Report: Planning and Budget Committee - February 26, 2024

REPORT NUMBER 210 OF THE PLANNING AND BUDGET COMMITTEE


FEBRUARY 26, 2024

To the Academic Board,
University of Toronto,

Your Committee reports that it held a meeting on February 26, 2024 at 3:10 p.m. with the following members present:

PRESENT: Mark Lautens (Chair), Markus Dubber (Vice Chair), Trevor Young (Vice President and Provost), Scott Mabury (Vice President, Operations & Real Estate Partnerships), Jeff Lennon (Assistant Vice President, Planning and Budget), Basil Abu Sara, , Catherine Amara, Carol Chin*, Janet Cloud, Lisa Dolovich*, Ramy Elitzur*, Adam Fox, Rita Kandel*,  Scott MacKendrick, Robyn Stremler, Sali Tagliamonte*, Steven Thorpe, Melanie Woodin

*participated remotely via Zoom

REGRETS: Lulwa Al Hidiq, Annabelle Dravid, Robert Gazzale, Suresh Sivanandam, Lindsay Stern,

NON-VOTING ASSESSORS: Leah Cowen (Vice President, Research and Innovation and Strategic Initiatives), Dave Lehto (Chief University Planning, Design & Construction), Trevor Rodgers (Chief Financial Officer)

SECRETARIAT: Tracey Gameiro, Secretary

IN ATTENDANCE: Elizabeth Church (Director, Communications & Strategic Projects), Elizabeth Cragg (Director, Office of the Vice President, Operations & Real Estate Partnerships), Joyce Hahn (Chief Administrative Officer)

OPEN SESSION
 

1. Chair’s Remarks
   
   The Chair welcomed members and guests to the meeting. He encouraged members to participate actively in the discussion and thanked those individuals who also attended the Budget Information Session on February 12, 2024. 
2. Assessors’ Reports
   
   Given the Budget Presentation there were no reports from the assessors.

3. Budget Report 2024-2025 and the Long Range Budget Guidelines 2024-25 to 2028-29
   
   Trevor Young (Vice President & Provost), Scott Mabury (Vice President, Operations & Real Estate Partnerships), and Jeff Lennon (Assistant Vice-President, Planning and Budget), gave a comprehensive presentation addressing the Budget Report for 2024-25, the Long Range Budget Guidelines 2024-25 to 2028-29, and the 2023-24 Enrolment Report. 
   
   As part of his introductory remarks, the Provost noted that the University continued to be in strong financial shape, although challenged by pressures related to recent significant compensation increases and continued constraints and uncertainty on primary sources of operating revenues.
   
   The Provost prefaced the presentation by reporting that announcements made by the provincial government just prior to the meeting could impact some of the assumptions made in preparation of the budget, although likely minimally.  He advised that, in response to the Blue-Ribbon Panel recommendation for increased funding for the sector, the government announced $1.3 billion in financial supports over three years, including $700 million to be distributed across all universities and colleges. The Provost estimated this to be a 7% increase in operating grants by the third year.  Other highlights included: $200 million to support institutions deemed to be at high risk financially and funding for unfunded domestic students. The province also announced a continuation of the freeze on Ontario-resident domestic tuition for another three years. The Provost noted that the institutional budget’s current long-range assumption was for a 3% increase in domestic tuition after next year, but this no longer aligned with the government’s plan.  He advised however, that the increase to operating grant funding would offset the financial impact of the continued freeze.  The Provost reported that there was yet no confirmation of the University of Toronto’s share of study permit applications for international students for the 2024-2025 academic year.  The University remained engaged with all levels of government, and remained cautiously optimistic that it would be granted the spots needed to meet existing enrolment targets.
   
   Highlights of the presentation of the Budget and Enrolment report included:

• The 2024-25 operating budget projected $3.52 billion in planned revenue (a 4.9% increase over 2023-24), balanced against an equal $3.52 billion in planned spending for future priorities.
• Growth was anticipated in all major categories of the operating budget, though there were significant variations of projected revenue growth rate across the divisions.
• A significant portion of revenue growth was from strong returns on short- and medium-term investments, which were expected to be significantly higher than in recent years.
• The Federal Government’s announcement of a two-year reduction in international student permits posed some risk to intake plans for 2024-25.
• Provincial support now represented just 20% of operating revenue, the lowest of any publicly funded university in Canada.
• Compensation would make up 64% of the operating budget, including the contingency for pension risk.
• The University Fund would be directed toward classroom technology upgrades and renewals, inclusive interdivisional research networks, research related initiatives, and support to divisions to help manage cost pressures associated with compensation increases and fund their priorities.
• 7% was set aside for contributions to capital projects.
• The University had approximately $4.1 billion in major capital projects in various stages of planning over the next five years.  
• Growth was anticipated to slow to around 3% per year over the five-year plan; reflecting slowing enrolment growth and continued constraints on tuition and operating grants.
• Budgetary risks included inflationary pressures, the cap on international student visas, deferred maintenance, operating reserves, and continued diversification of the student population.
  
