Transcript University of Toronto Impact of the Recession on the University’s Budget P/M Staff May 11 and 12, 2009 P/M Staff May 2009

University of Toronto
Impact of the Recession on the
University’s Budget
P/M Staff
May 11 and 12, 2009
P/M Staff May 2009
1
Discussion Today

University’s budget: 2009-10 and long-range
̶ Revenue / enrolment
̶ Expense
̶ Impact of endowment losses
̶ Compensation costs
̶ Deficit plan
̶ Impact and mitigation of budget pressures
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Budget Overview
2009-10
2013-14
Revenue
1437.6
1690.6
Expense
1482.6
1690.6
Annual planned deficit
(45.0)
0
Accumulated deficit
(77.7)
(9.0)
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Revenue vs. Expense, if no cost containment
$1,800
$1,600
$1,400
$1,200
$M
$1,000
$800
$600
$400
$200
$-
98-99
99-00
00-01
01-02
02-03
03-04
Revenue
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04-05
05-06
Expense
06-07
07-08
08-09
09-10
Revenue
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2009-10 Sources of Operating Revenue
Divisional Income
13%
Indirect Costs
2%
CRC
3%
Endowments
0%
Tuition Fees
38%
Provincial Grant
42%
Investment Income
1%
Other Income
1%
Enrolment

UG enrolment projected to increase by 500 FTEs over
planning period
̶ Reductions at St. George A&S and Engineering
̶ Increase at UTM, UTSC plans on hold

Graduate Expansion continues to 2013-14

Applications are strong
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FTE Enrolment at the University of Toronto
1973-74 to 2013-14
70,000
65,456
65,000
62,934
60,000
FTE Enrolment at the University of
Toronto
55,000
50,000
45,000
42,100
40,000
35,000
32,036
30,000
73
75
77
79
81
83
85
87
89
91
93
95
97
99
01
03
9
05
07
09P
11P
13P
Funding Per BIU
Government Operating Funding per BIU Adjusted For Inflation
$6,000
$5,500
27%
27%
27%
27%
$5,000
$4,500
$4,000
$3,500
$3,000
$2,500
91-92
92-93
93-94
94-95
95-96
96-97
97-98
98-99
99-00
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08
$4,418
$4,458
$4,122
$4,051
$3,958
$3,176
$3,530
$3,529
$3,577
$3,619
$3,691
$3,694
$3,677
$3,899
$4,297
$4,373
$4,376
91-92 value adj. for Inflation $4,418
$4,486
$4,566
$4,575
$4,674
$4,750
$4,827
$4,872
$4,957
$5,091
$5,221
$5,338
$5,486
$5,589
$5,710
$5,872
$6,001
In Absolute $
Revenue: increment relative to 2008-09
(excluding divisional revenue)
2009-10
To 2013-14
Grants
11.0
13.4
Tuition
39.9
210.5
Endowment
(39.8)
4.2
Other
(10.6)
10.9
0.5
239.0
Total revenue
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Tuition Revenue
̶ Tuition fee increases are regulated as per the
provincial framework (max is 5% avg. for
domestic)
̶ UofT 2009-10:
• Average domestic increase 4.31%
• Average international increase 5.9%
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Estimated Endowment Loss 2009-10

Total endowment payout was slated to be $62M
in 2009 payout cancelled

$46M flows through the operating budget to
support chairs and student aid

The remaining $16M stays in restricted funds to
support research and departmental expenses

Anticipate some payout next year
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Impact of endowment loss on the
operating budget
Endowed
Chairs
($M)
2008-09
12
–
2009-10
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Student Aid
($M)
–
34
Other Revenue Assumptions

Investment income significantly reduced but
projected to return to normal levels

Reduction in CRC program: 7 chairs, probably
starting in 2010-11

Institutional Cost of Research: At current levels
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Breakdown of Total Revenue
100%
90%
23%
21%
21%
22%
22%
22%
36%
38%
39%
40%
41%
42%
41%
41%
40%
38%
36%
35%
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
80%
70%
60%
50%
40%
30%
20%
10%
0%
Provincial operating grants
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Tuition fees
Other
Expense
Student Aid
Compensation
Shared Services
Academic Divisions
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Expense

