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Board of Governors
Agenda, Minutes and Supporting Documents
Tuesday, November 25, 2014
4 pm
Room 203 Toldo Health Education Centre
Please review all documents prior to the Board of Governors meeting.
All documents for this meeting are contained in the one PDF file for easy reading/printing.
REMINDER:
The Annual Board of Governors Dinner will immediately follow the Board meeting.
If you have not done so already, RSVP to Mary-‐Ann Rennie ([email protected], 519-‐973-‐7059)
If you are unable to attend the Board meeting, please notify Carol Perkes at [email protected]
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NOTICE OF MEETING There will be a meeting of the
Board of Governors Tuesday, November 25, 2014
4:00 pm in Room 203, Toldo Health Education Centre
AGENDA
ITEM DESCRIPTION DOCUMENT/ACTION Declaration of conflict of interest 1 Approval of the Agenda 2 Minutes of the meeting of October 21, 2014 Jones-‐Approval
BG141021M
3 Business arising from the minutes
4 Outstanding Business/New Business 4.1 Reports:
4.1.1 Remarks from the Chair Jones-‐Information 4.1.2 President’s Report Wildeman-‐Information
4.1.2.1 Presentation by Dean, Faculty of Arts, Humanities and Wright-‐Information Social Sciences
4.2 Audit Committee
4.2.1 Draft Audited Financial Statements of the University of Farmer/Bassman-‐Approval Windsor Pension Plans for the Year-‐ended June 30, 2014 (p4) BG141125-‐4.2.1a-‐b
4.3 Executive Committee
4.4 Governance Committee
4.5 Investment Committee
4.5.1 Phillips, Hager & North -‐ Core Plus Bond Fund (p43) Quenneville-‐Approval BG141125-‐4.5.1
4.6 Pension Committee (see Item 4.2.1 above)
4.7 Resource Allocation Committee
4.7.1 2014/2015 Operating Budget Update (p46) Allen-‐Information BG141125-‐4.7.1
4.7.2 2015/2016 Operating Budget Allen-‐Information
4.7.3 Centre of English Language Development (CELD) (p55) Allen-‐Approval BG141125-‐4.7.3
4.7.4 School of Creative Arts (TBQ) Development (p58) Allen-‐Approval BG141125-‐4.7.4
5 In Camera
6 Adjournment
BG141125A
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[Bylaw 1, Section 2.6 – Consent Agenda: Items that normally do not require debate or discussion either because they are routine, standard, or noncontroversial, shall be “starred” (identified by an asterisk (*)) on the agenda. “Starred” items will not be discussed during a meeting unless a member specifically requests that a “starred” agenda item be ‘unstarred’, and therefore open for discussion/debate. A request to “unstar” an agenda item can be made at any time before (by forwarding the request to the Secretary) or during the meeting. By the end of the meeting, agenda items which remain “starred” (*) will be deemed approved or received by the Board, as the case may be. No individual motion shall be required for the adoption of “starred” agenda items.]
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BG141125-‐4.2.1(a&b) University of Windsor Board of Governors
4.2.1(a&b): Audited Financial Statements of the University of Windsor Pension Plans For the year ended June 30, 2014 Forwarded by: Audit Committee/Pension Committee
Item for: Approval MOTION 1: That the Board approve the Audited Financial Statements of the University of Windsor
Retirement Plan for Faculty and Certain Employees for the year ended June 30, 2014. MOTION 2: That the Board approve the Audited Financial Statements of the University of Windsor
Employees’ Retirement Plan for the year ended June 30, 2014. Rationale: The audited financial statements for the Pension Plans are special purpose statements. These financial statements present the net assets available for benefits as of June 30, 2014 and the change in net assets. These financial statements have been prepared for the sole purpose of providing information to the Trustee of the University of Windsor Pension Plans and the Financial Services Commission of Ontario for compliance with regulations. Clean audit reports have been issued by the University’s external auditors, KPMG.
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Fund Financial Statements of
UNIVERSITY OF WINDSOR RETIREMENT PLAN FOR FACULTY AND CERTAIN EMPLOYEES Registration Number: 0366849 Year ended June 30, 2014
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INDEPENDENT AUDITORS' REPORT
To the Trustee of University of Windsor Retirement Plan for Faculty and Certain Employees
We have audited the accompanying financial statements of the University of Windsor Retirement Plan for Faculty and Certain Employees, which comprise the statement of net assets as at June 30, 2014, the statement of changes in net assets for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. The financial statements have been prepared by management based on the financial reporting provisions of Section 76 of the Regulations to the Pension Benefits Act (Ontario).
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of Section 76 of the Regulations to the Pension Benefits Act (Ontario), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform an audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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Opinion
In our opinion, the financial statements present fairly, in all material respects, the net assets of the University of Windsor Retirement Plan for Faculty and Certain Employees as at June 30, 2014, and its changes in net assets for the year then ended in accordance with the financial reporting provisions Section 76 to the Regulations to the Pension Benefits Act (Ontario).
Basis of Accounting and Restriction on Use
Without modifying our opinion, we draw attention to Note 2 to the financial statements, which describe the basis of accounting. The financial statements are prepared to assist the University of Windsor Retirement Plan for Faculty and Certain Employees to meet the requirements of the Financial Services Commission of Ontario. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the Trustee of the University of Windsor Retirement Plan for Faculty and Certain Employees and the Financial Services Commission of Ontario and should not be used by parties other than the University of Windsor Retirement Plan for Faculty and Certain Employees and the Financial Services Commission of Ontario.
Chartered Professional Accountants, Licensed Public Accountants
Date of approval
Windsor, Canada
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UNIVERSITY OF WINDSORRETIREMENT PLAN FOR FACULTY AND CERTAIN EMPLOYEES(Registration Number: 0366849)
Statement of Net Assets
Year ended June 30, 2014, with comparative information for 2013
2014 2013 $ $
AssetsAccrued interest and dividends 550,631 644,446 Investments note 5 424,387,478 357,510,606
Total Assets 424,938,109 358,155,052
LiabilitiesAccrued liabilities 454,698 349,865
Net Assets 424,483,411 357,805,187
See accompanying notes to the fund financial statements.
On behalf of the Trustees:
Administrator
Administrator
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UNIVERSITY OF WINDSORRETIREMENT PLAN FOR FACULTY AND CERTAIN EMPLOYEES(Registration Number: 0366849)
Statement of Changes in Net Assets
Year ended June 30, 2014, with comparative information for 2013
2014 2013 $ $
Increase in net assets: Investment income note 7 10,763,520 10,789,048 Net realized gain on sale of investments 24,982,193 6,560,713 Current period change in market values of investments 35,742,538 19,713,126 Contributions: Employee 6,060,494 5,904,584 Employer: Current service 8,180,728 7,981,723 Special 5,385,324 5,385,324 Total Employer Contributions 13,566,052 13,367,047
91,114,797 56,334,518
Decrease in net assets: Benefit payments 18,618,956 17,675,139 Payments to individuals on cessation of employment: Transfers to other plans 3,844,404 3,125,975 Administrative expenses note 8 1,973,213 1,597,706
24,436,573 22,398,820
Increase in net assets 66,678,224 33,935,698
Net assets, beginning of year 357,805,187 323,869,489
Net assets, end of year 424,483,411 357,805,187
See accompanying notes to fund financial statements.
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1. DESCRIPTION OF PLAN The following description of the University of Windsor Retirement Plan for Faculty and Certain Employees (the “Plan”) is a summary only. For more complete information, reference should be made to the Plan’s text.
(a) General
The University of Windsor (“the University”) sponsors two pension plans, the Retirement Plan for Faculty and Certain Employees (“the Faculty Plan”) and the Employees’ Retirement Plan (“the Employees’ Plan”). The Faculty Plan is a money purchase plan with a defined benefit minimum guarantee. The Employees’ Plan is a defined benefit plan. The Master Trust Fund (the “Fund”) holds the assets for both the Faculty Plan and the Employees’ Plan. Although the Plans are distinct and separate, the assets are invested jointly under a Master Trust Agreement in order to maximize investment income while minimizing administrative costs and management fees.
(b) Funding policy The Pension Benefits Act (Ontario) requires that the University, the Plan’s sponsor, must fund the benefits determined under the Plan. The determinations of the value of these benefits are made on the basis of a triennial actuarial valuation and any current legislative requirements.
(c) Income taxes The Plan is a Registered Pension Trust as defined in the Income Tax Act and is not subject to income taxes.
(d) Investment policy The Plan invests, together with other registered participant plans, in the Fund. The Fund is administered by Northern Trust on behalf of the participant plans.
2. BASIS OF PREPARATION
(a) Basis of presentation As permitted by the Financial Services Commission of Ontario (“FSCO”), the Plan may prepare financial statements in accordance with Canadian accounting standards for pension plans or prepare fund financial statements in accordance with Canadian accounting standards for pension plans excluding pension obligations and any resulting surplus or deficit.
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2. BASIS OF PREPARATION (continued) (a) Basis of presentation (continued)
The Plan has prepared fund financial statements in accordance with Canadian accounting standards for pension plans excluding pension obligations and any resulting surplus or deficit. In selecting or changing accounting policies that do not relate to its investment portfolio or pension obligations, Canadian accounting standards for pension plans require the Plan to comply (on a consistent basis) with either International Financial Reporting Standards ("IFRS") in Part I of Chartered Professional Accountants Canada (“CPA Canada”) Handbook or the Canadian accounting standards for private enterprises in Part II of the CPA Canada Handbook - Accounting. The Plan has chosen to comply on a consistent basis with IFRS. These fund financial statements have been prepared to assist the Trustees of the Plan to comply with the requirements of the FSCO under Section 76 of Regulation 909 of the Pension Benefits Act (Ontario). As a result, the fund financial statements may not be suitable for another purpose. These fund financial statements of the Plan do not purport to show the adequacy of the Plan's assets to meet its pension obligation. Such an assessment requires additional information, such as the Plan's actuarial reports and information about the University’s financial health. These fund financial statements have been prepared in accordance with the significant accounting policies set out below.
(b) Basis of measurement The fund financial statements have been prepared on the historical cost basis, except for investments and derivative financial instruments which are measured at fair value through the statement of changes in net assets.
(c) Functional and presentation currency These fund financial statements are presented in Canadian dollars, which is the Plan's functional currency.
