University Town Hall March 8, 2017

1 INITIAL ASSUMPTIONS FOR 2017 2018 OPERATING BUDGET University Town Hall March 8, 2017

2 Agenda Provincial Context The SMA and New Funding Formula Risks and Opportunities 2017 2018 Budget Planning Initial block assumptions

3 SMA and Funding Formula The Strategic Mandate Agreements (SMAs) are the mechanism through which universities articulate their unique mandates, strengths, and aspirations. They outline the relationship between the ministry and how each institution s mission and activities align with Ontario s vision for postsecondary education as articulated in this framework. Provincial Funding Priorities: 1.Enhance Quality and Student Experience 2.Support the Differentiation Process 3.Increase Transparency and Accountability 4.Financial Sustainability

4 SMA Changing the Funding Landscape SMA 1 SMA 2 SMA 3 2015-2017 2017-2020 2020-2023 Define mandate Establish program areas for growth Set graduate enrolment targets Report on standard performance metrics with no funding implications Implementation of new funding mechanism Establish new Government priorities Metrics developed and refined Performance-based funding anticipated No funding redistribution among institutions Fully implement performance targets and associated funding (a portion of funding at risk)

5 Reformed Funding Model Conceptual Approach Enrolment Grant Potential targeted growth fund to support provincial needs (HSW, OSAP) Declining Demographics Potential Inequities Arising from Model Clean-Up Corridor Approach Equal Funding Per Student Student Success or Differentiation Competitive Portion: New Accountabilities Existing Performance Grants (KPI & Quality) Non-Competitive Portion: Old Accountabilities Existing Differentiation Grants (French Language, Northern, Mission and Institution Grants) Special Purpose Grants Establish Multi-Year Funding Arrangements Condense Outdated Special Purpose Payments Streamline outdated payment structure Simplify Reporting Requirements Ministry of Advanced Education and Skills Development December 2016

6 Areas for Differentiation for Guelph commitment to remain as one of Canada s best comprehensive universities...academic programs responding to global issues and industry (e.g., food, health, environmental, biomedical) an innovator in teaching and learning (e.g., learning outcomes, experiential education, pathways, co-curricular opportunities) developing caring and connected citizens (e.g, community engagement, international opportunities, volunterism) a research intensive university (e.g., global impact, international partners, doctoral student recruitment)

7 New Funding Formula Objectives More enrolment management control by Ministry More Outcomes metric-based funding What it means: Enrolment Funding Default: Fixed Within a +/- 3% corridor Growth now subject to negotiations No longer can assume funding for all growth Funding Opportunities shifting to Metric-based - Student Success/Differentiation This funding to grow as system enrolments decline

How the Funding Corridor Works 8

General Operating Budget (Total Funding Sources $500M) Regulated Tuition and Operating Grants - 70% of Total Income 9 GH- Revenue Share 4% Recoveries (other funds) 10% Regulated Tuition (Undergrad & Grad) 33% International Tuition 5% Undergrad. 4% Other Revenues 11% Operating Grants 37% Graduate 1% % of Total Revenue and Recoveries

Initial Allocation of MAESD Operating Grants ($213M) 86% enrolment (corridor based) Guelph- Diff./Perform. 5.9% MAESD Operating Grants Initial Allocation by Major " Envelope" Guelph- Special Purpose 7.5% Guelph- Enrolment 71.4% Guelph-Humber 15.3% GH- Enrolment 14.5% GH Diff/Perform 0.7%

Risks and Opportunities - the new Funding Formula 11 Feature Risks Opportunity / Mitigations Fixed Corridor Funding More Performance Based funding Differentiation Priority Restrictions on most of our revenue growth No funding for costs increases pressures to reallocated among programs Discourage innovation in curriculum Competition (relative to others) Difficult to control Government directing priorities and defining our strategic priorities Specialized or comprehensive Micro-managing growth and disciplines based on short-term priorities Negotiations with province for: Targeted growth Fixing long-standing funding anomalies Diversification of revenues International strategies Cost-recovery programs Guelph strong in many areas (metrics) Student success Teaching and learning innovation Could gain greater share with continuous improvements Maintain our strengths Exploit those areas where we can realize funding meeting provincial priorities but Stay the course as we see our future!

12 SMA2: Next Steps SMA negotiation - January 2017 1 st phase focused on establishing corridor and enrolment plans 2 nd phase focused on establishing areas of differentiation and corresponding performance indicators Bonnie Patterson named to oversee negotiations with universities Past President & CEO, Council of Ontario Universities Past President & Vice Chancellor, Trent University

BUDGET PLANNING 2017 2018 13

14 The Balancing Act Available Revenues Expense Commitments Degree Enrolments Compensation Provincial Grants Infrastructure Tuition Strategic Investments

15 Provincial Priorities - 2017 2018 Provincial Deficit No new money for university funding New SMA and related new funding formula (starts) Tuition: extend current framework 2 yrs 3% cap on overall increase (framework excludes international fees) 5% increases permitted for graduate and professional programs Net tuition billing Implementation begins

