Report: Business Board - February 3, 2020

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Simcoe Hall, 27 King’s College Circle, Governing Council Chamber 2nd Floor

REPORT NUMBER 250 OF THE BUSINESS BOARD
Monday, February 3, 2020

To the Governing Council,
University of Toronto.

Your Board reports that it met on Monday, February 3, 2020 5:00 p.m. in the Council Chamber, Simcoe Hall, with the following members present:

Present:
Brian D. Lawson (Chair); Bruce Winter (Vice-Chair); Scott Mabury, Vice-President, Operations and Real Estate Partnerships; Sheila Brown, Chief Financial Officer; Preet Banerjee*; Robert G. Boeckner; David Bowden; K. Sonu Gaind; Gary D. Goldberg; Sue Graham-Nutter; Sarosh Jamal; Joan Johnston; Anna Kennedy; Jan K. Mahrt-Smith; Joanne McNamara; Brian A. Miron; John Paul Morgan; Susan Rodgers; Ian Taylor; Chris Thatcher; Keith Thomas;

* via conference call

Regrets:
Yining (Elin) Gu; Kelly Hannah-Moffat; Kathryn A. Jenkins; Laurent-Philippe (L.P) Veilleux

Secretariat:
Patrick F. McNeill, Secretary

Non-Voting Assessors:
Cheryl Regehr, Vice-President and Provost; David Palmer, Vice-President, Advancement; Edward (Ted) Sargent, Vice-President, International; Heather Boon, Vice-Provost, Faculty and Academic Life; Trevor Rodgers, Assistant Vice-President, Planning and Budget; Saher Fazilat, Chief Administrative Officer, UTM; Ron Saporta, Chief Operations Officer, Property Services & Sustainability

In Attendance:
Gwenn Burrows, Executive Director, Office of the Vice-President, International; Elizabeth Church, Director, Stakeholder Relations; Elizabeth Cragg, Director, VPOREP; Adrienne De Francesco, Executive Director, Capital Projects Group Planning, Design & Construction; Marc Drouin, Director, Environmental Health and Safety; Susan Mazza, Special Projects Officer, Office of the President; Owen McCartney, Development Finance Analyst, Real Estate Department; Joshua Mitchell, Director, Real Estate; Michael Wald, Commercial Leasing Analyst, Real Estate Department


IN CAMERA ITEMS 19(a) and 20(a) ARE RECOMMENDED TO THE GOVERNING COUNCIL FOR APPROVAL. ITEMS 11 AND 13 AND IN CAMERA ITEMS 19(b) AND 20(b) WERE APPROVED. ALL OTHER ITEMS ARE REPORTED TO THE GOVERNING COUNCIL FOR INFORMATION

Pursuant to section 33(i) of By-Law Number 2,
items 18 to 20 were considered in camera.

OPEN SESSION

  1. Chair’s Remarks

The Chair welcomed members and guests.

  1. Reports on Debt:
    1. Debt Strategy - Annual Review

Sheila Brown, Chief Financial Officer, noted that the current debt strategy had been approved by the Business Board in 2012. The two key questions examined when conducting the Annual Review were whether the Strategy was still prudent and whether it currently provided sufficient debt capacity to meet the University’s needs. The current review revealed that both questions were answered in the affirmative; and based on the current estimated timing of the debt requirement for capital projects under active consideration, and the forward assumptions made in the review, the debt policy limit would deliver enough debt to support the University’s capital needs.

Ms Brown reported that Moody’s Investor Service had upgraded the University’s credit rating from Aa2 to Aa1 in the fall of 2019 – the Moody’s report was used to compare U of T with US schools. She stated that the current annual review included projects under active consideration in estimating when debt issuance would be required.

In response to members’ comments and questions, Ms Brown stated the following:

  • projections reflected, amongst other assumptions, the University Operating Budget, which was a 5-year rolling budget;
  • an off-balance sheet debt strategy was being considered that would be complementary to the University’s current debt strategy – the University was looking at potential models. Such a strategy could be useful in some situations in support of the Four Corners Strategy;
  • projections reflected the current pension special payments budget, which would be adjusted to reflect University Pension Plan contribution requirements when the UPP was formally operational in mid-2021.
    1. Status Report on Debt

The Status Report on Debt to January 31, 2020 was presented for information.

  1. Forecast of University Financial Results at April 30, 2020, prepared as of January 31, 2020

Sheila Brown noted that the forecast, which was presented annually to the Board for information, contained forecasts of the net income and net assets of the University. Projections were made based on a number of assumptions, including a Long-Term Capital Appreciation Pool (LTCAP) annual investment return rate of 3.3% (the actual return from May 1 to November 30, 2019) with sensitivity analysis provided for three other investment return scenarios.