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2. BASIS OF PREPARATION (continued)
(d) Use of estimates and judgements The preparation of the fund financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities at the date of the statement of net assets and the reported amounts of changes in net assets during the year. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future years affected.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Plan and the Fund adopted the guidance in IFRS 13, Fair Value Measurement ("IFRS 13"), in Part I of the CPA Canada Handbook. As allowed under IFRS 13, if an asset or a liability measured at fair value has a bid and an ask price, the price within the bid-ask spread that is the most representative of fair value in the circumstances shall be used to measure fair value. The Plan and the Fund use closing market price as a practical expedient for fair value measurement. When available, the Plan and the Fund measure the fair value of an instrument using quoted prices in an active market for that instrument. A market is regarded as active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on an arm's length basis. If a market for a financial instrument is not active, then the Plan and the Fund establish fair value using a valuation technique. Valuation techniques include using recent arm's length transactions between knowledgeable, willing parties (if available), reference to the current fair value of other instruments that are substantially the same, discounted cash flow analyses and option pricing models.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Fair value measurement (continued) The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e. the fair value of the consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable markets. When transaction price provides the best evidence of fair value at initial recognition, the financial instrument is initially measured at the transaction price and any difference between this price and the value initially obtained from a valuation model is subsequently recognized in profit or loss on an appropriate basis over the life of the instrument but not later than when the valuation is supported wholly by observable market data or the transaction is closed out. Within the Plan and the Fund, all changes in fair value, other than interest and dividend income and expense, are recognized in the statement of changes in net assets as part of the current period change in market values of investments. Fair values of investments are determined as follows: Bonds and equities are valued at year-end quoted market prices where available. Where quoted prices are not available, estimated fair values are calculated using comparable securities. Short-term notes, treasury bills and term deposits maturing within a year are stated at cost, which together with accrued interest income approximates fair value given the short-term nature of these investments. Guaranteed investment certificates, term deposits maturing after a year and mortgages are valued at the present value of estimated future cash flows discounted at interest rates in effect on the last business day of the year for investments of a similar type, quality, and maturity. Pooled fund investments are valued at the unit values supplied by the pooled fund administrator, which represent the Fund's proportionate share of underlying net assets at fair values, determined using closing market prices. Investment in the Fund are valued at the unit values supplied by the Fund Manager, which represents the Plan’s proportionate share of underlying net assets at fair values determined using the accumulation of the fair values of the underlying investments determined using closing market prices.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Financial assets and financial liabilities
(i) Non-derivative financial assets Financial assets are recognized initially on the trade date, which is the date that the Plan becomes a party to the contractual provisions of the instrument. Upon initial recognition, attributable transaction costs are recognized in the statement of changes in net assets as incurred. The Plan measures all of its investments at fair value through the statement of changes in net assets. All other non-derivative financial assets including contributions receivable are measured at amortized cost. The Plan derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Plan neither transfers nor retains substantially all the risks and rewards of ownership and does not retain control of the financial asset. On de-recognition of a financial asset, the difference between the carrying amount of the asset and consideration received is recognized in the statement of changes in net assets as a net realized gain (loss) on sale of investments.
(ii) Non-derivative financial liabilities All financial liabilities are recognized initially on the trade date at which the Plan becomes a party to the contractual provisions of the instrument. The Plan derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired. Financial assets and liabilities are offset and the net amount presented in the statement of net assets when, and only when, the Plan has a legal right to offset the amounts and it intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
The Plan considers its accrued liabilities to be a non-derivative financial liability.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Net realized gain (loss) on sale of investments The net realized gain (loss) on sale of investments is the difference between proceeds received and the average cost of investments sold.
(d) Income recognition Investment income, which is recorded on the accrual basis, includes interest and dividend income. Brokers’ commissions and other transaction costs are recognized in the statement of changes in net assets in the year incurred.
(e) Foreign currency Transactions in foreign currencies are translated into Canadian dollars at the exchange rate at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated into Canadian dollars at the exchange rate at that date. Foreign currency differences arising on retranslation are recognized in the statement of changes in net assets as a current period change in market value of investments.
(f) Unit valuation
Participating pension plans (“Participant”) are issued units in the Fund based on the unit value at the Valuation Date, prior to which a contribution was made. Capital gains and losses, plus investment income, net of agency fees, custodian fees and fund managers’ fees are allocated to each participating pension plan on a pro-rata basis. Participating pension plans’ units are redeemed based on the unit value at the Valuation Date prior to which the request for redemption is made by the Participant.
4. FUNDING POLICY The University is required to provide funding, based on triennial valuations and any current legislative requirements, necessary to ensure that benefits will be fully provided for at retirement. The University’s funding policy is to make contributions from time to time using the level premium method as determined by the actuary. The most recent actuarial valuation for funding purposes was prepared as at July 1, 2011 by William M. Mercer Limited. A copy of the valuation was filed with the Financial Services Commission of Ontario, Pension Plans Branch as required by the Pension Benefits Act (Ontario).
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5. INVESTMENTS
The following table summarizes the Master Trust Fund’s investments at fair value and cost:
2014 2014 2013 2013
Fair Value $
Cost $
Fair Value $
Cost $
Cash and short-term investments 17,146,067 17,126,385 13,513,008 13,464,531 Canadian bonds and debentures 214,057,774 212,351,839 178,758,654 180,407,582 Canadian common and preferred shares 200,375,669 168,940,478 151,784,496 142,366,715 Investment in Canadian Master Trust 431,579,510 398,418,702 344,056,158 336,238,828 Investment in Non-Canadian Master Trust - Shares 190,233,645 119,026,573 178,162,080 133,754,020 621,813,155 517,445,275 522,218,238 469,992,848
The following table summarizes the Plan's pro-rata share of the investments at fair value and cost in the Master Trust Fund (68.25%; 2013 – 68.46%).
2014 2014 2013 2013
Fair Value $
Cost $
Fair Value $
Cost $
Cash and short-term investments 11,702,190 11,688,758 9,251,005 9,217,818 Canadian bonds and debentures 146,094,431 144,930,130 122,378,175 123,507,031 Canadian common and preferred shares 136,756,394 115,301,876 103,911,666 97,464,253 Investment in Canadian Master Trust 294,553,015 271,920,764 235,540,846 230,189,102 Investment in Non-Canadian Master Trust - Shares 129,834,463 81,235,636 121,969,760 91,568,002 424,387,478 353,156,400 357,510,606 321,757,104
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6. STATUTORY DISCLOSURE
The following information is provided in respect of individual investments with a cost or fair value in excess of 1% of the cost or fair value of the Master Trust Fund, as required by the Regulation to the Pension Benefits Act (Ontario).
(i) Cash and short-term investments
Issuer
2014 Fair Value
$
2014 Cost
$
2013 Fair Value
$
2013 Cost
$ Government of Canada Bonds 11,083,304 11,069,408 7,606,918 7,561,734
(ii) Canadian bonds and debentures Canada Housing Trust 7,927,877 7,749,360 58,101,259 15,486,900 PHN Pool 74,008,518 74,980,756 59,643,814 61,862,777
PHN Long Bond Pool 44,448,582 45,602,185 33,980,773 36,138,336 (iii) Canadian common and preferred shares Canadian equity pooled plans
FGP Small Cap Pool 10,959,739 7,632,179 8,206,182 6,916,240 SSgA Canadian Equity Index Pool - - 52,832,578 74,757,981
Pyramis Canadian Equity Pool 95,952,919 92,550,000 - - Canadian shares
Toronto Dominion COM NPV 7,350,842 4,582,454 5,430,830 4,082,816 Bank of Nova Scotia COM NPV 7,502,281 5,401,904 5,099,098 4,473,961 Royal Bank of Canada Common 6,970,314 4,970,914 4,448,621 3,602,905
(iv) Non-Canadian shares
BG Global Alpha Pooled Fund 94,654,891 57,721,564 89,769,844 65,214,579 Sprucegrove Global Pooled Fund 95,578,754 61,305,009 88,392,238 68,539,441
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7. INVESTMENT INCOME The following investment income represents the Plan’s pro-rata share of the investment income earned by the Fund:
2014
$ 2013
$ Cash and short term investments 120,036 171,924 Canadian bonds and debentures 7,589,516 7,659,590
Canadian common and preferred shares 4,518,023 6,313,980 Investment in Canadian Master Trust 12,227,575 14,145,494
Investment in Non-Canadian Master Trust- Shares 3,543,150 1,614,144 15,770,725 15,759,638 Plan’s pro-rata share of the Fund’s investment income 10,763,520 10,789,048
8. ADMINISTRATIVE EXPENSES
2014 $
2013 $
Investment management fees 1,406,775 1,112,628 Actuarial and investment consulting fees 258,542 149,098 Sponsor administrative fees 131,397 140,718 Trustee fees 71,584 82,119 Audit fees 7,833 7,837 Miscellaneous 97,082 105,306 1,973,213 1,597,706
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9. FINANCIAL INSTRUMENTS
(a) Fair values The fair values of investments are as described in note 3(a). The fair values of other financial assets and liabilities, being accrued interest and dividends and accrued liabilities, approximate their carrying values due to the short-term nature of these financial instruments. Fair value measurements recognized in the statement of net assets are categorized using a fair value hierarchy that reflects the significance of inputs used in determining the fair values. • Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities; • Level 2 - inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly; and • Level 3 - inputs for assets and liabilities that are not based on observable market data.
The Plan does not have assets classified as Level 3. The following table illustrates the classification of the Fund’s financial instruments using the fair value hierarchy as at June 30, 2014:
Level 1 $
Level 2 $
2014 Total $
2013 Total $
Cash and short term investments 3,044,612 14,101,455 17,146,067 13,513,008 Canadian bonds and debentures - 214,057,774 214,057,774 178,758,654 Canadian common and preferred shares 93,513,010 106,862,659 200,375,669 151,784,496 Investment in Canadian Master Trust 96,557,622 335,021,888 431,579,510 344,056,158 Investment in Non-Canadian Master Trust - Shares - 190,233,645 190,233,645 178,162,080 96,557,622 525,255,533 621,813,155 522,218,238 Plan’s share of the Fund 65,900,577 358,486,901 424,387,478 357,510,606
(b) Associated risks
(i) Market price risk
Market price risk is the risk that value of an instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. As all of the Plan’s financial instruments are carried at fair value with fair value changes recognized in the statement of changes in net assets, all changes in market conditions will directly result in an increase (decrease) in net assets.
