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TRANSCRIPT
McGILL UNIVERSITY
2018-2019
BUDGETBUDGET
Office of the Provost and Vice-Principal (Academic)October 31, 2018
02
TABLE OF CONTENTS
1.
2.
3.
4.
INSTITUTIONAL SETTING 03BUDGET 2018-2019 AT A GLANCE 04INTRODUCTION 05
McGill STRATEGIC PLANNING 05The 2017-2022 Strategic Academic Plan 05The 2013-2018 Strategic Research Plan 06The McGill University Physical Master Plan 06The 2015-2020 IT Services Strategic Plan 06
CURRENT ECONOMIC AND POLITICALENVIRONMENT 07University Enrolment in Québec and Canada 07Attraction of International Students 08Disposable income per capita 08Provincial Grants 09Tuition and fees 10Federal funding 10Interest Rates 11Currency Exchange Rate 11Inflation 12Regulatory Environment 13
REVIEW OF THE 2017-2018 BUDGETUNRESTRICTED FUND 16University-Level 16
BUDGET 2018-2019 16Priorities for 2018-2019 18
Student Aid 16Academic Renewal 16Student Mental Health Action Plan 17Protection of Library Collections 17Salary Policy 17Pension Plan Employer Contributions 17Preparation of the McGill Bicentennial Campaign 18Budgetary Outlook for 2018-2019 18Unrestricted Fund 18Restricted Fund 20Endowment Fund 21Plant Fund 21Overall Borrowing and Debt Position 23
Appendix 1: Budget 2018-19, Unrestricted Fund 25Appendix 2: Multi-Year Financial Outlook byRevenue and Expense, by Fund 26Appendix 3: Pro-forma Budget 2018-2019, All Funds 29Appendix 4: Financed Accumulated Deficit,Unrestricted Fund, Multi-Year Outlook 30Appendix 5: Enrolment Statistics 31Appendix 6: Staff Statistics 31Appendix 7: Budget 2018-2019 of Faculties,Unrestricted Fund 31Appendix 8: Budget 2018-2019 of Administrative Units,Unrestricted Fund 32Appendix 9: University Significant Accounting Policies 33Appendix 10: Glossary 34
03
In fulfilling its mission, McGill University embraces the principles and values of academic freedom, integrity, responsibility, equity and inclu-siveness.
After a wide consultation with members of the McGill community at the beginning of her mandate, the Principal and Vice-Chancellor has translated her vision of the direction of the University into five stable priority areas organized around three academic mission themes (student life and learning, research, community engagement) and two mission support themes (work culture, physical and virtual campus).
The McGill Commitment: Providing all students with a stimulating, innovative, and inquiry-based educational experience.
Unleashing Our Full Research Potential: Laying the foundation for McGill to excel in the increasingly competitive and challenging global research environment.
Enhancing Our Community Partnerships: Making McGill a responsive and dynamic collaborator with a wide range of communities and partners, locally, nationally and globally.
My Workplace: Turning McGill into a true learning organization, where administrative and support staff are empowered to use their knowledge to increase agility and effectiveness.
Transforming Our Campus: Providing our physical and virtual campuses with the resources necessary to continue our mission in a sustainable, safe and welcoming environment.
PRIORITIES OF THE PRINCIPAL ANDVICE-CHANCELLOR
MOTTOGrandescunt Aucta Labore(By work, all things increase and grow)
MISSIONThe mission of McGill University is the advancement of learning and the creation and dissemination of knowledge, by offering the best possible education, by carrying out research and scholarly activities judged to be excellent by the highest international standards, and by providing service to society.
INSTITUTIONALSETTING
04
Revenues – Unrestricted Fund: $870.9MUnrestricted revenues are expected to increase by 3.1% compared to2017-2018.
Tenure Stream Instructional Faculty 1,682*McGill added 15 incremental tenure-stream instructional faculty between January 2017 and January 2018.
Non-Tenure Stream Instructional Faculty: 1,625*McGill added 222 instructional faculty in non- tenure stream between January 2017 and January 2018.
Non-Academic Staff: 4,045*There were 4,045 non-academic staff at McGill in January 2018, compared to 3,798 in January 2017.
Expenses and interfundtransfers – Unrestricted Fund: $886.3MExpenses (including interfund transfers) in the unrestricted fund in 2018-2019 include an increase of $15.7M in salary expenses, $9.5M in non-salary expenses and a reduction of net interfund transfers of $7.5M.
Number of students:40,971The number of students increased by 1.2% in fall 2017 compared to fall 2016. McGill’s students are intensively committed to their experience, with 82% of them being enrolled as full-time students.
BUDGET 2018-2019 AT A GLANCE
*: See Appendix 6
05
The 2017-2022 Strategic Academic Plan supports the implementation of priorities of the Principal and Vice-Chancellor by serving as a guide for central strategic planning and providing opportunities for expression and implementation at the local level.
The plan focuses on the following objectives:
Be open to the world: McGill will strive to remain an institution of choice for international students and faculty and will make a commitment to providing undergraduate and graduate students with a 21st century education by increasing the number of enriched educational opportunities that offer opportunity for global engagement.
Expand diversity: We will deepen our commitment to excellence and diversity in faculty recruitment and career progression. We will also enhance accessibility for students from underrepresented groups, especially Indigenous students.
Lead innovation: We commit to supporting pedagogical and curricular innovation, including increased numbers and availability of active learning classrooms, and the implementation of robust programs to prepare undergraduate and graduate students for the full range of careers available to them, as well as to contribute to the innovation ecosystem of Montreal, Québec, and Canada.
Connect across disciplines and sectors: we will reduce administrative barriers to academic appointments across academic units and facilitate interdisciplinary teaching and research.
Connect with our communities: we will embrace our cultural milieu and physical location to build collaborative relationships with educational, commercial and policy sectors in Montreal and Québec and across Canada.
More details about the 2017-2022 Strategic Academic Plan can be found here: https://www.mcgill.ca/provost/article/mcgill-university-strategic-aca
demic-plan-2017-2022
We are pleased to present the McGill Budget for fiscal year 2018-2019. This budget enables the implementation of the McGill University’s strategic plans and initiatives and reflects the decisions the University has made regarding its activities for fiscal year 2018-2019.
The budget of McGill University covers four funds: the unrestricted fund, the restricted fund, the endowment fund and the plant fund. The first two funds – the unrestricted fund and the restricted fund – directly support the mission of the University of advancing learning and creating and disseminating knowledge. The plant fund and the endowment fund provide financial resources to activities that support the development of the University in achieving this mission. This document presents details on the budget of the unrestricted fund, and provides a financial overview of the other funds.
This budget supports transparency, accountability, and communication with members of our community. When a term appears in bold typeface within the text, the reader can find the definition in the Glossary (Appendix 10). McGill prepares its budget on a modified accrual basis. With the exception of unused vacation days, post-retirement benefit obligations, and accrued pension liabilities, which are recorded as year-end audit adjustments, transactions are recognized when the generating activity takes place rather than when the revenue is received, or when the expense is incurred.
INTRODUCTION McGill STRATEGIC PLANNING1.
The 2017-2022 Strategic Academic Plan
06
The 2013-2018 Strategic Research Plan expresses McGill’s core commitments to ideas, innovation, sustainability, collaboration and partnership, and social engagement in research. Furthermore, under the banner of primary inquiry to addressing major societal challenges, seven broad areas of research excellence have been identified:
Examine fundamental questions about humanity, identity, and expression.
Strengthen public policy and organizations and create a deeper understanding of social transformation.
Capitalize on the convergence of life sciences, natural sciences, and engineering.
Support health research and improved delivery of care.
Unlock the potential of the human brain and the entire nervous system.
Advance knowledge of the foundations and applications of technology in the Digital Age.
Explore the natural environment, space, and the universe.
More details about the 2013-2018 Strategic Research Plan can be found here: https://www.mcgill.ca/research/about/srp
At its meeting of December 14, 2017, the Executive Committee of the Board of Governors, on the recommendation of the Vice-Principal (Research and Innovation), endorsed the extension of the McGill Strategic Research Plan until December 31, 2018.
The 2013-2018 Strategic Research Plan
In support of the University’s mission, the McGill University Physical Master Plan was intended to guide infrastructure projects and future physical growth to help create a dynamic intellectual community and academic experience. It was developed with extensive consultation with McGill and greater Montreal communities. The plan was approved by the Board of Governors in April 2008 and continues to be updated.
Guided by nine overarching principles, the Plan was designed to modernize both the Downtown and Macdonald campuses, improve spaces for teaching and research, steward our historic and green spaces to further campus sustainability, and ensure that future development meets the needs of the McGill community.
More details about the University Physical Master Plan can be found here: http://www.mcgill.ca/campusplanning/planning-services/
master-planning
The McGill University Physical Master Plan
Approved in April 2015, the ITS Strategic Plan includes a five-year roadmap with a mission centered on the following three components:
Providing value-driven services: strengthening McGill’s commitment to providing internationally renowned quality education, research and scholarly activities.
Providing the best user experience: providing best practices, cost-effective, and timely solutions that emphasize the user experience.
Meeting McGill’s needs: supporting the growth of McGill's evolving technology needs.
