Budget Update January 12, 2009

Outline Review of 4-Year Plan as approved by the Board in May 2008 Current Status of the 4-Year Plan –Impact of Downturn in the Equity Markets How do we “Balance the Budget” –And …meet the Board’s Operating Reserve Target of $2.5 million

4-Year Plan (May 2008) : Background/Context Our current 4-Year Plan spans the period through Based on the Province’s Reaching Higher Plan -- which spans the period to –Undergraduate Growth Funding –Unfunded Basic Income Units (BIUs) –Tuition Freeze Compensation –Medical/Clinical Funding –Graduate Expansion –Quality

4-Year Plan (May 2008) : Background/Context 4-Year Provincial Government Framework on Tuition Fees – to –4.5% / 4% for Regulated Undergrad Programs –8.0% / 4% for Deregulated Undergrad as well as Graduate Programs

4-Year Plan (May 2008) : Operating Revenues Provincial Government Grants –A large portion of the Province’s New Investment has reached Steady-State –Two Growing Components Graduate Expansion Funding –Contingent on achieving government targets –Targets beyond not yet finalized Quality Funding –Based on overall enrolment levels

4-Year Plan (May 2008) : Operating Revenues Federal Government Grants –FFICR (federal funding for the indirect costs of research) -- assumed to be stable at current level Tuition Fees –Government Framework for and 4% Average Increase for Other Revenues –CRCs (Canada Research Chairs) almost at Steady- State –Substantial draws from Investment Income $18.55M in , $11.4M in , $16.4M in for a total of $46.3M

4-Year Plan (May 2008) : Expenditures UPIF (University priority investment fund) and One-Time funds to the Faculties and Support Units ECF, GEF, GEF+ (Enrolment Contingent Funding; Graduate Expansion Funding; Augment to Graduate Expansion Funding of $4K per qualified graduate student) Student Support -- Undergrad and Graduate

4-Year Plan (May 2008) : Expenditures University-wide Expenditures –Utilities – including New Buildings –Operating Costs of New Buildings –Library Acquisitions –Transfers to Capital: MMI (maintenance and modernization of infrastructure); FFICR (federal funding for indirect costs of research); CRC (Canada Research Chairs program) –Financing of Long-Range Space Plan $12.2M in and $4.5M in –One-time $6M to CFI (Canada Foundation for Innovation) Warchest Negotiated Employee Salary Increases

Current Status of 4-Year Plan: Revenues One known and one possible impact: 1. Downturn in Equity Markets –Impacts Endowments and Earnings from Non-Endowed Funds 2. Possible Deferral of Government Grant Increases –i.e. Graduate Expansion and Quality

Endowments The downturn in the equity markets has had a direct impact on our endowments For the current year (ie ), the planned 4.5% payouts have already been made As of December 31, our endowments are collectively underwater by about $11.1M We are examining options to deal with this “underwater” situation

Investment Returns As of Dec.31 in our Non-Endowed Funds: –Actual reserve at August 31/08 = $45.6M –Estimated reserve at Dec. 31/08 = -$11.5M The $18.55M transfer to the operating budget in the current year is being recommended to be withdrawn Current forecast: no investment draws for (was $11.4M) and (was $16.4M) Total impact to the operating budget over three years: $46.3 million less

4-Year Plan – Revised Forecasts (Jan 2009) Total Operating Revenues ($M) Cumulative Shortfall of $41.7M over the 3 Years

Impact on Operating Budget in How do we deal with the $18.55M shortfall in the current year and balance the budget? –Temporarily withdraw $6M from the CFI (Canadian Foundation for Innovation) Warchest (without limiting CFI initiatives) –Withdraw transfer to capital: $12.2M in We still need to remain with the Board’s capital debt limits Physics and Astronomy “on hold”

Impact on Operating Budget and Recommended Actions over the Next 2 Years –Additional Budget Reductions to the Faculty and Support Unit Base Budgets % average in each of the Next 2 Years –Examine University-wide and one-time expenditures and reduce as possible –Withdraw $4.5M allocation to capital in –Provide CFI (Canada Foundation for Innovation) funding as required; $3.5M will be required in 09-10

Looking beyond the current 4-yr plan As indicated in recent University budget documents, our operating revenues were already reaching steady-state At the same time, expenditures continue on an upward trend We were already anticipating expenditure constraints Any funding reductions arising from Ontario’s difficult fiscal circumstances will place additional constraints in our operating budget

What about graduate expansion? Graduate expansion continues to be of high priority for Western Future incremental government funding is directly linked to graduate expansion –$26,428 per incremental domestic PhD student –$13,290 per incremental domestic Masters student

Communications We are providing a budget update to the Western Community the week of January 12 We anticipate communicating decisions on the negative budget adjustments for all faculty and support units, as well as confirmations of spending levels from endowments by mid- February We will provide ongoing budget updates at Senate, Board and in other venues as budget deliberations continue, and further written updates as circumstances warrant

Budget Update January 12, 2009 Questions ??

Full-Time 1 st Year Enrolment Plan

Retention Rates of Cohorts in Direct-Entry Programs at Western

Full-Time Undergraduate Enrolment Forecast

Full-Time Masters Enrolment at Western Plan

Full-Time Doctoral Enrolment at Western Plan