Ms Brown reported net income for the year was projected to be $402 million, at 3.3% investment return rate. Net income was projected to range from $373 million (at 0% investment return) to $425 million (at 6% investment return). Net assets were projected to be $6.8 billion, at the 3.3% investment return rate. The projected range was from $6.5 billion (at 0% investment return) to $7.0 billion (at 6% investment return).

This item was presented for information and there were no questions from members.

  1. Pension Plan Annual Financial Report for the Year Ended June 30, 2019

Sheila Brown provided an overview of the Business Board’s responsibilities concerning the Registered Pension Plan (RPP) and highlighted the following financial results for the year ended June 30, 2019:

  • at June 30, 2019, the RPP had a market deficit of $239.8 million, an increase in the deficit of $28.0 million from the June 30, 2018 market deficit of $211.8, primarily due to investment returns of 3.83%, which was lower than the nominal target investment return of 6.10% for the year (4.0% plus CPI), partially offset by employer special payment contributions of $72.4 million; and
  • at June 30, 2019, the registered plan had a solvency deficit of $1.3 billion, an increase of $401.5 million from June 30, 2018, mainly due to a general decrease in the prescribed discount rates used to discount the liabilities as well as investment returns less than target returns.

Ms Brown reported that the Pension Plan Annual Financial Report for the year ended June 30, 2019 was approved by the Pension Committee at its meeting on December 10, 2019.

  1. Annual Report: Vice-President, International, 2018-2019

Professor Sargent, Vice-President, International offered a presentation, which included a progress report focused on five areas within the International Strategic Plan 2017 - 2022. He reminded members that the aim of the plan was to broaden and deepen the University’s global engagement opportunities for students, facilitate new opportunities for faculty members through global research partners, and expanding U of T’s global engagement through communications and alumni outreach.

Highlights of Professor Sargent’s presentation included the following:

Student Recruitment

  • the goal was to continue to increase competitive applications from a diverse set of countries, and to increase the rate (conversion) at which top applicants to the University accepted its offers;
  • the University levered scholarships such as the Lester B. Pearson International Scholarship to recruit the brightest students from around the world;
  • tuition deposits were implemented to better predict take-up on offers;
  • the University was on track to achieve its ambitious diversification growth for international undergraduate recruitment – it had made greater progress in some countries over others (i.e. exceeded targets in Europe, Asia and India, but not Africa and USA); and
  • when registered students’ data was viewed in aggregate, the University was tracking well on its diversity goals.

Student Mobility

  • surpassed targets of students participating in Learning Abroad program this past year, and have increased from 20% in 2017-18 to 23% of undergraduates participating by the time they graduate in 2018-19;
  • targets reset from 30% to meet 33% by 2022 (supported by various initiatives including increased funding by the University and external support (i.e. Mitacs Globalink Research Award) and improved coordination with academic units.

Academic Partnerships

  • continued to leverage complementary research strengths through partnership with other highly ranked international institutions;
  • through the International Doctoral Clusters partnership funding, over $5M leveraged to date through external sources funding (i.e. SSHRC, Simmons Foundation and others);
  • 11 International Doctoral Clusters approved to date with other leading institutions globally (i.e. National University of Singapore, Stellenbosch University, Tata Institute of Fundamental Research, Max Planck and many others);
  • global research alliance (GRA) partners continued to expand with partnered funding committed to GRA initiatives with universities such as University College London;
  • U of T established a centre in Mumbai, and had set up a Section 8 company in India, supported with a large six-year Tata Trusts grant; and
  • aggregate growth in international/multinational corporate funding across all regions of the world had increased from $14.4M in 2013 to $27.9M in 2019.

Reputation and Brand

  • among public universities, U of T ranked eighth in the world and fourth in North America on 2019 Times Higher Education (THE) World Reputation Rankings;
  • 4 International Leadership Councils to engage global alumni located in Asia, East and West Coast US, UK/Europe;
  • 12 priority international outlets for earned media are New York Times, Wall Street Journal, Washington Post, Boston Globe, Economist, Times of London, BBC, Guardian, Times of India, Hindustan Times, Al Jazeera and Reforma; and
  • results for above-noted strategic global publications: 2018-19 Actual: 56 stories, 1.5 times more than original target; and, 2019-20 Actual: On track for 71 stories in current cycle.