More details on the ITS Strategic Plan can be found here: https://www.mcgill.ca/it/it-mcgill/its-strategic-plan/
The 2015-2020 IT Services Strategic Plan
07
University enrolment has increased between 2011-2012 and 2015-2016 in Québec and Canada by 7% and 4%, respectively. This increase occurred despite a shrinking potential pool of traditional Canadian students. The population aged between 15 and 24 years old has declined by 7% in Québec between 2011 and 2017 and is projected to be 13% lower than its 2011 level by 2021. This decline represents a challenge for enrolment strategies targeting to preserve stability in the representation of students from Québec. Population projections beyond 2021 show a reversal of course, with the 15-24 years old population expected to be back to its 2017 level by 2026.
University Enrolment in Québec and Canada
McGill STRATEGIC PLANNING2.The planning represented by the McGill Budget 2018-2019 is shaped by the economic and political environment that impacts the demand and supply of the McGill student and research experience.
08
Despite a shrinking pool of domestic potential applicants, universities across Canada and Québec have increased enrolment through a significant increase in enrolment of international students. According to Statistics Canada, 168,000 international students were enrolled in a program at Canadian universities in 2015-2016 - a 40% increase since 2011-2012 – with Québec accounting for 38,000 of these students.
Disposable income per capita is used by the provincial government to set the maximum annual increase of base tuition fees (with a two-year lag), which represents a major source of revenues for universities. It also provides indications of the financial capacity of households in Québec to spend and save, after taking taxes into consideration.
Québec has experienced considerable increases in disposable income per capita between 2014 and 2016. Preliminary data also suggest that disposable income per capital grew at a rate of 2.8% in 2017, which will impact tuition fees to be collected in 2019-2020
Attraction of International Students
Disposable income per capita
103 103 104102
105
107 107 107109
101 101 10099 99 99
94
98
100 100 10098
9694
92
87
92
2011 2012 2013 2014 2015 2016 2017 2021P 2026P
2011
-12
= 10
0
Enrolment - CAN Enrolment - QC Pop1524- CAN Pop1524 -QC
FIGURE 1: UNIVERSITY ENROLMENT ANDPOPULATION 15-24 YEARS OLD
FIGURE 2: UNIVERSITY ENROLMENT, BYSTUDENT STATUS
Source: Statistics Canada. Postsecondary Students Information System. Census Population estimates and projections. Ministère de l’éducation et de l’enseignement supérieur du Québec. Système de gestion des données de l’effectif universitaire (GDEU).
Source: Statistics Canada. Postsecondary Students Information System.
80
90
100
110
120
130
140
150
2011 / 2012 2012 / 2013 2013 / 20142014 / 2015 2015 / 2016
2011
12=1
00
Canadian students - CAN Intnl students - CAN
Canadian Students - QC Intnl Students - QC
09
The Government of Québec sets rules regarding two major streams of revenues for McGill: revenues coming from the MEES operating grant – which supports teaching activities - and revenues generated by regulated tuition fees. The MEES operating grant and regulated tuition fees kept by McGill represent approximatively half of McGill’s annual revenues.
In its Budget 2018, the Government of Québec announced additional increases of $173M in funding for universities, of which $148M represents new cumulative commitments made for 2017-2018 (retroactive) and 2018-2019 and $25M can be attributed to growth in student complement and. These amounts are considerable, but still fall below the investment estimated by the system in 2013 of a required annual injection of $850M would be required to bring Québec to the level of funding per student equivalent to the rest of Canada.
Over the past two years, the Government of Québec has worked on updating the funding formula of Québec universities. The outcome of this work is expected to be communicated to universities in May 2018 and details are to be confirmed when the Government releases the Budget Rules (Règles Budgétaires) for fiscal year 2018-2019.
More than half the plant fund revenues are also provided by the Government of Québec. Budget 2018 announced commitment to an incremental investment of $282M for university infrastructure projects over the next five years, including a $220M envelope for maintenance and deferred maintenance, and $62M for new initiatives. The government has taken a new step to create a fund for patrimonial buildings. The fund is $148M, of which universities have access to $12.5M. This move represents a positive step, but in the context of McGill’s $1.3B deferred maintenance deficit, of which $300M can be attributed to the patrimonial aspect of many of our buildings, it is hoped that the government will make such funding recurrent.
McGill University also continues its discussions with the provincial government to transform the old Royal Victoria Hospital into a global hub for learning, research and innovation in environmental sustainability and public policy. The Royal Victoria Hospital site is now vacant and could be transformed into modern academic and research space. The site could potentially provide approximately 700,000 square feet of space, which would help to mitigate McGill’s space deficit. It could also create a real estate reserve that will ensure McGill’s long-term development and create a landmark site for Montreal, Québec, and the McGill community.
Source: Statistics Canada. Preliminary 2017 calculated by McGill University.
Source: MEES. Calculations by McGill University.
FIGURE 3: DISPOSABLE INCOME PER CAPITA,QUÉBEC, ANNUAL GROWTH RATE
Provincial Grants
2.1% 2.1%
2.9% 2.7% 2.8%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2013 2014 2015 2016 2017p
Budget2017
Budget2018
Total
29
0
29
71
50
121
106
60
166
145
75
220
145
120
265
145
150
295
641
455
1,096
Millions of dollars
20172018
20182019
20192020
20202021
20212022
20222023
Total
TABLE 1: REINVESTMENT IN GENERAL FUNDINGFOR QUÉBEC UNIVERSITIES, BUDGETS 2017 AND2018, IN MILLIONS OF DOLLARS
10
All regulated students pay a base tuition fee, which is indexed annually following the most recent disposable income per capita measure available. For 2018-2019, the base tuition fee will increase by 2.7%, reaching $81.85 per credit (or $2,455.55 for a students taking 30 credits). The same rate of increase applies to all ancillary fees, unless an agreement is reached with the students to apply a higher rate.
Regulated Canadian out-of-province and international students are also charged an additional supplement (or forfaitaire) that is returned to the government, thus having a nil impact on the McGill’s budget. However, universities are allowed to charge an additional 10% over and above the forfaitaire to help cover the costs of recruitment and support related to this population.
The deregulation of tuition fees for first cycle and second cycle professional international students requires the development of a pricing strategy to set the optimal tuition fees by program.
Tuition and fees
The Government of Canada’s research granting agencies are major contributors to research funding of post-secondary institutions.
Federal budget 2018 contained additional funding in research in response to Canada’s 2017 Fundamental Science Review (FSR) chaired by former University of Toronto President David Naylor. The FSR called to increase federal research spending by $1.3B over four years, balanced across four areas: (1) investigator-led research operating grant; (2) enhanced personnel supports for researchers and trainees at different career stages; (3) targeted spending on infrastructure-related operating costs for small equipment and Big Science facilities; and (4) improved coverage of the institutional costs of research from 25% to 40%. Budget 2018 announced an increase in funding of $1.2B over five years for the tri-councils – including $275M for a new fund aimed at research that is international, multidisciplinary and fast breaking-, $210M over five years for the Canada Research Chair program, $763M for the Canadian Foundation for Innovation and $572.5M for a Digital Research Infrastructure Strategy. Spending to cover institutional costs of research through the Research Support Fund is set to increase by $235M over five years, keeping the indirect costs of research covered by federal funding at 25%. While other amounts impact restricted funds of institutions, indirect costs of research impact the operating budget of universities. In line with its gender-based budgeting policy, Budget 2018 also announced the development of a harmonized
Federal funding
national framework to address gender-based violence at post-secondary institutions ($5.5M over five years).
By March 2018, the federal government had awarded 24 Canada 150 Research Chairs, out of a potential of 35 to be funded by the one-time funding of $117.6M that was announced in Budget 2017. Two of the 24 Canada 150 Research Chairs that were announced were awarded to McGill researchers. In February 2018, the federal government also designated the five Innovation Superclusters announced in Budget 2017 ($950 M over five years), including SCALE-AI – a Québec-based Supercluster on supply chains powered by artificial intelligence in which McGill is a partner.
Although the data is outdated, as of Budget 2016, the federal government was expected to be a major contributor to higher education in Canada with spending on postsecondary education expected to reach $15.7 billion by 2020-21.
11
Source: Parliamentary Budget Officer. URL: http://www.pbo-dpb.gc.ca/en/PSE_chart
FIGURE 4: TOTAL FEDERAL CONTRIBUTIONS TOPOSTSECONDARY EDUCATION, AS OF BUDGET 2016
FIGURE 5: GOVERNMENT OF CANADA MARKETABLEBONDS, AVERAGE YIELD - 5-10 YEARS
Interest rates have an impact on McGill’s investment revenues and borrowing expenses, as well as its liabilities related to employee benefits. The cost of future benefits decreases as interest rates increase.
Between May 2017 and April 2018, the Bank of Canada raised the overnight interest rate three times, bringing it from 0.50% to 1.25%. The average yield on Government of Canada marketable bonds with durations between 5 and 10 years are back to pre-2015 levels. Yields increased from 1.1% in May 2017 to 2.3% in April 2018. The economic outlook included in the federal budget 2018 and recent communiqués from the Bank of Canada suggest other increases are expected moving forward.
The exchange rate of the Canadian dollar relative to the American dollar impacts McGill’s budget through several channels. First, a lower Canadian dollar relative to the U.S dollar makes McGill’s tuition fees significantly lower for American students. Second, a lower Canadian dollar may also make McGill less attractive when recruiting and retaining the talented faculty from other countries. Third, a lower Canadian dollar makes purchases of goods in U.S. currency more expensive, including library serial collections, books, and research equipment. McGill is a net purchaser of U.S. goods.