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9. FINANCIAL INSTRUMENTS (continued)
(b) Associated risks (continued) (i) Market price risk (continued)
Market price risk is managed by the Administrator through construction of a diversified portfolio of instruments traded on various markets and across various industries. In addition, market price risk may be hedged using derivative financial instruments such as futures contracts.
The Fund’s investments in equities are also sensitive to market fluctuations. An immediate hypothetical increase (decline) of 10% in equity values will impact the Fund’s equity investments by an approximate gain and loss of $ 39,060,931 (2013 - $32,994,658). The Plan’s pro-rata share of this gain (loss) would be $26,659,085 (2013 - $22,588,143).
(ii) Liquidity risk Liquidity risk is the risk that the Plan will encounter difficulty in meeting obligations associated with financial liabilities. The Plan maintains an investment policy, as approved by the Administrator, which contains assets mix guidelines which help to ensure the Plan is able to liquidate investments to meet its pension benefit or other obligations.
(iii) Credit risk Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Plan. The University does not expect any counterparties to fail to meet their obligations given their high credit ratings. The University has established policies and minimum credit rating requirements for such investments. The Fund’s fixed income investments are in Canadian-issued instruments and are diversified among federal, provincial, corporate and other issuers. In order to minimize the exposure of risk, a comprehensive investment policy has been developed. There were no significant concentrations of credit risk in the portfolio in either 2014 or 2013. The maximum credit risk exposure as at June 30, 2014 is $214,057,775 (2013 - $178,758,654).
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9. FINANCIAL INSTRUMENTS (continued)
(b) Associated risks (continued)
(iii) Credit risk (continued) The breakdown of the total Canadian bonds and debentures by credit ratings as at June 30, 2014 is:
(iv) Interest rate risk
The following table summarizes the fair values of investments by the earlier of contractual re-pricing or maturity dates.
Credit Rating
2014 Master Trust
Fair Value
2014 Plan’s Pro-rata
share
2013 Master Trust
Fair Value
2013 Plan’s Pro-rata
share $ $ $ $ AAA 47,216,509 32,225,267 51,268,405 35,098,350 AA 17,119,427 11,684,009 11,992,931 8,210,360 AA Pooled Bonds Average Rating 118,457,099 80,846,970 93,624,587 64,095,392 A 23,671,086 16,155,516 17,015,627 11,648,899 BBB 7,593,653 5,182,669 4,857,104 3,325,174 214,057,774 146,094,431 178,758,654 122,378,175
2014 Master Trust
Fair Value
2014 Plan’s Pro-rata
share
2013 Master Trust
Fair Value
2013 Plan’s Pro-rata
share $ $ $ $ Within 1 year 19,585,472 13,367,085 13,513,008 9,251,005 1 to 5 Years 16,101,860 10,989,519 16,948,249 11,602,771 5 to 10 Years 23,850,308 16,277,835 23,107,548 15,819,428 Over 10 Years 50,235,118 34,285,468 45,078,270 30,860,584 No Specific Maturity 512,040,397 349,467,571 423,571,163 289,976,818 621,813,155 424,387,478 522,218,238 357,510,606
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9. FINANCIAL INSTRUMENTS (continued)
(b) Associated risks (continued)
(iv) Interest rate risk (continued)
The following table summarizes the average effective yield on the Master Trust Plan’s Investments at June 30, 2014.
Interest rate risk is the risk that the market value of the Plan’s investments will fluctuate due to the changes in the market interest rates. To properly manage the Plan’s interest rate risk, appropriate guidelines on the weighting and duration for the bonds and other fixed income investments are set and monitored. The Plan’s investments in fixed income are sensitive to interest rate movements. An immediate hypothetical 100 basis point or 1% increase (decrease) in interest rates, with all other variables held constant, would impact Canadian bonds and debentures by an estimated loss (gain) of approximately $19,090,800 (2013 - $15,428,000). The plans prorate share of this loss (gain) would be $13,029,500 (2013 - $10,562,000).
(v) Foreign currency risk
Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of the changes in foreign currency rates. The Plan invests in financial instruments and enters into foreign transactions denominated in Canadian dollars. The Plan is exposed to risks that the exchange rate of the foreign currency may change in a manner that has an adverse effect on the value of the portion of the Plan’s underlying assets or liabilities invested in foreign transactions. The Plan’s overall currency positions and exposures are monitored on a regular basis by the Administrator. The sensitivity to foreign currency risk is included in the market price risk analysis.
2014 Effective Yield
$
%
2013 Effective Yield
$
% Cash and short term investments 17,146,067 1.00 13,513,008 0.80 Canadian bonds and debentures 214,057,774 2.97 178,758,654 3.27 Canadian common and preferred shares 200,375,669 2.52 151,784,496 3.19 Investment in Non-Canadian Master Trust - Shares 190,233,645 2.10 178,162,080 2.16 621,813,155 2.50 522,218,238 2.80
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10. CAPITAL RISK MANAGEMENT The capital of the Fund is represented by the net assets available for benefits. The Fund’s objective when managing the capital is to safeguard its ability to continue as a going concern and to maintain adequate assets to support pension obligations. The Administrator has adopted a Statement of Investment Policies and Procedures (“the SIPP”) which states investment objectives, guidelines and benchmarks used in investing the capital of the plan, permitted categories of investments, asset-mix diversification and rate of return expectations. The SIPP is reviewed annually by the Investment Committee and was last amended effective February 26, 2013. The Plan invests in units of the Fund, which itself invests in various investment vehicles, in accordance with the SIPP and investment mandates specific to each investment manager. The Fund’s investment positions expose it to a variety of financial risks which are discussed in Note 9 - Financial Instruments. The allocation of assets among various asset categories is monitored by the Administrator on a monthly basis. A comprehensive review is conducted quarterly, which includes measurement of returns, comparison of returns to appropriate benchmarks, ranking of returns to appropriate universes and risk analysis. The University is required under the Pension Benefits Act (Ontario) to pay contributions, based on actuarial valuations, necessary to ensure the benefits are funded. More details on members and University contributions that were paid during the period can be found in Note 4 - Funding Policy. No contributions remain past due as of the end of the period covered by the financial statements.
11. RELATED PARTY TRANSACTIONS
The Plan defines its key management personnel as the University’s Board of Governors and other members of senior administration responsible for planning, controlling and directing the activities of the Plan. The Plan has not paid for services provided by key management personnel.
The University provides certain administrative services to the Plan. The cost to the Plan for these services during the year ended June 30, 2014 was $131,397 (2013 - $140,718), which is included in administrative expenses in Note 8 – Administrative Expenses.
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Fund Financial Statements of
UNIVERSITY OF WINDSOR EMPLOYEES’ RETIREMENT PLAN Registration Number: 0310573 Year ended June 30, 2014
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INDEPENDENT AUDITORS' REPORT
To the Trustee of University of Windsor Employees’ Retirement Plan
We have audited the accompanying financial statements of the University of Windsor Employees’ Retirement Plan, which comprise the statement of net assets as at June 30, 2014, the statement of changes in net assets for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. The financial statements have been prepared by management based on the financial reporting provisions of Section 76 to the Regulations to the Pension Benefits Act (Ontario).
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of Section 76 to the Regulations to the Pension Benefits Act (Ontario), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform an audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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Opinion
In our opinion, the financial statements present fairly, in all material respects, the net assets of the University of Windsor Employees’ Retirement Plan as at June 30, 2014, and its changes in net assets for the year then ended in accordance with the financial reporting provisions Section 76 to the Regulations to the Pension Benefits Act (Ontario).
Basis of Accounting and Restriction on Use
Without modifying our opinion, we draw attention to Note 2 to the financial statements, which describe the basis of accounting. The financial statements are prepared to assist the University of Windsor Employees’ Retirement Plan to meet the requirements of the Financial Services Commission of Ontario. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the Trustee of the University of Windsor Employees’ Retirement Plan and the Financial Services Commission of Ontario and should not be used by parties other than the University of Windsor Employees’ Retirement Plan and the Financial Services Commission of Ontario.
Chartered Professional Accountants, Licensed Public Accountants
Date of Approval
Windsor, Canada
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UNIVERSITY OF WINDSOREMPLOYEES' RETIREMENT PLAN(Registration Number: 0310573)
Statement of Net Assets
Year ended June 30, 2014 with comparative information for 2013
2014 2013$ $
AssetsAccrued interest and dividends 256,154 296,901 Investments note 5 197,425,677 164,707,632
Total Assets 197,681,831 165,004,533
LiabilitiesAccrued liabilities 214,158 172,066
Net Assets 197,467,673 164,832,467
See accompanying notes to the fund financial statements.
On behalf of the Trustees:
Administrator
Administrator
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UNIVERSITY OF WINDSOREMPLOYEES' RETIREMENT PLAN(Registration Number: 0310573)
Statement of Changes in Net Assets
Year ended June 30, 2014, with comparative information for 2013
2014 2013$ $
Increase in net assets: Investment income note 7 5,007,205 4,970,590 Net realized gain on sale of investments 11,621,753 3,022,567 Current period change in market values of investments 16,397,786 9,337,770 Contributions: Employee 3,384,666 3,500,985 Employer 3,384,666 3,500,944
39,796,076 24,332,856
Decrease in net assets: Benefit payments 5,364,326 5,084,960 Payments to individuals on cessation of employment: Transfers to other plans 777,635 1,933,337 Administrative expenses note 8 1,018,909 857,588
7,160,870 7,875,885
Increase in net assets 32,635,206 16,456,971
Net assets, beginning of year 164,832,467 148,375,496
Net assets, end of year 197,467,673 164,832,467
See accompanying notes to fund financial statements.
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1. DESCRIPTION OF PLAN The following description of the University of Windsor Employees’ Retirement Plan (the “Plan”) is a summary only. For more complete information, reference should be made to the Plan’s text. (a) General
The University of Windsor (“the University”) sponsors two pension plans, the Retirement Plan for Faculty and Certain Employees (“the Faculty Plan”) and the Employees’ Retirement Plan (“the Employees’ Plan”). The Faculty Plan is a money purchase plan with a defined benefit minimum guarantee. The Employees’ Plan is a defined benefit plan. The Master Trust Fund (the “Fund”) holds the assets for both the Faculty Plan and the Employees’ Plan. Although the Plans are distinct and separate, the assets are invested jointly under a Master Trust Agreement in order to maximize investment income while minimizing administrative costs and management fees.
(b) Funding policy The Pension Benefits Act (Ontario) requires that the University, the Plan’s sponsor, must fund the benefits determined under the Plan. The determinations of the value of these benefits are made on the basis of a triennial actuarial valuation and any current legislative requirements.
