Report: Business Board - June 19, 2024

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REPORT NUMBER 279 OF THE BUSINESS  BOARD

WEDNESDAY, JuNE 19, 2024

To the Governing Council,
University of Toronto,

Your Business Board reports that it held a meeting virtually via zoom on June 19, 2024, at 5:00 p.m. with the following members present:

PRESENT: Rajiv Mathur (Chair), Mathangi Gopinathan (Vice-Chair), Scott Mabury (Vice-President, Operations & Real Estate Partnerships), Trevor Rodgers (Chief Financial Officer), Janet Anne Cloud, Alicia Damley, Annabelle Dravid, Samuel Elfassy, Paul Huyer,  Kathryn Jenkins, Kikelomo Lawal, Nelson Lee, Scott MacKendrick, Brian Madden, Rima Ramchandani, David Regan, Carmen Sebert, Ian Taylor, Veronica Wadey, Grace Westcott, Mary-Agnes Wilson

REGRETS: Kelly Hannah-Moffat (Vice-President, People Strategy, Equity & Culture), Sharleen Ahmed, Glen W Bandiera, Vikram Chadalawada, Maureen Harquail

NON-VOTING ASSESSORS: Christine Szustaczek (Vice-President, Communications), Jeff Lennon (Assistant Vice-President, Planning & Budget), David Lehto (Chief of University Planning, Design & Construction)

SECRETARIAT: Timothy Harlick (Secretary), Sheree Drummond (Secretary of the Governing Council), Megann Davidson

IN ATTENDANCE: Thomas Hofmann, Jodie Glean (Executive Director, Equity, Diversity & Inclusion), Sanish Samuel (Controller and Director of Financial Service), Elizabeth Cragg (Director, Office of the Vice President, Operations & Real Estate Partnerships), Helen Bao (Executive Finance Officer, OREP), Sherol Cowell (Manager, Office of the Vice-President, Advancement)
 

Pursuant to section 38 of By-Law Number 2,
consideration of items 15 to 18 took place in camera.

OPEN SESSION

  1. Chair’s Remarks

    Vice-Chair Mathangi Gopinathan chaired the meeting on behalf of the Chair. The Chair welcomed members and guests to the final meeting of the governance year. 

    The Chair noted that Item 2: Reports of the Administrative Assessors and Item 6: Annual Report 2023-24: Vice President, Operations & Real Estate Partnerships would be deferred until after the Annual Report 2023-24: Equity and Diversity and Inclusion to accommodate a temporary absence of the Senior Assessor.
  2. Reports of the Administrative Assessors

    Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships, provided an update on the following:

    Encampment

    Professor Mabury referenced a community message from President Gertler that had been released earlier in the day. In it, the President reiterated the University’s principles that guided its actions: neutrality on issues of scholarly debate, adherence to University policies and procedures in all its activities, inclusivity and democratic principles regarding the membership of University committees, and recognition of the fundamental right to protest.

    The President’s message further commented on the University’s application for an injunction being heard by the Ontario Superior Court on June 19th & 20th. The University was seeking to preserve the right to debate, disagree, and protest for all community members. If the University was awarded an injunction, encampment participants, along with all University community members, would be free to exercise their right to free expression, protest, and continue advocating for their cause without erecting structures or occupying property overnight. The order before the court included provisions for the Toronto Police Service (“TPS”) to assist in carrying out the order to vacate King’s College Circle if necessary, should individuals refuse to comply with the injunction.

    The message concluded by stating the University aimed to find a peaceful resolution that allowed the campus to return to normal while still respecting the right to protest. The hope was that all parties involved, especially those within the encampment, could reach an agreement that avoided negative outcomes and preserves the broader community’s well-being.

    Cyber Security Incident

    A cyber security incident occurred at the Ontario Institute for Studies in Education (“OISE”), impacting approximately 14,238 individuals. Of these, approximately 8,000 individuals may have had their social insurance numbers exposed. The incident was reported to the Information and Privacy Commissioner, and credit monitoring was offered to affected individuals. Fortunately, most of the impacted systems were approaching their end-of-life cycle and did not require extensive restoration or business continuity plans.

    The incident highlighted issues such as insufficient adoption of endpoint protection, identity best practices, and vulnerability management. Data governance challenges, including outdated data retention policies and lack of clear system inventory, were also identified during the investigation. Overall, the incident underscored the need for improved security practices across the university.

    Enrolment

    Current enrolment targets were approximately 100 students below projections. Specifically, there were 700 fewer international students which was partially offset by 600 more domestic students than anticipated. Despite this, Ontario’s post-secondary sector experienced a 20% decline in international enrolment, excluding the University of Toronto. The challenges around international recruitment arose from the global awareness and continued uncertainty of government policies impacting international student visas.

