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In its final meeting of the academic year, the Board of Trustees approved the university’s operating budget for the 2025-26 fiscal year, projecting a deficit of $26.4 million, down from the original deficit of $62.8 million announced two years ago.

During the meeting, the board also received an update on the recently completed 2024-25 fiscal year. The university reported a projected operating budget deficit of $34.3 million, down from the initial projection of $35.7 million announced last May. The year’s finalized results will be published as part of the university’s audited consolidated financial statement in the fall.

“Thanks to the university community’s collective efforts, we have made substantial progress in reducing our operating budget deficit so far,” says Matthew Evans, Provost and Vice-Principal (Academic). “While, without question, this is very encouraging, it’s also clear that �ʹ�����’s will continue to face financial headwinds over the next few years, with our operating expenses expected to continue to outpace our revenues, and so longer-term structural changes are still needed.”

�ʹ�����’s is currently projecting operational deficits of $20-25 million for each of the next three years. The largest components of these projected deficits are significant budget shortfalls in the Faculty of Arts and Science (FAS).

�ʹ�����'s is not alone in facing budgetary pressure, as more than half of Ontario’s universities are projecting a combined operating deficit of $338 million for the 2024-25 academic year. This sector-wide situation is due to the 2019 provincial tuition cut, the ongoing tuition freeze for Ontario students, the international student enrolment cap, and steadily rising expenses.

“Although our revenue remains essentially flat, due to government restrictions, we are experiencing inflationary costs of about four per cent per year from salary increases and other expenses,” says Provost Evans. “This situation creates ongoing pressure on our operating budget.

Over the past few years, �ʹ�����’s has responded by implementing several cost-cutting measures, including a university-wide hiring freeze, voluntary retirement and exit initiatives, position eliminations, base budget reductions, reduced spending, and the implementation of operational improvements—made through initiatives like the ongoing �ʹ�����’s Renew Program.

Increased investment income for operations

In September 2024, �ʹ�����’s agreed to consider increasing the annual allocation from its Pooled Investment Fund (PIF) investment income to the operating budget.

“Following feedback and engagement with the campus community, we undertook a detailed analysis of how we were drawing upon our investment income to support our operations,” says Donna Janiec, Vice-Principal (Finance and Administration). “The insights we gained allowed the administration to approve new levels of budgeted income, which will help mitigate the university’s ongoing financial challenges.”

After this careful evaluation, the university increased the budgeted annual income from the PIF from $5.2 million to $10 million for the next three years.

“There may be questions about why we aren’t increasing allocations from the PIF even further,” says VP Janiec. “However, it’s important to remember that PIF income isn’t guaranteed, and we must limit the financial risk to our operating budget.”

Due to ongoing global market volatility, an updated investment income projection for the 2024-25 fiscal year is not yet available. Investment income will be reported as part of the university’s audited consolidated financial statements later this year.

Deficit Mitigation Fund

Over the past year, all units, including faculties and shared services, reduced budgets to support the creation of a Deficit Mitigation Fund.

Shared services budgets were reduced by 1.5 per cent for 2025-26 and will be held flat for the following two years. Faculties and schools reduced budgets by 4 per cent and will continue to reduce by that amount annually over the same period. The Faculty of Arts and Science (FAS) is an exception, as it faces challenges with its operating budget.

The Deficit Mitigation Fund, alongside a portion of the increased PIF allocation, will primarily support FAS, as well as strategic investments needed to ensure our teaching and research missions are not compromised.

Enrolment changes to meet demand and boost financial sustainability

During the meeting, the board also reviewed an enrolment redistribution plan aimed at assisting the university in reducing its operating budget deficit. Previously approved by �ʹ�����’s Senate, the plan will shift a total of 1,200 undergraduate enrolment spaces from the Bachelor of Arts (BA) and Bachelor of Arts Honours (BAH) programs in FAS to professional and STEM-based programs across the university over the next four years, starting in the 2026-27 fiscal year.

“Those programs gaining enrolment have higher tuition fees and are among the most in demand by both domestic and international students, which will help strengthen our financial position over the next few years,” says Provost Evans.

This growth of STEM at �ʹ�����’s will also be supported by a newly announced investment of $15.9 million from the Government of Ontario in 2025-26. This funding, specifically targeted at STEM areas, will enable the university to expand its capacity to educate a skilled workforce, positioning it as a leader in meeting the growing demands of STEM job markets, and strengthening its academic mission.

Credit ratings holding steady

�ʹ�����’s efforts to address its structural operating budget deficit continue to be positively received by leading credit rating agencies. S&P Global Ratings and DBRS Limited (Morningstar DBRS) have reaffirmed their credit ratings for �ʹ�����’s University, with S&P maintaining an 'AA+' long-term issuer credit rating and DBRS confirming an AA issuer and senior unsecured debt crediting ratings, reflecting the university's prudent management of its financial challenges.

For more information on �ʹ�����’s budget activities, visit the Balanced Budget Plan website.