(c) Income taxes The Plan is a Registered Pension Trust as defined in the Income Tax Act and is not subject to income taxes.
(d) Investment policy The Plan invests, together with other registered participant plans, in the Fund. The Fund is administered by Northern Trust on behalf of the participant plans.
2. BASIS OF PREPARATION (a) Basis of presentation
As permitted by the Financial Services Commission of Ontario (“FSCO”), the Plan may prepare financial statements in accordance with Canadian accounting standards for pension plans or prepare fund financial statements in accordance with Canadian accounting standards for pension plans excluding pension obligations and any resulting surplus or deficit.
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2. BASIS OF PREPARATION (continued) (a) Basis of presentation (continued)
The Plan has prepared fund financial statements in accordance with Canadian accounting standards for pension plans excluding pension obligations and any resulting surplus or deficit. In selecting or changing accounting policies that do not relate to its investment portfolio or pension obligations, Canadian accounting standards for pension plans require the Plan to comply (on a consistent basis) with either International Financial Reporting Standards ("IFRS") in Part I of Chartered Professional Accountants Canada (“CPA Canada”) Handbook or the Canadian accounting standards for private enterprises in Part II of the CPA Canada Handbook - Accounting. The Plan has chosen to comply on a consistent basis with IFRS. These fund financial statements have been prepared to assist the Trustees of the Plan to comply with the requirements of the FSCO under Section 76 of Regulation 909 of the Pension Benefits Act (Ontario). As a result, the fund financial statements may not be suitable for another purpose. These fund financial statements of the Plan do not purport to show the adequacy of the Plan's assets to meet its pension obligation. Such an assessment requires additional information, such as the Plan's actuarial reports and information about the University’s financial health. These fund financial statements have been prepared in accordance with the significant accounting policies set out below.
(b) Basis of measurement The fund financial statements have been prepared on the historical cost basis, except for investments and derivative financial instruments which are measured at fair value through the statement of changes in net assets.
(c) Functional and presentation currency
These fund financial statements are presented in Canadian dollars, which is the Plan's functional currency.
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2. BASIS OF PREPARATION (continued)
(d) Use of estimates and judgements The preparation of the fund financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities at the date of the statement of net assets and the reported amounts of changes in net assets during the year. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future years affected.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Plan and the Fund adopted the guidance in IFRS 13, Fair Value Measurement ("IFRS 13"), in Part I of the CPA Canada Handbook. As allowed under IFRS 13, if an asset or a liability measured at fair value has a bid and an ask price, the price within the bid-ask spread that is the most representative of fair value in the circumstances shall be used to measure fair value. The Plan and the Fund use closing market price as a practical expedient for fair value measurement. When available, the Plan and the Fund measure the fair value of an instrument using quoted prices in an active market for that instrument. A market is regarded as active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on an arm's length basis. If a market for a financial instrument is not active, then the Plan and the Fund establish fair value using a valuation technique. Valuation techniques include using recent arm's length transactions between knowledgeable, willing parties (if available), reference to the current fair value of other instruments that are substantially the same, discounted cash flow analyses and option pricing models.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Fair value measurement (continued) The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e. the fair value of the consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable markets. When transaction price provides the best evidence of fair value at initial recognition, the financial instrument is initially measured at the transaction price and any difference between this price and the value initially obtained from a valuation model is subsequently recognized in profit or loss on an appropriate basis over the life of the instrument but not later than when the valuation is supported wholly by observable market data or the transaction is closed out. Within the Plan and the Fund, all changes in fair value, other than interest and dividend income and expense, are recognized in the statement of changes in net assets as part of the current period change in market values of investments. Fair values of investments are determined as follows: Bonds and equities are valued at year-end quoted market prices where available. Where quoted prices are not available, estimated fair values are calculated using comparable securities. Short-term notes, treasury bills and term deposits maturing within a year are stated at cost, which together with accrued interest income approximates fair value given the short-term nature of these investments. Guaranteed investment certificates, term deposits maturing after a year and mortgages are valued at the present value of estimated future cash flows discounted at interest rates in effect on the last business day of the year for investments of a similar type, quality, and maturity. Pooled fund investments are valued at the unit values supplied by the pooled fund administrator, which represent the Fund’s proportionate share of underlying net assets at fair values, determined using closing market prices. Investment in the Fund are valued at the unit values supplied by the Fund Manager, which represents the Plan’s proportionate share of underlying net assets at fair values determined using the accumulation of the fair values of the underlying investments determined using closing market prices.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Financial assets and financial liabilities (i) Non-derivative financial assets
Financial assets are recognized initially on the trade date, which is the date that the Plan becomes a party to the contractual provisions of the instrument. Upon initial recognition, attributable transaction costs are recognized in the statement of changes in net assets as incurred. The Plan measures all of its investments at fair value through the statement of changes in net assets. All other non-derivative financial assets including contributions receivable are measured at amortized cost. The Plan derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Plan neither transfers nor retains substantially all the risks and rewards of ownership and does not retain control of the financial asset. On de-recognition of a financial asset, the difference between the carrying amount of the asset and consideration received is recognized in the statement of changes in net assets as a net realized gain (loss) on sale of investments.
(ii) Non-derivative financial liabilities All financial liabilities are recognized initially on the trade date at which the Plan becomes a party to the contractual provisions of the instrument. The Plan derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired. Financial assets and liabilities are offset and the net amount presented in the statement of net assets when, and only when, the Plan has a legal right to offset the amounts and it intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. The Plan considers its accrued liabilities to be a non-derivative financial liability.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Net realized gain (loss) on sale of investments
The net realized gain (loss) on sale of investments is the difference between proceeds received and the average cost of investments sold.
(d) Investment recognition
Investment income, which is recorded on the accrual basis, includes interest and dividend income. Brokers’ commissions and other transaction costs are recognized in the statement of changes in net assets available for benefits in the year incurred.
(e) Foreign currency
Transactions in foreign currencies are translated into Canadian dollars at the exchange rate at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated into Canadian dollars at the exchange rate at that date. Foreign currency differences arising on retranslation are recognized in the statement of changes in net assets as a current period change in market value of investments.
(f) Unit valuation
Participating pension plans (“Participant”) are issued units in the Fund based on the unit value at the Valuation Date, prior to which a contribution was made. Capital gains and losses, plus investment income, net of agency fees, custodian fees and fund managers’ fees are allocated to each participating pension plan on a pro-rata basis. Participating pension plans’ units are redeemed based on the unit value at the Valuation Date prior to which the request for redemption is made by the Participant.
4. FUNDING POLICY The University is required to provide funding, based on triennial valuations and any current legislative requirements, necessary to ensure that benefits will be fully provided for at retirement. The University’s funding policy is to make contributions from time to time using the level premium method as determined by the actuary. The most recent actuarial valuation for funding purposes was prepared as at July 1, 2011 by William M. Mercer Limited. A copy of the valuation was filed with the Financial Services Commission of Ontario, Pension Plans Branch as required by the Pension Benefits Act (Ontario).
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5. INVESTMENTS
The following table summarizes the Master Trust Fund’s investments at fair value and cost:
2014 2014 2013 2013
Fair Value $
Cost $
Fair Value $
Cost $
Cash and short-term investments 17,146,067 17,126,385 13,513,008 13,464,531 Canadian bonds and debentures 214,057,774 212,351,839 178,758,654 180,407,582 Canadian common and preferred shares 200,375,669 168,940,478 151,784,496 142,366,715 Investment in Canadian Master Trust 431,579,510 398,418,702 344,056,158 336,238,828 Investment in Non-Canadian Master Trust - Shares 190,233,645 119,026,573 178,162,080 133,754,020 621,813,155 517,445,275 522,218,238 469,992,848
The following table summarizes the Plan's pro-rata share of the investments at fair value and cost in the Master Trust Fund (31.75%; 2013 – 31.54%):
2014 2014 2013 2013
Fair Value $
Cost $
Fair Value $
Cost $
Cash and short-term investments 5,443,877 5,437,627 4,262,003 4,246,713 Canadian bonds and debentures 67,963,343 67,421,709 56,380,479 56,900,551 Canadian common and preferred shares 63,619,275 53,638,602 47,872,830 44,902,462 Investment in Canadian Master Trust 137,026,495 126,497,938 108,515,312 106,049,726 Investment in Non-Canadian Master Trust - Shares 60,399,182 37,790,937 56,192,320
42,186,018
197,425,677 164,288,875 164,707,632 148,235,744
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6. STATUTORY DISCLOSURE
The following information is provided in respect of individual investments with a cost or fair value in excess of 1% of the cost or fair value of the Fund, as required by the Regulation to the Pension Benefits Act (Ontario):
(i) Cash and short-term investments
2014 2014 2013 2013
Issuer Fair Value Cost Fair Value Cost
$ $ $ $
Government of Canada Bonds 11,083,304 11,069,408 7,606,918 7,561,734
(ii) Canadian bonds and debentures Canada Housing Trust 7,927,877 7,749,360 58,101,259 15,486,900
PHN Pool 74,008,518 74,980,756 59,643,814 61,862,777 PHN Long Bond Pool 44,448,582 45,602,185 33,980,773 36,138,336
(iii) Canadian common and preferred shares Canadian equity pooled plans FGP Small Cap Pool 10,959,739 7,632,179 8,206,182 6,916,240 SSgA Canadian Equity Index Pool - - 52,832,578 74,757,981 Pyramis Canadian Equity Pool 95,952,919 92,550,000 - - Canadian shares
Toronto Dominion COM NPV 7,350,842 4,582,454 5,430,830 4,082,816 Bank of Nova Scotia COM NPV 7,502,281 5,401,904 5,099,098 4,473,961
Royal Bank of Canada Common 6,970,314 4,970,914 4,448,621 3,602,905 (iv) Non-Canadian shares BG Global Alpha Pooled Fund 94,654,891 57,721,564 89,769,844 65,214,579 Sprucegrove Global Pooled Fund 95,578,754 61,305,009 88,392,238 68,539,441
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7. INVESTMENT INCOME The following investment income represents the investment income earned by the Master Trust Fund:
2014
$ 2013
$ Cash and short term investments 120,036 171,924 Canadian bonds and debentures 7,589,516 7,659,590
Canadian common and preferred shares 4,518,023 6,313,980 Investment in Canadian Master Trust 12,227,575 14,145,494
Investment in Non-Canadian Master Trust - Shares 3,543,150 1,614,144 15,770,725 15,759,638 Plan’s Pro-rata share of Master Trust Fund investment income 5,007,205 4,970,590
8. ADMINISTRATIVE EXPENSES
2014 $
2013 $
Investment management fees 651,666 511,690 Actuarial and investment consulting fees 158,880 122,812 Sponsor administrative fees 81,224 89,764 Trustee fees 33,125 37,859 Audit fees 3,150 3,225 Miscellaneous 90,864 92,238 1,018,909 857,588
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9. FINANCIAL INSTRUMENTS
(a) Fair values The fair values of investments are as described in note 3(a). The fair values of other financial assets and liabilities, being accrued interest and dividends and accrued liabilities, approximate their carrying values due to the short-term nature of these financial instruments. Fair value measurements recognized in the statement of net assets are categorized using a fair value hierarchy that reflects the significance of inputs used in determining the fair values. • Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities; • Level 2 - inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly; and • Level 3 - inputs for assets and liabilities that are not based on observable market data.
