Town Hall Meeting Presentation June 3, 2016

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Vice-President Finance & AdministrationDivisional Management

Meeting

Gary BrewerJune 3, 2016

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Outline1. Budget Update2. Institutional Integrated Resource Plan (IIRP)3. SHARP Budget Model Update4. Capital Planning Updates

Federal Government's Strategic Investment Fund (SIF) York University Bond Issue Markham Campus Subway Update Central Square Podium Roof The Quad New Student Centre Update

5. Questions and Answers

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1. Context for Budget Planning2. Current Budget Plan 2015-2017 (including Projected Divisional Deficits)3. Enrolment Update4. Divisional Carryforward Positions – 2015-16 Budget vs Projected Results5. Capital Markets Update – Endowment and Pension 6. Pension Plan Update – December 31, 2015 Valuation Results7. Academic Strategic Investment Contingency Fund8. Budget Outlook - 2018-19 Changes ( Revenue/Expense and Net Impact) 9. Budget Outlook – Risks10. Managing the Projected Deficit11. Key Budget Planning Assumptions and Emerging Budget Risks

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External PSE Context

Enrolment decline

Financial challenges

Increasing accountability

• Applications declining in Ontario through to 2021

• Increasing competition in Ontario

• Uncertainty in tuition fee framework

• No additional MTCU funds beyond enrolment growth

• Special envelopes aligned with MTCU priorities

• Performance based grant funding

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Implications for PSE Landscape• Continuing emphasis on:

o quality o differentiation in systemo career preparation and success for studentso research impact and contribution to socioeconomic

developmento credit transfer among colleges and universitieso technology enhanced learning, open access and

collaboration

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Challenge for York• Reputation

• Loss of market share

• Disproportionate reliance on small number of programs

• Research intensification

• Student advising

• Campus experience

• Budget

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Context for Budget Planning

• Current approved Budget Plan covers the period to 2016-17

• In Fall 2014, the University confirmed its Transition Plan to the new SHARP (Shared Accountability Resource Plan) Model effective fiscal 2017-18.

• The presentation format for the SHARP Budget Model will be considerably different under SHARP and will provide an increased level of detail

• For illustrative purposes, the numbers for 2017-18 and 2018-19 are being provided to demonstrate the impacts of budget assumptions for that fiscal year. Approval will not be requested at this time for the fiscal 2017-18 or the 2018-19 Budget

• Recent decision of the new Markham Campus has not been incorporated into the 2016 Budget Plan. Budget Plan impacts are anticipated to occur beyond the current 2016 budget planning horizon.

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• The typical approach to update the Budget Plan would be to amend the Approved Budget Plan (June 2015) for significant changes and extend for one additional year

• A key assumption underlying the Budget Plan is the enrolment plan. The projected enrolment plan that was reflected in the multi-year Budget Plan approved in 2015 remains solid, and no changes are required at this time

• The projections for the 2018-19 fiscal year (based on the current incremental budget model) include total tuition fee revenue increases of $10M and total compensation increases of $10M – resulting in “neutral” impact on the in year bottom line position

• The other major cost pressures that have been identified to date this year have been addressed through the Academic Strategic Investment Contingency Fund - resulting in no changes to the overall institutional budget plan

• The Multi Year Budget Plan that was approved in June of 2015 covering the 2016-17 fiscal year is therefore being proposed to be reaffirmed at the Board meeting in June

• The University will prepare in the Fall of 2016 a multi-year SHARP Budget Plan covering the period 2017-18 to 2019-20, to illustrate the new format

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Current Approved Budget Plan 2015 - 2017 (Including Projected Divisional Deficits)

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2015-16 Final Undergraduate FFTEs

2012-13Actual

2013-14Actual

2014-15Actual

2015-16Enrolment Contract

Target

2015-16 University

Budget Target *

2015-16Actual

Eligible40,631.8 39,713.7 38,095.8 37,194.1 35,796.0 36,981.8

Visa3,211.7 3,569.9 3,994.2 4,286.4 4,278.0 4,449.7

Other Ineligible

437.0 457.6 471.9 471.9 471.9 439.3

Total44,280.5 43,741.2 42,561.9 41,952.4 40,545.9 41,870.8

* University Budget Target includes projected Engineering growth over 2011-2012

+1,186 -212

+163 +172

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2015-16 Final Masters Fall FTEs