  Enrolment
• Overall enrolment in 2023-24 grew slightly more (0.2%) than planned.
• Graduate enrolments decreased slightly owing to weaker than expected domestic enrolments.
• International enrolments grew by 4.9%.
• Overall, international students made up 31.1% of the undergraduate student body, with slightly higher rates in direct entry programs.
• A growth of approximately 1,200 international student spots and 2,500 domestic students, was planned over the five-year planning period.
• Non-Ontario domestic tuition in undergraduate programs would increase by 5%, consistent with the frameworks in place since 2021-22.
  
  In response to a member’s question submitted in advance of the meeting, regarding why graduate degree enrolment was less than planned, Mr. Lennon added that while graduate enrolment overall was relatively steady year over year, some divisions had planned on more growth this year and as such the variance to plan was negative as noted in the report.  Reasons for the variance by division required more detailed analysis, but preliminary observations included:
• There had been a general softening in demand for research-stream masters programs.
• Increased competition for professional masters programs, particularly in management programs.
• Some divisions, notably OISE, had quite ambitious growth plans for their graduate programs (e.g. Master of Education and Doctor of Education),  which were taking longer to achieve than planned.
  
  Strategic Mandate Agreement (SMA)
• In 2024-25, 25% of operating grant funding would be linked to SMA performance metrics, with the remainder linked to enrolment and special purpose grants.
• The 10 performance metrics were categorized as either research or teaching relating. The University weighted funding across the metrics with a 50/50 split.
• Performance-based funding would be retained as long as targets on metrics were met, but there would be no funding increases for exceeding targets.
• The University exceed targets on all metrics in the fourth year, and the long-range budget guidelines assumed retention of all performance-based funding throughout the planning period.
  
  Financial Aid
• The University had redesigned its UTAPS bursary program to decouple it from the OSAP assessment of financial need and make it more responsive to students.
• Total spending for student aid was projected at $380 million.
• Divisions had set aside up to 6% of international undergraduate tuition revenue to support international students; this was in addition to the Pearson Scholarship Program.
• In total, $90 million would be set aside to fund international award programs.  
  
  Following the presentation of the budget, the following matters were addressed by the assessors in response to members’ questions:
  
  Domestic Tuition Increases for Non-Ontario Residents
  
  A member stated that differentiated tuition fees for non-Ontario domestic students overlooked potential unintended repercussions.  Beyond amplifying financial hardships, the member cautioned that this approach could make out-of-province students feel unwelcome, jeopardize the benefits of a diverse student body, and damage U of T’s reputation and prestige nationally.  The member asked how the continued tuition increases for out-of-province domestic students could be reconciled with the University’s diversity and inclusivity priorities.
  
  The Provost indicated that the budget was a one year plan and not indicative of future tuition fee structures, and that all possible options would be explored annually.   The Provost also pointed out that prior to the government’s announcement to maintain the tuition freeze, tuition increases had been planned for both Ontario resident and out-of-province students. The Provost reminded members that all students were eligible for student aid scholarships.
  
  Balance of Degree Fees for Graduate Students
  
  A concern was raised that the Balance of Degree Fee charged through the School of Graduate Studies seemed to penalize full-time students for finishing their degrees early, in less time than the defined program length.  In addition to the financial stress, the member noted that students could not obtain their letter of completion from the University, which could have further impacts such as the inability to file for Permanent Residence in a timely fashion. 
  
  The Provost undertook to have the Dean of the School of Graduate Studies address this question at the upcoming Academic Board meeting scheduled for March 7, 2024.
  
  Funding For Research & Deferred Maintenance
  
  Assessors clarified for members that the University Fund was not the only source of funding to support research initiatives and reported that the bulk of funding flowed from the Divisions.
  
  With regards to increased budget for deferred maintenance, the Provost acknowledged the risk the liability presented and explained that the approach had been one of balancing risk, especially in the face unanticipated post-bill 124 compensation increases which required adjustments to divisional plans, and international visa caps.
  
  Strategic Mandate Agreement – Performance Metrics
  
  While there were no funding increases for exceeding targets, the Provost explained that there were a number of reasons the University would want to exceed the metrics as many were meaningful to the institution in all its core activities (research, economic impact, graduation rate, experiential learning), and also drove international rankings.
  
