Tuition Fees, Student Aid and Budget Report

Business Board March 7, 2011

Provincial Tuition Framework

• Average increase across University capped at 5% per year

• Continuing students capped at 4% in program • Entering students - undergraduate programs

most capped at 4.5% • Entering students - professional and graduate

programs up to 8%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Undergraduate Graduate Domestic International

FTE

2010-11 Plan 2010-11 Actual

2010-11 Enrolment: plan vs. actual

Applications, Offers, Registrations, Yield Rates Undergraduate Direct-entry

58 59 5962 61 62

37 38 37 38 39 40

11 11 11 11 11 12

28.4% 29.7% 28.7% 29.0% 28.9% 28.6%

0%

25%

50%

75%

100%

0

10

20

30

40

50

60

70

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Thou

sand

s

Applications Offers FT Registrations Yield Rate

Average tuition increases

Average domestic increase 4.31%

Average international increase 6.42%

•Most international tuition will increase by 8-10% for incoming students •Significant investment in services to support international students

60.9%

19.6% 19.5%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$250 or Less $251 to $350 $351 or More

% o

f dom

estic

stu

dent

s2011-12 Distribution of Dollar

Increases in Domestic Tuition

1.9%

91.6%

6.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Less than 4% 4% to 4.5% More than 4.5%

% o

f dom

estic

stu

dent

s2011-12 Distribution of Percentage

Increases in DomesticTuition

$7,198

$6,676

$6,584

$6,412

$6,265

$6,263

$6,259

$6,107

$6,103

$6,095

$6,083

$5,982

$5,253

$0 $2,000 $4,000 $6,000 $8,000

McGillMontreal

DalhousieAlbertaQueensToronto

LavalOttawa

WesternMcMaster

CalgaryWaterloo

UBC

G13 Domestic Tuition and Incidental Fees Undergraduate Arts and Science 2010-11

AAU Non-resident Tuition and Incidental Fees Undergraduate Arts and Science 2010-11

$15,272

$16,474

$16,757

$19,230

$21,853

$24,525

$25,972

$27,114

$27,650

$33,819

$37,265

$0 $10,000 $20,000 $30,000 $40,000 $50,000

Montreal

Western

McGill

Alberta

UBC

Toronto

AAU Mean

Penn State-University Park

University of Illinois at Urbana-Champaign

University of California-Berkeley

The University of Michigan-Ann Arbor

Student Aid

UofT Policy 1998: “No student offered admission to a program at the University of Toronto should be unable to enter or

complete the program due to lack of financial means”

MTCU Student Access Guarantee (SAG) •No qualified Ontario student should be prevented from attending … due to lack of financial support programs

•Students should have access to the resources they need for their tuition and books and mandatory fees.

51.7 26%

3.6 2%

7.9 4%

52.2 27%

37.5 19%

5.7 3%

9.6 5%

28.3 14%

University of Toronto Financial Support for Doctoral Stream Students 2009-10 Total =$196.5M

Awards and Stipends-federal

Awards and Stipends-other provincial

Awards and Stipends-provincial OGS

Employment income

UofT Fellowships

OSOTF and OGSST

Awards and stipends - endowments

Other internal funding - research, operating

$M

53.9% 57.0% 56.8% 59.3% 60.1% 59.9% 60.1% 55.4% 53.9% 54.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

University of TorontoProportion of Students Without OSAP Debt

Convocating from Direct-Entry Programs (nominal $)

0% 10% 20% 30% 40%

$1-15,000

$15,001-25,000

> $25,000

University of Toronto Total OSAP Repayable: Students with OSAP Debt Graduating from

Direct-Entry Programs, 2006-2010 (2009 Dollars)

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

2011-12 Budget Report and Long Range Budget Guidelines to 2015-16

Governing Council Policy

• GC policy provides for long-range budget planning using a rolling-window

• Committed to a balanced budget each year, except in extraordinary circumstances

• Accumulated deficit to be repaid over a five-year period

Fiscal Context

• Funding for higher education flat and decreasing across many jurisdictions

• Regulated provincial tuition framework continues • Enrolment demand remains strong at UofT • Pension challenges: like almost every other Canadian

and US public sector institution with Defined Benefit pension plan

Overview

• Balanced budget at the institutional level for 2011-12

• Continue to pay down accumulated deficit on schedule

• $108.6M new revenue over last year ($10.4M UF)

• Continuing uncertainty on compensation settlements in new regulated provincial environment