Nov 2007

Actual

Nov 2012Actual

Nov 2013Actual

Nov 2014Actual

Nov 2015Enrolment Contract

Target

2014/15 to 2016/17Ministry Target *

Nov 2015 Preliminar

y

Eligible2,587.7 2,310.1 2,320.5 2,280.4 2,415.0 2,589.4 2,269.3

Visa160.3 385.4 414.6 559.3 559.3 N/A 561.2

Other Ineligible

119.6 155.5 148.0 148.4 148.4 N/A 141.3

Total2,867.6 2,851.0 2,883.1 2,988.1 3,122.7 N/A 2,971.8

• Targets as provided in SMA, April 16, 2014• Government reduced the target from the previous target by 159.58 FTEs

from 2,748.98 FTEs

-320-146

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2015-16 Final Doctoral FTEs

Nov 2007 Actual

Nov 2012Actual

Nov 2013Actual

Nov 2014Actual

Nov 2015Enrolment Contract

Target

2014/15 to 2016/17Ministry Target *

Nov 2015 Preliminary

Eligible1,019.4 1,051.7 987.0 987.3 1,060.4 1,030.56 1,039.1

Visa127.3 173.3 196.1 204.3 204.3 N/A 212.3

Other Ineligible

274.1 460.6 463.8 429.6 429.6 N/A 417.9

Total1,420.8 1,685.6 1,646.9 1,621.2 1,694.3 N/A 1,669.3

• Targets as provided in SMA, April 16, 2014• Reduced from previous target by 181.6 from 1,212.16

+9 -21

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Divisional Carryforward Positions -2015-16 Budget vs. Projected Results

Cumulative Year-End Carryforward Positions

2015-16 Budget Position

2015-16 Forecasted

PositionVariance to

Budget Comments

($millions)

Institutional 1.39 0.00 1.39 On Budget

Divisional Projections

President's 0.83 1.31 0.48 Positive to Plan

Advancement (1.13) 0.81 1.94 Positive to Plan

Academic (54.10) (37.60) 16.50 Positive to Plan

Research 1.29 1.76 0.47 Positive to Plan

VP Admin & Finance 5.72 5.80 0.08 On Plan

Total Divisional (47.39) (27.92) 19.47

Total (46.00) (27.92) 20.86

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Capital Markets Update – Endowment and Pension Fund

2015 Calendar Year

Pension Fund Performance

Total Fund 9.5%

Plan Text Requirement 6.0%

4.98% -2.90%7.11% -2.41%

Value Added -2.13% -0.49%

Endowment Fund Rate of ReturnPolicy Benchmark

Endowment Performance

Calendar Year 2015 12 months to

December 31, 2015

Fiscal YTD 2015-16 11 months to

March 31,2016

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Pension Plan UpdateGoing Concern Valuation Results as of December 2015

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Pension Plan UpdateHypothetical Wind-Up and Solvency Financial Position

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Academic Strategic Investment Contingency Fund

• In the 2014 Approved Budget Plan the University created an Academic Strategic Investment Contingency Fund from the net savings created from lower Required Special Pension Contributions. These savings were realized as a result of higher employee contributions, matched by the employer, strong investment performance in recent years, and Stage II solvency relief approved by the Government, which deferred solvency contributions for a total of four years.

