Report: Business Board - February 01, 2023

REPORT  NUMBER  269  OF  THE  BUSINESS  BOARD

FEBRUARY 1, 2023

To the Governing Council,
University of Toronto.

Your Business Board reports that it held a meeting in the Council Chamber, Simcoe Hall, on Wednesday, February 1, 2023 at 5:00 p.m. with the following members:

In Attendance: Sandra Hanington (Chair), Rajiv Mathur (Vice-Chair), Heather Boon* (Acting Vice-President, People Strategy, Equity & Culture), Scott Mabury (Vice-President, Operations and Real Estate Partnerships), Trevor Rodgers (Chief Financial Officer), Glen Bandiera, Olenka Baron, Janet Cloud, Alicia Damley, Teo Dechev, Annabelle Dravid*, K. Sonu Gaind, Indi Gopinathan, Sue Graham-Nutter, Maureen Harquail, Thomas Hofmann, Paul Huyer, Sarosh Jamal, Kathryn Jenkins, Scott MacKendrick, Arman Rasekh, David Regan*, Ian Taylor, Grace Westcott, Mary-Agnes Wilson

Regrets:  Danielle Skipp, Lara Zink

Secretariat: Timothy Harlick (Secretary)

Non-Voting Assessors:
Jeff Lennon (Assistant Vice-President, Planning & Budget), Susan McCahan (Vice-Provost, Academic Programs and Vice-Provost, Innovations in Undergraduate Education), Deborah Brown (Chief Administrative Officer, UTM), Joshua Mitchell (Director, Real Estate), Dave Lehto (Chief, University Planning, Design & Construction)

Guests:
Wisdom Tettey (Vice-President and Principal, UTSC), Gillian Morrison (Assistant Vice-President, University Development), Elizabeth Cragg (Director, Office of the Vice President, Operations and Real Estate Partnerships), Alex Matos (Director, Internal Audit), Sanish Samuel (Controller and Director Financial Services), Anthony Tia (Director, Treasury & Investment Services), Noreen Ahmed-Ullah (Director, Office of the Vice-President, Communications), Anna Kulikov (Senior Manager Business Improvement & Strategic Initiatives)

*Attended remotely

ITEMS 6 (a, b & c), 7, 17 (a & b) & 18 WERE APPROVED. ALL OTHER ITEMS ARE REPORTED TO THE GOVERNING COUNCIL FOR INFORMATION.

Pursuant to section 33(i) of By-Law Number 2,
items 14-18 were considered in camera.

OPEN SESSION
 

1. Chair’s Remarks

   
   The Chair welcomed members and guests.
    

2. Reports of the Administrative Assessors

   
   Professor Heather Boon, Acting Vice-President, People Strategy, Equity & Culture, reported that a newly revised employment equity survey would be circulated to employees in February. She noted that while the survey contained new language and new questions designed to increase the University’s understanding of the makeup of its workforce, the responses would not be made available until sufficient data had been collection to present meaningful results. As a result, the Employment Equity Report to be received by the Board at its cycle 6 meeting would therefore not include results from this new survey.
   
   There were no questions from members.
    

3. Annual Report: Deferred Maintenance, 2022
   
   Mr. Ron Saporta, Chief Operating Officer, Property Services & Sustainability offered a presentation on the Annual Report on Deferred Maintenance. 
   
   The presentation highlighted the following key points:

• The deferred maintenance budget was reviewed on an annual basis through the budget process.
• As reported in the 2022 budget report, deferred maintenance funding remained a key budget risk for the institution. The current level of funding for the St. George campus would have to increase to $69M to match the 1.45% average level of investment by peer institutions in Ontario.
• Aligned with the 10-year budget plan, an additional $2.5M in base funding was being sought through the Divisional Advisory Committee (DAC) process for fiscal year 2023–24 for the St. George campus.
• Combined current replacement value of all academic and administrative buildings at the University of Toronto had grown by $559M to $5.9B.
• Tri-campus deferred maintenance liability of all academic and administrative buildings had increased from $820.5M to $961.3M.
• The tri-campus Facilities Condition Index (FCI) had grown from 15.5% to 16.4%.
• Inflationary costs had accounted for almost the entirety of the year over year increase.
  
  Discussion
  
  In response to questions from members, Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships, and Mr. Saporta discussed the overall management of the deferred maintenance program, the use of a weighted risk model to assign priority and confirmed a member’s comment that the program was managed appropriately. Professor Mabury also highlighted that the University received significantly less government funding for deferred maintenance than other comparable universities and the University had continually increased spending over the past decade to meet the demand of the program. The Board was informed of numerous rehabilitation projects and the use of de-carbonatization projects planned, underway, or completed that would further reduce deferred maintenance costs.

4. Debt Strategy - Annual Review December 31, 2022
   
   Mr. Trevor Rodgers, Chief Financial Officer, noted that the current debt strategy had been approved by the Business Board in 2012 and sets a debt policy limit each year based on a 5% debt burden ratio and a 0.8 viability ratio. As of April 30, 2022, the debt policy limit was $2,096.7M, with $962.7M internal and $1,134M external debt. The debt policy limit was projected to increase by $374.3M in the next five years, but that projection might be affected by interest rate increases and lower growth in expenditures. In view of the rising interest rate environment, the University had assumed a 6.0% borrowing rate (up from the 5.5% rate assumed last year) for future debt. The 6.0% assumption was 100 bps higher than borrowing rates of recent debt issued by some Canadian universities.
   
   There were no questions from members.
    