  Future Operating Grant Increases
  
  Regarding whether the (estimated) 7% increase to base operating grants was predictive of future funding from the provincial government, the Assistant Vice President, Planning & Budget, shared that governments tended to plan according to a three-year planning horizon, and that anything beyond that was unknown at present.   

On motion duly moved, seconded and carried,

YOUR COMMITTEE RECOMMENDED

Be It Recommended:

THAT the Budget Report 2023-24 be approved, and

THAT the Long Range Budget Guidelines 2024-2025 to 2028-29 be approved in principle.

4. Enrolment Report, 2023-2024
   
   The Enrolment Report, 2023-2024, was provided to members with the Budget Report presentation.
5. Institutional Strategic Research Plan (ISRP), 2024-2029
   
   Professor Leah Cowen, Vice-President, Research and Innovation, and Strategic Initiatives (VPRI) gave a presentation on the Institutional Strategic Research Plan (ISRP) highlighting the rigorous consultation process between May and June 2023. Professor Cowen reported that the ISRP outlined U of T’s strategic research vision for the next five years.  She explained that the ISRP operated in conjunction with divisional strategic plans and institutional documents and did not limit divisional or individual faculty member’s research priorities.
   
   Professor Cowen went on to note that the University was obligated to have an ISRP supported by its most senior planning body in order to participate in the Canada Research Chairs (CRC) program, the Canada Excellence Research Chairs program, and to apply to funding opportunities with the Canda Foundation for Innovation (CFI).
   
   Professor Cowen indicated that one of the new components being introduced to this ISRP was a list a Global Grand Challenges that align with the unique research strengths of U of T and partner hospitals.  
   
   Another new element of the ISRP was the inclusion of Core Research and Innovation Values. These values, which were in alignment with the university’s Statement of Institutional Purpose, received wide consensus across U of T’s leadership and in survey responses.
   
   Professor Cowen concluded her presentation with a review of the five strategic objectives which formed the core of the strategic research plan.  These objectives would inform and guide U of T’s research and innovation strategic direction and performance measures:
   1. Lead nationally and globally in research and innovation.
   2. Provide institutional supports to empower scholars to do their best research.
   3. Enable, train and support the next generation of researchers and innovators.
   4. Promote all stages of research from idea to discovery, translation and impact.
   5. Cultivate an environment to leverage opportunities and foster collaboration and partnerships.

In response to a member’s question regarding consultation with external stakeholders, the VPRI indicated that the ISRP consultation process sought feedback from dozens of U of T scholars and staff that regularly engaged with government (e.g., the leadership in U of T’s Government Relations Office) and industry (e.g., leaders of Institutional Strategic Initiatives, the Innovations & Partnerships Office, and University of Toronto Entrepreneurship in the VPRI). Also consulted were friends of the university who are leaders of national and international research and innovation organizations, such as Tony Gaffney (President & CEO, Vector Institute for Artificial Intelligence), Dr. Janet Rossant (Chief of Research Emeritus, Senior Scientist, The Hospital for Sick Children and the President & Scientific Director, Gairdner Foundation), Stephen Toope (President & CEO, CIFAR), Professor Emeritus Alan Bernstein (former inaugural President of CIHR, and current Director of Global Health, University of Oxford) and former U of T President Dr. David Naylor. 

In response to a member’s comment regarding the description of the equity, diversity and inclusion initiatives of the ISRP, Professor Cowen shared with members that the language was thoughtfully reviewed by the Indigenous community.  She undertook to consult further with them to ensure the language reflected the intention.

Professor Cowen thanked members for their comments and undertook to incorporate their feedback into future presentations of the ISRP. 

Subsequent to the meeting and further to members’ suggestions, the presentation of the ISRP was revised to include explicit mention of external consultations.

CONSENT AGENDA
 

6. Annual Report: Approved Endowed and Limited Chairs, Professorships, Distinguished Scholars and Program Initiatives, 2022-2023 (for information)
   
   The Committee received the Annual Report: Approved Endowed and Limited Term Chairs, Professorships, Distinguished Scholars and Program Initiatives, 2022-2023 for information. 
7. Report of the Previous Meeting: Report Number 209 – September 28, 2024
   
   The Report of the Previous Meeting was approved.
8. Business Arising from the Report of the Previous Meeting
   
   There was no business arising from the report of the previous meeting.
    

END OF OPEN SESSION CONSENT AGENDA

9. Date of the Next Meeting: April 9, 2024, 2:10 – 4:10 p.m.
   
   The Chair reminded members that the next meeting of the Committee would be in on April 9, 2024 and noted the special earlier 2:10 p.m. start time.
10. Other Business
    
    No items of other business were raised.

The meeting adjourned at 4:45 p.m.
 

March 1, 2024