Post-secondary institutions across Canada, including York University, have been actively managing financial pressures resulting from a multitude of external factors that have decreased both enrolment and enrolment revenue.
Unanticipated costs and pressures have increased due to the global pandemic, and a continuing post-pandemic trend toward lower international student enrolment, most recently exacerbated by the international student cap introduced in January 2024.
In Ontario, the government cut domestic tuition by 10% in 2019 and then unexpectedly decided to extend tuition freezes at this lower rate through to the end of 2026-2027. The domestic enrolment corridor has also limited growth aside from a few targeted areas such as nursing.
The repeal of Bill 124 was a further complicating factor. Some universities, including York, made significant wage adjustments with the repeal of the Bill but these increases were done without support from the government. Despite contrary recommendations from the government’s own Blue Ribbon Panel, the Province has provided only modest increases to grant revenue for 2024-2025 despite inflationary increases in the past several years.
Universities in Ontario have sought to align administrative and academic expenditures with lower revenue through cost containment measures and where possible seeking alternative sources of revenue.
York has been experiencing the same fiscal challenges as other universities especially those in Ontario. Nevertheless, there is variability in the sector depending on program mix, per cent international, and reputation. Some universities have a small number of international students, under 10%, and were therefore less affected by the international cap. York’s international students represent approximately 18% of the student population.
Applications especially among international students have been trending toward STEM, professional programs and health-related disciplines for a number of years. Certain faculties have therefore experienced greater declines with the result that York’s international enrolment has been more significantly impacted in comparison to several of our competitors.
Global ranking also matters and we are competing with numerous universities in the GTHA. York’s reputation has been steadily improving in recent years, but still lags behind some of our close competitors. Further, based on our past experience and the number of students who have accepted our offer of admission, projected enrolment for 2024-2025 will also be impacted by the 2023-2024 labour disruption.
The combined impact of all the factors discussed in questions 1 and 2 has created a critical financial situation for York. If unaddressed, the cumulative shortfall threatens to put the University in a negative financial position by 2026-27.
York has built a strong foundation in response to the changes occurring in higher education including becoming increasingly comprehensive in response to emerging market needs and student demands over the last 15 years. Efforts have also been made to elevate York’s liberal arts and fine arts programs including investments in better facilities, international partnerships, hosting Congress, and strategic faculty hires. We continue to invest in initiatives that will drive growth, innovation, enrolment and the diversification of revenues to maintain our positive trajectory but achieving the planned recovery and ensuring our future success will also require that we take the necessary steps to align our expenditures with the drop in enrolment and enrolment revenue. The combination of the decline in enrolment and government policy directions has had a significant impact on our budget that requires both cost containment measures and growth.
Last year, the provincial Auditor General (AG) conducted a Value for Money Audit of York University and made the determination that while York is financially sustainable, it is essential that several budgetary actions that were underway continue. With the additional pressures created by external policy directions impacting higher education in 2024-2025, it is now critically important to take additional budgetary actions to ensure York’s long-term success.
The University has an approved three-year budget plan that relies on the implementation of 17 strategic actions (the York U Forward Action Plan) that will stabilize the University’s finances, including the urgent need to identify $200 million in total savings over three years, while also pursuing new revenue generating strategies.
The AG’s report unfortunately relies on a specious analysis in identifying the increase in management roles and salaries by using percentages and counting jobs whose titles had changed as “new” positions when they in fact existed prior to 2018-2019 (i.e., typically Executive Director). There is very little actual change in pay for these positions – i.e., the reported growth is an artifact of mismeasurement rather than a real increase exacerbated by the small number of positions and use of percentages. We have shared our concerns about the misinterpretation with the AGO and we will continue to make the point with them in our subsequent responses.
Specifically, of the 12 “new” roles identified by the AGO, seven of them were reclassifications of existing positions corresponding with expanded responsibilities. These were not added positions and no one new was hired to fill those roles.
There were only five truly new positions created since 2018-19:
- Vice-President of Equity, People and Culture increased York’s total VP head count from four to five VPs which is a 25% increase.
- Two Associate Vice-Presidents in the Division of Equity, People and Culture: AVP, Indigenous Initiatives; and AVP, Faculty Affairs.
- Two Assistant Vice-Presidents in the Division of Finance and Administration who focus on efficiency and financial management. One of these two roles has since been closed.
Salary comparison:
- It is noteworthy that the overall salary increases of the four VPs who were in those roles in 2018-19 to 2022-23, was 6.5%, significantly less that the overall increase in YUFA salaries between 2018-19 and 2022-23 which was 17%.
In brief, York Region is the fastest growing area in Ontario — perhaps Canada — of 18-21 year olds. York is investing in Markham as a key component of our Strategic Enrolment Plan to grow both domestic and international enrolment. To provide some history, York was one of two universities awarded funds in 2016-2017 to establish a new campus as part of the provincial major capacity expansion (MCE) program launched by the Liberal government to serve the increasing numbers of 18-21 year olds (particularly in York Region and Peel Region) seeking access to post secondary education. The project was delayed when the Conservatives took the helm in 2018 and developed a new (MCE policy framework limiting financial support to enrolment. A careful analysis was undertaken at the time regarding York’s capacity to finance the capital costs (including philanthropy) relative to the advantages of being the first (primary) university in the Region especially given the interest of competitors to establish campuses in this fast-growing area. The expanding market, emerging tech sector, the potential for enrolment growth and strategic partnerships for research and experiential education were all factored into the final decision to proceed in addition to the availability of existing infrastructure (for food, athletics, etc.) near the land being donated to the University from the City of Markham (i.e., space and facilities at the Keele Campus were deemed to have reached maximum capacity for accommodating the number of students we had at that campus). The Markham Campus is therefore creating the space for enrolment growth, facilitating the development of new programs to meet student interests and emerging talent needs, and identifying new opportunities for research and innovation. It has just recently been “turned over” to the University in preparation for this September, 2024.