    In terms of financial impact, using historical melt rates, there was a projected $30 million impact on the operating budget by following Fall semester. This was, however, less severe than initially anticipated as earlier projections suggested an impact of over $40 million. On a positive note, the University’s summer enrolment had improved, contributing a positive variance of approximately $11 million. Professor Mabury concluded noting that although there were more domestic students, it didn’t necessarily correlate with additional government grants, which are fixed based on the university’s approved enrolment corridor.
  3. Financial Statements
    (Arising from the meeting of the Audit Committee held on June 17, 2024)
    1. Audited Financial Statements for the Fiscal Year ended April 30, 2024

      In his introduction, Mr. Trevor Rodgers, Chief Financial Officer, recognized the extraordinary efforts and exceptional job of those members from Financial Services, Internal Audit, University of Toronto Management Corporation and the external auditors in the annual preparation of the audited statements.

      Mr. Scott MacKendrick, a member of both the Audit Committee and Business Board, reported that the Audit Committee had met with the external auditors on two occasions. The Committee reviewed the audit plan at its December meeting and was satisfied with the areas of audit emphasis, some of which included how the University recorded its revenues and accounts for its investments, pension and employee post-retirement benefits, as well as capital projects. There were no major deviations from the audit plan and scope during the execution of the audit.

      Mr. MacKendrick concluded his report stating that the Audit Committee was satisfied that the financial statements fairly represented the financial position of the University and its results for 2023-24 and had no concern that would call into question the integrity of the financial statements.

      Mr. Rodgers noted the following:
    • The University remained in a strong financial position, with net assets increasing by $923 million to $9.9 billion in 2024. However, it faced challenges due to slowing enrollment growth, fee restrictions, and rising expenses. The net income of $508 million had been largely driven by strong returns on working capital investments, capital asset additions that are amortized and not expensed in-year, and funds set aside for future priorities.
    • In 2024, the University had paid $2.5 billion for salaries and employee benefits, comprising 61% of the University’s $4.1 billion in expenses. The University was a member of the University Pension Plan Ontario (UPP), and it had set aside $175 million in a pension special payments reserve to fund any future liabilities. That year, $60 million of the reserve was transferred to the UPP as a prepayment against potential future special payment obligations.
    • Additional expenses had included $364 million for scholarships, fellowships, and bursaries, $311 million for materials, supplies and services, $222 million for amortization of capital assets, and $147 million for inter-institutional contributions.
    • The University had continued to invest in vital capital infrastructure, spending $369 million (net) on capital asset additions in 2024. It also acquired a 20% interest in the CampusOne Student Residence and completed construction of Harmony Commons, a 746-bed student residence at the Scarborough Campus.
    • Despite the challenges, the University had continued to generate funding for research and raise funds from philanthropy, including $312 million in donations and philanthropic research grants raised in 2024. The Long-term Capital Appreciation Pool realized a return of 11.4% during fiscal year 2024. The University also implemented a new Advancement Investment Model (AIM) to support strategic investment in fundraising.

His presentation included additional information in the following areas:

  •  Results from the Statement of Operations;

  • Breakdown of Net Assets;
  • Investment Returns;
  • Status of the Endowment and Payout for the Year; and
  • Status of Debt and the Sinking Fund.

The Chair thanked Mr. Rodgers for his detailed report and extended congratulations to everyone involved with preparing the financial statements. She also thanked the members of the Audit Committee for their careful review of the statements.

In response to a member’s question, Mr. Sanish Samuel, Controller and Director of Financial Services commented that as it relates to Note 7 regarding employee benefits, the primary factor affecting actual gains was a change in the discount rate this year. There had been a recent transition from a funding valuation method to an accounting valuation method for employee future benefits. This shift necessitated the use of an AA discount rate that varies annually based on long-term interest rates and therefore introduces more volatility into the valuation of employee future benefit liabilities.

On motion duly made, seconded and carried,

YOUR BOARD RECOMMENDED

THAT the University of Toronto audited financial statements for the fiscal year ended April 30, 2024, be approved.

  1. Supplementary Report by Fund (April 30, 2024)

    The Supplementary Report was received by the Board for information.​​​​​​
  1. Appointment of the External Auditors
    (Arising from the meeting of the Audit Committee held on June 17, 2024)

    Mr. Rodgers reported that the University issued a Request for Proposals for external audit services in November 2023 which had been ten years since its last formal tender process. An evaluation working group had been established and included the Chair of the Business Board, and the Chair and Vice-Chair of the Audit Committee.

