The meeting was held at 12:00 noon, in Room 330, Stevenson-Lawson Building
PRESENT: Mr. W.W. Peel, Chair; Ms. J.K. Van Fleet, Secretary
Mr. J. Adams, Mr. R. Bateman, Dr. P. Davenport, Mr. J. Etherington, Mr. W. Gibson, Ms. S. Grindrod, Mr. D.J. McDougall, Dr. G. Moran, Mr. T. O'Neil, Dr. J.L. Stokes, Mr. T. Vine, Dr. A. Weedon, By Invitation: K. Cole, E. DelMaestro, D. Riddell
Dr. Davenport recalled that this special meeting of the Board was called to review and approve the University's submission to the SuperBuild Growth Fund for Postsecondary Education, in light of the November 15 deadline for submissions. The proposal before the Board (Appendix I) has been approved by the Senate Committee on University Planning (SCUP) and its Subcommittee on Capital Allocations (SUCA).
Dr. Davenport presented Western's proposed submission to the SuperBuild Fund, Category I. The Fund will provide $660 million in capital funding for postsecondary institutions to expand their capacity "to help provide a place for all qualified and motivated students graduating from high school now and in the future as the population continues to grow." The fund is divided into two categories. Category I will provide $510 million for capital initiatives related to enrolment expansion. Category II will provide a maximum of $150 million for innovative academic projects where two or more institutions are involved. Of the $510 million related to enrolment expansion, the universities' share will be about $340 million, and Western's share would normally be about 10%; however, the Ministry has made it clear that there is no guaranteed "share" to be awarded in this competition. The government, in announcing the SuperBuild Fund, stated that it was to be $10 billion and it is hoped to leverage another $10 billion from non-governmental, private sources. The Minister's letter advising of the SuperBuild competition, did not include a requirement of 50% matching funds, and the senior administration has done its best to learn what the expectation of the Ministry is; the impression is that the overall expectation is that there will be something like 50% matching.
Dr. Davenport listed the objectives of the University's submission: (1) to provide space for the double cohort and the "baby boom echo"; (2) to improve the quality of education and research through the provision of more modern facilities; (3) to respond to areas of high student demand; (4) to get help with deferred maintenance; and (5) to build in a way that respects the University's strategic plan and the beauty of Western's campus.
The government's objectives are set out in the SuperBuild criteria: (1) enrolment growth; (2) private and non-provincial funding; (3) student demand; and (4) community/regional impact. Dr. Davenport commented on each of these in the context of Western's proposal:
• Enrolment growth: This is clearly the most important of the criteria. The University's submission will show how SuperBuild funds will allow us to create more spaces at the University.
• Private and non-Provincial funding: Matching funds can include federal funding, CFI money, municipal funding. Ontario monies from other sources, such as ATOP, cannot be used.
• Student demand: This will be demonstrated in the application with data such as the ratio of applications to registrants and grades of entering students.
• Community and regional impact: Western's application will state that the University's expansion is crucially important to meeting the double cohort issues in London. There are families that would prefer that their children have access to Western rather than being required to study elsewhere during the double cohort years. Also, the application will quantify the economic boost to the London region that will be realized as a result of construction of facilities and expansion of the University in terms of more students, faculty and staff. Approximately 2300 to 2500 new permanent jobs will be created in London, outside the University, based on a recent Ernst & Young study. The expansion of student places in medical sciences will be vital to London's biotechnology initiative and expansion in areas such as engineering and science will have a very beneficial effect on technology transfer in the area.
Dr. Davenport provided an overview of the two proposed projects in Category I, with the use of slides which are reproduced in Appendix 1 to these Minutes:
Proposal #1 - the Accessibility and Quality Project which involves new academic facilities and includes the affiliated colleges. This project is associated with 3400 new student places; 880 of these would find places in the affiliated colleges. The total projected cost is $80 million: $40 million requested from SuperBuild; $40 million from non-Provincial government sources. The amount of borrowing will depend on the amount of funds raised through other sources.
Proposal #2 - the Biomedical Sciences Project which involves major renovations, deferred maintenance, some provision of new space. This project involves 600 new student places.
Because the Accessibility and Quality Project seems to respond best to the first criterion -- enrolment growth -- it has been ranked first. Dr. Davenport stressed that both proposals include a statement that commitment to enrolment increases is contingent on the provision of sufficient operating funds to maintain and enhance the quality of degrees offered by Western. The document refers to full use of the BIU formula and additional funds in order to reduce the student/faculty ratio. It is of particular importance to Western that the weighting of BIUs for professional programs be maintained and that there be full funding for graduate students. It would not be in the interest of Ontario to acknowledge enrolment increases only at the first entry undergraduate level. Graduate students are important because there is a growing demand for them in the advanced technology industry and also as professors during the second half of the decade.