The Canadian dollar appreciated during summer 2017. The exchange rate of an American dollar then floated between $1.23 CAD and $1.26 CAD between September 2017 and April 2018.
Interest Rates Currency Exchange Rate
Source: Bank of Canada.
12
Source: Statistics Canada.
FIGURE 6: MONTHLY AVERAGE EXCHANGE RATE,CANADIAN DOLLAR PER U.S DOLLAR,MAY 2017-APRIL 2018
FIGURE 7: CONSUMER PRICE INDEX, QUÉBEC,ANNUAL GROWTH RATE, AS OF APRIL
The cost of several items in the University’s basket of goods and services typically increases more rapidly than the Consumer Price Index. However, the latter is an important factor in determining the economic component of salary increases. The Consumer Price Index increased by 1.7% between April 2017 and April 2018. This marks a significant increase after four years of CPI inflation below 1.4%.
Apart from indexation of salaries, additional resources are typically not allocated to deal specifically with inflation. From time to time, allocation parameters are updated, and adjustments are made to deal with sizeable changes in big ticket items (e.g., library collections), but in most cases the University counts on units finding ways to adjust their operations in order to meet the higher costs.
Inflation
Source: Statistics Canada.
1.15
1.20
1.25
1.30
1.35
1.40
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2014 2015 2016 2017 2018
13
Pension Plan Under government regulations, every three years McGill’s pension plan is required to undertake an actuarial valuation exercise. The University is obliged to make supplementary contributions from the budget of the unrestricted fund to the pension plan to make up for any shortfalls in the ability to cover the defined pension benefits to departing employees as well as shortfalls in annuity plans written for some pensioners.
The annual report on the McGill University Pension Plan for the year ended December 31, 2017 reminded members that the actuarial valuation of the Pension Plan completed as of December 31, 2015, revealed a going concern deficit of $78M and the degree of solvency of the Pension Plan as at December 31, 2016 was 81%. The next valuation exercise is due no later than December 31, 2018, with the results to be filed with the government by the regulatory deadline of September 30, 2019. Discussions are ongoing to perform a valuation earlier due to the favourable interest rates.
Immigration and Work PermitsOver the past several years, the federal government has tightened certain rules and regulations for renewing work permits. For example, recruiting or retaining a professor who has an existing right to work in another country but who would lose that status by applying for Canadian permanent residence rather than simply holding a work permit, might be discouraged from accepting employment.
Work permit renewals for citizens of countries with which Canada does not have a free trade agreement require an application to be submitted and a relevant fee to be paid. This complicates the process for Assistant Professors who seek to renew their work permit in line with their pre-tenure reappointment, following their initial three-year appointment.
The Québec government has tightened both French and English language requirements to qualify for immigrant status, entailing increased costs for demonstrating language competence, but also posing challenging time limits for mid-career and senior scholars to acquire the language competency needed under Québec’s immigration point system. The Québec processing times have increased as well, which have resulted in the necessity of renewing work permits instead of professors acquiring permanent residency. These regulations and factors also present budgetary challenges.
Regulatory Environment
14
The forecast deficit of the unrestricted fund for fiscal year 2017-2018 stands at $24.1M vs. a budgeted deficit of $9.9M at the beginning of fiscal year.
Revenues in the unrestricted fund in 2017-2018 are 29.5M$ higher than budgeted, forecast at $844.5M. Higher than budgeted tuition fees ($11.4M) and sales of goods and services ($10.0M) account for a large part of the difference.
Tuition fees are forecast to be higher due to higher enrolment of deregulated students relative to targets used in Budget 2017-2018, which generated an additional $7.3M in tuition fees. Higher sales of goods and services were observed in self-financing operations of residences (including food services). Higher sales of goods and services are also observed in the Faculty of Medicine due to additional revenues generated by medical residents from the Middle East. Grants from the provincial government are $3.4M higher than budgeted, partly due to additional funding announced by the provincial government during the fiscal year. Grants from the federal Research Support Fund to cover indirect costs of research are $2.7M higher than what was budgeted, due to an in-year allocation by the federal government.
University-Level
REVIEW OF THE 2017-2018 BUDGET – UNRESTRICTED FUND3.
15*: Before reclassifications of non-salary expenses.
TABLE 2: BUDGET OF UNRESTRICTED FUND, 2017-2018
2016-2017(actuals)
Budget2017-2018*
Year-EndForecast
2017-2018
Revenues Grants – QuébecTuition and FeesSales of Goods & ServicesGrants – CanadaInvestment and interestincome, forex gain Gifts and BequestsUnrealized gains (losses)Revenues – total Expenses SalariesAcademicAdministrative & SupportBenefitsStudent and student aidSalaries-total Non-Salary (net)Building and occupancycosts (including energy)Services(contracts/professional/travel)Cost of Goods Sold &Services RenderedMaterials, Supplies &PublicationsHardware and SoftwareMaintenanceInterest and Bank ChargesOther Non-Salary ExpensesContributions toPartner InstituteNon-Salary (net) - totalExpenses - totalInterfund transfersIncrease/(decrease) inFund Balance
313,869294,314138,384
28,8659,4187,9074,979
797,736
265,944214,705
87,58442,313
610,546
41,445
35,812
19,361
13,069
9,9252,145
10,083
11,983143,823754,369(38,335)
$5,032
332,544307,836134,067
25,7087,9926,884
-815,031
271,147217,038
94,17743,681
626,043 33,820
23,318
21,547
12,584
11,7032,740
38,650
9,933154,295780,338(44,622)
(9,929)
335,985319,243144,074
28,4228,8497,942
844,516
275,452227,467117,136
46,788666,843
45,024
36,820
25,941
19,714
10,935968
16,822
11,174167,398834,240(34,377)
(24,101)
(thousands of dollars)
(thousands of dollars)
Expenses and net transfers from the unrestricted fund in 2017-2018 are forecasted to be $43.7M than budgeted, with higher than originally budgeted administrative and support staff salaries, employer pension-related expenses, and a pay equity provision accounting for the largest differences.
The University added 297 non-academic staff members between January 2017 and January 2018 1 Headcount as of January 31st snapshots. Exclusion: staff on unpaid leave, trades and services staff, casual staff.
16
McGill University has reached a watershed moment in its budgeting. It has started planning for the integration of a new provincial funding policy, as well as for an unprecedented capital renewal of the campus. In addition, the provincial government continues to require of universities running a deficit a plan to return to a balanced budget in order to be eligible for its conditional grant. Failure to conform to this requirement has the following consequences: postponement of the conditional grant until an acceptable plan to return to balanced budget is accepted by MEES. Given the current forecast of a deficit from 2017-2018 to 2020-2021, adhering to a long-term balanced budget plan will be critical. McGill remains committed to support activities that support its primary mission by promoting academic excellence and improving services to students.
McGill continues its commitment to accessibility by contributing at least 30% of incremental net tuition towards student aid and support, taking into account incremental amounts received from donations. McGill maintains its commitment to provide financial support to students by contributing $32.6M of its unrestricted fund towards student aid and support in 2018-2019.
BUDGET 2018-20194.
Currency Exchange Rate
Student AidAmount: $32.6M in 2018-2019
While the number of new tenure stream faculty represents a relatively low percentage of total tenured faculty every year, each new tenure position represents a potential multi-million dollar commitment of the University from a budget perspective.
Net new hires of tenure stream faculty will be nil from 2019-2020 until 2022-2023, with both planned new hires and planned departures set at 55 per year. Costs of new hires should be contained as the higher salaries of departing senior faculty members could compensate for the cost of additional positions, most of which are expected to be at the entry-level.
Academic RenewalAmount: $4.2 M in 2018-2019
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Student Mental Health Action PlanAmount: $8.7M/7 years
Source: McGill University. Academic Renewal Budget Framework. Updated as of January 29, 2018.
FIGURE 8: ACADEMIC RENEWAL, TENURE TRACKCOMPLEMENT, END OF YEAR
The Health and Wellness Committee consulted the McGill community in 2017 on mental health and wellness at McGill. Following this consultation, the ‘Action Plan for Addressing Student Mental Health at McGill’ proposes the implementation of the following initiatives to facilitate access to campus and community-based resources: 1) the creation of a Student Wellness Hub in the Brown Student Services Building; 2) the establishment of a network of wellness advisors anchored to the Hub and located in the Faculties and other student-oriented units across campus and 3) the creation of comprehensive website to map and facilitate access to such resources.
The plan commits $13M over seven years towards the implementation of this Action Plan, $8.7M of which will be contributed from the University’s unrestricted fund and the remaining being expected to be provided by an external philanthropic partner.
Indigenous Studies and Education Initiatives Amount: $1.4 M one-time and recurring.Based on recommendations of the Provost’s Task Force on Indigenous Studies and Indigenous Education, two new positions, including that of Special Advisor, Indigenous Initiatives, will be created. A bursary fund will be created to support incoming Indigenous students, and an Indigenous Artist in Residence Program will be created. Support for Faculty initiatives, including the Indigenous Studies minor is included in this amount.
Protection of Library CollectionsAmount: $1.25M in 2018-2019
The collections budget remains whole and is dominated by the scholarly journal budget in accordance with the University’s status as one of Canada’s top-ranked research intensive institutions and the concomitant user demand for journal literature.