There are two major components:
̶ Shared services
 $ 310M
̶ Academic divisions
 $ 850M

Objective is to maximize funding for academic
divisions to maintain quality of the student
experience

Over 70% of the budget is allocated to
compensation costs
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Student Aid: 2009-10

We anticipate higher demand for needs-based
student aid
̶ Projection is $90M
̶ More funds allocated to needs-based

University is committed to guarantee
accessibility as per GC policy
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Cost Increases — Union Compensation
$M
USW
8.9
TAs
1.3
Other unions
2.3
Total
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12.5
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Cost Increases — Senior Admin and
Faculty Compensation
$M
Senior Administration
0%
0
Faculty, ATB
if:
1%
4.2
Faculty, ATB
if:
3%
12.6
Faculty, PTR (merit)
8.4
0 – 21.0
Total
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Cost Increases — P/M Compensation
PM/Confidential
$M
ATB
if :
1%
0.8
ATB
if:
3%
2.3
Merit
1.5
Total
0 – 4.6
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Pension

Pensions are guaranteed

University required to make special payments 
the budget allocates $27M per year which is
more than amount required
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Shared Services Expenses

Budgets for university-wide services reviewed by
the President’s Budget Planning and Priorities
Committee (BPP)

Review aims to ensure alignment between
services, academic needs, budgets

Very few new allocations made based on top
priorities
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Shared-Services
$M
Non-discretionary costs
9.8
Compensation
5.0
Other costs
6.5
Total
20.3
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Shared-Services
$M
Total needed
20.3
Redirected cfwd
(6.3)
Cost containment
(4.5)
Total increase
10.5
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Total U-W Expense
$M
Shared services
10.5
Central funds
(11.0)
Net increase
(0.5)
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Non-discretionary Expenses

Total non-discretionary $9.8M, including:
̶ USW job evaluation adjust. fund and costs ($3M)
̶ Utilities ($3.6M)

Compensation increases: U-W service ($5M) –
based on settlements, otherwise total increase
no more than inflation
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2009-10 University-wide Costs by Cost Bin
UW General
9%
Financial Mgmt
2%
Occupancy
25%
UW Academic
10%
Student
6%
Research Admin
3%
IT
6%
University Mgmt
4%
HR
5%
Library
20%
Advancement
4%
Pension
6%
Funding for Academic Divisions

Academic divisions have significant financial
challenges

Multi-year plans reviewed by Provost and
advisory committee

Review informs UF allocations and approval of
faculty appointments
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Net revenue to academic divisions:
overview relative to 2008-09
2009-10
To 2013-14
Revenue available to
University
0.5
239
UW Expenses: reduction
0.5
(45)
Student aid: reduction
5.2
(11)
Net revenue to academic
divisions
6.2
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183
Fiscal Position
2009-10
To 201314
Net revenue to academic
divisions
6.2
183
Estimated divisional costs
(61.0)
(288)
Expense containment
required
(54.8)
(105)
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Deficit Financing
2009-10
Expense containment
required
(54.8)
Deficit financing
45.0
Remaining expense
containment required
(9.8)
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To 201314
(105)
9
(96)
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
13-14
Historical accumulated deficit — $43.9M
11.2
11.2
11.2
10.3
–
New divisional deficit financing — maximum $45M
–
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9.0
9.0
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9.0
9.0
Impact and Mitigation of Budget
Pressures
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UofT approach

No “broad-brush” approach – each academic
division is impacted differently and will respond
accordingly

Cost containment of 3% applied to shared
service divisions

Year-end OTO funds received from province
provide short term relief ($18M)

Continued advocacy with both levels of gov’t.
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Academic Division Responses

Redirection of carry-forward funds

Faculty searches cancelled

Some staff positions left unfilled/some layoffs

Increased contribution from research grants to
graduate student support

Short-term adjustments to enrolment targets

Travel/conferences/catering reduced
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Service Division Responses

Re-lamping and chiller replacement estimated to
have reduced consumption by 16 GWh, saving
$1.6M annually

Review of printing costs is underway

Resources Committee

CIO position — integrated approach to IT

Some staff positions left unfilled/some layoffs
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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

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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