Last Monday, the Business Board of U of T’s Governing Council reported that millions of dollars in provincial funding for facility maintenance expected in January had not yet been announced, possibly due to the provincial government’s budgetary changes. The board also presented the university’s new initiative to implement a tuition deposit for prospective international students.

The meeting, the third of the 2018–2019 year, was held on February 4. The Business Board monitors and approves the university’s business policies and major transactions.

Aside from voting to approve the report of the previous meeting, all open session items were for information, meaning that no action needed to be taken.

Deferred maintenance funding

Ron Saporta, the Chief Operating Officer of Property Services & Sustainability, presented the annual report on deferred maintenance for 2018. U of T’s Facility Condition Index (FCI) is 15.2 per cent, up from 13.4 per cent last year.

The FCI is a standard index used to assess the conditions of a building against norms. At U of T, facilities with an FCI higher than 10 per cent are ‘Poor.’ U of T’s FCI is “significantly higher than the [Council of Ontario University] average of 11%,” according to the report.

The increase is partially due to a new FCI-measuring method used on 24 buildings. Saporta said that these were “heavily weighted in laboratories, which tend to have a higher cost” and which thus do not form a representative sample of U of T buildings.

Using the FCI framework, there are 78 ‘Poor’ buildings at U of T — 71 at UTSG, three at UTM, and four at UTSC. In order for the university to maintain its 15.2 per cent FCI next year, an investment of $28.7 million is required; last year, the university invested $24 million.

Of last year’s funding, $7 million came from the provincial government’s Facility Renewal Program. Scott Mabury, Vice-President Operations, said that the university usually receives notice of this funding in January but, as of the meeting, had not yet received anything.

The report notes a “growing concern that this funding may be impacted by the anticipated provincial budget changes.”

Saporta added that to bring the university’s FCI down to a ‘Fair’ rating of maximum 10 per cent, the university would need to invest $66 million per year over 10 years.

According to Mabury, $28.7 million is enough to make renewals to Priority 1 buildings, which are described in the report as “assets that are well beyond useful life or are currently failing.”

International intake, tuition deposit

Vice-President International Ted Sargent presented his annual report on international student initiatives at the university. Among the new policies is the implementation of a tuition deposit for prospective international students.

“Until recently, essentially students could accept our offer, but they didn’t have to put any appreciable money down,” Sargent said. The list of prospective students who pay the deposit will be used to create “a waitlist to take in the right number of students and pursue [the university’s] diversity goals.”

International intake from Africa and the US is falling short of the university’s targets, while intake from India and a number of East Asian countries are exceeding projections.

“The US is the world’s most competitive higher education market, and the University of Toronto really should be on the list of the best students coming out of the US, thinking about where to go,” Sargent said.

The university has also increased its targets for outbound exchange students from 20 per cent to 30 per cent. Sargent’s office is working with the provost’s office to establish a fund to support students for whom the cost of studying abroad may be too expensive.

In response to a question about potentially targeting international students to make up for revenue losses from the provincial government’s 10 per cent tuition cut, Mabury said that increases to international intake is done for academic reasons. “It is not [a] financial imperative. That’s not how we view international students. It’s primarily academic.”

New fund to support research grants

Vivek Goel, the Vice-President Research & Innovation, announced a new $2 million donation from Professor Daniel Drucker to establish the Drucker Family Innovation Fund.

The donation is contingent on U of T and the University Health Network (UHN), an affiliated medical research organization, both matching it to bring the endowment to $6 million.

“Professor Drucker is hoping that when we publicly announce this with the [UHN], it will be the kickoff for [a] much larger fundraising campaign,” said Goel.

Income generated by the fund will be used for an annual grant competition for faculty affiliated with the Banting and Best Diabetes Centre and the Department of Medicine at Mount Sinai Hospital and UHN. Grants of up to $50,000 will be awarded.

Goel said that when U of T researchers’ inventions generate revenue above a certain threshold, the university receives portions of their royalties. The university’s $2 million will thus come from revenue generated by Drucker’s discoveries.

