University of Toronto 2009-10 Budget Report and Long Range Budget Guidelines 2009-10 to 2013-14

PDAD&C 5 March, 2009 PDAD&C — 5 March, 2009 1

Overview

 Government grants are flat – increases only come from enrolment growth  Some increase in tuition  Offset by endowment and investment revenue loss in the next couple of years  Extraordinary increase in cost to meet endowment commitments  A short-term deficit is necessary

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Governing Council Policy

 Last year GC policy was changed to allow long range budget planning using a rolling-window  We committed to a balanced budget each year, except in extraordinary circumstances  Accumulated deficit to be repaid over a five-year period

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Revenue

PDAD&C — 5 March, 2009 4

Revenue: increment relative to 2008-09 (excluding divisional revenue)

Grants

2009-10

11.0

Tuition 39.9

Endowment Other Flow-through to other institutions Total revenue

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(39.8) (11.4) 0.8

0.5

To 2013-14

13.4

210.5

4.2

9.3

1.6

239.0

Undergraduate enrolment

 UG enrolment projected to increase by 500 FTEs over planning period Reductions at St. George A&S and Engineering Increase at UTM  Discounted funding for UG growth over 2004-05 estimated at $4.6M in 2009-10 and $4.7M in 2010-11

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UG Domestic & International Enrolments 54,000 52,000 50,000 48,000 46,000 44,000 42,000 40,000

International Domestic 2008-09 5,442 45,336 2009-10P 5,455 46,451 2010-11P 5,640 46,404 2011-12P 5,800 45,628 2012-13P 5,899 45,476 2013-14P 5,932 45,417

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Funding Per BIU Government Operating Funding per BIU Adjusted For Inflation $6,000 $5,500 $5,000

27% 27%

$4,500 $4,000 $3,500 $3,000 $2,500 In Absolute $ 91-92 value adj. for Inflation 91-92 $4,418 $4,418 92-93 93-94 $4,458 $4,486 $4,122 $4,566 94-95 $4,051 $4,575 95-96 $3,958 $4,674 96-97 97-98 $3,176 $4,750 $3,530 $4,827 98-99 $3,529 $4,872 99-00 00-01 $3,577 $4,957 $3,619 $5,091 01-02 $3,691 $5,221 02-03 $3,694 $5,338 03-04 $3,677 $5,486 04-05 $3,899 $5,589 05-06 $4,297 $5,710 06-07 07-08 $4,373 $5,872 $4,376 $6,001 PDAD&C — 5 March, 2009 8

Incremental Revenue ($M) – Undergraduate

Domestic International Total

2009-10

26 17 43

To 2013-14

89 71 160

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Graduate Enrolment

 Graduate Expansion continues to 2013-14  Last week universities received final MTCU allocations of expansion spaces and funding  We received close to what we asked for – will need to adjust some enrolment plans.

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Graduate Domestic & International Enrolments 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 -

International Domestic 2008-09 1,693 11,224 2009-10P 1,712 11,737 2010-11P 1,746 12,362 2011-12P 1,746 12,745 2012-13P 1,816 12,967 2013-14P 1,867 13,076

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Incremental Revenue

($M)

– Graduate

Domestic International Total

2009-10

10 (4) 6

To 2013-14

55 8 63

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Assumptions - Tuition

Increases based on proposed schedule Average domestic increase 4.31% Average international increase 5.9% Set-aside for student aid based on estimate to meet accessibility commitment

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Estimated Endowment Loss 2009-10

 Total endowment payout was slated to be $62M in 2009  $46M flows through the operating budget to support chairs and student aid  The remaining $16M stays in restricted funds to support research and departmental expenses

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Impact of endowment loss on the operating budget

2008-09 2009-10 Endowed Chairs ($M) 12 – Student Aid ($M) – 34

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Other Revenue Assumptions

 Investment income (from EFIP) will remain at 2008-09 forecast level of $13M, gradually returning to normal levels of $32M by end of period  Reduction in CRC program: 6 chairs, probably starting in 2010-11  Institutional Cost of Research: At current levels  Divisional income estimated based on last year’s actuals, increasing by 2% per year

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2009-10 Sources of Operating Revenue Divisional Income 13% CRC 3% Endowments 0% Indirect Costs 2% Provincial Grant 42% Tuition Fees 38% Investment Income 1% Other Income 1%

Expense

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University Wide Expenses

 Funding of University-wide undergoes review by the President’s Budget Planning and Priorities Committee (BPP)  Committee includes divisional leaders and P&B Chair as observer  Significant self-restraint in funding requests  Committee made very few allocations to high priority needs

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Significant Non-discretionary expenses 2009-10

 Total non-discretionary = $9.8M

 Includes: USW job evaluation adjustment fund and costs ($3M) Utilities ($3.6M) Legal ($1M) City water backflow prevention ($0.8M)

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Allocations to Shared Services ($M)

Allocation approved by BPP Compensation Sub-total Funded from carryforwards and President’s office Funded from oper. budget

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16.3

5.0

21.3

(6.3) 15.0

Total University-wide costs (Schedule 2)

Shared services Cost containment Net shared services Central funds Net change Schedule 2 15.0

(4.5) 10.5

(11.0) (0.5)

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2009-10 University-wide Costs by Cost Bin UW General 9% Financial Mgmt 2% UW Academic 10% Student 6% Research Admin 3% Library 20% Occupancy 25% Advancement 4% IT 6% University Mgmt 4% HR 5% Pension 6%

Student Aid: 2009-10

 We anticipate higher demand for needs-based student aid  University is committed to guarantee accessibility as per GC policy  Funds will be re-directed from carryforwards and new expendable donations to meet increased demand  As a result, the load on the operating budget is estimated to be $5M less

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Student aid: 2009-10

2008-09 student aid budget Redirected from other sources Est. reduction in funds needed from the 2009-10 operating budget 2009-10 student aid funds available

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90 5 (5) 90

Funding for Academic Divisions

 Academic divisions have significant financial challenges  Strategy ensures as much revenue as possible remains in the hands of academic divisions

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Net revenue to academic divisions: overview relative to 2008-09

Revenue available to University UW Expenses Student aid Net revenue to academic divisions

2009-10

0.5

To 2013-14

239 0.5

5.2

6.2

(45) (11) 183

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Overview relative to 2008-09 (Schedule 4)

Net revenue to academic divisions Estimated divisional costs Expense containment required

2009-10

6.2

(61.0) (54.8)

To 2013-14

183 (288) (105)

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Deficit Plan

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Overview relative to 2008-09 (Schedule 4)

Expense containment required Deficit financing Remaining Expense Containment Needed

2009-10

(54.8) 45.0

(9.8)

To 2013-14

(105) 45.0

(60)

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Deficit Financing for Academic Divisions

 A division may request approval for deficit financing from the Provost to assist in managing endowment and investment losses  Repayment will be in equal installments over five years

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Accumulated Deficit Repayment

09-10 10-11 11-12 12-13

Historical accumulated deficit — $43.9M

13-14

11.2

11.2

11.2

10.3

– New divisional deficit financing — maximum $45M – 9.0

9.0

9.0

9.0

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Concluding Remarks

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Concluding Remarks

 Flat revenue projections next year – difficult, but manageable with short-term deficit financing  Revenue projections improve in outer years, but deficit will need to be repaid

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Concluding Remarks

 Academic and administrative review process is helping in managing revenues and costs  Thanks to responsive divisional planning, we are in a better budget position than we could have been

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P&B Website

 For a copy of this presentation, the budget and other material, visit: www.planningandbudget.utoronto.ca

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