The PVPA will continue to support the collection with one-time annual adjustments, as it is one of the reputational pillars of McGill. McGill also maintains its commitment to demonstrate the potential for digital resources to enhance education and continue to serve both students and faculty.
Salary PolicyAmount: $12.2M in 2018-2019Salaries and benefits represent close to 80% of the University’s total operating expenses. In order to attract and retain top academics in a global market, both starting salaries and annual salary increases for McGill professors must remain competitive. McGill must also be able to provide starting salaries and interesting career prospects to talented administrative and support staff that have the skills to support the academic mission of the University in a professional manner.
The average salary policy rate for 2018-2019 is 2.68% on a salary mass of $454.5M, for cost of salary policy of $12.2M.
Pension Plan Employer ContributionsAmount: $21.5M in 2018-2019All employees who joined McGill on or after January 1, 2009 are members in the McGill defined-contribution pension plan. However, McGill must still cover the unfunded liabilities related to the defined benefits component of the hybrid plan that were accrued before January 1, 2009 for members who joined or were eligible to join the plan before this date. McGill University is the only university in Québec that currently offers a defined-contribution pension plan.
1,645
1,650
1,655
1,660
1,665
1,670
1,675
1,680
1,685
1,690
1,695
1,700
2016-17 2017-18 2018-19p 2019-20p 2020-21p 2021-22p 2022-23p
18
Budgetary Outlook for 2018-2019
Note: Before potential reclassifications of non-salary expenses. See Appendix I for details.
Preparation of the McGill Bicentennial CampaignAmount: $275,000 in 2018-2019
Unrestricted FundUniversity-Level
Over the past 200 years, McGill has been and continues to be a leader in education and research. McGill’s greatest strength is its people – students, alumni, faculty, and staff. The University is committed to being Canada’s most international university while being firmly rooted in Montreal and Québec and is well-placed to address the grand challenges and complexities of the 21st century.
As the plan for the bicentennial celebration comes together, it is being supported by discretionary funds in Principal and Provost and Vice-Principal (Academic)’s respective budgets
The budgeted deficit of the unrestricted fund for 2018-2019 stands at $15.4M.Revenues are expected to increase by $26.3 M and reach $870.9M while expenses (not including interfund transfers) are expected to increase by $25.2M and reach $859.4M.
TABLE 3: BUDGET 2018-2019, UNRESTRICTED FUND
Revenues Grants – QuébecTuition and FeesSales of Goods & ServicesGrants – CanadaInvestment and interestincome, forex gainGifts and BequestsRevenues – total Expenses SalariesAcademicAdministrative & SupportBenefitsStudent and student aidAdjustment to pay periodSalaries-total Non-Salary (net)Building and occupancycosts (including energy)Services (contracts/professional/travel)Cost of Goods Sold & Services RenderedMaterials, Supplies & PublicationsHardware and Software MaintenanceInterest and Bank ChargesOther Non-Salary ExpensesContributions to Partner Institute
Non-Salary (net) - totalExpenses - totalInterfund transfers
Increase/(decrease) in Fund Balance
350,845332,138139,884
30,438
10,3097,249
870,863
286,418233,526112,981
47,7751,825
682,525
40,42231,92324,35114,28811,116
3,72039,89711,159
176,876859,401(26,904)
(15,442)
14,86012,895(4,190)
2,016
1,460(693)-
26,347
10,9666,059
(4,155)987
1,82515,682
(4,602)(4,897)(1,590)(5,426)
1812,752
23,075(15)
9,47825,161
7,473
8,659
(thousands of dollars)
(thousands of dollars)
Budget2018-2019*
Change vs. 2017-2018 forecast
19
Note: Excluding interfund transfers. See Appendix 7 for details.
Revenues are set to increase by $26.3 M in 2018-2019, mostly as a result of higher provincial grants ($14.9M) and tuition and student fees ($12.9M). The provincial government announced additional funding related to the implementation of the new funding policy which will result in $7.4M additional grants for McGill University. The remainder of the increase in the provincial grant comes a higher teaching grant resulting from an increase in the number of funded doctoral students (see appendix 5 for details). Tuition fees for undergraduate international students in deregulated disciplines are increasing by 7.7% in 2018-2019, and annual rates of increase are set at this level until 2020-2021. This increase is a minimum, and may be adjusted upward as market and economic indicators demand.
Expenses in the unrestricted fund are set to increase by $25.2M in 2018-2019, with about 60% of the increase in salary expenses and 40% in non-salary expenses.
Salary expenses are set to increase by $15.7M, including $12.2M in increases as a result of salary policy. Benefits are set to decline by $4.2M as a result of reduced contributions to cover pension plan liabilities. This takes into account interest rates increases that occurred in 2017-2018, as well as increases that are anticipated in 2018-2019.
Non-salary expenses are set to increase by $9.4M, mostly as a result of the creation of provisions and contingencies for future initiatives.
The University charges an overhead recovery fee on revenues earned in non-core unrestricted funds in order to cover part of the central services provided and for the use of the infrastructure. As planned, the overhead recovery fee is increasing from 5.0% in 2017-2018 to 7.5% in 2018-2019. The process for collecting and recording of this fee is applied on a quarterly basis.
Faculties and Administrative UnitsThe Office of the PVPA enters into annual budget planning agreement with each academic and administrative unit. The multi-year and multi-fund budget planning agreement describes various actions pertaining to the academic or administrative unit’s development objectives and priorities within the context of the University’s strengths and values.
FIGURE 9: ACADEMIC UNIT BUDGET, UNRESTRICTEDFUND, 2018-2019: $510.1M
$64.0
$19.6
$150.3
$37.0
$9.8
$39.0
$16.5
$48.3
$12.0
$26.3
$65.1
$22.2
Sciences
Schulich - Music
Medicine
Libraries
Law
Engineering
Educa�on
Desautels - Management
Den�stry
Cont. Studies
Arts
Agr./Env. Sciences
20
Note: (a): Actual (o): Outlook.
Five-Year Outlook
The five-year outlook shows a reduction of the deficit from $15.4M in 2018-2019 to a surplus of $3.7M in 2022-2023. This projection takes into account the provincial funding policy that was in effect at the end of 2017-2018.
Restricted Fund
The two major components of the restricted fund are the research grants and contracts, and the spendable income from endowments along with non-endowed gifts and bequests that must be spent in accordance with the terms of the donor.
As of January 31, 2018, revenues (net of deferrals) of the restricted fund totalled $274.0M, compared to $264.3M for the same period in 2016-2017. Corresponding expenses of $265.1M were $6.3M higher compared to the same period last year.
Figure 11 represents a projection of the restricted fund revenues. These are forecast by applying the third quarter to final result ratio to the third quarter number for the current fiscal year. To this total is applied the percentage growth in the forecast values given by units in the context of the budget process for the restricted fund.
$14.8
$12.2
$5.1
$6.7
$22.5
$1.3
$36.9
$13.0
$1.3
$2.1
$2.9
$0.8
$39.0
$10.8
$20.1
$17.3
$8.7
$66.4
$18.8
$11.2
$14.9
VP (University Advancement)
VP (Research and Innova�on)
VP (Com. and External Rela�ons)
VP (Admin and Finance)
Student Services
Secretariat
Residences & Student Housing
Provost & VP (Academic)
Principal And Vice Chancellor
Macdonald Campus
Legal Services
Interfaculty Studies
IT Services
Human Resources
Graduate & Postdoc Studies
Food and Dining Services
Financial Services
Facili�es Mgmt / Ancillary Services
Dep. Provost (Student Life and Learning)
Campus Planning and Development
Athle�cs
336.4 349.1 354.8
372.4
$426.3
$373.3 $374.3 $372.6
250270290310330350370390410430450
FY14a FY15a FY16a FY17a FY18o FY19o FY20o FY21o
$M
Strategic budget reallocations have been mandated on administrative units for 2018-2019. These reallocations are built into the budget and failure to meet these requirements would impact the University’s annual results.
In addition to administrative units, some funds are managed by central administration for specific purposes. Central funds have a budget of $33.9M in 2018-2019. These funds include, for example, provisions for the pension plan deficit, as well as other central contingencies.
FIGURE 10: ADMINISTRATIVE UNITS BUDGET,UNRESTRICTED FUND, 2018-2019: $326.9M
21Note: (1): Plant fund gifts are largely gifts in kind.
TABLE 4: DONATIONS BY TYPE, 2016-2017
Direct SpendEndowment Total
UnrestrictedRestrictedPlant(1)Total
031,279
031,279
7,90751,662
6,09465,663
7,90782,941
6,09496,942
Endowment Fund
The University is a careful steward of the gifts and donations it receives and is mindful of the obligations it undertakes whenever accepting philanthropic support. Principal among these obligations is the alignment of endowments with University needs and to ensure that the funds are indeed spent to support our mission.
Pledges from fundraising and other donations are recorded in the period in which they are collected (excluding commitments). In terms of McGill’s predicted philanthropic revenues, total “cash in” (gifts plus pledge payments) is forecasted to be between $105M - $125M in 2017-2018 and budgeted to be between $115M - $135M for 2018-2019.
For the most part, donations are received for restricted purposes with more than half being destined towards the endowment fund.