The Business Board has voted to concur with the recommendation of the University Affairs Board (UAB) to enforce a smoking ban at U of T and to approve the university’s Four Corners Strategy in principle. These were two of the 14 items on the agenda for the board’s second meeting of the 2018–2019 academic year, held at Simcoe Hall on November 26.

As part of Governing Council, the Business Board is responsible for monitoring the cost-effectiveness of the university’s investments and for approving its business-related policies.

Smoke-free policy

The Business Board was the fourth stage of governance for the university’s proposed smoke-free policy, following recommendation by the UAB on November 19 and information sessions at the UTSC and UTM Campus Councils on November 20 and 21 respectively. The policy must now be endorsed and forwarded by Governing Council’s Executive Committee on December 4 and approved by Governing Council on December 13 in order to take effect.

Vice-President Human Resources & Equity Kelly Hannah-Moffat presented the item to the board.

If approved by Governing Council, the smoke-free policy would ban most forms of smoking at the university’s three campuses effective January 1. Exceptions to the policy are Indigenous ceremonies and medical requirements.

The policy would not apply to the university’s three federated colleges — the University of St. Michael’s College, the University of Trinity College, and Victoria University.

“I’ve talked to all three head provosts and presidents of the federated universities. They all anticipate going the same direction, although they are working through their own governance processes with respect to it so they may not go at the same time. I expect they will also be using similar signage to that which we are using,” Hannah-Moffat said. She added that affiliated institutions “immediately proximate to [U of T] like Knox College… are going to adopt [their own smoke-free policies].”

“Enforcement of this policy will be first and foremost about educating our community and also talking to our community about the risks of second-hand smoke and the risks of smoking,” Hannah-Moffat added. The university will continue to provide staff, faculty, and students smoking cessation support.

All present voting assessors at the meeting voted in favour of the item, meaning that the board concurs with the approval passed by the UAB.

Real estate strategy

The board also unanimously approved the Four Corners Strategy. According to Vice-President University Operations Scott Mabury, the strategy has been in development for around four years. It will replace the existing real estate strategy implemented by the university in 2007 and act as a framework to guide the university when investing in new real estate projects.

“We’re calling this ‘Four Corners’ because we want it to cover all corners of the university, wherever they may be,” Mabury said. The strategy will be updated to include the university’s properties in the Huron-Sussex neighbourhood, as well as the land housing the Centre for Addiction and Mental Health that it bought last year. He added that the federated colleges will not be included, as “practically speaking, they run their [own] affairs.”

According to the report presented to the board, the strategy’s goals are “providing quality amenity spaces” and “generating financial returns directed to the operating fund through income of its improved properties.”

Mabury said that amenity spaces will include “innovation spaces, residential [spaces] to improve our ability to attract and retain our faculty and senior staff, [and] retail [spaces] to enliven and engage more effectively with the surrounding city as well as provide services for the academic community.”

A main goal is to expand available housing to faculty members, staff, and students. Mabury cited the graduate student waiting list of over 1,000 and the loss of senior staff and faculty due to a lack of available housing. “The goal here is to [make] the residential side respond — and it’s a dynamic situation and it’s not constant where that demand is.”

Other items

The in camera session comprised of the quarterly list of donations of $250,000 or more, administrative assessors’ reports, compensation increases for various staff and faculty, and approval of the membership of the board’s Striking Committee.

Hannah-Moffat also presented the Human Resources & Equity Annual Report of 2017–2018 and the Report on Employment Equity of 2017–2018, which include the university’s initiatives to increase diversity, equity, and inclusion.

Tuition fees are expected to increase again this year after the Business Board of the university’s Governing Council approved the increases at a meeting on March 21.

The tuition increases were first outlined in the university’s proposed budget for the 2018–2019 academic year, which outlines a for-credit tuition fee revenue of $148 million to fund initiatives and capital projects across the three campuses.

What are the tuition increases?

Domestic undergraduate tuition fees for the Faculty of Arts & Science; the John H. Daniels Faculty of Architecture, Landscape, and Design; the Faculty of Music; and the Faculty of Kinesiology & Physical Education are expected to increase by three per cent in the 2018–2019 academic year.

Tuition fees for the Faculty of Applied Science & Engineering is expected to increase by five per cent, with tuition to be $15,760.

