Report: Business Board - June 20, 2023

REPORT NUMBER 273 OF THE BUSINESS  BOARD

JUNE 20, 2023

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To the Governing Council,
University of Toronto.

Your Business Board reports that it held a meeting in the Council Chambers, Simcoe Hall, on Tuesday June 20, 2023, at 5:00 p.m. with the following members:

In Attendance: Sandra Hanington (Chair), Rajiv Mathur (Vice-Chair)*, Ron Saporta (Acting Vice-President, Operations),  Heather Boon (Acting Vice-President, People Strategy, Equity and Culture), Trevor Rodgers (Chief Financial Officer), Glen Bandiera*, Olenka Baron,  Janet Cloud, Alicia Damley*, Teodora Dechev*, K. Sonu Gaind, Sue Graham-Nutter, Maureen Harquail, Thomas Hofmann, Paul Huyer, Sarosh Jamal, Kathryn A. Jenkins, Ian Taylor, Grace Westcott, Mary-Agnes Wilson*

Regrets: Annabelle Dravid, Mathangi Gopinathan, Arman Rasekh, David Regan, Danielle Skipp, Lara Zink

Secretariat: Timothy Harlick, Assistant Secretary (Secretary), Sheree Drummond (Secretary of the Governing Council), Joanne Chou (Assistant Secretary)

Non-Voting Assessors:
Cheryl Regehr Vice-President, Academic & Provost, David Palmer, Vice-President, Advancement, David Lehto, Chief, University Planning, Design & Construction, Luke Barber, Acting Chief Operating Officer, Deborah Brown, Chief Administrative Officer, UTM*

In Attendance:
Janet Ecker, Chair of Governing Council, Sanish Samuel, Controller and Director of Financial Services, Anthony Tia, Director of Treasury and Investment Services Tad Brown, Council, Business Affairs and Advancement, Allison Burgess, Acting Executive Director, Equity, Diversity & Inclusion, Elizabeth Cragg, Director, Office of the Vice President, Operations & Real Estate Partnerships, Helen Bao, OREP Executive Finance Officer

*Attended Remotely

ITEMS 4 & 5 WERE RECOMMENDED. ITEMS 6(a)&(b), 7(a)&(b), 13 & 14 and IN-CAMERA ITEMS 22(a)&(b), 23(a)&(b), 24 & 25 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 25 were considered in camera.

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OPEN SESSION
 

1. Chair’s Remarks

   
   The Chair welcomed members and guests to the meeting of the Board.
   
   Recognition of the Business Board Chair
   Ms Janet Ecker, Chair of the Governing Council, thanked Ms Sandra Hanington for her service to the Board as its Vice-Chair from 2021-22 and Chair from 2022-23. She stated that Ms Hanington had been an excellent Chair, managing meetings in an efficient and respectful manner.
   
   She noted that during her time as Chair, the Board had dealt with several major items including capital projects and complex property acquisitions. Ms Ecker made a special note that Ms Hanington would serve as Vice-Chair of the Governing Council in the upcoming year. 
   
   As a token of appreciation and consistent with tradition, Ms Ecker presented a chair to Ms Hanington in recognition of exemplary service and leadership. 
    

2. Annual Report: Senior Appointments and Compensation Committee (SACC)
   
   Ms Ecker presented the Annual Report of the Senior Appointments and Compensation Committee (SACC) covering the period May 1, 2022 to April 30, 2023. She noted that SACC was responsible for attesting to the Governing Council, through the Business Board, that compensation policies and programs for particular categories of employees were appropriate, and that decisions about the compensation of individuals had been made in accordance with established policy and practice.
   
   As part of its role, SACC reviewed the President’s Annual Activity Report for 2021-22, and considered the Chair of the Governing Council’s performance evaluation for the President – as well as the performance assessments of the Vice-Presidents prepared by the President. SACC had also reviewed the proposed compensation increases for Professional, Managerial and Confidential Staff, Advancement Professionals and Senior Research Associates/Research Associates and had previously recommended them for approval by the Business Board.
   
   The report was received for information.
    

3. Reports of the Administrative Assessors
   
   There were no reports from the administrative assessors.
    

4. Financial Statements
   
   (Arising from the meeting of the Audit Committee held on June 19, 2023)

   1. Audited Financial Statements for the Fiscal Year ended April 30, 2023
      
      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 External Audit in the annual preparation of the audited statements.
      
      Mr. Paul Huyer, a member of both the Audit Committee and Business Board, reported that the Audit Committee had met with the external auditors. 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. Huyer 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 2022-23 and had no concern that would call into question the integrity of the financial statements.
      
