Managing key budget risks

The university continues to take a proactive approach to risk mitigation and maintains a focus on long-term strategic planning and decision making to sustain financial responsibility. Looking holistically at all potential positive and negative impacts to the budget, we reiterate that this as a low to moderate risk budget based on the likelihood and consequences of the major items. Our key budget risks and mitigation strategies, where applicable, include the following:

Achieving enrolment targets

This is a continued risk, but the university has normally realized enrolments within +2 per cent of its annual estimates. Recently emerging government policies on international student enrolment caps present a significant challenge for us this year and particularly so as we have yet to be notified of our international student allocation number. In response, we have reduced the amount of expected revenues associated with international student growth based on best assumptions and planned for a $3M contingency fund.

Maintaining academic quality and student success

Our investments in student well-being and academic success supports continue to grow, but the diversity of our students and their expanding needs outpace the investment. By taking a values-based approach, we are attempting to invest in high impact initiatives while also trying to respect the individuality of each of our community members. This is why we have chosen to invest more dollars to support additional faculty, staff, and student teaching assistant supports and resources. At this time, we assume a need to grow over 600 students a year just to cover annual salary increases for current employees.

Financial indicators

At this time the university is rated lower by credit agencies than our sister institutions based on: (i) Liquidity (ii) Sustainability (iii) Performance which impacts borrowing rates and review by other external parties. Based on industry standards, Ontario Tech’s credit rating ismedium risk. However, adjusting the sustainability ratios to account for debenture funding from the province, the university is within our target ratios. With a balanced budget and with funds set aside for reserves in 2024/2025, we anticipate the University’s ratios to remain stable.

Aging equipment

One of the first budget areas to be reduced over the last few years was the repair and replacement of equipment. The chances of equipment failure only increase as the equipment ages. While we had planned last year to increase in-year spending for capital renewal and return to increasing our planned reserves for future needs, we have chosen to continue to invest in our people and delay these investments. With that said, there are three larger pieces of equipment that are past end of life, which we are monitoring closely and spending funds on regular maintenance to maintain. We have a general contingency in place to mitigate emergency repairs. This equates to about $1.5M risk; however, the larger concern is the impact on business continuity if any of these pieces of equipment fail.