Tuition for international students in the Faculty of Arts & Science is expected to rise by no more than nine per cent in the 2019–2020 academic year, while international students in the Faculty of Applied Science & Engineering will see an increase of eight per cent to their tuition over the same period. According to the budget, “international fees are set at a level to more closely reflect the true cost of educating students.”

Tuition fees for most professional programs will increase by 2.5 per cent to five per cent under the provincial tuition framework.

Tuition fees for international graduate students will be the same as their domestic counterparts in Fall 2018, as per a university decision in mid-January.

As a result of tuition increases, an increase in student financial aid is also expected.

The proposed budget for 2018–2019 puts $224 million towards student aid for the year. In a 2016–2017 report on student financial support, the university committed itself to providing increased aid not only for undergraduate domestic students but also international students.

Why does tuition keep rising?

The overall increase in tuition is meant to address higher enrolment and increased costs, according to Vice-President and Provost Cheryl Regehr. The costs also come in response to the tuition framework mandated by the Ontario government.

“The three per cent overall increase is the tuition framework from the provincial government and the issue is costs… continue to rise as they do everywhere,” said Regehr, noting that the government grant per student “has not increased for many years now.”

Mathias Memmel, the President of the University of Toronto Students’ Union, said that the union was “disappointed, although not surprised, that the university is increasing fees by as much as it possibly can.”

Memmel, like Regehr, pointed to issues in government funding.

“The provincial government needs to step up and make a serious commitment to public education,” said Memmel. “Otherwise, our public universities will cease to be truly public and will become private institutions with public funding.”

Despite the fee increases, the university reaffirmed its commitment to aiding students in positions of financial need.

“We have always had the longstanding commitment that any qualified student who is admitted to the University of Toronto will be able to not have financial barriers that stop them from completing their education,” said Regehr.

The commitments are outlined in the university’s Policy on Student Financial Support.

The University of Toronto released their proposed budget for the upcoming 2018–2019 fiscal year, which featured increased funding in financial aid, research opportunities, and graduate programs. The budget reports a total budgeted operating revenue of $2.676 billion, 8.2 per cent higher than the 2017–2018 budget.

Expenses in the proposed budget include large-scale building projects on all three campuses, including an increase in spending toward the total deferred maintenance liability, an increase in student aid, and grants and diversity initiatives.

$224 million is budgeted toward student aid for the 2018–2019 fiscal year. This figure is expected to grow to $260 million over five years. The increase in spending on financial aid can be attributed to the university’s policy on student financial support. The statement principle outlines that, “No student offered admission to a program at the University of Toronto should be unable to enter or complete the program due to lack of financial means”.

The proposed budget also aims to fund diversity and equity initiatives. A total of $3 million over a course of three years will be allocated to coordinate access programs for students from underrepresented groups on campus. Similarly, $3 million over a course of three years will be set aside to fund postdoctoral fellowships for individuals from underrepresented groups. In turn, this will diversify the amount of minority scholars across the country.

Deferred maintenance has been a critical issue, costing the university $549 million in liabilities this year. Of that $549 million cost, UTSG accounts for $478 million with an increase of $4 million compared to last year. UTSC and UTM campuses saw decreases of $2 million and $4 million, respectively. $18 million has been allotted for deferred maintenance repairs, specifically at the St. George campus, while $2.5 million are set aside for the UTM and UTSC campus in their respective budgets.

OSAP                                                                                                          

Changes in the Ontario Student Assistance Program (OSAP) were also included in the report. The program was changed to include free tuition for students from low and middle-income families, 30 per cent off tuition grants, and opportunity-based grants for students to reduce loan debt. 55 per cent of U of T students receive OSAP payments.

Funding for the University of Toronto Advanced Planning for Students program (UTAPS) is also projected to increase by an additional $13 million over the planning period. UTAPS gives grants to OSAP eligible students based on financial need.

Revenues

Much of the university’s operating revenue is obtained through provincial operating grants, tuition, and various student fees. Tuition and grant revenue for 2018–2019 is projected to be $2.336 billion, a 2.5 per cent increase compared to the $2.279 billion projected last year. Similarly, large endowments from the university’s greater community have also contributed over $2.38 billion to the operating revenue.