The Plan does not have assets classified as Level 3.
The following table illustrates the classification of the Fund’s financial instruments using the fair value hierarchy as at June 30, 2014:
Level 1 $
Level 2 $
2014 Total $
2013 Total $
Cash and short term investments 3,044,612 14,101,455 17,146,067 13,513,008 Canadian bonds and debentures - 214,057,774 214,057,774 178,758,654 Canadian common and preferred shares 93,513,010 106,862,659 200,375,669 151,784,496 Investments in Canadian Master Trust 96,557,622 335,021,888 431,579,510 344,056,158 Investment in Non-Canadian Master Trust - shares - 190,233,645 190,233,645 178,162,080 Total investments in Master Trust Fund 96,557,622 525,255,533 621,813,155 522,218,238 Plan’s share of Master Trust Fund assets 30,657,045 166,768,632 197,425,677 164,707,632
(b) Associated risks (i) Market price risk
Market price risk is the risk that value of an instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market.
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9. FINANCIAL INSTRUMENTS (continued)
(b) Associated risks (continued) (i) Market price risk (continued)
As all of the Plan’s financial instruments are carried at fair value with fair value changes recognized in the statement of changes in net assets, all changes in market conditions will directly affect result in an increase (decrease) in net assets. Market price risk is managed by the Administrator through construction of a diversified portfolio of instruments traded on various markets and across various industries. In addition, market price risk may be hedged using derivative financial instruments such as futures contracts.
The Fund’s investments in equities are also sensitive to market fluctuations. An immediate hypothetical increase (decline) of 10% in equity values will impact the Fund’s equity investments by an approximate gain and loss of $ 39,060,931 (2013 - $32,994,658). The Plan’s pro-rata share of this gain (loss) would be $12,401,846 (2013 - $10,406,615).
(ii) Liquidity risk
Liquidity risk is the risk that the Plan will encounter difficulty in meeting obligations associated with financial liabilities. The Plan maintains an investment policy, as approved by the Administrator, which contains assets mix guidelines which help to ensure the Plan is able to liquidate investments to meet its pension benefit or other obligations.
(iii) Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Plan. The University does not expect any counterparties to fail to meet their obligations given their high credit ratings. The University has established policies and minimum credit rating requirements for such investments. The Fund’s fixed income investments are in Canadian-issued instruments and are diversified among federal, provincial, corporate and other issuers. In order to minimize the exposure of risk, a comprehensive investment policy has been developed. There were no significant concentrations of credit risk in the portfolio in either 2014 or 2013. The maximum credit risk exposure as at June 30, 2014 is $ 214,057,775 (2013 - $178,758,654).
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9. FINANCIAL INSTRUMENTS (continued)
(b) Associated risks (continued) (iii) Credit risk
The breakdown of the total Canadian bonds and debentures by credit ratings as at June 30, 2014 is:
(iv) Interest rate risk
The following tables summarize the fair values of investments by the earlier of contractual re-pricing or maturity dates.
Credit Rating
2014 Master
Trust Fair Value
2014 Plan’s Pro-rata share
by credit rating
2013 Master
Trust Fair Value
2013 Plan’s Pro-rata share
by credit rating
$ $ $ $ AAA 47,216,509 14,991,242 51,268,405 16,170,055 AA 17,119,427 5,435,418 11,992,931 3,782,571 AA Pooled Bonds Average Rating 118,457,099 37,610,129 93,624,587 29,529,195 A 23,671,086 7,515,570 17,015,627 5,366,728 BBB 7,593,653 2,410,984 4,857,104 1,531,930 214,057,774 67,963,343 178,758,654 56,380,479
2014 Master
Trust Fair Value
2014 Plan’s Pro-rata share
2013 Master
Trust Fair Value
2013 Plan’s Pro-rata share
$ $ $ $ Within 1 year 19,585,472 6,218,387 13,513,008 4,262,003 1 to 5 Years 16,101,860 5,112,341 16,948,249 5,345,478 5 to 10 Years 23,850,308 7,572,473 23,107,548 7,288,120 Over 10 Years 50,235,118 15,949,650 45,078,270 14,217,686 No Specific Maturity 512,040,397 162,572,826 423,571,163 133,594,345 621,813,155 197,425,677 522,218,238 164,707,632
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9. FINANCIAL INSTRUMENTS (continued)
(b) Associated risks (continued) (iv) Interest rate risk (continued)
The following table summarizes the average effective yield on the Master Trust Fund’s Investments at June 30, 2014.
Interest rate risk is the risk that the market value of the Plan’s investments will fluctuate due to the changes in the market interest rates. To properly manage the Plan’s interest rate risk, appropriate guidelines on the weighting and duration for the bonds and other fixed income investments are set and monitored. The Plan’s investments in fixed income are sensitive to interest rate movements. An immediate hypothetical 100 basis point or 1% increase (decrease) in interest rates, with all other variables held constant, would impact Canadian bonds and debentures by an estimated loss of approximately $19,090,800 (2013 - $15,428,000 ). The Plan’s pro-rata share of this loss (gain) would be $6,061,300 (2013 - $4,866,000).
(v) Foreign currency risk Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of the changes in foreign currency rates. The Plan invests in financial instruments and enters into foreign transactions denominated in Canadian dollars. The Plan is exposed to risks that the exchange rate of the foreign currency may change in a manner that has an adverse effect on the value of the portion of the Plan’s underlying assets or liabilities invested in foreign transactions. The Plan’s overall currency positions and exposures are monitored on a regular basis by the Administrator. The sensitivity to foreign currency risk is included in the market price risk analysis.
2014 Effective Yield
$
%
2013 Effective Yield
$
% Cash and short term investments 17,146,067 1.00 13,513,008 0.80 Canadian bonds and debentures 214,057,774 2.97 178,758,654 3.27 Canadian common and preferred shares
200,375,669 2.52 151,784,496 3.19
Investment in Non-Canadian Master Trust - Shares
190,233,645 2.10 178,162,080 2.16
621,813,155 2.50 522,218,238 2.80
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10. CAPITAL RISK MANAGEMENT
The capital of the Fund is represented by the net assets available for benefits. The Fund’s objective when managing the capital is to safeguard its ability to continue as a going concern and to maintain adequate assets to support pension obligations. The Administrator has adopted a Statement of Investment Policies and Procedures (“the SIPP”) which states investment objectives, guidelines and benchmarks used in investing the capital of the plan, permitted categories of investments, asset-mix diversification and rate of return expectations. The SIPP is reviewed annually by the Investment Committee and was last amended effective February 26, 2013. The Plan invests in units of the Fund, which itself invests in various investment vehicles, in accordance with the SIPP and investment mandates specific to each investment manager. The Fund’s investment positions expose it to a variety of financial risks which are discussed in Note 9 - Financial Instruments. The allocation of assets among various asset categories is monitored by the Administrator on a monthly basis. A comprehensive review is conducted quarterly, which includes measurement of returns, comparison of returns to appropriate benchmarks, ranking of returns to appropriate universes and risk analysis. The University is required under the Pension Benefits Act (Ontario) to pay contributions, based on actuarial valuations, necessary to ensure the benefits are funded. More details on members and University contributions that were paid during the period can be found in Note 4 - Funding Policy. No contributions remain past due as of the end of the period covered by the financial statements.
11. RELATED PARTY TRANSACTIONS
The Plan defines its key management personnel as the University’s Board of Governors and other members of senior administration responsible for planning, controlling and directing the activities of the Plan. The Plan has not paid for services provided by key management personnel. The University provides certain administrative services to the Plan. The cost to the Plan for these services during the year ended June 30, 2014 was $81,224 (2013 - $89,764), which is included in administrative expenses in Note 8 – Administrative Expenses.
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BG141125-‐4.5.1
University of Windsor Board of Governors
4.5.1: Phillips, Hager & North – Core Plus Bond Fund
Item for: Approval MOTION: That the pension and endowment funds currently invested in PHN’s Universe Bond fund be
transferred to PHN’s Core Plus Bond Fund. Rationale: § It is recommended that the pension and endowment funds currently invested in PHN’s Universe Bond fund be
transferred to PHN’s Core Plus Bond Fund. The latter is a high yield fund with the potential of higher value added compared to the benchmark.
§ The Investment Committee had significant discussion during 2014 regarding the enhanced return expectation, the risks and the volatility of the PHN Core Plus Bond Fund.
§ The Committee noted that there is minimal risk in this proposal, involving only 2.48% of total pension and endowment funds. As such, the impact of any added volatility of the Core Plus Bond Fund is mitigated.
§ The benchmark expectation for PHN regarding the bond fun portfolio has not changed. § If approved, the Statement of Investment Policies and Procedures for the Investment of the Pension Fund of the
University of Windsor and the Statement of Policies and Goals for the Management and Investment of Endowment Funds at the University of Windsor will be revised accordingly.
§ See attached.
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For qualified investors only. Please read the disclosures at the end of the document. 1
Updated October 2013
Mandate Profile: PH&N Core Plus Bond Fund
Fund type Canadian Fixed Income
Date of inception June 30, 2013
Manager & principal
portfolio adviser
Phillips, Hager & North Investment Management
Benchmark DEX Universe Bond Index
Investment objectives The fund seeks to provide relatively high yields and stability of capital by investing
primarily in a diversified portfolio of fixed income securities issued by Canadian
governments and corporations and similar securities outside of Canada. The fund targets
to outperform the DEX Universe Bond Index by 125 basis points over a market cycle.