5. Forecast of University Financial Results to April 30, 2023, prepared as at January 6, 2023
   
   Mr. Rodgers noted that the forecast, which was presented annually to the Board for information, contained high-level projections of the net income and net assets of the University for the fiscal year ending April 30, 2023, including operating, ancillary, capital, and restricted funds. The forecast was a reasonable estimate based on available information and included uncertainties and risks that could cause actual results to differ. In particular, investment returns were uncertain due to market volatility and current global events.
   
   The forecast assumed a 0.8% investment return in the long-term capital appreciation pool, an endowment payout of $113M, and $573M in capital asset additions. A sensitivity analysis showed the impact of varying investment returns on net income and assets, with net income projected to be $361M and net assets projected to be $8.81B.
   
   The forecast indicated a $78M shortfall compared to the operating budget, driven primarily by a 2% shortfall in tuition fee revenues and lower than planned investment income on short- and medium-term expendable funds.
   
   Discussion
   
   In the discussion that followed, Mr. Rodgers and Mr. Jeff Lennon, Assistant Vice-President, Planning & Budget), provided information on the 2% shortfall in tuition income noting that it was, in part, due to COVID-19 related issues and the pace at which the Federal government approved student visas, as well as a temporary softening of enrollment numbers for certain graduate programs.

OPEN SESSION CONSENT AGENDA

 

On motion duly moved, seconded, and carried,

YOUR BOARD APPROVED

THAT the consent agenda be adopted, and items 6(a, b, c) and 7 be approved.
 

6. Annual Review of Policies:
   1. University of Toronto Health and Safety Policy
      
      On 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, be confirmed in its current form without amendments.
      
       

   2. Policy with Respect to Workplace Harassment
      
      On motion duly moved, seconded, and carried,
      
      YOUR BOARD APPROVED
      
      THAT the University of Toronto Policy with Respect to Workplace Harassment, a copy of which is attached, be confirmed in its current form without amendments.
      
       

   3. Policy with Respect to Workplace Violence
      
      On motion duly moved, seconded, and carried,
      
      YOUR BOARD APPROVED
      
      THAT the University of Toronto Policy with Respect to Workplace Violence, a copy of which is attached, be confirmed in its current form without amendments.
      
       

7. Report of the Previous Meeting, Report Number 268, November 23, 2022
   
   Report Number 268, from the meeting of November 23, 2022, was approved.
    

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

9. Status Report on Debt to December 31, 2022
   
   Members received the Status Report on Debt to December 31, 2022, for information.
    

10. Health and Safety: Quarterly Compliance Report (October 1 to December 31, 2022)
    
    The Health and Safety: Quarterly Compliance Report for the period October 1 to December 31, 2022, was received for information.
     

11. Report Number 150 of the Audit Committee, November 30, 2022
    
    Report number 150 of the Audit Committee, November 30, 2022, was received for information.
     

12. Date of the Next Meeting
    
    The next meeting was confirmed for Wednesday, March 15, 2023, at 5:00 p.m.

CLOSING ADMINISTRATIVE MATTERS
 

13. Other Business
    
    
    There was no other business.
    
    The Board moved In-camera.
     
14. Collective Agreement Updates
    1. September 1, 2021 – August 31, 2024 Collective Agreement between the University of Toronto and CUPE Local 3902, Unit 3
       
       An update on the September 1, 2021 – August 31, 2024 Collective Agreement between the University of Toronto and CUPE Local 3902, Unit 3, was received by the Board, for information.
       
        
    2. July 1, 2021 – June 30, 2023 Collective Agreement between the University of Toronto and CUPE Local 3261, Full-Time & Part-Time2022
       
       An update on the July 1, 2021 – June 30, 2023 Collective Agreement between the University of Toronto and CUPE Local 3261, Full-Time & Part-Time, was received by the Board, for information.
        

15. In Camera Reports of the Administrative Assessors
    
    Professor Mabury provided an update on two confidential property matters. A member declared a conflict of interest related to the first matter and exited the meeting for the duration of the discussion. The member rejoined the meeting once the discussion had concluded.
     

16. Report on Capital Projects as of December 31, 2022
    
    The Board received the Report on Capital Projects as of December 31, 2022, for information.
    
    Professor Mabury and Mr. David Lehto, Chief, University Planning, Design & Construction, provided a summary overview and update of the capital projects underway this academic year. 
     

17. Capital Project - Capital Project (Level 3): Report of the Project Planning Committee for the SAMIH (Scarborough Academy of Medicine & Integrated Health), UTSC:
    1. Financing Requirement
       
       On motion duly moved, seconded, and carried,
       
       YOUR BOARD APPROVED
       
       THAT the recommendation of Professor Scott Mabury, Vice-President, Operations and Real Estate Partnership, as outlined in the memorandum dated January 25, 2023, regarding the financing requirement of the Scarborough Academy of Medicine and Integrated Health at the University of Toronto Scarborough Campus (UTSC) capital project, be approved.
       
        
    2. Execution of the Project
       
       On motion duly moved, seconded, and carried,
       
       YOUR BOARD APPROVED
       
       THAT the recommendation of Professor Scott Mabury, Vice-President, Operations and Real Estate Partnership, as outlined in the memorandum dated January 25, 2023, regarding the execution of the Scarborough Academy of Medicine and Integrated Health at the University of Toronto Scarborough Campus (UTSC) capital project, be approved.

18. Confidential Real Estate Matter
    
    On motion duly moved, seconded, and carried,
    
    YOUR BOARD APPROVED
    
    THAT the recommendation of Professor Scott Mabury, Vice-President, Operations and Real Estate Partnership, as outlined in the memorandum dated January 25, 2023, regarding a property/real estate matter, be approved.

The Board returned to Open Session.

The meeting adjourned at 7:06 p.m.

February 2, 2023