This year, a maximum three per cent increase will be added to tuition for Arts & Science students. Tuition fees for graduate and professional program students may also be increased by a maximum of five per cent. The university has also proposed to align tuition fees for international PhD students with the domestic rate.

The university recently signed a new Strategic Mandate Agreement (SMA2) with the province of Ontario. The agreement aims to re-establish the university’s leadership role in research and innovation in Ontario. SMA2 aims to include funding for 631 new master’s student spaces and 198 new doctoral student spaces by fall 2019.

Governing Council will vote on the $2.68 billion proposed operating budget for the 2018–2019 fiscal year on April 5

The university’s annual report on deferred maintenance reveals that the total cost of repairs required on U of T’s buildings is $549 million, down $2.5 million from last year. The cost of deferred maintenance represents the amount of money in repairs that the university is delaying, typically as a cost-saving measure.

The majority of the liability for this year is at UTSG, which accounts for $478 million, up by $4 million since last year. About five per cent of this figure — approximately $24 million — represents deficiencies that must be addressed within the next year, while approximately $287 million represents deficiencies that must be handled in the next three to five years.

UTSC’s deferred maintenance repairs this year totalled $42 million, down $2 million from last year. UTM accounts for $29 million of the total cost of deferred maintenance, down $4 million from last year’s figure.

The report also stated that the university’s combined facility condition index (FCI) — a number obtained by dividing the cost of repairs required by the cost of replacing the building — stands at 13.4 per cent, higher than the 11 per cent the Council of Ontario Universities last reported in 2015, but 0.5 per cent lower than last year. If an FCI is over 10 per cent, then repairs are needed.

The FCI of the 10 buildings at UTSC is 11 per cent . The 14 buildings at UTM have a combined FCI of 6.7 per cent.

UTSG’s FCI currently stands at 14.7 per cent, down slightly from last year’s 15 per cent. Of the 101 academic and administrative buildings audited for the report, 71 were classified as being in poor condition.

The report also noted that the majority of UTSG buildings were built post-war and have lower construction quality than pre-war buildings and modern, complex buildings on campus. These post-war buildings tend to require a “fundamental renewal of building systems.”

The report also pointed out that the combined internal and federal funding is “approaching” the roughly $28 million needed to reduce the FCI to 12 per cent within 10 years at UTSG. According to the report, the university “can maintain and even start to improve the condition of our academic and administrative buildings [at U of T]” with this funding.

The document also detailed changes to be made to how the deferred maintenance figures are assessed, including shortening the auditing frequency from every seven years to every five years, incorporating costs associated with professional services and consulting fees, and providing more accurate building information.

U of T is expected to report a net income of $391 million for the fiscal year ending April 30, 2018. This income shows a decrease of $26 million from last year’s $417 million, according to a report from Chief Financial Officer Sheila Brown to the Governing Council’s Business Board. Net assets are projected to be approximately $5.8 billion, increasing by $313 million from 2017.

The report details revenue, expenses, net income, and net assets for the university. It was prepared using a combination of forecasting methods, including projection to April 30 using current year-to-date figures and estimation based on trend analysis of prior years.

Key assumptions made in projecting these numbers are a 5.4 per cent investment return, an $84 million endowment payout, $100 million in divisional savings, and $444 million in capital asset additions, or property.

Revenue and deficits

Based on the report, U of T’s revenue should be $3.36 billion this year, principally generated through a projected $1.57 billion in student fees. Expenses are forecast to come in at $2.97 billion, meaning U of T is making and spending a little more than it did last year, based on totals of $3.22 billion in revenue and $2.8 billion in expenses from 2017.

A deficit of $95 million is projected for 2018. Last year’s report projected a deficit of $93.9 million, but the actual deficit came in at $59 million.

The deficit is comprised of a $43 million operating fund surplus, with $35 million more in tuition fee revenue earned than in budgeted due to international undergraduate enrolment, $5 million in utilities savings, $4 million in additional government grants, and $3 million in investment returns.

An unrestricted deficit of $138 million in other funds is attributed to the internal debt component of the university’s debt program. These will be repaid over a longer period of time.