Asset mix policy Target ranges:
Fixed income investments 75% - 100%
Cash and equivalents 0% - 25%
Investment strategies To achieve its investment objective, the fund will utilize “core” fixed income instruments
found in the DEX Universe Bond Index, as well as contain a significant allocation to non-
benchmark securities, including mortgages, international and high yield bonds.
Risk:
The principal risks are associated with interest rate, credit, liquidity, currency and foreign
markets. The fund is suitable for investors with moderate tolerance for risk. Please see the
fund’s offering document for details.
Investment guidelines Permissible investments include:
Canadian, U.S. and foreign government and corporate fixed income securities;
Asset-backed securities;
Infrastructure debt;
First mortgages;
Derivatives, such as, but not limited to, swaps, options, credit-linked notes, futures,
and forwards; and Convertible bonds, loans.
Sector concentration guidelines are as follows:
Maximum
Canadian Federal and Provincial Government Debt 100%
Cash 25%
Investment Grade Corporates 80%
Mortgages 30%
High Yield Corporate Bonds 30%
Emerging Market Debt 30%
Convertible Bonds and Bonds with Warrants 10%
Common Equity, Preferred Shares, REITs and
Income Trusts 10%
Non-Canadian securities 50%
Non-hedged currency exposure 30%
Credit Quality Guidelines
BBB and above 100%
BB+ and below 40%
CCC+ and below 5%
Ratings are determined by reference to a recognized rating agency and apply at the time of
purchase.
Continued…
Page 44 of 62
2
PH&N Core Plus Bond Fund
Investment guidelines
continued
Individual issuer concentration guidelines are as follows:
Maximum
Government of Canada 100%
Provincial 40%
Corporate Bond rated BBB- and above 5%
Corporate Bond rated B- to BB+ 2%
Corporate Bond rated below B- 1%
Government-Guaranteed Mortgage 2%
Conventional Mortgage 1%
Interest rate guidelines: DEX Universe Bond Index +/- 2 year duration.
Currency hedging The fund will take on foreign exchange exposure through investments in international
bonds, as a portfolio risk management tool or tactical lever where appropriate. The fund’s
maximum non-hedged currency exposure is 30%.
Securities lending The fund may enter into securities-lending, repurchase and reverse-repurchase
transactions to generate additional income and/or as a short-term cash-management tool.
Although client approval for this practice is not required, client notifications are sent out.
Derivatives Derivatives counterparty credit risk: counterparties must maintain a minimum “A” rating.
The fund may use derivatives, such as, but not limited to, swaps, options, credit-linked
notes, futures, and forwards for:
hedging purposes, including to protect against fluctuations in the value of foreign
currency relative to the Canadian dollar, and to offset exposures to interest rates; and
non-hedging purposes, including as a substitute for direct investment
Distributions A distribution of net income is made in March, June and September. The remaining net
income and net realized capital gains are distributed in December.
We automatically reinvest all distributions in additional units of the fund unless explicitly
instructed to distribute in cash.
Custodian & Trustee RBC Investor Services Trust (Canada)
Disclosures
This document is confidential, and is being provided solely for information purposes to assist discretionary clients in
assessing their own investment guidelines and to assist financial analysts in assessing their own product offering. This
document is not meant for further distribution and does not constitute an offer to sell, or a solicitation of an offer to purchase
any security. Under no circumstances is this document to be construed as an offering circular, offering memorandum or
other offering document relating to a distribution of the units of the fund.
No securities are being offered, except pursuant and subject to the respective offering documents and subscription materials,
which may be provided to qualified investors only, and not to any other category of investor. This document is for general
information only and is not, nor does it purport to be, a complete description of an investment in any Phillips, Hager & North
(PH&N) investment funds. If there is an inconsistency between this document and the respective offering documents, the
provisions of the respective offering documents shall prevail.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.
Please read the fund’s offering memorandum before investing. Mutual funds are not covered by the Canada Deposit
Insurance Corporation or by any other government deposit insurer. The unit values of non-money market funds change
frequently. For money market funds, there can be no assurances that the fund will be able to maintain its net asset value per
unit at a constant amount or that the full amount of your investment in the fund will be returned to you. Past performance may
not be repeated.
Investment objectives may only be changed as permitted under the Master Trust Agreement for the fund. Investment
guidelines and strategies of the fund must always be consistent with the fund’s investment objectives and may be adjusted
over time without prior notice.
Phillips Hager & North Investment Management is a division of RBC Global Asset Management Inc. (RBC GAM Inc.), an
indirect, wholly-owned subsidiary of Royal Bank of Canada. RBC GAM Inc. is the manager and principal portfolio adviser of
the Phillips, Hager & North investment funds.
®/™ Trademark(s) of Royal Bank of Canada. Used under licence.© RBC Global Asset Management Inc., 2013.
Publication date: December 11, 2013. #IC1310441
Page 45 of 62
BG141125-‐4.7.1
University of Windsor Board of Governors
4.7.1: 2014/2015 Operating Budget Update Item for: Information Forwarded by: Resource Allocation Committee See attached. Rationale: § The process for ongoing monitoring of the Board-‐approved 2014/2015 operating budget includes a review of the
University’s spending at the mid-‐year point, once the final Fall enrolment numbers are in. § As the mid-‐year review does not include a proposal to revise the 2014/2015 operating budget but rather
provides a projection to year end, the mid-‐year review is provided for information only.
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Following the start of the Fall semester, the University assesses any impact on its Board-‐approved operating budget based on the activities that have occurred since the inception of the fiscal year. This report serves to update the Committee on the University’s fiscal position when compared to the operating budget. This report will focus on the main categories of revenue and expenditure that could impact the balanced position as presented in the budget which follows. SECTION 1 – 2014/15 OPERATING BUDGET The following table summarizes the main categories in the Board-‐approved 2014/15 Budget:
BASE OPERATING REVENUE
Total Student Fees $144,319
Government Grants -‐ Provincial 99,364
Government Grants -‐ Federal 3,266
Investment Income & Other 4,831
TOTAL OPERATING REVENUE $251,780
BASE OPERATING EXPENDITURES Faculties $152,402
Non Faculty 106,079 Institutional Overheads (7,699) Strategic Priority Fund 998
TOTAL EXPENDITURES $251,780
BALANCED OPERATING BUDGET $0
Vice-‐President, Planning and Administration 401 Sunset Avenue
Windsor, Ontario N9B 3P4
T 519-253-3000 F 519-971-3619
To: Board of Governors
From: Sandra Aversa, Vice-‐President, Planning & Administration
Date: November 25, 2014
Subject: 2014/15 Operating Budget Update
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SECTION 2 – ENROLMENT UPDATE With 96.8% of the University’s operating budget derived from revenue (tuition and government grant) that is based on actual enrolment, an understanding of the Fall 2014 enrolment is critical in understanding the fiscal position.
Chart 1 -‐ Fall Full-‐time Enrolment
The above chart provides a summary of previous four years of total full-‐time enrolment at the institution, both undergraduate and graduate. The 2014/15 operating budget was based on a planned full time enrolment of 14,377 which included total undergraduate enrolment of 11,813 and total graduate enrolment of 2,564. The annual Ministry count date for enrolment is November 1. All funding implications for the current fiscal year and forward planning are based on enrolment as of that date. As of November 1, 2014, the University had 14,027 full-‐time students on campus. This represents 350 fewer students than budgeted (225 few undergraduate students and 125 few graduate students. Reductions in enrolment have been noted across many Ontario universities as the province enters a demographic trend of a steady-‐state university-‐aged population, expected to last for the next five to six years. The November 1 Fall 2014 enrolments (first year and upper year enrolment) will now influence our projected enrolment and revenue estimates for 2015/16. We are currently preparing the projected 2015/16 enrolments, and these will determine the final level of realignment required to balance the budget in 2015/16. The final realignment targets will be communicated to the campus in early December.
0
5,000
10,000
15,000
20,000
Fall 10 Fall 11 Fall 12 Fall 13 Fall 14 Nov 1 Prel.
Fall 14 Budget
3,285 3,322 3,454 3,431 3,181 3,400
11,645 11,639 11,804 11,802 11,588 11,813
1,658 1,669 1,904 2,301 2,439 2,564
First Year Total Undergraduate Graduate
14,027 13,303 13,308 13,708 14,103 14,377
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The following sections outline the projected impact of Fall 2014 enrolment on 2014/15 tuition-‐ based revenue for the institution. Undergraduate Enrolment Chart 2 -‐ First Year Undergraduate Headcount First year enrolment, a key indicator for future enrolment, has experienced a decline from Fall 2013 (250 fewer students) and from the 2014/15 budget (219 students).
1,928
2,100
1,700
1,800
1,900
2,000
2,100
2,200
2,300
Fall 10 Fall 11 Fall 12 Fall 13
Fall 14 Nov 1 Prel.
Fall 14 Budget
101's
370 400
184 180
245 220
454 500
0
100
200
300
400
500
600
700
Fall 10 Fall 11 Fall 12 Fall 13
Fall 14 Nov 1 Prel.
Fall 14 Budget
105's Internadonal Law Returning
This graph illustrates the number of students entering the University directly from Secondary schools. There are 172 fewer students entering directly from secondary school from the original projection.
This graph illustrates the other categories of first year students entering the University, their historical pattern and how Fall 2014 final enrolment compares to the budgeted enrolment.
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Chart 3 -‐ Fall Undergraduate Full-‐time Enrolment by Faculty The decline of 225 full-‐time undergraduate students is best understood when looking at the enrolment by Faculty. The following chart shows a comparison of the Fall 2013 enrolment in each of the Faculties compared to the Fall 2014 enrolment.
The most significant decline in enrolment has been experienced in the Faculty of Humanities, Arts and Social Science (FAHSS) (a decline of 439 full time students). This reduction in enrolment is a trend that has been experienced across the sector. An increase in enrolment continues to be seen in the professional Faculties (Engineering, Law, Science, Education), with a slight decline in Business for Fall 2014. The projected impact on tuition fee revenue based on the Fall 2014 actual enrolment is a decline in tuition fee revenue of $1.6M and no impact on the government grant for undergraduate. The average tuition per student for the institution is increasing as the enrolment is moving from lower tuition programs (FAHSS) to the professional programs which have higher tuition fees. This has mitigated to some extent the impact of significant enrolment decline primarily in FAHSS.
0
1,000
2,000
3,000
4,000
5,000 4,706
1,393
435 1,070
758 378 641 847
1,574
4,267
1,355
440 1,243
772 356 658 871
1,626
Fall 13 Fall 14 Nov 1 Prel.