• Funding of key institutional priorities

Revenue/expense category $M % of total revenue

% of revenue excl. divisional

revenue

Operating grants and tuition 1,316 78% 89%

Other general revenue 168 10% 11%

General university revenue 1,484 100%

Divisional revenues 204 12% Total revenue 1,688 100%

Centrally-funded student aid 98 6% University-wide costs 425 25% Academic divisions 1,165 69% Total expense 1,688 100%

2011-12 Operating Budget Overview $M

Enrolment • Total UofT Planned growth of 2500 students by

2015-16 to 81,000 (69,000 FTE)

• St George A&S Decrease of 1200 full time students • UTM and UTSC additional growth planned but

dependent on space capacity

• Graduate expansion continues to 2013-14

• MTCU caps on domestic graduate and UG spaces

• International enrolment planned to increase across many divisions

University of Toronto Total FTE Enrolment 1977 - 2015

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11P 13P 15P

4,000

7,000

10,000

13,000

16,000

19,000

22,000

00 01 02 03 04 05 06 07 08 09 10 11P 12P 13P 14P 15P

20,466

14,780

14,208

10,247

8,923

A&S St George

St George other divisions

Tri-campus graduate

FTE Enrolment at the University of Toronto 2000 - 2015

UTM

UTSC

International Enrolment as a Proportion of Total Enrolment

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000Total Enrolment Total International Enrolment as a % of Total Enrolment

3.8%

14%11%

Masters Pool Target

Doctoral Pool Target

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

04-0

5

05-0

6

06-0

7

07-0

8

08-0

9

09-1

0

10-1

1

11-1

2

12-1

3

13-1

4

04-0

5

05-0

6

06-0

7

07-0

8

08-0

9

09-1

0

10-1

1

11-1

2

12-1

3

13-1

4

Masters DoctoralYear (Fall Term)

Graduate Expansion

Prof. Masters Doct Str. Masters Doctoral

Fall

Elig

ible

FTE

Graduate Intake by Geographic Origin

GTA Area62%Other

Ontario12%

Other Canada

9%

Other Countries

17%

2005-06

GTA Area63%Other

Ontario9%

Other Canada

14%

Other Countries

14%

2010-11

Undergraduate Intake by Geographic Origin

GTA Area74%

Other Ontario

9%

Other Canada

5%

Other Countries

12%2005-06

GTA Area66%

Other Ontario

8%

Other Canada

7%

Other Countries

19%

2010-11

Revenue category 2011-12 $M

Operating Grants 31.7

Tuition – tuition and enrolment volume 66.0

Other (endowment, investment and application fees)

10.9

Total 108.6

Incremental Revenue over 2010-11 2011-12 New Revenue

Critical need to increase government support for per-student funding and student aid

Government Operating Grants

• Full per-student funding for UG and (most) graduate students for current plan

• Need for more undergraduate & graduate spaces

• Increase in funding over the 5-year period resulting primarily from masters growth , some growth at UTM and UTSC (total $11M)

• Increased per-student funding for MD ($11M) and PGME ($1.5M) students next year

-

200

400

600

800

1,000

1,200

1,400

Ope

ratin

g G

rant

Rev

enue

$M

Government Operating Grants: if UofT were in another province

(using one university in each province as a proxy )Data source: University 2010 Financial Statements and Fall 2009 Facts & Figures or equivalent reports. For illustrative purposes only using publicly available data

Incremental Tuition Revenue 2011-12 over prior year ($M)

Domestic tuition changes $20

International tuition changes $33

Enrolment increase and flow-through $13

Total Increase $66

Other Revenue

• CRC chairs: project decrease of 5 chairs from 247 to 242, back up to 248 by end of planning period

• Investment income: this is interest earned on EFIP: rate of return 2.63% this year, 3.22% next year

• Federal Institutional Cost of Research (ICR): rate at 18% and falling ($19.6M) Actual cost of ICR > 50% ; operating budget absorbs $30M

UofT Federal Tri-Council Funding 2000-2010 ($M)

$0

$100

$200

$300

$400

$500

$600

$700

$800

CIHR NSERC SSHRC

Share of Tri-Council Funding

4%

6%

8%

10%

12%

14%

16%

18%Sh

are

%

U Toronto McGill UBC U de Montréal U Alberta

29.1M 31.5M 33.3M 34.8M 36.5M 38.1M

12.7M 13.7M

14.0M 14.3M

14.5M 14.8M

$-

$10

$20

$30

$40

$50

$60

$6.80

$7.00

$7.20

$7.40

$7.60

$7.80

$8.00

$8.20

2010 2011 2012 2013 2014 2015

Eno

wm

ent P

ayou

t $ M

illio

ns

End

owm

ent p

ayou

t rat

eEndowment Revenue for Student Aid and Chairs

Student aid Chairs Endowment Payout Rate

Investment Income 2%

Provincial Grant38%

Scholarship grants1%

Other Income 1%

Tuition Fees 40%

Endowment 2%

CRC2%

Divisional Income12%

ICR2%

2011-12 Sources of Operating Revenue Total = $1.688B

Expense

• Careful controls on spending despite new revenues

• Base and OTO cost containments continue: – 3% base across central divisions – % varies across academic divisions – OTO cost containment continues to pay down old

institutional deficit ($21.5M remains)