• The attached schedule outlines the commitments against this fund and the value of uncommitted funds that are available to assist in managing a number of institutional risks including:

The potential rebase of the MTCU Operating Grant as a result of declining domestic enrolments

The potential Solvency Special Payments that may be required in 2018

The changing demographic in domestic enrolments over the next 3-5 years

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Academic Strategic Investment Contingency Fund

2014-15 2015-16 2016-17 2017-18 2018-19 Total

ContributionsBudget Plan 2014 18.30 11.00 8.40 8.40 8.40

4.80Budget Plan 2015 6.00 6.00 6.00 6.00

1.00 1.00 1.003.002.00

Total Contributions 23.10 22.00 15.40 15.40 15.40 91.30

Faculties10.00 15.00

0.40 0.40 0.400.700.75 0.75

CUPE Conversion 0.27 0.27 0.270.50

Total Faculties 0.40 12.62 16.42 0.27 0.00 29.71

Academic Support0.50 0.50

0.80 1.00 0.40 0.40

Student Aid/Scholarship 1.00 1.00 1.200.60 1.70

0.11

Library - Collections 0.50 0.800.70 0.70

Total Academic Support 0.80 4.30 5.21 1.60 0.00 11.91

Institutional OtherYork in York Region 1.00Markham Campus - planning and space 0.60 1.40 1.40 1.40CFI Grant Support 1.16Copyright Clearance 0.30 0.30Presidential Search 0.05 0.25Refugee Funding Program 0.03 0.17

Total Institutional 1.00 2.14 2.12 1.40 1.40 8.06Total Commitments 2.20 19.06 23.75 3.27 1.40 49.68Net In-Year Commitments 2.94 -8.35 12.13 14.00Cumulative Ending Balance 20.90 23.84 15.49 27.62 41.62 41.62

- Operating

YU StartStrategic Enrolment Response-contd

Student Life AwardsUniversity Translator

Commitments

AMPD Funding

(in $millions)2014-15 to 2017-18

Fiscal 2015 OPEB Adjustment

SHARP Implementation

PRASEInstitutional Restructuring FundCapital Reserves

Lassonde EducationSchulich

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• Revenue outlook changes to the 2016 Plan Enrolment plan tabled in 2015 for 2016-17 and 2017-18 reaffirmed

Enrolment plan for 2018-19 maintains undergraduate enrollment relatively flat to the 2017-18 plan approved

Projected tuition fee revenue fee increases for the 2018-19 year are estimated at $10 million

• Expense outlook changes to the 2016 plan All approved cost pressures are currently being funded through the Academic

Strategic Investment Contingency Fund with exception of compensation

The projected compensation costs for 2018-19 are estimated at $10 million

• Net Budget Impact for 2018-19 The projected changes at an institutional level for 2018-19 are total tuition

revenue changes of $10M offset by total expense changes of $10M for net impact for the year of zero

A detail Multi Year Budget Plan using the SHARP format will be presented in the Fall of 2016 for the period 2017-18 to 2019-20

Budget Outlook – 2018-19 Changes

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Budget Outlook – Risks

Risk of Government Grant Rebasing• The Provincial Government Base funds the University on its domestic

undergraduate enrolments at the level of its enrolments achieved in 2010-11 through its Operating Grant

• This was close to York’s highest level of Domestic enrolments. Since that time and projected into the near future York is not expected to attain these enrolment levels and currently receives grant funding through its Base Grant for enrolment levels higher than its actual enrolment

• There is no clear indication at this time that the Government will rebase York’s Operating Grant to reflect the lower enrolment levels. The risk however exists, but it is anticipated that should the Government make a decision to do so it will consult with the University and provide at least one year’s notice

• Recent information from the Ministry indicates that decision on the changes to the Funding Formula review will not occur in 2016-17 fiscal year

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Budget Outlook – Risks

Risk of Government Grant Rebasing cont’d…• There are a few Ontario Universities who have been in similar situations in

recent years and the Government has not chosen to rebase their Operating Grant.

• York has been in a similar situation with its Graduate enrolments for the last five years and the Government has not chosen to rebase the Graduate grant.

• The draft budget plans have assumed that the University will not experience any reduction in its Base Operating Grant.

• The total Undergraduate grant at risk should the Ministry rebase is dependent upon actual enrolment. The current grant received in excess of enrolments for undergraduates is about $10 million.

• The University is currently receiving about $4M in grant funding for Graduate students that could also be at risk of rebasing.