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Graduate Enrolment As of November 1, 2014, the University had 2,439 full-‐time graduate students on campus. This represents 138 more graduate students than Fall 2013, yet 125 fewer graduate students than budgeted. The graduate enrolment is best understood when considering the various categories of graduate enrolment as outlined below. The following graph illustrates the graduate enrolment by Faculty: Chart 4 -‐ Fall Full-‐Time Graduate Enrolment by Faculty
Chart 5 -‐ Fall Full-‐Time Domestic Graduate Enrolment
0
200
400
600
800 666
321
692
445
61 74 42
668
384
689
471
63 98 66
Fall 13 Final Fall 14 Nov 1 Prel.
978 1052
236 227
0
200
400
600
800
1,000
1,200
Fall 10 Fall 11 Fall 12 Fall 13 Fall 14 Nov 1 Prel.
Fall 14 Budget
Masters Canadian PhD Canadian
This graph illustrates the number of domestic Masters and PhD students on campus. There is an increase in domestic graduate students since Fall 2013. The total domestic graduate enrolment for Fall 2014 is 65 less than budget.
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Chart 6 -‐ Fall Full-‐Time International Graduate Enrolment
The projected impact on tuition fee revenue based on the Fall 2014 actual graduate enrolment is an increase in revenue of $900,000. As the domestic graduate enrolment did not meet budgeted enrolment for 2014, there is a projected reduction in the graduate expansion grant of $400,000. The other impact on the Operating Budget associated with graduate enrolment is the Central Overheads that are generated from the self-‐supporting programs. As noted in the Operating Budget above, the University budgets approximately $7.7M from overheads from self-‐supporting programs and ancillary operations. As discussed during the development of the 2014/15 budget, there are external risk factors that could impact the level of international enrolment that the University cannot totally mitigate. In order to mitigate the risk of possible volatility in the enrolment, the Central overheads that could be generated from the self-‐supporting programs are not budgeted at 100%. This strategy safeguards the Central base Operating Budget from unexpected fluctuations in international enrolment. Based on the actual Fall 2014, it is projected that Central Overheads earned will exceed the budgeted amount. It is projected that one-‐time monies will be available in 2014/15 from these overheads. One-‐time monies available from this source will be available for strategic investments to support the University’s Strategic Mandate Agreement and/or provide funding for initiatives in support of students. In addition to the enrolment impacts noted above, the enrolment for Intersession exceeded the budget. This will provide a further $450,000 in revenue over projections. In summary, the net impact on the operating revenue is a reduction of approximately $600,000 from budget. This shortfall will be fully funded from expenditure savings noted below and/or Central Overheads generated.
1,118
1,168
107 117
0
200
400
600
800
1,000
1,200
1,400
Fall 09 Fall 10 Fall 11 Fall 12 Fall 13 Fall 14 Nov 1 Prel.
Fall 14 Budget
Masters Internadonal PhD Internadonal
This graph illustrates the number of international Masters and PhD students on campus. There are 1,225 international graduate students on campus, a significant increase since Fall 2013. The total international graduate enrolment for Fall 2014 is 60 less than budget.
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SECTION 3 – FACULTY BUDGETS Individual Faculties are responsible for the management of their respective budgets. Any projected increase and/or decrease in their expenditure budgets are managed with their own resources. The main activity since the inception of this fiscal year has been the successful negotiation of the faculty collective agreement. When developing the 2014/15 operating budget, there were assumptions made with respect to the outcome of this agreement. Based on the final settlement, and when considering the full cost of the settlement over the term of the agreement, there are no budget adjustments required in 2014/15. One-‐time monies will be available that will support the cost of the settlement over its term. The faculty settlement will have no impact on our 2014/15 year end projections. Pension contributions represent 7% of the Operating Budget. Work is underway to complete the mandatory funding valuations for both the Faculty and Employee Pension Plans. There is a projected increase in the going concern deficit of the Faculty Plan which will require an increase in Special payments to fund the deficit commencing July 1, 2015, and this will be reflected in the 2015/16 budget. In addition, there is an increase in the contributions required to fund the Minimum Guarantee Benefit (MGB). As the cost of the MGB is fully funded by the employer, the University, it is projected that an additional $800,000 will be required in 2014/15 for the increase in this contribution as this increase is retroactive to the date of the valuation, July 1, 2014. The projected impact on salary, wages, pension and benefit costs budgeted expenditures is NIL. One-‐time monies available as a result of the final Faculty settlement will fund the required 2014/15 increase in the MGB pension contributions. SECTION 4 – NON-‐FACULTY BUDGETS Individual Service Departments are responsible for the management of their respective budgets. Any projected increase and/or decrease in their expenditure budgets are managed with their own resources. The University is anticipating savings in utilities during 2014/15 as a result of the negotiated agreements. This savings will provide funding for other expenditures that will require an increase in their budget. Based on the level of legal support required since the beginning of the fiscal year, we are projecting that additional funds will be required in support of legal costs. In addition, a further increase in other central budgets such as Bad Debt, Insurance, etc. will be required. Savings from utility costs will fully offset the incremental budgets required in these other categories.
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SECTION 5 – SUMMARY In summary, the projection for 2014/15 continues to be one of a balanced budget position for the University. One-‐time monies will be available to support further adjustments required as we move into the Winter 2015 semester. In addition, strategic investments will be possible with one-‐time monies available. Final decisions on allocation of these one-‐time monies will occur following Winter 2015 enrolment count date.
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BG141125-‐4.7.3 UNIVERSITY OF WINDSOR
BOARD OF GOVERNORS
4.7.3: Centre for English Language Development (CELD) Vanier Hall – Winclare A Renovation
Item for: Approval MOTION: That the Board of Governors approve that the University proceed to tender and award the
construction contract for the Centre for English Language Development (CELD), Winclare A Renovation, to the most qualified bidder provided the bid is within the total overall project budget of $1,390,500.
GOALS AND OBJECTIVES FOR THE PROJECT The CELD specializes in English language training programs for academic purposes. The most significant program is the English Language Improvement Program (ELIP). In addition to this four-‐level bridge program for academic admission to the University, CELD also facilitates discipline-‐specific language programs for students in Business, Engineering and Graduate Studies, as well as English as a Second Language teacher training. All of the programs offered by CELD are non-‐credit courses. In 2013/14, the total revenue for CELD was $3.3M. ELIP was launched in 1999 in support of international student recruitment. International students that need to meet language proficiency for academic admission to the University may opt to enroll in ELIP as opposed to sitting for a standardized English language proficiency test. Successful completion of the final level (ELIP 3) meets the University’s English proficiency requirements. ELIP is the University’s recommended option for meeting English language proficiency due to the impact on retention rates. In 2010, a review of ELIP graduates identified that 90% of the graduates were in good academic standing by their second semester. This success rate is approximately 10% higher in comparison to the academic standing of students who supplied other measures to demonstrate their English proficiency. CELD is housed in our facility at 1880 Wyandotte St. W. The University purchased this facility in November 2007 and renovated the facility to meet the needs of the CELD program. The student capacity in this facility is 300 students. For the last two Fall semesters, ELIP enrolment has exceeded 300 students. Based on the current enrolment in CELD and the future growth plans for this program, additional space is required. CELD operations will continue in this facility and the Winclare A will serve as additional space. In its current state, the CELD space is not sufficient to handle admissions/registration, teacher preparation and classroom space. CELD is actively pursuing to increase student enrolment to 500 students per semester. This increase will further challenge the programming spacing needs. To accommodate the increase in enrolment, CELD has held late evening classes and has resorted to renting classroom space off campus. As an engaged department in international student recruitment, CELD is committed to supporting an increase of 200 students per semester in order to meet the University’s strategic plan of increasing international student enrolment across campus by 2,500 students. The proposed location on campus and its proximity to the International Student Centre make this re-‐investment into the University’s current infrastructure an ideal fit. The space identified was held by Food Services in the past and has been relinquished back into Central space and will support the growth and success rate of international students into the future.
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DESCRIPTION OF THE PROJECT The scope of work of this project will be to renovate the existing dining hall located in Vanier Hall (Winclare A). The renovation will include the construction of 4 new classrooms (for 20 – 25 students each), an Admissions/Reception Area, washrooms, offices, meeting rooms, an entrance foyer, and support space. Vanier Hall includes 2 Dining halls used primarily for residence students. Over the years, the use of both halls has diminished due to the number of residence students. As noted above, Food Services relinquished this space in Fall 2013. Winclare B continues to serve as a Food Service dining facility. Renovation work includes upgrading the existing entrance foyer (720 sq.ft.) and Winclare A (5,700 sq.ft.) which includes flooring, wall and ceiling modifications, signage, millwork, window treatments, furniture, and accessible washrooms. Electrical work includes LED lighting, security (card access & cameras), and audio visual, data and telecommunications (IT). Mechanical work includes new ductwork distribution and controls, mixing boxes, plumbing fixtures, fire hose cabinet, and drinking fountain. STATUS OF THE PROJECT In December 2013, a Request for Proposal (RFP) was issued for an Architectural firm who would work with the University in the design and construction on this renovation project. A thorough technical and financial evaluation was completed resulting in the selection of WalterFedy (the Consultants), a full-‐service integrated design firm. A Steering Committee has been established with key stakeholders from CELD, Facility Services, and other Senior Administrators. Under the direction of the Steering Committee, the Consultant has been instructed to assist with layout options, design, construction administration and estimates. Pending the approval by the Resource Allocation Committee and Board of Governors, the next step will be to issue the tender in December 2014. Construction is expected to start in early January 2015 with completion and occupancy in Summer 2015. PROJECT BUDGET
GENERAL CONTRACTOR (Based on Estimate)
General Construction Cost:
$863,700 CONSULTANTS’ COST
WalterFedy Architects:
$98,950 AV & Asbestos Consulting Fees $20,000
Disbursements $5,000
EQUIPMENT AND FURNITURE $241,500 $1,229,150
Project Contingency:
$115,500 PROJECT COST BEFORE HST
$1,344,650
HST (net of rebate) 3.41% $45,850 TOTAL PROJECT COST
$1,390,500
SOURCES OF FUNDING The total project budget of $1,390,500 will be funded from the following 3 sources: 1) $500,000 – CELD reserves generated from previous years’ operations; 2) $809,500 – Internal Loan held by CELD; term of loan – 5 years; Principal and interest payments -‐ $177,000 (fully funded by CELD operations); and 3) $ 81,000 – Ancillary one-‐time funding for improvements to Entrance to Vanier Hall.
