, 11 per cent to student aid, seven per cent to capital projects, six per cent to occupancy costs, two per cent to pension contingency, and the remaining 12 per cent to other expenses.

The student aid budget for next year is projected to be $380 million, with about $65 million coming from endowment payouts, and the rest from operating funds, which include student tuition and provincial grant money. 

The university has been steadily increasing the amount of money it allocates to student aid since the 2019-2020 academic year. That was when Doug Ford’s conservative government came into power, and made it more restrictive for students to qualify for the Ontario Student Assistance Program (OSAP). Whereas 64 per cent of Ontario students at U of T received OSAP in 2019–2020, only 52 per cent received OSAP in 2022–2023, the budget committee reported at the March 7 meeting earlier this year.

Gertler clarified at the April 4 meeting why U of T continues to advocate against the tuition freeze while maintaining student affordability as a priority. Indeed, the province has represented the freeze as a move to make higher education more affordable. “On an intuitive level, that seems to make sense,” he acknowledged. 

However, Gertler noted that the tuition freeze does not differentiate between families who actually need financial aid, and those who are perfectly prepared to pay higher tuition ratesn. Furthermore, he asserted that the tuition freeze takes resources away from U of T’s own student aid programs, which do differentiate students based on financial needs. 

Capital projects

U of T is planning to invest $4.1 billion over the next five years into capital expansion — which mostly encompasses constructing and expanding university-owned buildings. This amount includes $101 million from this current year’s revenues.

Some of the new buildings U of T is planning to construct include a data sciences and commerce building at the St. George campus, a literature, arts, media and performance building at the Scarborough campus, and a computation, robotics and new media building at the Mississauga campus. 

There are also ongoing housing projects at St. George, which include the Oak House Residence at Sussex-Spadina, which should open sometime in the upcoming academic year, and the Site One Gateway project at Bloor-Spadina, which purports to be “the largest university housing development of its kind” in Canada. 

U of T is now waiting on the province to confirm the specific amount it will allocate to the university in its operating grant. If the operating grant is higher than the budget’s conservative assumption, the budget notes, “the additional revenue would be allocated to divisions through the University’s budget model to support their highest priorities.”