The market value of McGill’s endowment, including trust funds, has achieved steady growth during the past few. Additional donations to the endowment fund as well as capitalizations allow the purchase of more units while the performance of related investments impacts the unit value.
As of February 28, 2018, the market value of the endowment fund was $1.634B. While the market value of the fund has increased by 2.2% in the first 10 months of 2017-2018, interfund transfers from the endowment fund are expected to be higher in 2017-2018 compared to the previous year (see details in appendix II).
Fund
Thousands of dollars
For more information, please refer to the annual Report on Endowment Performance: https://www.mcgill.ca/investments/annual-reports
TABLE 5: ENDOWMENT FUND, AS OF APRIL 30
Number ofMIP units
MIP UnitValue
MIP Marketvalue ($M)
2014201520162017
1,293.31,449.01,434.91,612.3
3,446,2263,579,3653,694,6413,796,339
375.27404.82388.38424.71
Year
Plant Fund
The plant fund includes capital grants received primarily for the purposes of renovating existing space, addressing deferred maintenance projects, and from time to time, constructing new space in addition to purchasing capital assets. As well, there are contributions in the way of gifts and bequests as well as contributions from student groups.
McGill’s capital budget includes projects worth $1.4B between 2017-2018 and 2022-2023. The 2018-2019 budget for those projects amount to $260.4M, including $101.4M of construction financed by debt, $52.2M of capital budget coming from the MEES (including the deferred maintenance portion) and $33.8M of IT projects financed by debt. This planned budget does not include amounts related to the potential redevelopment of the Royal Victoria Hospital.McGill’s share of the provincial capital grant has been declining in recent years mostly due to the age factor of buildings being maximized at 50 years old. Each year, the average age of McGill’s heritage campus gets closer to that of the newer campuses, and our share of the renovation grant is thereby reduced.
In 2015-2016, a Province-wide exercise led by Bureau de Coopération Inter-universitaire (BCI) sought to identify our deferred maintenance inventory. Officially, our deferred maintenance deficit, in MEES-subsidized buildings (excluding downtown residences), is estimated at $728M. Because of limitations in the methodology, this number is an absolute minimum (e.g., it does not include building facades, etc.). For 2018-2019, there were 26 deferred maintenance projects submitted in the Plan décennal des investissements universitaires (PDIU) 2018-2028, with $128.4M to be spent that year.
22
Source: Plan décennal des investissements universitaires 2018-2028.
2018-2019Budget ($M)
TotalBudget ($M)
Student Services BuildingMcTavish HousesMcLennan-Redpath Library Renovation680 SherbrookeWilson HallMacdonald Farm Information Centre
10.09.15.04.23.52.8
10.09.1
165.020.047.2
3.1
Fund
TABLE 6: CAPITAL PROJECTS IN 2018-2028 PDIU
TABLE 7: CAPITAL PROJECTS IN 2018-2028 PDIU,HIGHER EDUCATION COMPONENT,EXCLUDING RESEARCH
1
-
-
$300M Debt - Construction$100M Debt - ITMinistry of Education (MEES) - Capital Budget (1)Strategic Investment FundOther Special GrantsResearch FundsOperating FundsDonationsInternal LoansOther Internal FundsUnknown at present (2)Placeholder for Research Portfolio (3)
Total anticipated cash-flow
$52,935 $28,115$35,136$13,225$1,104$7,258$9,867$2,492$11,508$7,538$2,445-
$171,623
$101,405$33,827$52,259$31,618$9,065$2,720$2,196$2,099$8,253$4,353$12,617-
$260,412
$50,800 $17,566$57,462$13,578$27,730-$455$3,033$1,400$1,069$14,000$119,971
$307,064
$32,525 $4,615$53,630$1,006$28,354-----$12,147$273,155
$405,432
$8,878 -$42,493-------$16,000$131,82
$199,193
--$47,384-------$15,750$19,280
$82,414
$246,543$84,123$288,363$59,426$66,252$9,978$12,517$7,624$21,162$12,960$72,959$544,228
$1,426,138
Funding Source FY2018(e)
FY2019(e)
FY2020(e)
FY2021(e)
FY2022(e)
FY2023(e)
Sum of Total ProjectCosts (FY18 - FY23)
23
In February 2015, the Board of Governors approved an initiative to address the University’s accumulated backlog of deferred maintenance, information technology and space needs, and the Executive Committee approved, on the recommendation of the Finance Committee, for the University to borrow or issue debt up to $400 million as a financing plan in support of this initiative.
The Finance Committee of the Board of Governors was informed that as at December 31, 2017, $121.2M had been committed to approved capital projects, out of $300M allocated to meet the University’s most pressing deferred maintenance needs. The Finance Committee was also informed that as at December 31, 2017, $84M had been committed to approved IT-related projects, out of $100M allocated to meet the University’s most pressing information technology needs.
The $400M investment in deferred maintenance will come at a significant financial cost, which will be part of the unrestricted fund budget over the next 40 years. Repayments from the unrestricted fund will start in 2019-2020 with a payment of $11.5M and increase to $23.0M annually from 2020-2021 to 2022-2023.
Overall Borrowing and Debt Position
1
Impact of Capital Investments on University Funds ($M)
[A] Capital Payment - - ($0.72) ($8.61) ($8.61) ($8.61)
[B] Interest payment - - ($10.78) ($14.39) ($14.39) ($14.39)
[D] Rate lock (M to M) ($1.20) - - - - -
[E] Interest earned $1.43 $0.51 $0.97 $4.68 $6.65 $6.07
[F] Expenses - ($0.67) ($0.57) - - -
[VALUE] - ($11.50)
($23.00) ($23.00) ($23.00)
FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
[C=A+B] Net cash flow for McGill Operating Fund
24
Consistent with prior years, Financement-Québec has asked the University to institute a régime d’emprunts for the period between now and June 30, 2018, to borrow from Financement-Québec as a way to receive the next installment of the Québec capital grant. This maximum borrowing amount for McGill for the period ending June 30, 2018 is $173,591,522. Both the annual interest and the capital amount borrowed are repaid by MEES. In most circumstances, both the interest and capital are repaid via additional issuances of long-term borrowings. MEES requests that each university board adopt a resolution authorizing the university to “borrow” long term. The new debt is issued by Financement-Québec to refinance the province’s maturing debt, and to reimburse short-term bank borrowings incurred by the University on behalf of the Québec government.
As at January 31, 2018, the University’s total borrowings were $1.1B, all of which was long-term debt. Exceptionally at this date there was no bank indebtedness. Included in the long-term debt is $160M of McGill Senior Unsecured Debentures issued in January 2016 and $150M of McGill Senior Unsecured Debentures issued in 2002. The remaining $802.1M is substantially all due from MEES, for which University charges MEES interest. Overall long-term debt increased by $23.9M in 2017-2018 compared to the previous year. The projected MEES total debt is expected to be approximately $791.6M by April 2018.
The cost of borrowing is expected to be approximately 1.05% over the course of 2017-2018 and total interest and bank charges expenses are forecast to be $1.0M in 2017-2018. The average borrowing rate is expected to rise from 1.05% in 2017-2018 to 2.25% in 2018-2019, and borrowings are expected to increase for purposes of extrapolation of future budget estimates. As such, our interest and bank charges expenses will be approximately $3.7M.
S&P Global affirmed its AA- (stable) rating in their report dated February 21, 2018, unchanged from that of February 2017. Moody’s performed its annual review in mid- November confirming McGill’s rating of Aa2 (stable), on both the Series A ($150 Million) and Series B ($160 million) issuances.
25
APPENDIX 1: BUDGET 2018-2019, UNRESTRICTED FUND
Budget2018-2019
Forecast2017-2018
Change($)
Change(%)Unrestricted Fund ($000’s)
RevenueGrants- QuébecTuition & FeesSales of Goods & ServicesGrants- CanadaInvestment and Interest IncomeGifts & BequestsForeign Exchange GainUnrealized Gains (Losses) (1)
Total Revenues ExpensesSalary:Salary-AcademicSalary-Administrative & SupportBenefitsStudent AidSalary- StudentYear-end audit adjustments(pension liability & post-employmentbenefit restatements) (2)
Year-end audit adjustments `(vacation, pension obligation,post-employment benefits) (2)
Total Salary Non-Salary: Cost of Goods Sold & Services Rendered Building Occupancy Costs Energy Materials, Supplies & Publications Contract Services Contributions to Partner Institutions Hardware and Software Maintenance Professional Fees Travel Interest and Bank Charges Other Non-Salary ExpensesTotal Non-SalaryTotal ExpensesExcess of revenue over expenses Interfund Transfers(negative is a debit, positive is a credit)Net change in fund balancePension Liability and Post-Employment Benefit Remeasurements (2)
Interfund TransfersInternal Loan RepaymentsCapital purchases via interfund transfersOver (under) Distributed Endowment IncomeBook to Market Adjustment (1)
(Capitalization) Decapitalization of Current Year Investment IncomeTotal Interfund TransfersIncrease (Decrease) in Net Assets Net Assets, Beginning of YearNet Assets, End of YearDecrease (Increase) in Accumulated Financed Deficit (2)
350,845332,138139,884
30,4389,8097,249
500-
870,863
287,422234,347112,981
32,57415,201
-
-682,525
24,35122,20918,21314,28812,07611,15911,11610,491
9,3563,720
39,897176,876859,401
11,462
- -
16,003(10,000)(30,000)
(2,500)-
(407)(26,904)(15,442)
(344,034)(359,476)
(15,442)
335,985319,243144,074
28,4228,3497,942
500-
844,516
274,180228,739117,136
32,71314,075
-
-666,843
25,94125,30119,72319,71415,18411,17410,93511,47010,166
96816,822
167,398834,240
10,275 --
8,490(10,000)(30,000)
(2,500)-
(366)(34,377)(24,101)
(319,933)(344,034)
(24,101)
14,860 12,895 (4,190)
2,0161,460
(693)--
26,347
13,2425,608
(4,155)(139)1,126
-
-15,682
(1,590)(3,092)(1,510)(5,426)(3,108)
(15)181
(979)(810)2,753
23,0759,479
25,1601,187
7,514000-
(41)7,4738,659
(24,101)(15,442)
8,659
4.4%4.0%
-2.9%7.1%
17.5%-8.7%0.0%
-3.1%
4.8%2.5%
-3.5%-0.4%8.0%
-
-2.4%
-6.1%-12.2%
-7.7%-27.5%-20.5%
-0.1%1.7%
-8.5%-8.0%
284.5%137.2%
5.7%3.0%
11.5%
88.5%0%0%0%
-11%
-22%-36%
7.5%4.5%
-35.9%Note: (f): Forecast. (1) Unrealised gains (losses) and the offsetting Book-to-Market Adjustment are not forecasted or budgeted. (2): The forecast and budget do not include estimates for year-end audit adjustments: pension liability and post-employment benefit restatement, as well as, accruals for vacation, pension obligation and post-employment benefits.
