A message from the President and Provost:

We are writing to the University community to provide an additional update on the University's budget.

Since our last message, the Budget Committee has continued to review budget submissions from all areas of campus. Our fundamental priorities, maintaining our core teaching services for students and supporting the University's well-established record as one of Canada's leading research universities, continue to guide our budget decisions.

It has not been easy for managers to find the savings to balance their budgets and unfortunately the predicted reduction in our workforce of between 50 and 100 jobs is proceeding. However, the University's financial picture has brightened in some areas thanks to a combination of factors.

Revenue:

The provincial government had been uncertain of its ability to provide additional support to universities at its financial year-end in April. But the government has demonstrated once again its commitment to higher education and its belief in the role universities play in Ontario's short and long-term economic future. The province has provided:

The majority of money from both of these goes directly to the Faculties to help pay for academic programs.

Expenses:

Units have done an incredible job finding ways to reduce costs through program adjustments, restructuring and deferred hiring. These moves have produced savings that will help control expenses through 2010/11. A number of one-time costs are expected to be covered through existing appropriations.

Together, the improved revenue picture and reduced expenses have allowed us to make some strategic investments as well as cover inflationary costs created by salary and benefit increases, pension deficit payments, post-retirement benefit payments, and increased utility costs. But it is important to emphasize that creating a balanced, structural operating budget has been very difficult and painful in many areas and that it is likely that further expense reductions will be necessary over the next few years to address ongoing inflationary pressures.

Moving Forward

Compensation Legislation:

The province introduced compensation restraint legislation as part of this year's budget and universities are covered under this legislation. While the act has not yet been voted into law, it is intended to be retroactive to March 24th of this year. There is every indication that the legislation will help to reduce the impact of employee costs on the budget.

The legislation does create challenges in equity as it contains different provisions for employees depending on whether they are part of a bargaining group. Bargaining groups, including faculty associations, have been exempted from this legislation but the government has been clear that it expects that future contract negotiations will reflect the spirit of the compensation act. Non-bargaining groups, such as TMG, are covered by the legislation.

Pensions:

While we have identified funds to pay the current pension costs and deficit payments, the need to continue to control the university's pension liabilities and costs as well as post-retirement benefit costs is paramount if we are to have the funds to support our core missions of teaching and research. The recent provincial budget indicated that the government may consider ways of providing some relief in the rules around pension funding. We continue our discussion with the government on our pension challenges and have had very positive feedback on the significant moves our labour groups have been willing to make in order to increase pension contributions and make adjustments to pension and post-retirement benefits. We look forward to productive discussions later this year with MUFA so we are able to continue the University's success in addressing our compensation challenges.

The Budget Committee is now drafting its final document for approval by the President. The budget then proceeds to the Finance Committee and to the Board of Governors in June.

Thank you for your continued attention to budget issues and we look forward to updating you as the budget process continues.

Yours sincerely,

Peter George, President and Vice-Chancellor

Ilene Busch-Vishniac, Provost and Vice-President, Academic

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