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Reserves

It is a common misunderstanding that accumulated reserves represent extra money that is available for the university to expend. For Ontario Tech, the reserves are revenues that are already spent or committed to specific projects. Based on best practices for working capital and deferred maintenance reserves, we are significantly under recommended levels. We must set aside funds to stabilize our budget over the multi-year period. At the November 2021 Audit and Finance Committee meeting, financial sustainability and reserves were discussed, confirming the university will use these monies for future investments in large-scale repairs/replacements, the creation of a strategic category for new priorities/infrastructure, and operating contingencies to offset unanticipated external budget impacts.

For context, the facilities portfolio consists of 24 buildings, covering more than 1.3 million gross square feet of space, with an estimated 2025 replacement value of $440 million. Industry practice suggests investing 0.5–1.5% of current replacement value in annual maintenance and setting aside 1.5–2.5% for future capital renewal/maintenance.[4] For Ontario Tech, that equates to $6.6 million per year in maintenance and $11 million in recommended savings. At our current annual maintenance investment of $2 million, deferred maintenance costs could exceed $40 million by 2034 and grow at an even faster pace thereafter.

Operating/Contingency reserve strategy: Some organizations calculate and identify their base level of unrestricted funds as a working capital reserve. This implies that all funds beyond those needed for working capital will be specifically employed for predetermined purposes. Determining an ideal level of reserve is one that is high enough to allow the organization to maintain sufficient liquid assets without being considered excessive. The Ministry’s Financial Accountability Framework calculates a Reserve Ratio as [Expendable Net Assets / Total Expenses] × 365, an amount which outlines a university should have over 90 days to be outside of the medium risk category. Based on 2025 statements, and based on the calculation, Ontario Tech would need almost $70 million in reserves compared to the $6 million it has today. The university must allocate more resources to reserves to finance future projects and safeguard our financial future.

Our current reserves position as of March 31, 2025, is outlined in Note 20 of the 2025 Annual Financial Statements. These funds, designated for purposes such as mandated working capital ($6M), internally funded research ($10M), and ancillary reserves, leaves only $8 million (29%) for strategic initiatives, including support for the Deans’ Priority Fund, academic strategies, and upgrades to the university’s digital and physical infrastructure.

  1. National Research Council. 1990. Committing to the Cost of Ownership: Maintenance and Repair of Public Buildings. Washington, DC: The National Academies Press. ↩