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Appendix A
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BG141125-‐4.7.4 UNIVERSITY OF WINDSOR
Board of Governors
4.7.4: School of Creative Arts (TBQ) Development
Item for: Approval
MOTION: That the Board of Governors approve that the University proceed with the School of Creative
Arts (TBQ) Development with a total project cost of $12,865,000. GOALS AND OBJECTIVES FOR THE PROJECT
The development of the Downtown Campus continues to align with the University’s strategic plan and priorities of the institution. The Downtown Campus is a major component of the Board-‐approved Capital Transformation Plan. It will enhance the student experience, engage the local community, and provide students, faculty and staff with facilities and services to enable strong academic programs. The development of a Downtown campus has been well communicated in the University’s Strategic Mandate Agreement now approved by MTCU.
The University will play a significant role in the economic and social well-‐being of the Windsor-‐Essex region. Creating a downtown nucleus of post-‐secondary institutions along with St. Clair College will allow for the integration of academics, culture, and industry and will achieve synergies with downtown businesses.
The Downtown Campus redevelopment consists of five components:
1. The former Windsor Star building for the “School of Social Work and Centre for Executive and Professional Education”;
2. The former Windsor Armouries for the School of Creative Arts, referred to herein as SOCA(Armouries); 3. The former TBQ site for the School of Creative Arts, referred to herein as SOCA(TBQ); 4. The former Bus Depot site for adaptive reuse; and 5. The Chatham Street Parkette, for a public open green space.
The Board of Governors approved the development on the former Windsor Star building in April 2013 and the SOCA (Armouries) Development in April 2014. The current proposed project includes the construction of a new building on the property that currently represents the TBQ Restaurant, adjacent parking lot, and the former Nut House property. All existing buildings on this property will be demolished and the site will be made ready for construction of a new building.
Final decisions on the adaptive reuse of the Bus Depot site are pending. Further direction on this site is planned for Fall 2015. During construction of the SOCA properties (Armouries & TBQ), this site will be used as a staging/parking area for the contractors.
Preliminary planning for the public open green space on the Parkette site is underway.
The new building will house major components of the School of Creative Arts (SOCA). Created by the merger of the School of Music, the School of Visual Arts, and the new Film Production Program, the SOCA development will provide the new collaborative School with a Downtown location designed to suit the needs of the students and
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allowing the opportunity for increased collaboration with each other and with the cultural organizations in downtown Windsor, i.e., Art Gallery of Windsor, Windsor Symphony Orchestra, and the many theatre companies.
HISTORY OF PROJECT
The strategic direction of developing a Downtown Campus location had been under discussion for many years:
• April 2011 -‐ The Board of Governors approved the development of a business case for the establishment of a Downtown Campus for the University;
• August 2011 -‐ CS&P Architects Inc. (CS&P) retained to provide an all-‐inclusive design and implementation of renovations to the Windsor Star, Armouries and Bus Depot;
• Downtown project was approved to continue through the Design Development stage until the Fall of 2012, and then continue to the preparation of construction drawings and specifications into the Spring of 2013;
• April 2013 – Board of Governors approved the Windsor Star project; this building is now under construction with a scheduled completion date of late Spring 2015;
• February 2014 – Board of Governors approved the purchase of the former TBQ site for the construction of a new building originally planned for the Bus Depot Site;
• April 2014 – Board of Governors approved the SOCA(Armouries) Development; construction will commence soon with a tentative completion date of August 2016;
• November 2014 – Appointment of Construction Manager for the SOCA projects.
The next critical phase of the Downtown campus will be the approval of a new building to be constructed on the former TBQ restaurant property, the SOCA (TBQ) Development. This report provides an update and status report for this new building, sets out the next steps for this project, and requests approval to proceed. One of the first steps in this Development, and combined with the development of the SOCA (Armouries), will be to conclude the procurement of Construction Management services for both SOCA buildings.
In concert with the physical planning and design for the Downtown Campus, academic and operational planning has also proceeded under the direction of the multiple Downtown Campus Steering Committees. Academic programming, administrative planning, communications and marketing, development and fundraising, labour relations, logistics, and student support services are all being addressed as part of the Downtown Campus development.
GENERAL DESCRIPTION
Following Board of Governors’ approval, the University purchased a strategic parcel of property in Downtown Windsor in June 2014. The parcel of land includes the primary property at 58 Park Street (the TBQ Restaurant), its adjacent parking lot, and a smaller secondary property at 357 Goyeau Street, the former Nut House property, along with its adjacent parking. The total property was purchased for $3.98M. The University funded this property purchase from one-‐time monies earned from overheads generated from self-‐supporting programs. The property will be fully funded by the end of 2014/15.
The two properties, while adjacent to each other are bisected by a north-‐south public alley which needs to be retained for service to other adjacent properties. While the TBQ Restaurant fronts onto Park Street East and the house fronts onto Goyeau Street, the new SOCA (TBQ) building will have its main entrance facing the corner of
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Freedom Way and Park Street East. It will also have a functional entrance onto Freedom Way and will connect across the street to the SOCA (Armouries). The building will also have a significant service and pedestrian entrance from Goyeau Street for the delivery of goods to support the Arts programs, as well as waste removal.
The single-‐storey SOCA (TBQ) building will consist of new masonry and steel construction on the site after abatement, demolition, minor remediation and site preparation are completed on the existing buildings. The proposed new building will be 22,335 gross square feet and includes 2,925 gross square feet of leasable space. The SOCA programming space will include learning studios and edit suites for Media and Film Studies, workshops for metal and woodworking, and digital fabrication labs, as well as a studio for printmaking.
Unlike the other components of the Downtown Campus, the new SOCA (TBQ) building and its site have no heritage aspects and represent a relatively straightforward design and construction project.
PROJECT STATUS & ISSUES
The Project Team is continuing to prepare the design and construction drawings and specifications for the SOCA (TBQ) building with user committee input and refinement of special systems and audiovisual requirements. The latest cost estimate for the project has been developed based on the completed Schematic Design/Design Development phase and is addressed in the Project Cost section below. It is intended to complete the construction documents in a sequential manner so that the abatement, demolition and site preparation can commence by the end of the 2014 year, and the building construction can start in the Spring of 2015.
The Project team, including legal advisors, have been working for the past year on resolving the detailed development conditions imposed by the agreement which has now been signed between the University, the City of Windsor (City) and the Windsor-‐Detroit Tunnel Corporation (WDTC). The tunnel runs under Freedom Way, between this property and the SOCA (Armouries), and there are requirements for extensive construction monitoring prior to, and after any construction adjacent to the Tunnel. In addition, there are perimeter issues and easement concerns that will be resolved with the City due to the alley bisecting the site. Power poles in the alley must remain as the relocation of the overhead cables and equipment will require longer term planning and implementation. It is proposed to locate the main electrical transformer for serving the SOCA(TBQ) building on the Goyeau site property and a buried cable easement will be required to cross under the public alley.
Considerable due diligence of the site has already been carried out including geotechnical investigations, Stage 1 and 2 Environmental Site Assessments, and Stage 1 and 2 Archaeological Studies. Negotiations with the City are well underway concerning an Official Plan Amendment to rezone the site, along with the regular Site Plan Control review. No issues are anticipated at this time.
CONSTRUCTION MANAGEMENT APPROACH Consistent with the SOCA (Armouries) building, it is the intention to use Construction Management (CM) for this building also in order to sequence the design work and the sequential tendering so that both SOCA buildings can be delivered at the same time. This is a critical requirement for the delivery of the SOCA academic program. This new building must be coordinated with the SOCA (Armouries) construction schedule so that the delivery and final occupancy of both buildings will be in unison. Sequential competitive tendering of five major construction packages will be managed by the CM and are planned to include: 1) designated substance abatement; 2)
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demolition; 3) site services; 4) mechanical, electrical, structural and building envelope; and 5) interior fit-‐out and finishes.
The CM procurement process has been completed including the Prequalification and Request for Proposal stages. Proposal submissions were received in early October 2014 and interviews took place with two firms. A recommendation to award to the successful proponent has been provided by the Evaluation Committee. The cost of the CM fee is included in the Project Budget outlined below.
ESTIMATED TIMELINES
Finalize Complete Construction Documents packaging for SOCA (Armouries) Fall 2014
Obtain SOCA(Armouries) Foundation Permit November 2014
Obtain SOCA(Armouries) Building Permit December 2014
Complete SOCA(TBQ) Design & Construction Documents January 2015
Complete Construction Manager Procurement October-‐ November 2014
Resource Allocation Committee Meeting November 12, 2014
Board of Governors’ Meeting November 25, 2014
Sequential Tender Packages December 2014 – March 2015
Construction January 2015 – August 2016
Move-‐in, Set-‐up, and Occupancy July -‐ August 2016
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PROJECT BUDGET
Cost per sq. ft.
CONSTRUCTION COST (including construction contingency) $8,202,000 $367 CONSULTANTS’ COST
CS&P Architects $803,000 Construction Management 377,000
Project Management 117,000 Other Architectural 318,000
Audiovisual Consulting & Commissioning 175,000 Total Consultants’ Fees: $1,790,000
FURNITURE &EQUIPMENT
Furniture 200,000 Equipment 750,000 Audiovisual 660,000
Total Furniture &Equipment $1,610,000 MISCELLANEOUS COSTS 539,000
Design Contingency 300,000 $12,441,000
HST (net of rebate) 3.41% 424,000 TOTAL PROJECT COST 12,865,000 $576
As noted above, the latest cost estimate for the project has been developed based on the Schematic Design documents. As a result, a Design contingency has been earmarked should final changes impact the overall cost of the project. The total project cost includes all construction costs, furniture, equipment and other soft costs.
FUNDING FOR THE PROJECT
The total project budget of $ 12,865,000 will be funded from the following sources:
1. $10,965,000 -‐ University of Windsor 2006 Bond Fund available; existing base budget for interest payments 2. $750,000 -‐ Internal loan; repayment of loan funded from future lease payments 3. $ 1.15M – Financing made available from fundraising efforts; existing base budget for Principal & Interest
OPERATING COSTS
The operating costs for this building have been calculated based on current square footage rates and levels of service for utilities, custodial, maintenance, security and insurance. Additional costs were included in support of servicing of equipment, classrooms and logistical solutions. These incremental costs are estimated at $230,000 annually and will be funded in the University’s operating budget.
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