16 Our 2017 2018 Budget Goals Unchanged from Last year Recruit & Retain Best: faculty, staff and students Invest in infrastructure: To enhance learning, research and student success Increase Impact: On local/regional/global societies and economies Ensure Fiscal Sustainability: Diversify revenues Effective management of resources

17 Major Planning Components 2017 2018 Enrolment Funding Traditional sources declining Increased competition Need to negotiate grant funding for any enrolment growth Provincial Grants: Fixed overall funding No funding for inflation Shift to metrics based Tuition Tuition framework extended Operational impacts of net tuition Costs Compensation Year of major negotiations 90% of compensation budget under negotiation Infrastructure Systems/information technology Capital demands Aging Buildings Modern teaching & learning space Strategic Investments Funding our priority areas Innovation and renewal

Reported FTE's 18 Enrolment Gains this year (2016 2017) Exceeded budgetary targets fall 2016 Total University Enrolment Degree Credit Programs Undergraduate and graduate Includes international This level will be: 24,000 23,000 22,000 21,000 20,000 21,730 2,320 230 513 22,470 2,550 22,685 2,555 10.0% 8.0% 6.0% 4.0% Our 2017 2018 budget target Used by MAESD for setting our corridor under new formula. 19,000 18,000 17,000 16,000-0.7% 2.7% 1.0% 19,410 19,920 20,130 2017 Plan 2017 Actual 2018 Plan Undergrad UG Increase Grad Gr Increase % Change 2.0% 0.0% -2.0%

19 2016 2017 Projected Enrolment Experience Gains. Gains 700 more students than planned: 500 undergrads 200 grads MAESD funded eligible (grants) Impact: Expenses were contained within initial budget allocations Means: Net revenue available Plan: Sustain this higher enrolment level Use revenue gains to balance 2017 2018 $10.0 Revenue Above Budget $9.3 M $9.0 $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $- Tuition $6.6 Grants $2.7

20 Key Assumptions - Revenues Provincial Grant Funding Assume: frozen at current levels: per SMA and funding formula However explore negotiated growth in targeted areas Enrolment Lock in enrolment revenue gains from 2016 2017 Undergraduate set intake at: 4,625 - domestic and international Will result in small flow - through increase Graduate Enrolment; Assume current levels (any funded gains will be reinvested) Tuition Implement the new framework at 3% overall

21 Tuition Framework - University s Position Overall 3% on Regulated increases will reflect maximum permitted Minimum increases for: Most graduate programs Doctoral and doctoral-stream programs especially Both international and domestic Higher increases for: Undergraduate professional programs Certain professional-based masters International Maintaining our position competitively Eliminate cohort fees

Tuition framework(s) - Proposed 22 Provincially Regulated Programs Max Allowed Proposed Note Undergraduate Regular 3% 3% Undergraduate Professional 5% 5% 1. Graduate- Doctoral 5% 0% Graduate - MA/MSc/MASc 5% 1% Graduate professionally oriented 5% 3.5% MBA 5% 2% MA- Leadership 5% 0% International Not Provincially Regulated Entering Cohort Undergraduate - Regular n/a 3% 2. Undergraduate - Professional n/a 3% 2. Graduate- Doctoral & MA/MSc/MASc n/a 0% 2. Graduate - professionally oriented n/a 3% 2. MBA n/a 3% MA- Leadership n/a 0% 1. Excluding certain engineering programs (Mech.; Computing; Biomed.) which will be increased 3% to realign fees closer to other engineering programs 2. Remove the fixed cohort fee for the entering class. Prior years cohorts will be grand parented i.e., have no increase consistent with prior commitment.

23 Key Assumptions - Expenses Compensation General provision for negotiation costs covering ~ $350 million in compensation costs Infrastructure Investments Maintain both capacity and quality Technology WIFI, inflation, security, demand Space new buildings, inflation Safety building security, emergency notification Student Assistance Maintain increases of last year ($ 3.9 million) Add $1.1 million (grad and undergrad) Continue to provide to strategic investment Last year $3.5 million in base was allocated (mainly to colleges) Provide for additional opportunity this year

24 Major Block Assumptions.so far New Available Revenues New Expense Commitments Tuition & Grants from enrolment gains in 16 17 $9.3M $9.0M Compensation Increases Tuition from Flowthrough Enrolment 3% Tuition Increase 17 18 Other Income $2.3M $4.9M $1.4M $4.9M $2.9M $1.1M Activity-Based and Initiatives Infrastructure Student Aid

Summary Initial Assumptions consolidate gains and reinvest. Revenues Frozen provincial grant levels Lock in this year s enrolment level Expenses Cost Increases: Compensation and infrastructure Provide for strategic investment Targeted and based on our budget goals Student Success Maintain and continue to grow allocations for student assistance Fiscal Sustainability Reserves to absorb downside (in the short term) Maintain overall financial health 25

26 Next Steps Prepare detailed 16/17 Forecast Gains from current year revenues will provide one-time funding College/divisions need to prepare their forecasts Under carry-forward policy Complete assumptions for 17/18 Finalize initial assumptions SMA negotiations begin. Prepare for completion of detailed budget document Budget Communications and Input Jan-March College/Town Halls; Senate April 4 Finance Committee April 4 Board of Governors April 21

27? budget@uoguelph.ca