• Some investments planned for key institutional priorities

Pension Problem

• Estimated solvency deficit ~ $1billion

• Based on certain conditions/metrics, government may approve plan to amortize over 15 years

• IF member contributions do not increase, unlikely to receive government approval for extended amortization period

• RESULT: ~$200M/yr pension special payments

Pension Proposed Strategies

• Multi-pronged strategy – Increase special payment budget

– Borrow: internally from EFIP and/or externally

– Sell or lease assets

– Issue letters of credit • Strategy must include increased employee contributions

for current service costs; these contributions are not used to fund the pension deficit but rather to ensure a sustainable plan for the future

New Pension Special Payment (over and above existing $27.2M)

2011-12 $30M

2012-13 $20M

2013-14 $10M

Total new $60M

Alternative scenario 1: no government approval ~ $200M per year for 5 years

Alternative scenario 2: interest rates increase, markets rise special payment <$60M

Full payment: $27.2M + $60M = $87.2M per year to

2029

Investment in Shared Infrastructure ($M)

NGSIS, Blackboard, Wireless 7.1 Caretaking, maintenance 2.2 Advancement (campaign) 4.7 Research Services 2.5 Financial Services 0.2 Recruitment & marketing fund 1.0 Library 1.2 Total * 18.9

* of total, $15M is OTO

Occupancy$95.4 23%

IT $29.0 7%

University Mgmt $16.1

4%

Financial Mgmt $7.6 2%HR $17.2

4%

Pension $45.1 11%

Advancement $23.6

6%

UT Libraries $73.2 18%

Research Admin $13.0

3%

Student Services $24.4

6%

UW Academic $30.9

7%

UW General$37.8 9%

University Wide Costs $425M (Budget Report, Appendix A, Schedule 3)

Central Administrative Costs as a % of Total Expenditures (source: COU Financial Report of Ontario Universities)

4.2%

6.0%

0%

2%

4%

6%

8%

10%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

cent

ral a

dmin

cos

ts a

s %

of t

otal

ope

ratin

gex

pens

es

University of Toronto

Ontario system (excluding Toronto)

2011-12 Incremental funding for Central Student Aid ($M)

Operating Funds 3.4

Ontario Graduate Scholarships 2.4

Student aid funded by endowments 2.5

Subtotal 8.3

One-time-only funds (carryforward and expendable donations) 4.0

Total new funds allocated to student aid $12.3

Total student aid funded centrally $98.2

Budgets for Academic Divisions

Academic Budgets: Step 1

Gross revenue

Net revenue to academic divisions

University-wide expenses

Student aid

University Fund

Academic Budgets: Step 2

Divisional budget consist of two parts:

+

Net revenue

University fund allocation

Academic Divisional Planning Process

Enrolment targets

Capital / space plans

Complement plans Advancement targets

Tuition fees

Incremental Net University Fund Contributions and Allocations ($35M), 2007-08 to 2011-12

DENTOISEMEDLAW

MUSFORARCHINFOTYPMGTNURSSWK

PE&HPHRM

APSEA&S

UTSCUTM

$(12M) $(9M) $(6M) $(3M) $- $3M $6M $9M

Net Contribution Net Allocation

University Fund Relative to Total Revenue ($M)

99 104 111 115 124 134 141 148 154

1,284 1,334 1,416

1,483 1,573

1,688 1,763

1,836 1,911

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13P 2013-14P 2014-15P

UF Total Expense Budget

Student aid and non-discretionary

5.15%

Pension special payment

3027%

Academic divisions70.465%

Shared-service divisions

3.12%$108.6M

Allocation of new revenue

Estimated Divisional Cost Pressures (Appendix A, Schedule 4)

From remaining net revenues, academic divisions must fund: – Compensation increases * – Graduate student support – Capital costs – Divisional deficit repayments

*estimated at 0% ATB for UTFA, USW, PM/C and other unions where no settlement in place, subject to upcoming negotiations

Summary

Balanced and responsible budget Some new investments

Strategic Decisions Matter At the institutional level

At the divisional level At the unit level