26
APPENDIX 2: Multi-Year Financial Outlook by Revenue and Expense, by Fund
2015-2016 2016-2017 2017-2018(f) Budget2018-2019Unrestricted Fund ($000’s)
RevenuesGrants- QuébecTuition & FeesSales of Goods & ServicesGrants- CanadaInvestment and Interest IncomeGifts & BequestsForeign Exchange GainUnrealized Gains (Losses) (1)Total Revenues ExpensesSalary:Salary-AcademicSalary-Administrative & SupportBenefitsStudent AidSalary-StudentYear-end audit adjustments(pension liability & post-employment benefit restatements) (2)Year-end audit adjustments(vacation, pension obligation, post-employment benefits) (2)Total Salary Non-Salary: Cost of Goods Sold & Services Rendered Building Occupancy Costs Energy Materials, Supplies & Publications Contract Services Contributions to Partner Institutions Hardware and Software Maintenance Professional Fees Travel Interest and Bank Charges Other Non-Salary ExpensesTotal Non-Salary
Total ExpensesExtraordinary RevenuesExcess (deficiency) of revenue over expenses
Interfund Transfers(negative is a debit, positive is a credit)Net change in fund balancePension Liability and Post-Employment Benefit Remeasurements (2)Interfund TransfersInternal Loan RepaymentsCapital purchases via interfund transfersOver (under) Distributed Endowment IncomeBook to Market Adjustment (1)(Capitalization) Decapitalization of Current Year Investment Income
Total Interfund TransfersIncrease (Decrease) in Net Assets Net Assets, Beginning of YearNet Assets, End of YearDecrease (Increase) in Accumulated Financed Deficit (2)
336,956274,322133,522
25,8329,1276,989
791(6,284)
781,255
249,433209,495103,303
29,12011,786
(26,853)
13,949590,233
17,19323,10118,42715,59012,004
9,8328,0699,0599,031
10,33413,291
145,931
736,16420,63865,729
-(26,853)
3,830(11,447)(31,202)
(4,213)6,284(336)
(63,937)1,792
(326,757) (324,965)
15,741
313,869294,314138,384
28,8656,7617,9072,6574,979
797,736
265,944214,705
87,58430,05512,258
-
-610,546
19,36122,70218,74313,06914,30311,983
9,92511,11810,391
2,14510,083
143,823
754,369-
43,367
-8,2955,755
(7,539)(38,204)
(1,285) (4,979)
(378)(38,335)
5,032
(324,965)(319,933)
5,032
335,985319,243144,074
28,4228,3497,942
500 -
844,516
274,180228,739117,136
32,71314,075
-
-666,843
25,94125,30119,72319,71415,18411,17410,93511,47010,166
96816,822
167,398
834,240 -
10,275 --
8,490(10,000)(30,000)
(2,500)-
(366)(34,377)(24,101)
(319,933)(344,034)
(24,101)
350,845 332,138 139,884 30,438 9,809 7,249 500 -
870,863
287,422 234,347 112,981 32,574 15,201
-
- 682,525
24,351 22,209 18,213 14,288 12,076 11,159 11,116 10,491 9,356 3,720 39,897
176,876
859,401 -
11,462 --
16,003 (10,000) (30,000) (2,500)
- (407)
(26,904)(15,442)
(344,034)(359,476)
(15,442)
Note: : (f): Forecast. (1) Unrealised gains (losses) and the offsetting Book-to-Market Adjustment are not forecasted or budgeted. (2): The forecast and budget do not include estimates for year-end audit adjustments: pension liability and post-employment benefit restatement, as well as, accruals for vacation, pension obligation and post-employment benefits.
27
2015-2016 2016-2017 2017-2018(f) Budget2018-2019Restricted Fund ($000’s)
RevenuesGrants-CanadaGrants-QuébecInvestment and Interest IncomeGifts & BequestsGrants-Other sourcesContractsSales of Goods & ServicesGrants- United StatesUnrealized Gains (Losses) (1)Total Revenues ExpensesSalary:Student AidSalary-AcademicSalary- Administrative & SupportSalary- StudentBenefitsTotal Salary Non-Salary: Contributions to Partner Institutions Materials, Supplies & Publications Travel Professional Fees Contract Services Building Occupancy Costs Hardware and Software Maintenance Energy Interest and Bank Charges Other Non-Salary Expenses
Total Non-Salary Total Expenses Excess (deficiency) of revenue over expenses
Interfund Transfers(negative is a debit, positive is a credit)Interfund TransfersInternal Loan RepaymentsCapital purchases via interfund transfers(Capitalization) Decapitalization of Current Year Investment Income
Total Interfund TransfersIncrease (Decrease) in Net Assets Net Assets, Beginning of Year Net Assets, End of Year
174,92852,05442,82941,0319,074
21,133 6,386
7,302 82
354,819
76,90269,34022,59725,53216,609
210,980
30,83628,07116,99911,62210,638
4,870225
(174)3
27,966
131,056
342,036
12,783
2,480(739)
(13,672)
(11,931)852
(971)
(119)
162,10943,18648,90951,662
36,352 17,363
6,379 6,440
- 372,400
81,44768,80523,90525,12617,711
216,994
39,23928,82917,06911,73910,956
4,540526561
227,255
140,716
357,710
14,690
10,713(11,719)(13,684)
(14,690)0
(119)
(119)
194,432 58,740
58,544 47,317
37,016 17,079 7,032 6,140
- 426,300
100,12283,31129,69029,29920,828
263,250
39,13530,38218,64414,79112,689
5,591577425
- 28,278
150,698
414,257
12,043
10,000(10,000)(12,000)
(12,000)43
(119)
(81)
166,782 59,327
59,129 47,791
9,450 17,250
7,102 6,201
- 373,033
87,706 72,981 26,009 25,666 17,515
229,877
34,282 26,614 16,332 12,957 11,115
4,898 505 373
- 23,072
130,111
360,459
12,574
10000(10,000)(13,000)
(13,000)(426)
(81)
(503)
Note: (f): Forecast. (1) Unrealised gains (losses) and the offsetting Book-to-Market Adjustment are not forecasted or budgeted.
28
2015-2016 2016-2017 2017-2018(f) Budget2018-2019Plant Fund ($000’s)
RevenuesGrants-QuébecGrants-CanadaGifts & BequestsInvestment and Interest IncomeSales of Goods & ServicesUnrealized Gains (Losses) (1)Total Revenues ExpensesNon-Salary: Amortization Interest and Bank Charges Other Non-Salary Expenses
Total Non-Salary Total Expenses
Extraordinary revenues Excess (deficiency) of revenue over expenses
Interfund Transfers (negative is a debit, positive is a credit)Net change in fund balanceInterfund TransfersInternal Loan RepaymentsCapital purchases via interfund transfers(Capitalization) Decapitalization of Current Year Investment IncomeTotal Interfund TransfersIncrease (Decrease) in Net AssetsNet Assets, Beginning of YearNet Assets, End of Year
54,56716,412
6,131778338
(2,032)76,194
113,43229,521
3,610146,563
146,563
2,513
(67,856)
3871,431
12,18644,874
58,878(8,978)
270,945261,967
54,30115,616
6,0942,810
413 (2,525)
76,709
115,47534,218
2,303151,996
151,996
-
(75,287)
73122,885(3,174)51,888
72,330(2,957)
261,967259,010
55,53915,073
6,0675,064
367 5,037
87,147
124,62335,638
4,124164,385
164,385
-
(77,238)
50010,00020,00042,000
72,500(4,738)
259,010254,272
72,66233,466
6,189 5,166 400 -
117,881
127,115 36,351 5,578
169,044
169,044
-
(51,163)
5001000020,00043,000
73,50022,337
254,272276,609
Note: (f): Forecast. (1) Unrealised gains (losses) and the offsetting Book-to-Market Adjustment are not forecasted or budgeted.