    Mr. MacKendrick reported that at the Audit Committee discussed the very limited number of firms in Canada who operated in the post-secondary sector capable of undertaking the work requested by the University and in addition, that a number of those firms had expressed a conflict of interest due to ongoing non-audit services already provided to various divisions within the university.

    He further noted that the Audit Committee acknowledged that Ernst & Young (EY) had been the external auditor for 10 years, and recognizing that longstanding relationship, was satisfied that any potential issue of auditor independence had been appropriately managed.

    In response to a Member’s question, Mr. Rodgers noted that the proposal EY submitted included a new audit team including both the engagement partner and the senior manager.

On motion duly made, seconded and carried,

YOUR BOARD RECOMMENDED

THAT Ernst & Young LLP be re-appointed as external auditors of the University of Toronto for the fiscal year ending April 30, 2025.

  1. Debt Policy Limit, Debt Allocations, Outstanding Debt Issued and Status of the Long-Term Borrowing Pool to April 30, 2024

    Mr. Rodgers explained that the Report, which was an annual item presented to the Board for information, provided an update on the total debt policy limit; the debt burden ratio and the viability ratio; as well as an update of the status of the long-term borrowing pool. The Long-Term Borrowing Pool was a self-imposed sinking fund in which the University was accumulating funds to repay debentures as they matured.

    The report was received for information.
  2. Annual Report 2023-24: Vice President, Operations & Real Estate Partnerships

    Professor Mabury presented the Annual Report 2023-24: Vice President, Operations & Real Estate Partnerships. Highlights included:
  • An overview of how the portfolio had advanced Institutional priorities which included: “Embrace our Place” through housing strategies to increase housing supply for students and faculty; and master planning to leverage the location of the University within Toronto’s core downtown area; and “Reinventing Undergraduate and Graduate Education” through innovative research and learning opportunities.
  • An overview of the portfolio and an organizational chart reflecting a well-coordinated tri-campus model supporting the institution’s academic mission.
  • Facilities and Services’ geothermal systems and deep building retrofits showcased a commitment to sustainability, and engaging students in these initiatives fostered a dynamic academic environment. Development of the deep building retrofit program would result in a 75% reduction in the GHG emitted by four priority buildings and address a material portion of the deferred maintenance backlog.
  • The University ranked first for sustainability in the QS World University Rankings for 2024 and had developed a multi-year strategy and funding plan for the implementation of phase one of the Utilities Master Plan as part of the institution’s Climate Positive Plan. 
  • University Planning, Design & Construction had initiated processes, plans and programs to ensure that it offered its clients value for money, transparency and accountability.
  • Space & Experiences continued to excel in meeting the needs of a large and diverse student population. Acquisitions such as CampusOne immediately added as many as 890 beds to the increased the student housing capacity by 9%,
  • Information Technology Services continued to focus on their multi-year information security plan, through initiatives and programs such as: security awareness training, next-generation endpoint protection across UofT, enhancing security networks and vulnerability management.
  • The Planning and Budget Office remained agile in responding to government requests and their oversight of the operating budget and enrollment planning ensured financial stability.

The Chair thanked Professor Mabury for his presentation.

  1. Annual Report 2023-24: Equity and Diversity and Inclusion

    Ms Jodie Glean, Executive Director, Equity, Diversity & Inclusion, presented the Annual Report 2023: Equity, Diversity & Inclusion. The Report reflected the collective efforts of the University community to embed equity and inclusion and belonging across the institution.

    Highlights of the presentation included:
  • An overview of Equity, Diversity & Inclusion (“EDI”) activities across the tri-campus from January 1 to December 31, 2023, including initiatives by Faculties, divisions, campuses, and institutional efforts.
  • The EDI report focused across four themes: Increasing Access, Attracting Talent; Enhancing Current Experiences; Forging Future Pathways; and On the Horizon.
  • Education initiatives, including topics on anti-racism, intersectionality of faith and anti-racism, accessibility and 2SLGBTQ+ inclusion, were essential for promoting understanding and awareness. The IEO welcomed the Assistant Director of Faith and Anti-racism who will provide guidance to the University community in addressing individual and systemic faith and race-based discriminations.
  • Collaboration across divisions and engagement with institutional partners underscored the collective effort required to achieve EDI goals. The Report of the Anti-Asian Racism Working Group, along with other institutional reports, contributes significantly to shaping policies and practices to enhance inclusion across the tri-campus.
  • The 2023 Employment Equity Survey was redesigned with updated questions to better capture and garner a deeper understanding of the diversity of the university community .  
  • A summary of future work included emphasizing the importance of collaboration by inviting the community to consider their role in advancing inclusion and belonging at the University.

