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

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

Budget Overview 2009-10 2013-14 Revenue 1437.6 1690.6 Expense 1482.6 Annual planned deficit (45.0) Accumulated deficit (77.7) (9.0)

Revenue

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

FTE Enrolment at the University of Toronto

Funding Per BIU 27% 27% 27% 27% 27%

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 Total revenue 0.5 239.0

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%

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

Impact of endowment loss on the operating budget Endowed Chairs ($M) Student Aid ($M) 2008-09 12 – 2009-10 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

Expense Student Aid Compensation Shared Services Academic Divisions

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

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

Cost Increases — Union Compensation USW 8.9 TAs 1.3 Other unions 2.3 Total 12.5

Cost Increases — Senior Admin and Faculty Compensation Senior Administration 0% Faculty, ATB if: 1% 4.2 3% 12.6 Faculty, PTR (merit) 8.4 Total 0 – 21.0

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

Pension Pensions are guaranteed University required to make special payments  the budget allocates $27M per year which is more than amount required

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

Shared-Services $M Non-discretionary costs 9.8 Compensation 5.0 Other costs 6.5 Total 20.3

Shared-Services $M Total needed 20.3 Redirected cfwd (6.3) Cost containment (4.5) Total increase 10.5

Total U-W Expense $M Shared services 10.5 Central funds (11.0) Net increase (0.5)

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

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

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 (45) Student aid: reduction 5.2 (11) Net revenue to academic divisions 6.2 183

Fiscal Position 2009-10 To 2013- 14 Net revenue to academic divisions 6.2 183 Estimated divisional costs (61.0) (288) Expense containment required (54.8) (105)

Deficit Financing 2009-10 To 2013- 14 Expense containment required (54.8) (105) Deficit financing 45.0 9 Remaining expense containment required (9.8) (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

Accumulated Deficit Repayment 09-10 10-11 11-12 12-13 13-14 Historical accumulated deficit — $43.9M 11.2 10.3 – New divisional deficit financing — maximum $45M 9.0

Impact and Mitigation of Budget Pressures

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.

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

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

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