Note: (f): Forecast. (1) Unrealised gains (losses) and the offsetting Book-to-Market Adjustment are not forecasted or budgeted.
2015-2016 2016-2017 2017-2018(f) Budget2018-2019Endowment Fund ($000’s)
RevenuesTotal Revenues ExpensesTotal Expenses
Excess (deficiency) of revenue over expenses Interfund Transfers (negative is a debit, positive is a credit)Net change in fund balanceInterfund TransfersOver (under) Distributed Endowment IncomeBook to Market Adjustment (1)
(Capitalization) Decapitalization of Current Year Investment IncomeTotal Interfund TransfersIncrease (Decrease) in Net Assets Net Assets, Beginning of Year Net Assets, End of Year
- -
-
(4,499) (7,741) 4,213 (6,284)
336 (13,975)(13,975)
1,436,131
1,422,156
-
-
-
187,564 (16,921)
1,285 4,979
378
177,285177,285
1,422,156
1,599,441
- -
-
42,225 (28,490)
2,500 -
366 16,60216,602
1,599,441
1,616,043
- -
-
43,070 (36,003)
2,500 -
407 11,97411,974
1,616,043
1,626,016
29
30
APPENDIX 3 : Pro-forma Budget 2018-2019, All Funds
2015-2016 2016-2017 2017-2018(f) Budget2018-2019Unrestricted Fund ($000’s)
Grants Canada Quebec United States Other SourcesContractsTuition & FeesSales of Goods & ServicesGifts & BequestsForeign Exchange GainInvestment and Interest IncomeUnrealized Gains (Losses) (1)Total Revenues ExpensesSalary: Academic Administrative & Support StudentStudent AidBenefitsYear-end audit adjustments (pension liability &post-employment benefit restatements) (2)Year-end audit adjustments (vacation, pensionobligation, post-employment benefits) (2)Total Salary Non-Salary: Materials, Supplies & Publications Contributions to Partner Institutions Contract Services Professional Fees Travel Cost of Goods Sold & Services Rendered Building Occupancy Costs Energy Other Non-Salary Expenses Hardware and Software Maintenance Amortization Interest and Bank ChargesTotal Non-Salary Total Expenses Extraordinary Revenues (Expenses) Excess (deficiency) of revenue over expenses Net Assets (deficiency), beginning of year(negative is a debit, positive is a credit)Net change in fund balancePension Liability and Post-EmploymentRemeasurements (2)Interfund TransfersInternal Loan RepaymentsCapital purchases via interfund transfersOver (under) Distributed Endowment IncomeBook to Market Adjustment (1)(Capitalization) Decapitalization of CurrentYear Investment IncomeNet Assets (deficiency), end of period
30,438350,845
---
332,138139,884
7,249500
9,809-
870,863
287,422234,347
15,20132,574
112,981--
682,525
14,28811,15912,07610,491
9,35624,35122,20918,21339,89711,116
-3,720
176,876
859,401
-
11,462
(344,034)
--
16,003(10,000)(30,000)
(2,500)-
(407)(359,476)
166,78259,327
6,2019,450
17,250-
7,10247,791
-59,129
-373,033
73,06626,03925,69687,81017,536
--
230,148
26,65034,32211,12812,97216,351
-4,904
37323,105
506--
130,311
360,459
-
12,574
(76)
--
10,000(10,000)(13,000)
--
-(503)
33,46672,662
----
4006,189
-5,166
-117,881
--------
--------
5,578-
127,11536,351
169,044
169,044
-
(51,163)
254,272
500-
10,00020,00043,000
--
-276,609
------------
--------
-------------
-
-
-
1,616,043
43,070-
(36,003)--
2,500-
4071,626,016
230,686482,834
6,2019,450
17,250332,138147,386
61,228500
74,103-
1,361,777
360,488260,386
40,897120,384130,517
--
912,672
40,93845,48123,20423,46325,70724,35127,11318,58668,58011,622
127,11540,071
476,231
1,388,904
-
(27,127)
1,526,204-
43,570------
-1,542,647
237,927450,263
6,14037,01617,079
319,243151,473
61,327500
71,9575,037
1,357,962
357,589258,464
43,409132,952137,988
--
930,402
50,13650,35527,88726,27828,83225,94130,89920,14949,26211,512
124,62336,605
482,480
1,412,882
-
(54,920)
1,538,399
42,725-------
1,526,204
206,590411,356
6,44036,35217,363
294,314145,176
65,6632,657
58,4802,454
1,246,845
334,749238,610
37,384111,502105,295
--
827,540
41,89851,22225,25922,85727,46019,36127,24219,30439,64110,451
115,47536,365
436,535
1,264,075
-
(17,230)
1,359,039
188,2958,295
------
1,538,399
31
APPENDIX 4 : Pro-forma Budget 2018-2019, Unrestricted Funds
32
APPENDIX 5: ENROLMENT STATISTICS
Enrolment (headcount)
APPENDIX 6: STAFF STATISTICS
Staff Headcount, as of January 31
APPENDIX 7: BUDGET 2018-2019 OF FACULTIES, UNRESTRICTED FUND
To get detailed enrolment statistics, please refer to Enrolment Services reports:https://www.mcgill.ca/es/registration-statistics
Fall2017
Fall2012
%Change(1 year)
%Change(5 years)
Fall2016
UndergraduateMasterDoctoralOther GraduateTotal GraduateTotal students (credits)OthersAll students
27,5264,7713,5321,4019,704
37,2303,741
40,971
27,4754,6413,4061,4269,473
36,9483,545
40,493
26,3494,2123,3781,7719,361
35,7103,069
38,778
+0.2+2.8+3.7-1.8+2.4+0.8+5.5+1.2
+4.5+13.3
+4.6-20.9+3.7+4.3
+21.9+5.7
2018-2019Budget ($M)
TotalBudget ($M)
Instructional FacultyTenure streamNon-tenure streamTotalNon-academic staffExecutiveManagerial and ProfessionalClericalLibrary AssistantTechnicalTrades and servicesOther (Residences, Nurses, Hospital)TotalTotal staffUnpaid non-tenure streamTotal staff (incl. unpaid non-tenure stream)
1,6711,4933,164
161,933
89677
405451
203,7486,9123,130
10,042
1,6821,6253,307
162,147
92476
409453
204,0457,3523,220
10,572
Budget 2018-2019($000)Faculty
Faculty of ArtsFaculty of DentistryDesautels Faculty of ManagementFaculty of EducationFaculty of EngineeringFaculty Agricultural & Environmental SciencesFaculty of ScienceFaculty of LawMcGill University LibrariesFaculty of MedicineSchool of Continuing StudiesSchulich School of MusicTotal
65,11112,02348,33616,45238,96322,23963,972
9,78836,973
150,31126,31019,644
510,121
Notes:1) Most student assistants are no longer on the HR fileas they are now paid through BSAC
2) Staff whose administrative unit is “Long Term Disability” are not included in these staff counts
3) Staff on leave are included in these staff counts
33
BUDGET 2018-2019 OF ADMINISTRATIVE UNITS, UNRESTRICTED FUND
Budget 2018-2019($000)Unit
Associate VP (Macdonald Campus)
Athletics - Downtown Campus
Campus Planning and Development
Deputy Provost (Student Life & Learning)
Facilities Management & Ancillary Services
Financial Services
Food and Dining Services
Graduate & Postdoc Studies
Human Resources
Information Technology Services
Interfaculty Studies
Legal Services
Principal And Vice Chancellor
Provost & VP (Academic)
Residences & Student Housing
Student Services
University Secretariat
VP (Administration and Finance)
VP (Communications and External Relations)
VP (Research and Innovation)
VP (University Advancement)
Total Administrative Units
Total Administrative Units – including central funds
2,132
14,939
11,164
18,809
66,390
8,698
17,325
20,118
10,810
38,951
848
2,946
1,332
12,955
36,942
22,479
1,251
6,687
5,081
12,235
14,777
326,871
360,742
APPENDIX 8:
34
APPENDIX 9: UNIVERSITY SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition The University follows the deferral method of accounting for contributions, which include gifts and bequests, contracts and government grants. Research grants are recognized as revenue in the year in which related expenses are recognized.
Interest and dividend revenue is recorded on an accrual basis. Realized gains or losses on sales of investments are recorded when secu-rities are sold based on the cost. Unrealized gains and losses related to the change in market value are recorded as investment income.
Capital assets Capital assets are recorded at cost. Purchases made using restricted funds are capitalized directly in the plant fund. Restricted fund contributions will be recorded in the plant fund as deferred contributions and recognized as revenue simultaneous to the amortization expense. Constructed assets do not include interest incurred during construction. Contrib-uted capital assets are recorded at appraised fair value at the date of contribution when fair value can be reasonably estimated; otherwise they are recorded at a nominal amount. Amor-tization of assets under development com-mences when development is completed.
Grants receivable Under GAAP, these amounts meet the criteria of an asset. An offsetting liability is recorded as a corresponding deferred contribution. Please refer to 21.2 regarding “revenue recognition” for grants.
Pledges Donation pledges are not recognized until received and are disclosed in the notes to the financial statements, consistent with other Canadian Universities and accounting stan-dards for not-for-profit organizations.