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Managing the Projected Deficit

• The 2015 Budget Plan projected an accumulated deficit (including Divisional Deficit Positions) of $68.74M by the end of 2017/18.

• The approved 2015 Budget Plan is based on the in-year structural deficits being reduced over the period covered by the plan, to result in an in-year balanced positions by the end of 2017-18.

• The accumulated divisional deficits noted above would have to be addressed in subsequent budget years.

• The actual financial results at the end of fiscal 2015-16 are currently projected to be positive to Plan (with the final numbers to be confirmed shortly).

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Key Budget Planning Assumptions and Emerging Budget Risks

• Achieving the Enrolment Plan • Tuition Fee Framework beyond 2017• Divisional Deficit Positions• Impact of IIRP on Divisional/Faculty Budget Management• Government Grant Rebasing Risk (Undergraduate and

Graduate)• Provincial Government University Funding Formula Review

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IIRP Institutional Initiatives

• Advance innovative /signature pedagogies• Develop strategies to achieve White Paper benchmarks in regards to

undergraduate and graduate teaching prioritiesQuality teaching and learning

• Advance quality in academic programs• Address programmatic issues with declining enrolment• Streamline degree requirements

High quality academic programs

• Develop and implement a comprehensive shared services modelHigh quality affordable administrative services

• Complete graduate re-visioning• Undertake organizational review of faculties and academic units Optimal academic organizational

structures

• Reform student advising experience• Enhance campus experience

Student Centricapproach

• Develop pan-university operational plan to support research intensificationResearch intensification

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Institutional Working Groups

pan-university working groups in the following areas: teaching and learning program quality student experience – advising student experience – the campus experience shared services role of the Faculty of Graduate Studies

Two existing working groups expanded based: Technology-enhanced learning Experiential education

Working Groups developing implementation plans Summary report to Board in June

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Activities to Prepare for SHARP Implementation

Shadow Budget completed for fiscal 2011-12, 2012-13 and 2013-14 and 2014-15, 2015-16 in progress

Transition Plan to SHARP finalized Faculty level presentations completed on SHARP Budget Model and Transition Plan Presentations to Shared Service Units, Faculty Executive Officers, Finance Officers,

AVP’s completed SHARP Budget calendar developed SHARP Budget detailed work plan completed to tie into Budget calendar Four separate Focus Groups created to develop tools and education sessions SHARP Budget Guidelines in draft Draft SHARP Budget Format developed for Board materials SHARP Budget Report – populated with historic data Systems in development to produce Budget Driver Data SHARP website in development Faculty sign off received on SHARP Base Year (2013-14) Data

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Capital Program Funding Summary• The capital program elements (both Essential and Priority projects) highlight the need for capital

financing in the amount of ~$100 million• The financial implications associated with the additional debt will be funded through the operating

budgetCapital Program Req’d Funding ($M)Markham Campus 45

Student Information System 30

Cogen Plant Upgrade 15

Burton Auditorium 6

Artificial Turf 6

Engineering/Science Expansion 120

Schulich School of Business 50

Science Renewal 48

Sherman Health Sciences Expansion 28

Engineering I (Specialized Equipment) 10

Sub Total 358Less Internal Financing (100)

Less Government Grants, Fundraising (154)

Total Capital Financing Required 104

Essential Projects

Priority Projects

Enhance student experience and support enrolment growth

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• On April 6, 2016 the Federal Government announced the launch of a $2 billion infrastructure program for Post-Secondary Educational institutions• Up to 50% of eligible capital project costs will be covered by the Federal Government• Remaining funding will come from other partners, including provincial and territorial governments and the institutions• Deadline for submissions was May 9, 2016• Projects must be substantially completed by April 30, 2018

Government funding is anticipated to cover over 50% of project eligible costs

• The Government of Canada will cover up to 50% of a project's eligible costs• Remaining funding will come from other partners, including provincial and territorial governments and the

institutions• The University (York) will only be responsible for raising its share of anticipated project costs

Mandate to support long-term sustainable projects targeted at research and innovation

• Improve the scale or quality of facilities for research and innovation, including commercialization spaces• Improve the scale or quality of facilities for specialized training at colleges focused on industry needs• Improve the environmental sustainability of research- and innovation-related infrastructure at post-secondary

institutions and of college training infrastructure.