In response to members’ comments and questions, Professor Sargent stated the following:

  • students register with U of T safety abroad were now also covered by International SOS which assisted students in many emergency situations such as the Hong Kong protests and individual medical emergencies. The University continued to monitor the Coronavirus health crisis and had reached out to all students abroad with updates;
  • working on ongoing engagement in Africa with support of the Mastercard Foundation Scholars Program; and
  • VPI team continued to work closely with the VP Communications group to accomplish these related to reputation and brand building by delivering U of T’s story around the world.

The Chair expressed thanks to Professor Sargent and his team for the ongoing international initiatives and efforts.

  1. Annual Report: Deferred Maintenance, 2019

Ron Saporta, Chief Operations Officer, Property Services and Sustainability presented the annual report on deferred maintenance.

Mr. Saporta explained that as a result of the mandated changes to the Facilities Condition Assessment Program (FCAP) that allowed standardization of reporting within both the University and College sector, the reported deferred liability at U of T had increased to $879M representing an increase of $47M from the previous year. The University’s combined facility condition index (FCI) had increased to 15.8%, 0.6% higher than the previous year.

Other highlights reported included the following:

  • the University’s Tri-campus normalized deferred maintenance liability was approximately 30% higher than its Ontario peers, and significantly higher than those in Quebec, but it is lower than the institutions in Eastern and Western Canada; and
  • the current rate of renewal funding (at 0.7% of replacement value) was below both the provincial (1.5%) and national (1.95%) averages, and was falling behind the necessary renewal rate to maintenance the current FCI level.

Mr. Saporta stated that while the volume of deferred maintenance items had increased at St. George, it was important to note that the highest priority repairs, priority one, had remained relatively flat over the past seven years. This stability was the result of significant direct internal and Provincial Facilities Renewal Program (FRP) funding combined with the indirect impact of several capital building renovation projects and building energy retrofits financed through the Utilities Reduction Revolving Fund (URRF). Despite the sizable estimated cost of this liability, significant improvements had been achieved over the past decade to the fundamental elements of the portfolio of buildings on campus. He added that the University had adequately maintained its buildings and minimized, although not eliminated, the chance of an unforeseen problem having major consequences to the University’s mission and operating budget.

In response to a member’s comment regarding the current level of funding that would have to increase by approximately 120% to match the provincial average, Mr. Saporta and Professor Mabury explained that renewal capital projects such as the Fitzgerald building would improve the deferred maintenance reporting levels. As part of institutional decision making, Deans across all three campuses continued to identify priorities and allocate more funds as part of the ongoing budget process to address deferred maintenance – the comprehensive data collection and reporting on deferred maintenance which would help the University in the long-run in its planning and prioritizing of projects.

  1. Capital Projects and Real Estate Annual Review to December 31, 2019

Joshua Mitchell, Director, Real Estate and Adrienne De Francesco, Executive Director, Capital Projects Group Planning, Design & Construction presented the Capital Projects and Real Estate Annual Review. The presentation included a comprehensive list of capital projects under construction and in design.

Professor Mabury commented that the construction market in the Greater Toronto Area continued to present challenges to the University’s current and planned construction needs as it related to labour supply and demand.

In response to a member’s comment, the VPOREP stated that the University learned from the various projects undertaken which had revealed unexpected costs or construction challenges; however many were one-off experiences (i.e. Robarts Library).

  1. Update on the Tri-Campus Review

Professor Regehr provided an update on the Tri-Campus Review, which had begun in Spring 2018 and was nearing its conclusion. She shared that the Review was the latest phase in the University’s thinking about the relationship among the campuses, and followed the theme of “One University, Three Campuses” first introduced in 2008.

It was reported that the Tri-Campus Review was guided by a steering committee and included five working groups, each with its own mandate:

  1. Academic Planning and Academic Change, which considered questions related to changing or creating new academic programs and units, as well as academic reviews and academic planning;
  2. Graduate Units, which considered questions related to graduate faculty memberships, faculty searches, the appointment of graduate chairs, and the structure of graduate units;
  3. Student Services, which considered questions related to tri-campus responsibilities in providing student services, modes of delivery for student services, and resourcing of student services;
  4. Administrative Structure, which considered questions related to tri-campus reporting lines and leadership; and
  5. Budget Relationships, which considered questions related to accounting for University-wise and campus-wide costs, the funding of tri-campus graduate units, and the annual budget review processes.

Professor Regehr stated that each working group was proceeding along different timelines, with all of them close to completion. As of December, most working groups had submitted final recommendations to the Tri-Campus Review Steering Committee, which would synthesize the recommendations into a final report that would be presented for information to governance at a later date.