      Mr. Rodgers noted the following:

   • for the year ended April 30, 2023, the University recorded a positive net income of $551 million (12.9% of revenues);
   • The positive net income also included funds that had been set aside for future capital projects and other priorities, resulting in an increase of $395 million in central and divisional reserves;
   • The University received $308 million in fundraising pledges during the year, which included $256 million in pledges and gifts (donations) and $52 million in philanthropic research grants from non-government sources;
   • The University continued to invest in vital capital infrastructure with $536 million in capital asset additions;
   • Enrolment continued to be strong, increasing 7% over the last 5 years providing $2.2 billion in revenues from student fees. Government grants provided in support of student enrolments amounted to $719 million. Together these two sources accounted for 68.4% of revenues for the year;
   • $2.2 billion was spent on salaries and employee benefits comprising 59.9% of the University’s $3.7 billion in expenses; and
   • Net assets increased by $531 million to a total of $9.03 billion, This was net of the amount reported as a deficit ($483 million) largely due to the internal financing of capital construction in accordance with the University’s debt strategy.
     
     He then offered a presentation, which provided 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.
      

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, 2023 be approved.
 

2. Supplementary Report by Fund (April 30, 2023)
   
   The Supplementary Report was received by the Board for information.

5. Appointment of the External Auditors
   
   (Arising from the meeting of the Audit Committee held on June 19, 2023)
   
   Mr. Rodgers reminded members that Ernst & Young LLP had been re-appointed annually following a tendering process for the 2014-15 financial statements and that the University remained very satisfied with the quality of work performed by Ernst & Young LLP. Mr. Rodgers further reported that Ernst & Young LLP continued to perform well and were proactive in bringing issues and new developments forward. The firm had also met the University’s very tight deadlines and heavy workload requirements for the various audits.
   
   He noted that the Audit Committee and the administration had reviewed the performance of the external auditors, which had been very positive. Mr. Rodgers expressed unqualified support for the re-appointment of the external auditors.
   
   Mr. Huyer confirmed that at its meeting on June 19, 2023, the Audit Committee had recommended to the Business Board the re-appointment of Ernst & Young LLP for the upcoming fiscal year 2023-24.
   
   Mr. Rodgers also advised the Board that Ernst & Young had been providing the University with auditing services since 2014 and his team would be undertaking a review of audit services in 2024. A review process would be discussed with the Audit Committee in the upcoming year.
   
   In response to a member’s question, Mr. Sanish Samuel, Controller and Director of Financial Services, advised that the auditors had been very proactive in bringing forward changes in accounting standards, including a new regulatory standard for employee future benefits that had been implemented in the current fiscal year.

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, 2024.
 

6. Conflict of Interest Policies
   
   Professor Heather Boon, Acting Vice-President, People Strategy, Equity & Culture, reported that the University’s existing conflict of interest policies and guidelines offered direction and guidance on what the University considered a conflict of interest and how they were managed. The new Policy on Conflicts of Interest – Administrative Staff clarified expectations and obligations for administrative staff and their managers related to actual or perceived conflicts of interest.
   
   The proposed Policy included: the distinction between actual and perceived conflicts of interest, the obligations of staff and managers, and provisions for confidentiality, consequences for policy violations, a process for reviewing decisions, and protection against reprisal.
   
   The Board was informed that for some administrative staff, conflict of interest was addressed separately in the following policies: Policies for Professional and Managerial Staff; Policies for Senior Research Associates and Research Associates (Limited Term); and Policies for Confidentials. Some staff groups were not explicitly covered by any policy.
   
   The new Policy on Conflict of Interest – Administrative Staff would apply to all administrative staff, unionized or non-union ensuring consistent framework and understanding of obligations. As a result, revisions to the Policies for Professional and Managerial Staff; Policies for Senior Research Associates and Research Associates (Limited Term); and Policies for Confidentials were necessary.
   
   Following the presentation, Professor Boon discussed the consultation conducted during development, which had included multiple stakeholders such as academic administrators, and a range of staff members including HR professionals, CAOs and unionized staff. The Board was also informed of the range of possible disciplinary outcomes depending on the context of a policy violation.

   1. New Conflict of Interest Policy – Administrative Staff

On motion duly made, seconded and carried,

IT WAS RESOLVED

THAT the proposed new Policy on Conflicts of Interest – Administrative Staff be approved, effective July 1, 2023.
 

2. Revisions to the Staff Policies for PMs, Confidentials, and RAs and Senior RAs

   On motion duly made, seconded and carried,
   
   IT WAS RESOLVED
   
   THAT, subject to the approval of the Policy on Conflict of Interest – Administrative Staff, the proposed revisions to Policies for Professional and Managerial Staff, Policies for Senior Research Associates and Research Associates (Limited Term), and Policies for Confidentials be approved, effective July 1, 2023.