Discounting of Long-Term Grants Receivable Under GAAP, long-term receivables are discounted to their present value. A rate based on risk of the counter party will be agreed to.
Deferral of Research and Capital Grants Under the deferral method, unspent research and capital grants are recorded as deferred contributions, rather than as grant revenue. Revenue recognition occurs in the year as related expenses are incurred.
Long-term debt Long-term debt is presented at the gross value of all outstanding debt.
Unused Vacation Days, Post-Retirement Benefit Obligations, and Accrued Pension Liabilities In the case of unused vacation days, post-re-tirement benefit obligations, and accrued pension liabilities, accruals are recorded over the periods of service. An actuarial accounting valuation is performed annually at year-end to determine the amounts related to the pension liability and the post-employment benefit obligation. The valuation will use estimates and assumptions as agreed to by management. The tri-annual actuarial valuation for the pension plan was last performed as at Decem-ber 31, 2015.
Funding of operating and capital goods and services by fund typeExpenses are either operating (i.e., value of goods and services expended in current fiscal period) or capital (i.e., value of goods and services expended beyond the current fiscal period). Operating and capital expenses are funded through four fund types: unrestricted, restricted, plant and endowment. Operating expenses are funded from both unrestricted and restricted funds, while capital expenses are funded from both restricted and plant funds. The endowment fund generates payout that can be used to fund either operating or capital expenses.
1.
2.
3. 8.
9.
4.
5.
6.
7.
The University’s audited financial statements are prepared in accordance with Canadian accounting standards for not-for-profit organizations (“ASNPO”) using the deferral method.
The following significant accounting policies are included in the annual audited financial statements of the University:
35
APPENDIX 10: GLOSSARY
Academic Renewal: The program by which the University sets Faculty-based tenure-track academic targets and provides Faculties with the operating support needed to reach the targets, including operating salaries, start-ups, and recruitment funds.
Accrual: The accrual accounting method reports revenue when earned (rather than received), and expenses when incurred (rather than paid).
Accumulated Deficit: The total debt (i.e., the sum of the deficits from the unrestricted fund) incurred to support the accumulated spending that is in excess of revenues.
Activity: Production under the responsibility, control and management of an institutional units, that uses inputs of labour, capital, and goods and services to produce outputs of goods and services.
Amortization: The accounting of a purchased asset, which represents a non-cash expense over a period of time. Also, for those units required to repay internal loans, it represents the systematic repayment of the debt over the agreed period.
Asset: A tangible or intangible item of positive value to the University (e.g., cash, government receivables, a building, or a piece of equipment).
Bequest: A gift given to the university at the time of a person’s death as set forth in the individual’s last will and testament. Bequests can have a variety of forms including, but not limited to: cash, marketable securities, tangible fixed assets, and consumable commodities. Bequests are classified according to the absence or presence of donor stipulations as unrestricted, temporarily restricted,
or permanently restricted.
Budget: An organizational plan stated in monetary terms; functions as a tool to measure revenues and expenditures against expectations.
Budget Planning Agreement: A multi-year and multi-fund operating plan signed by the PVPA, and the Dean or Vice-Principal, which reports on previous year achievements and challenges, and describes activities that support strategic objectives, aspirations and priorities. It includes a summary of key performance indicators over a multi-year time frame. Finally, it includes all financial requests for a three-year period and the related decisions made by the PVPA.
Budget Reclassification: Action of moving budget from one budget expense category to another one. This typically happen throughout the fiscal year when a global amount for a given initiative is budgeted but the detailed breakdown is not yet available. Often, the budget will be classified in a residual budget expense category (e.g., other non-salary expenses).
Capital Assets: Assets used in operations, either tangible (e.g., plant, property, equipment) or intangible (e.g., software) that have an initial useful life of more than one year. See also plant fund.
Capitalization: Term used in relation to the endowment fund when unspent distributed income is reinvested in the endowment fund
Conditional grant: 10% of the provincial grant, which can be withheld by the MEES if a university runs an annual deficit, based on a predetermined formula (excluding year-end audit adjustments),
without providing a plan to return to a balanced budget. This grant is accrued and typically paid subsequent to year-end.
Contribution: Gifts, grants, bequests and any similar transfer of resources (both monetary and in-kind).
Decapitalization: Term used in relation to the endowment fund when previously capitalized distributed income is credited back to the spendable fund.
Deferred Maintenance: The amount of renovation and upgrade required for the University’s physical infrastructure. The repairs are serious and urgent in-nature as preventive maintenance was not performed in prior years. Examples include: upgrading ventilation systems, roof replacements, and building facade replacements.
Deficit: Also known as overdraft; the amount by which a fund’s expenses and transfers out exceed revenues and transfers in.
Deregulated: Refers to tuition fees that are set by the University rather than by government regulation. See also Regulated.
Donation: An act of presenting something as gift, bequest, or contribution, especially to a public institution or charity.
Endowment Fund: Consists of all gifts, donations, and bequests, including those for Chairs, financial aid, and other specific purposes, held in perpetuity and invested to earn a reasonable rate of return over time, while
36
APPENDIX 10: GLOSSARY
attempting to protect the purchasing power of the original gift. The earned income is distributed according to the University policy in effect, and is spent as specifically designated by the donor.
Expenditure: The amount spent for goods delivered or services rendered, whether paid or accrued, including expenses, debt service, and capital outlays.
Expense: Charges incurred, whether paid or accrued, for operation, maintenance, interest, and other charges that are presumed to benefit the current fiscal period.
Fiscal Year (FY): Twelve consecutive months used for accounting purposes. As of 2011-2012 the 12-month financial year starts on May 1 and ends on April 30.
Forfaitaires: (also called tuition supplements) the additional tuition, above the Québec student tuition, charged to out-of-province Canadians and International students. These amounts are determined by MEES annually and the universities remit them back to the Province in exchange for having the students funded through the grant at the level for in-province students.
Fund Balance: The difference between assets and liabilities in a fund; also defined as the cumulative results of a fund.
Gift: A resource provided by a donor who enters into the transaction voluntarily and receives nothing other than a token of appreciation in exchange for the resource he/she is providing. Contributions can have a variety of forms including, but not limited to: cash, marketable securities,
tangible fixed assets, and consumable commodities. Gifts are classified according to the absence or presence of donor stipulations as unrestricted, temporarily restricted, or permanently restricted. See also Bequest, Contribution, and Donation.
Grant: A monetary award, allowance or subsidy.
Indirect costs of research: The institutional costs incurred by the University to support research projects. Costs include items such as central administrative support, Library, computing infrastructure, utilities and other plant costs.
Investment: Refers to an exchange of cash for a less liquid asset that is expected to increase in value beyond the initial purchase price. Investment vehicles include corporate stocks and bonds, government bonds and real estate.
MEES: Ministère de l’éducation et de l’enseignement supérieur du Québec.
MEES operating grant: The grant received from the MEES in support of teaching and research. Also known as the ‘subvention de fonctionnement’ in French.
Plant Fund: Capital projects and assets; including those funds from Québec capital grants, donations, and other sources.
Regulated: Refers to tuition rates set by the government (MEES), either frozen or indexed to changes in disposable household income.
Resource allocation: The process of distributing resources to units in order for them to
conduct their designated activities and to absorb operating and/or facilities costs in order to achieve goals.
Restricted Fund: Any fund with stipulations imposed by a sponsor or donor external to the University. A particular project or activity is specified in writing by the donor. These funds also refer to research-related funds from Canadian, Québec, and international sources.
Revenue: Income generated by the supply of goods or services by the University unit to an external customer. Some examples are: tuition and fees, sales of goods and services to external entities, and earnings on investments.
Self-funded: Students for whom universities in Québec are allowed to establish the fees but for whom no grant is received. This represents a small number of students enrolled in specialized Masters-level programs in Management as well as non-Québec students studying in distance programs outside Québec.
Self-financing: Funds for which the source and/or use are outside the realm of operating budgets. They represent unrestricted activity for a unit, with continuation dependent on participation and availability of funding.
Surplus: the amount by which a fund’s revenues and transfers in exceed expenses and transfers out.
Tenure stream. A term that refers to either tenured or tenure-track academic staff.
Tenured: permanent academic appointment
37
APPENDIX 10: GLOSSARY
granted to Associate and Full Professors who have demonstrated excellence in teaching and research.
Tenure-track: academic appointment that includes future consideration for tenured status.
University Resources: Assets available (actual and anticipated) for University operations; includes people, equipment, and facilities.
Unrestricted Fund: Revenue is primarily from
grants, tuition and fees, overhead on research grants, Investment and endowment income, and annual gifts. The revenue is pooled and then allocated to units concerned with fundamental and on-going operations, dealing primarily with those activities normally associated with the University’s core teaching and research. There are no external constraints as to how these funds are spent as long as the University policies and procedures are respected.
Year-End Audit Adjustments: Costs related to major institutional obligations – unused vacation days, post-retirement benefit obligations, and accrued pension liabilities – for which we are required to record accruals over the periods of service. These three adjustments explain the difference between the GAAP Accumulated Deficit and the University Financed Accumulated Deficit. These adjustments are also excluded from the provincial calculation of annual operating results in determining eligibility for the conditional grant.
McGILL UNIVERSITY
2018-2019BUDGETOffice of the Provost and Vice-Principal(Academic)October 31, 2018