    Discussion

    In response to a member’s question, Ms Glean provided an update on the progress made in implementing the recommendations from the Report of the Anti-Asian Racism Working Group. The office was collecting data related to this work and key initiatives included incorporating Asian identities and experiences into EDI education programming. Additionally, data collection enhancements, such as the Employment Equity Questionnaire, were being utilized to support meeting the outlined recommendations. Challenges included maintaining awareness of the report landscape and ensuring ongoing communication and partnership with EDI leads across divisions.

    In response to member’s question, Ms Glean highlighted the ongoing efforts to combat antisemitism within the institutional Equity Office. Over the past five years, the office had engaged in workshops, speaker series, and education initiatives focused on addressing antisemitism. Currently, the office is providing support through community check-ins and the coordination of on-site counseling. Looking ahead, the IEO is working towards the development of E-modules to further contribute to this important work, which will also include addressing anti-Israeli discrimination and other related topics.

    The Chair thanked Ms Glean for her presentation.
  1. Collective Agreement Updates:

    1. July 1, 2023 – June 30, 2026 Collective Agreement between the University of Toronto and CUPE Local 1230 Full-Time & Part-Time

    2. ​​​​​​​July 1, 2023 – June 30, 2026 Collective Agreement between the University of Toronto and CUPE Local 1230 Student Casual

    3. May 1, 2024 - April 30, 2027 Collective Agreement between the University of Toronto and Unifor Local 2003

    4. April 26, 2024 - December 31, 2024 Collective Agreement between the University of Toronto and USW Local 1998 – UTM Residence Dons

The Board received a brief update on recently ratified collective agreements.

CONSENT AGENDA
 

On motion duly moved, seconded, and carried

YOUR COMMITTEE APPROVED

THAT the consent agenda be adopted and that Item 11, the Report of the Previous Meeting, be approved.

  1. Quarterly List of Donations of $250,000 or more to the University of Toronto: February 1 - April 30, 2024

    The Quarterly List of Donations of $250,000 or more to the University of Toronto – February 1 to April 30, 2024, was received for information.
  2. Status Report on Debt to May 31, 2024

    The Status Report on Debt to May 31, 2024, was received for information.
  3. Report of the Previous Meeting: Report Number 278, April 25, 2024

    Report Number 278 of the Special Meeting of the Business Board held on April 25, 2024, was approved.

  4. Business Arising from the Report of the Previous Meeting

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

  5. Date of Next Meeting – September 25, 2024, at 5:00 p.m.

    Returning members were reminded that the first meeting of the 2024-25 academic year would be September 25, 2024, at 5:00 p.m.
  1. Other Business

    There were no items of other business.

The Board moved In-Camera.

IN CAMERA SESSION

  1. In Camera Reports of the Administrative Assessors

    There were no in camera reports made by the administrative assessors.
  2. Report on Capital Projects as of May 30, 2024

    The Report on Capital Projects as of May 30, 2024, was received for information.
  3. Capital Project (Level 2): Report of the Project Planning Committee for the Hart House Infrastructure Renewal Project - Stage 1

    1. Financing Requirements

      The Board approved a motion that the recommendation of the Vice-President, Operations and Real Estate Partnerships, as outlined in the memorandum dated June 12, 2024, be approved.
       

    2. Execution of Project

      The Board approved a motion that the recommendation of the Vice-President, Operations and Real Estate Partnerships, as outlined in the memorandum dated June 12, 2024, be approved.

  4. Report of the Striking Committee: Coopted Membership of the Business Board and the Audit Committee for 2024-2025

On motion duly made, seconded and carried

IT WAS RESOLVED

BUSINESS BOARD

THAT Lindsay Boyce be appointed to the Business Board as a co-opted administrative staff member for a one-year term from July 1, 2024 to June 30, 2025;

THAT Adel Melek and Samantha Kappagoda be appointed to the Business Board as co-opted lay members for three-year terms from July 1, 2024 to June 30, 2027; and

THAT Firdaus Sadid be appointed to the Business Board as a co-opted student member for a 1-year term from July 1, 2024 to June 30, 2025.

AUDIT COMMITTEE

THAT the following be appointed as co-opted members of the Audit Committee for one-year terms from July 1, 2024 to June 30, 2025:

  • Sue Graham-Nutter (re-appointed);
  • Rima Ramchandani (re-appointed); and

THAT Joanne McNamara be re-appointed as Chair of the Audit Committee and Paul Huyer be re-appointed as Vice-Chair of the Audit Committee for one-year terms from July 1, 2024 to June 30, 2025.

The Board returned to Open Session.

The meeting adjourned at 7:02 p.m.

June 20, 2024