7. Fundraising Policies
   
   
   Mr. David Palmer, Vice-President, Advancement, reported that the University had developed a detailed Advancement Investment Model that set out the required divisional and DUA investments necessary to achieve the Defy Gravity $4 billion campaign goal.
   
   Using peer-reviewed comparative data from institutions typically raising $400 million or more annually, Advancement 2025 identified an evidence-based path to increase annual fundraising performance from a five-year average of $241 million at the conclusion of the previous Boundless campaign, to an average of $400 million per year required to meet the goals of the Defy Gravity campaign.  It also identified a gap in the number of front-line fundraising roles required to reach these goals and outlined a plan to close that gap with strategic and specialized resources in both the Divisions and the DUA. 
   
   Mr. Palmer noted that the model required an annual assessment fee on the endowment fund to be set at 6.5% on the annual payout from all endowments as of April 30, 2024 (equivalent to approximately 0.26% on the endowment fund market value), with a cap of $25,000 on any individual fund. The proposed revisions to the Long-Term Capital Appreciation Pool policy would allow the reinvestment fee to support costs of the University-wide advancement program on a go forward basis.

   The model also required a separate amendment to the Guidelines on Fund Raising Strategy and Programs at the University of Toronto to assess a fee on all expendable gifts to further support the costs of the University-wide advancement program.  The one-time charge would be set at 2% per expendable gift with a cap of $100,000. The charge would be introduced as of May 1, 2024, and be applied at the time of receipt on new expendable gifts.
   
   Following the presentation the Board discussed with Mr. Palmer, the University’s cost per dollar raised ratio and it was noted that the University compared favorably in this regard to peer institutions. The University’s cost per dollar was approximately 15 cents per dollar on a 10-year average and the Advancement Investment Model would not impact this ratio in any material way. The Board was also informed that the model would not pose any impact on the preservation of capital for endowments.

   1. Revisions to the Long-Term Capital Appreciation Pool Policy
      
      
       

      On motion duly made, seconded and carried,
      
      IT WAS RESOLVED
      
      THAT the proposed revisions to the Long-Term Capital Appreciation Pool policy be approved, to be effective June 20, 2023.
      
       

   2. Revisions to the Guidelines on Fund Raising Strategy and Programs at the University of Toronto 
      
       

      On motion duly made, seconded and carried,
      
      IT WAS RESOLVED
      
      THAT the proposed revisions to the Guidelines on Fund Raising Strategy and Programs at the University of Toronto be approved, to be effective June 20, 2023.
       

8. Annual Report 2022: Equity, Diversity & Inclusion
   
   Professor Boon presented the Annual Report 2022: Equity, Diversity & Inclusion. The Report reflected the collective efforts of the University community to embed equity and inclusion and belonging across the institution.
   
   Dr. Allison Burgess, Acting Executive Director, Equity, Diversity & Inclusion, provided a presentation with the following highlights:

• The inaugural inclusion of the employment equity data for employees at the University was embedded within the EDI Report and tracked the progress of increasing diversity of the workforce.
• The 2022 Employment Equity Survey for the period of January 1 – December 31, 2022 had a 91.3% response rate (a 0.7% increase from the previous reporting period, and the highest since the relaunch of the Employment Equity Survey in 2016).
• The Division of People Strategy, Equity and Culture had launched the Employment Equity Project with an advisory group, to evaluate the Employment Equity Survey and how that data was shared.
• The University established the Institutional Equity Office (IEO) in Fall 2022 guided by three priorities: Inclusive Leadership and Equitable Systems Change, Community Experience of Belonging and Changing Our Institutional Culture.
• Four key themes were included in the Report: Increasing Access and attracting talent, Enhancing Current Experiences, Forging Future Pathways, and on the horizon.
• Institutional commitments had been informed by the two reports: the Anti-Black Racism Rask Force Report, the Scarborough Charter, and the Antisemitism Working Group Report, as well as ongoing commitments related to the Answering the Call: Wecheehetowin: Final Report of the Steering Committee for the University of Toronto Response to the Truth and Reconciliation Commission of Canada. Institution-wide action based on the Final Report of the Anti-Asian Racism Working Group would be implemented later in 2023.  
  
  The Chair thanked Dr. Burgess for her presentation.
   

9. Debt Policy Limit, Debt Allocations, Outstanding Debt Issued and Status of the Long Term Borrowing Pool to April 30, 2023
   
   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.