The University took a $100M debenture to replace the government’s withdrawal of capital funds; it is worth noting however that the value of the land alone is $50M. York Region also contributed $25 million and we have raised approximately 50% of the philanthropic goal to date. Markham Campus is responsible for covering its own costs including the interest on the debenture until it is paid back and will also repay the capital contribution made by the University (budgeted to start in Year 6 when the campus is closer to steady state and no longer operating in deficit). These funds then become available for future strategic priorities. This is an investment in the future of York University and in York Region, and the planning principles are sound.
Enrolment is looking strong for the first cohort of students. As of July, 326 undergraduate students had accepted an offer and 90 graduate students (with international graduate student acceptances above target). Similar to the rest of the University, the enrolment in some programs did not meet targets but as a brand new campus, a contingency had been built into the Markham budget that is more than needed. Faculty and staff hiring has been timed carefully to align with the build up of enrolment and to limit the start up deficit that comes with any new initiative.
Financial sustainability is not the only measure that should determine which programs are offered since the funding available for individual programs does not always reflect their costs of delivery. As such, an internal redistribution of revenues has always taken place to provide sufficient breadth, diversity, and quality of learning opportunities to serve the knowledge needs of students and of the province. An advantage of the SHARP budget model is to provide faculties with greater flexibility to plan for different-size programs and to provide greater transparency about attributed revenue, allocated revenue from the University Fund, and shared costs.
At the same time, the University must balance its budget over the three years of a rolling budget. This does not mean that all programs have to be large. Faculties have a responsibility to offer high quality programs that meet the needs of students and society, including responding to programs and courses that have seen declining enrolment year over year. Responses might include downsizing the programs and aligning the expenditures appropriately, or revising the programs to grow enrolment, or as has been done in some cases, making the decision to close or replace programs. The York U Forward Action Plan includes projects on Program Sustainability, and discussions led by the Provost and Vice-President Academic are underway with the Academic Policy, Planning and Research Committee of Senate, and with academic leaders across campus, and will continue.
Divisions also have the responsibility to run as effectively as possible while offering high quality services.
It is time for the University to consider how best to organize itself, and this includes considering a reorganization of academic Faculties that could streamline administrative overhead. Currently only two of York’s Faculties (Osgoode and Schulich) can balance their in-year operating budgets. While some redistribution of revenue among faculties through the allocation from the University Fund is normative, it is important for a University to be able to reserve some institutional funds for strategic investments such as research intensification, deferred maintenance, digital transformation, etc. Some of York’s smaller Faculties are struggling with accumulated multi-year deficits in the range of $40 million to $50 million, and this warrants consideration of the optimal organization to support the academic activities of the University across all Divisions.
It is not unusual for universities to borrow money typically for capital for academic activities and the infrastructure that supports those activities. Funds provided by the Federal government for urgently needed research facilities rarely (never) provides 100% of the capital costs. Over the years, York has borrowed monies to help cover the costs of the Accolade buildings, the Schulich expansion, Markham, parking facilities, etc., the first half of which comes due after 2040, and the second half of which comes due between 2054 and 2060. Ancillaries (revenue generating activities including residence, bookstore, parking, and food operations) pay monies annually into a “sinking fund” that has been invested in order to cover the debentures when they come due. The annual interest is paid centrally as part of the shared service model, although Markham pays the full amount of interest on the debenture specifically issued for Markham capital. Philanthropy and government programs typically make up the remaining capital / equipment funds. These funding decisions are carefully reviewed by the Board of Governors in the context of realizing the vision and the priorities of the University. Based on a recommendation from the AGO, going forward, the business case for capital decisions will assess the Return on Investment including any monies borrowed or invested by the University – building on the approach taken in the case of the Markham Campus.
York’s mission and vision has from the beginning aimed to enhance access and impact as a progressive, modern University committed to enhancing the well-being of the communities we serve. The expectation was that we would build on our well-established strengths in the arts, humanities, social sciences and professional programs in business and law, to become increasingly comprehensive over time but developing distinct, interdisciplinary programs and research to meet the talent and knowledge needs of society. We have developed an excellent track record of doing exactly that developing unique programs in science, technology, health, and engineering. A School of Medicine has been part of our plans from our inception and we are developing a curriculum that reflects the interprofessional and interdisciplinary approach for which we are known. As a first of its kind program focussed on primary care with a community-based learning model, including digital health solutions, a York University School of Medicine has the potential to enhance access for students whose dream it is to practice medicine, to strengthen interdisciplinary research and innovation in health-related fields, and to advance equity in health care across Ontario. There is a dire shortage of primary care doctors in Ontario, and this is a unique opportunity for York to make a positive societal impact.
The School of Medicine is also a component of York’s longer-term success as a leading Higher Education institution in Canada. A School of Medicine will strengthen York’s reputation, attract new enrolment, enhance research opportunities including partnerships with industry, NGOs, hospitals and others, and bring in new revenue streams from the Ministry of Health, as well as additional research funding and related Canada Research Chairs, and philanthropy.
The Province has given the green light and confirmed the operating beginning with a first cohort in 2028. The capital will depend largely on philanthropy with the potential for government funding. In sum, a School of Medicine will draw on new revenue sources, new enrolment and provide a new opportunity for significant positive impact.