Source: Government of Canada – Innovation, Science and Economic Development Canada

By improving our college and university facilities, we are supporting innovation, scientific research and entrepreneurship in Canada, which translates into sustainable economic growth and support for all Canadians.The Honourable Kirsty Duncan, Minister of Science

Canada's post-secondary institutions are front-line agents in fostering science and research excellence. They help to train the workforce of tomorrow and create knowledge and insights necessary for the private sector and policy makers to build a thriving, clean economy. These investments will create good, well-paying jobs that can help the middle class grow and prosper today, while also delivering economic growth for years to come.The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development

Federal Capital Stimulus Program PSE

Strategic Investment Fund provides York with a significant opportunity to accelerate investment to enhance enrolment in high return projects

Recent Development - Post Secondary Institution Strategic Investment Fund

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Project Benefit Total Funding

Science Renewal • Renovations of facilities and equipment for the Faculty of Science

• Annual funding levels are $12 million on average across five research departments and over 150 full-time faculty members

• Maintain reputation as state-of-the-art research and innovation organization

$48 million

Cogeneration Plant Upgrade

• Co-generation plant is used to increase resource efficiency and lower operating costs by using a single fuel source (natural gas) to produce electricity and heat

• Cheaper alternative than purchasing electricity and heat separately because it makes use of the “waste” heat that would normally be expelled in the process

• The co-generation plant produces ~60% of Keele Campus’ electricity requirements, with the remaining 40% purchased

• Increase resource efficiency and reduce the university’s energy expenditures

• Aligned with government’s green initiatives

$15 million

Schulich School of Business

• New building for the Schulich School of Business in order to increase capacity and enrolment • The Schulich School of Business offers undergraduate and graduate degree and diploma programs

in business administration, finance, accounting, business analytics, public administration and international business as well as a number of PhD and executive programs

• Support intake for York’s flagship graduate program that continues to top domestic and international rankings

$50 million

Engineering/

Science Bldg

• Build an additional building for the Lassonde School of Engineering in order to increase capacity and support the increased enrolment trend

• The current home of the Lassonde School is the Bergeron Centre (opened April 8), which has no lecture halls, instead encouraging student creativity and collaboration with active learning classrooms, labs, entrepreneurial spaces and prototyping labs

• Engineering represents the biggest component of enrolment growth, providing the highest fee and grant value

• New building will facilitate the intake of additional 440 students with tuition and grant revenue of ~$20,000 each

$120 million

$233 million

• York will benefit from capitalizing on the Post-Secondary Institutions Strategic (PSIS) Investment Fund to accelerate infrastructure projects for STEM related initiatives that can ultimately support higher enrolment rates and improve student experience

• With support from the Federal Government and other non-Federal partners, funds will be directed to the following Priority projects that will create long-term sustainable growth and improve the scope of the University’s capabilities

Capitalizing on the Strategic Investment Fund – Accelerating Priority Projects

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Transaction Review York University (“York”) priced a successful C$100 million offering of 40-year senior

unsecured debentures- Marked the University’s return to the bond market since its last C$100 million 40-

year transaction in February 2014 York’s quick-to-market strategy and management flexibility allowed it to capitalize on

a number of supportive spread dynamics:- Provincial spread tightening since mid-April with foreign buying activity- Corporate spread tightening due to limited new issue supply, particularly higher-

quality product in the long-end of the curve- GE’s announced C$5.1bn tender offer (including C$1.4bn long-bond) resulted in

investors actively seeking to add similar-rated high quality new issue product Investor demand was fueled by appetite for highly-rated credits and demand for

duration which allowed York to generate several notable results including:- Attractive coupon of 3.579% marks lowest long-dated coupon in the