Debt projections

U of T places its outstanding debt at $1 billion, whereas its debt policy limit, or the amount it can borrow, stands at $1.5 billion. The Business Board approved $1.26 billion in allocations, which includes borrowing and contingency for donations, targets, and pledges, leaving $241 million remaining for future allocation throughout the next four months.

The annual debt strategy review states that debt “primarily supports capital projects and pensions.” Over the next five years, the review estimates that approximately $560 million of additional debt will be needed for capital projects that have not yet been approved by the Business Board but that are under consideration.

Some of these capital projects include a second instructional centre at UTSC, renovations to some Arts & Science buildings at UTSG, and the Landmark project to renovate front campus.

“In assessing the appropriateness of a debt strategy, we considered the need for debt together with the need to remain affordable, and for debt servicing to continue to be financially responsible,” reads the Debt Strategy Review.

By April 30, 2023, the debt policy limit is projected to increase to $1.85 billion to accommodate these new capital projects. Moody’s Investors Service gave U of T an Aa2 credit rating, which is unchanged from recent years, meaning U of T fulfils its financial commitments and repays the money it borrows in an effective and timely manner.

On October 10, the Business Board of U of T’s Governing Council held its second meeting of the 2017–2018 academic year at Simcoe Hall. Comprised of 42 members, the Business Board is responsible for monitoring the cost-effectiveness of the university’s resource allocation and approving its business policies and major transactions.

Among the 22 slated agenda items for the meeting were the annual endowment financial report for the previous academic year, revisions to the Workplace Harassment Policy and Workplace Violence Policy, and the status of capital projects on campus costing over $2 million.

The endowment report, presented by Sheila Brown, U of T’s Chief Financial Officer and a member of the University of Toronto Asset Management Corporation (UTAM) board, states that as of April 30, 2017, the university had “over 6,000 individual endowment funds totalling $2.4 billion market value,” a net increase of $282 million from the previous term.

Established in 2000, UTAM oversees the management of U of T funds, which includes the university’s endowment and pension funds. U of T is the only Ontario university that owns a distinct not-for-profit for investment management; other universities use their governance committees and staff members.

According to Elizabeth Church, the university’s Issues and Media Strategist, “the Business Board sets the targets for investment returns and risk tolerance. The responsibility for asset allocation is delegated to the administration and then further delegated to UTAM.”

The largest contribution to the increase in endowment funds was the university’s investment income, totalling $341 million. In comparison, the 2015–2016 academic year’s investment income totalled $13.1 million. In the latest Endowment Annual Financial Report, Brown attributed the approximate $327.9 million increase in investment income to a “favourable” investment market, compared to “years, such as 2015-16, when investment markets are poor.”

In the 2016–2017 academic year, the university also received $36 million in endowed donations and $8 million in transfers from its unrestricted funds, while it incurred net losses of $22 million on fees and expenses and $81 million on spending allocation.

The endowed donations comprise part of the $2.24 billion raised by the Boundless campaign, surpassing the campaign’s original $2 billion goal six months ahead of schedule. According to its website, the Boundless campaign “is a transformational fundraising effort that embodies the University of Toronto’s bold vision for the future.” Its three priorities are strengthening the university’s role within Toronto, establishing strong international partnerships with leading institutions globally, and reimagining undergraduate education.

Amendments to the Workplace Harassment and Workplace Violence Policies were also presented for recommendation at the Business Board meeting; if applicable, approval will be decided on October 26 by the Governing Council. The amendments “add specific references to the Policy on Sexual Violence and Sexual Harassment and the Sexual Violence and Prevention Centre.”

The Business Board also released the Report on Capital Projects as of September 15, 2017. Of the nine properties undergoing construction listed in the report, the overall total project cost (TPC) budget is at least $342,026,121, with the Faculty of Architecture cost remaining in camera. The UTM Deerfield Hall North Building Phase B has the largest TPC budget on the list at $120,086,121; it is currently 49 per cent complete and slated for completion in September 2018.

The UC Revitalization project, set to start in 2018, and the renovation of the Davis Building’s Meeting Place in UTM are two major capital projects that will start this academic year.