In response to member’s comments, the Provost stated that the review revealed a stronger relationship and sense of connection among the three campuses. The roles of institutional responsibility and those portfolios that are tri-campus would be clarified and better defined as a result of the review.

  1. Report on Librarians and Gender-Based Salary Equity, November 28, 2019 and Provost’s Response to the Report on Librarians and Gender-Based Salary Equity: University of Toronto, December 6, 2019

Professor Regehr stated that on April 15, 2019 the Report of the University of Toronto’s Provostial Advisory Group on Gender Pay Equity was released. At that time and in the Provost’s administrative response to original Report, the University committed “to conducting a similar analysis for our librarian colleagues in continuing appointments.” Professor Regehr reminded Board members that the Vice-President Human Resources and Equity, Kelly Hannah-Moffat, provided a brief update at its November 2019 meeting concerning the forthcoming report and discussions concerning librarians and gender-based salary equity.

Professor Regehr stated that a second Report looked at all librarians at U of T. It used a similar model to that used in the initial report on faculty salaries. That model was designed to allow the University to identify the closest peer-to-peer comparisons of men and women librarian salaries, taking into account individual differences in experience (measured as rank and years since Master of Library Science), and whether or not a librarian held a position as a Senior Administrator or Department Head. Based on comparisons with universities in Canada and peer institutions internationally, the Provost had issued an administrative response to the Report on December 6, 2019.

In her response, the Provost reported that the “University and UTFA have agreed that, retroactive to July 1, 2019, every woman Librarian at the University of Toronto will receive an increase to her July 2, 2019 base salary – this included 125 eligible Librarians at U of T. As was the case with the faculty gender-based salary equity payment, the Provost committed to fund the cost from institutional funds.

The Board received the Provost’s report for information.

  1. Health and Safety Requirements: Quarterly Report on Compliance

The Quarterly Report on Compliance was received for information.

  1. Health and Safety Policy

On a motion duly moved, seconded, and carried

YOUR BOARD APPROVED

THAT the on-going application of the University of Toronto Health and Safety Policy, a Copy of which is attached to Professor Hannah-Moffat’s Memorandum to the Business Board dated February 3, 2020, be confirmed.

  1. Reports of the Administrative Assessors

There were no reports of the Administrative Assessors.

OPEN SESSION CONSENT AGENDA

On a motion duly moved, seconded, and carried

YOUR BOARD APPROVED

THAT the consent agenda be adopted.

  1. Report of the Previous Meeting

Report Number 249 of the Business Board, November 27, 2019 was approved.

  1. Business Arising from the Report of the Previous Meeting

There was no business arising from the Report of the previous meeting.

  1. Report Number 135 of the Audit Committee, December 3, 2019

Report Number 135 of the Audit Committee dated December 3, 2019 was received for information.

  1. Date of the Next Meeting – Wednesday, March 18, 2020

The Chair advised members that the next meeting would be Wednesday, March 18, 2020 at 5:00 p.m.

END OF CONSENT AGENDA

Other Business

There were no items of other business.

THE BOARD MOVED IN CAMERA

  1. In Camera Reports of the Administrative Assessors

There were no In Camera Reports of the Administrative Assessors.

  1. Capital Project: Science Building at the University of Toronto Mississauga - Revised Total Project Cost and Sources of Funding
    1. Financing Requirement

      On motion duly made, seconded and carried

      YOUR BOARD APPROVED

      The recommendation of Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships, as outlined in the memorandum dated January 22, 2020, regarding the financing of the Science Building at the University of Toronto Mississauga capital project.

    2. Execution of the Project

      On motion duly made, seconded and carried

      YOUR BOARD APPROVED

      The recommendation of Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships, as outlined in the memorandum dated January 23, 2020, regarding the execution of the Science Building at the University of Toronto Mississauga capital project.
  1. Capital Project: FitzGerald Building Revitalization - Revised Total Project Cost and Sources of Funding
    1. Financing Requirement

      On motion duly made, seconded and carried

      YOUR BOARD APPROVED

      The recommendation of Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships, as outlined in the memorandum dated January 22, 2020, regarding the financing of the FitzGerald Building Revitalization capital project.

    2. Execution of the Project

      On motion duly made, seconded and carried

      YOUR BOARD APPROVED

      The recommendation of Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships, as outlined in the memorandum dated January 23, 2020, regarding the execution of the FitzGerald Building Revitalization capital project.

The Board returned to open session.

The Chair thanked members for their attendance and participation in the Board meeting.

The meeting adjourned at 6:39 p.m.

February 6, 2020