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OPEN SESSION CONSENT AGENDA

 

On motion duly moved, seconded, and carried,
 

YOUR BOARD APPROVED

THAT the consent agenda be adopted.
 

10. Annual Report: Vice President, Operations & Real Estate Partnerships
    
    The Annual Report: Vice President, Operations & Real Estate Partnerships, was received for information.
     

11. University of Toronto Asset Management Corporation Annual Report 2022, for the calendar year ended December 31, 2022
    
    The University of Toronto Asset Management Corporation Annual Report 2022, for the calendar year ended December 31, 2022, was received for information.
     

12. Report on Debt to May 31, 2023
    
    The Status Report on Debt to May 31, 2023, was received for information.
     

13. Report of the Previous Special Meeting: Report Number 271 of the Business Board (April 24, 2023)
    
    Report Number 271 of the Special Meeting of the Business Board held on April 24, 2023, was approved.
     

14. Report of the Previous Meeting
    
    Report Number 272 of the previous meeting of the Business Board held on April 26, 2023, was approved.
     

15. Business Arising from the Report of the Previous Meeting
    
    There was no business arising from the Report of the previous meeting.
     

16. Date of the Next Meeting – September 27, 2023
    
    The Chair advised returning members that the first meeting of the 2023-24 academic year would be September 27, 2023, at 5:00 p.m.

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CLOSING ADMINISTRATIVE MATTERS
 

17. Other Business
    
    
    There were no items of other business.
    
    On motion duly made, seconded and carried
    
    THE BOARD MOVED IN CAMERA

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IN CAMERA CONSENT AGENDA
 

On motion duly moved, seconded, and carried

YOUR BOARD APPROVED

THAT the in camera consent agenda be adopted.
 

18. Quarterly List of Donations of $250,000 or more to the University of Toronto: February 1 - April 30, 2023
    
    The Quarterly List of Donations of $250,000 or more to the University of Toronto – February 1 to April 30, 2023 was received for information.

IN CAMERA SESSION
 

19. In Camera Reports of the Administrative Assessors
    
    Mr. Ron Saporta, Acting Vice-President Operations, provided an update on a Real Estate Matter.
    
    Mr. Rodgers provided an update on the University Pension Plan (UPP).
     

20. Collective Agreements:

    1. Collective Agreement between the University of Toronto and Agreement Unifor Local 2003
       
       The Collective Agreement between the University of Toronto and Agreement Unifor Local 2003, was received by the Board for information.
       
        
    2. Collective Agreement between the University of Toronto and Agreement CUPE 1230 FT & PT
       
       The Collective Agreement between the University of Toronto and Agreement CUPE 1230 FT & PT, was received by the Board for information.
       
        
    3. Collective Agreement between the University of Toronto and Agreement CUPE 3261 – Casuals
       
       The Collective Agreement between the University of Toronto and Agreement CUPE 3261 – Casuals was received by the Board for information.
        

21. Report on Capital Projects as of May 31, 2023
    
    Mr. Saporta presented the Capital Projects Report for the period ending May 31, 2023. The report included a comprehensive list of capital projects under construction and in design.
     

22. Capital Project (Level 2): DTL Ramsay Wright

    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 13, 2023, be approved.
       
        

    2. Execution of the 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 13, 2023, be approved.
        

23. Capital Project (Level 2): Innis College Renovation & Expansion

    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 13, 2023, be approved.
        

    2. Execution of the 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 13, 2023, be approved.
        

24. Capital Project (Level 2): UTL Downsview High-Density Storage Expansion 2 - Execution of the 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 13, 2023, be approved.
     

25. Report of the Striking Committee: Co-opted Membership of the Business Board and the Audit Committee for 2023-2024
    
    On motion duly made, seconded and carried
    
    IT WAS RESOLVED
    
    Re BUSINESS BOARD
    
    THAT Carmen Sebert be appointed to the Business Board as a co-opted administrative staff member for a one-year term from July 1, 2023 to June 30, 2024; and
    
    THAT Rima Ramchandani be appointed and David Regan be re-appointed to the Business Board as co-opted lay members for three-year terms from July 1, 2023 to June 30, 2026.
    
    Re AUDIT COMMITTEE
    
    THAT the following be appointed as co-opted members of the Audit Committee for one-year terms from July 1, 2023 to June 30, 2024:

• 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 appointed as Vice-Chair of the Audit Committee for one-year terms from July 1, 2023 to June 30, 2024.

On motion duly made, seconded and carried

THE BOARD RETURNED TO OPEN SESSION.

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

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The meeting adjourned at 7:17 p.m.

June 23, 2023