Canadian market for a University issuer- At +57 bps vs ON, York’s pricing was ~10-12 bps inside recent University

ultra-long deals- Accelerated execution resulted in ~17 bps coupon savings since RFP

presentation in early April - Pricing assumes a flat to arguably negative new issue concession to

existing York secondaries- Execution approach and optimal deal timing eliminated pricing impact of

recent rating agency actions- Offering was supported by a high quality order book of ~C$153 million

Net proceeds from this offering will be used to finance York’s “essential” capital projects targeted towards driving enrolment and enhancing the student experience

York University: C$100 million Senior Unsecured Series A Debentures due 2056

C$100,000,000

3.579% Senior Unsecured Series A Debentures

due May 2056

Sole BookrunnerMay 11, 2016

A(high)/-/A

Debt Repayment/Refinancing Strategy

• York’s debenture issues have been 40-yr term bullet bond issues:

• $200 M - issued in 2002 - repayment in 2042




• From the initial issue in 2002, York has been building a sinking fund towards debt repayment, for both the ancillary and academic portions of the outstanding debt. The amount accumulated to the end of Apr/2016 is $63 M (Ancillary - $25 M / Academic $38 M)

• While additional contributions to the academic portion of the debt were suspended last year, the principle and interest contributions from ancillary operations will continue

• Assuming a 2% interest rate for the next 10 years, and 3% thereafter on the ancillary portion alone will provide an amount for debt repayment in 2042 of about $190 M

• Assuming the same interest rates as above, but also rolling forward the $38 M academic portion as well, would provide an amount in 2042 of about $260 M

• Based on the above amounts, the University is currently exercising a prudent approach to managing outstanding debt/refinancing risk associated with the first two issues

• Note that some portion of the debt is anticipated to be refinanced when it comes due36

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2008

2015 1. TTC busway built and operating on east edge of Academic core

2. Portions of campus roadways temporarily closed

3. Temporary parking lots and by-pass roadways built

4. YU subway station nearing completion

ConstructionContext

1

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3

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3

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Master Plan Contemplates Transformational Opportunity

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Master Plan Contemplates Transformational Opportunity

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• TTC is aggressively pursuing subway opening for the end of 2017 and is finalizing surface restoration contracts

• York has an opportunity to begin to establish its desired post-subway roadway network in and around the York University Station

The decision framework needed to transform the area around The Common into the ‘pedestrian focused legacy condition’ contemplated in the Keele Campus Master Plan

Trigger the Transformation

1. The busway, north of The Pond Road Retain or remove2. The York Blvd. parking lot by-pass road: Retain or remove3. Chimneystack temporary parking lot: Retain or remove4. Ian Macdonald Blvd and The Common Loop: Pedestrians or vehicles

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Legacy Pedestrian / Road Network

Pedestrian Zone

University Roadways

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A New Pedestrian Priority Zone

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Pedestrian Priority Zone – Potential Design Concept

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•2012-16•$ 6,400,000•GFA 114,000 sf•Program:

• Water proofing• Multi-phased• Green roof• Seating• Lighting• Planting / bio-diversity• Improved aesthetics

Central Square Podium RoofSite Plan

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Scott Torrance Landscape Architects


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SUMMER 2016

SPRING 2017

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Central Square Podium Roof

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The Quad Student Housing Community

The Quad includes two buildings, located on the south side of the Pond Road, east of Sentinel Road. The project includes 812 beds of new student housing, available exclusively to York University and Seneca @ York students. The project also includes ground floor retail along the Pond Road.

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The Quad: February 19, 2016

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The Quad: April 14, 2016

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The Quad: May 19, 2016

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Federal Government's Strategic Investment Fund (SIF) York University Bond Issue Markham Campus Subway Update The Quad New Student Centre Update


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New Student Centre Site Plan

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New Student Centre

South Elevation

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New Student Centre

Southwest Corner

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New Student Centre

Northeast Corner

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New Student Centre

Northwest Corner

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Federal Government's Strategic Investment Fund (SIF) York University Bond Issue Markham Campus Subway Update The Quad New Student Centre Update


Documents

Town Hall Meeting Presentation June 3, 2016