With reference to the $40 million from non-Provincial Government sources for the Accessibility and Quality Project, Dr. Davenport advised that the $6.2 from university sources includes $2.8 million for the large classroom project that has already been approved by the Board and $3.4 million from university reserves. The $8.5 million fund raising target includes a $3.25 million contribution from the Affiliated Colleges and a $3 million contribution from the Richard Ivey School of Business. If the University is successful in raising all funds as projected, there may be as much as $11.3 million from borrowing. He provided an illustration as to how the University could manage repayment of a loan in support of this project. If one imagines 3400 new additional students less the 880 for going to the Affiliated Colleges, and imagine borrowing $20 million financed over 10 years' time, paying back about $2.7 million per year, we are not far off having to set aside $1000 per student for that permanent increase in student numbers. We could lower that number by stretching the payout period beyond 10 years. In general, Western would probably have to set aside 10% to 15% of the additional revenue that the new students would generate in order to pay off the loan, based on Western's current BIU structure and tuition levels. There would be a plan to set aside funds in each year's operating budget in order to pay back the loan. Dr. Davenport stressed that the project is vital to Western and, in his view, the borrowing and loan repayment are manageable.
Project #2 - the Biomedical Sciences Project - involves major renovations to the Medical Sciences Building, a project the Board has been aware of for some time. It also involves expansion and renovation of the Dental Sciences Building which was part of last year's budget. This type of renewal of aging resources is vital to faculty recruitment, and the project will contribute to the University's part in technology transfer and the biotechnology industry. This project includes 600 new student places: increased enrolment is expected in the Bachelor of Health Sciences program and the Faculty of Medicine & Dentistry has announced an intention to establish a Bachelor of Medical Sciences program in about two years' time. The cost is $37 million. The SuperBuild Fund will be asked to provide $16 million and $21 million will come from non-Provincial Government sources. The latter includes $14 million from university sources: $5 million from the planned dental facilities project, $5 million from the planned medical facilities project, and $4 million from the deferred maintenance budget.
The timeline for meeting enrolment targets is five years, 2004-2005 -- the peak of the double cohort. Dr. Moran stated that the net increase in FTEs is about 15% for the University. Enrolment increases are relative to 1998-99 which is the base year, as stated in the SuperBuild application. Western's enrolment in 1999-2000 already increased by some 700 students over 1998-99. The projected new enrolment is based on a systematic formula of attributed costs in capital that are accepted by the Ministry.
Dr. Weedon asked if Western's proposal will be weakened by the commitment to increase enrolment by 4,000 students, given that the government's enrolment target is a 25% increase system-wide, which by implication would mean 6,000-7,000 additional students for Western. Dr. Moran responded that the Ministry must take into consideration the real capital costs associated with enrolment expansion. The formula used in calculating the costs associated with the enrolment increase includes a discount factor of 30%. Western must look internally for efficiencies such that costs can be cut by 30%. If the numbers were further inflated, Western would be suggesting to the government that a research-intensive university can increase its enrolment with capital cost increases that are ridiculously small. Expansion costs for non-research-intensive universities are lower than research-intensive universities and this factor must be weighed by the Ministry. He explained that the University will emphasize to the provincial government that additional faculty, staff and support resources will be needed to cope with the influx of students expected by 2004-05.
In reply to a request for clarification about Western's request for $10 million from the City of London, Dr. Davenport advised that the City pledge, if it is received, can be used to leverage CFI money for the Advanced Technology Centre (ATC) in Engineering and then be presented as matching funds in SuperBuild for the ATC. Western can match with one project and use the matched dollars in the same project for SuperBuild as long as the dollars are not Ontario government money. The $10 million in support the University is seeking from the City of London will be crucial to the success of Western's bid. Dr. Davenport said the economic spin-off from this initiative would generate an estimated 2,300 to 2,500 jobs in the London community in addition to any extra faculty and staff hired.
Dean Stokes observed that the $10 million from the City cited in the SuperBuild proposal is also cited in the 125th Anniversary Campaign. He asked if it is being counted twice, or whether plans for the $10 million within the Campaign have been forfeited in favor of the SuperBuild application. Dr. Davenport explained that when discussions began with City officials about a donation from the City to the Campaign, it quickly became clear that the City's interest is an investment in construction projects, not in areas such as student aid or faculty recruitment. The only issue, if the City Council approves the $10 million gift to the University, will be how it is structured among CFI, SuperBuild, and so on. For example, a City donation could be used to leverage CFI funds for the Advanced Technology Centre in Engineering, and it could then also be presented as matching funds within SuperBuild.
Mr. Etherington observed that the Board has not addressed the question of the ideal size for Western. He asked whether, during discussions of SuperBuild, the administration has thought about ideal size. Dr. Davenport advised the Board that discussions continue between the Provost and each the Deans about the expansion of their units over the next five to ten years. The SuperBuild submission is a very modest representation of their intentions. Included in the figures are new approved programs and anticipated growth in some areas. For example, there is already increased enrolment as a result of the University's participation in the Access to Opportunities Program (ATOP) and the offering of new programs such as the BHSc and MIT. Also, expansions in Education and Nursing are anticipated because of government's interest in these areas. Dr. Moran added that the discussion about ideal size of the University is ongoing. At the end of the current planning process, he anticipates that he will have program-by-program projections of future size.
Mr. McDougall expressed surprise that borrowing can be used as a revenue source in the SuperBuild proposal. In his view, this is a negative from the Board's perspective because if Western can borrow funds in this context, all universities would have 50% matching funds. He contended that the borrowing number will be erased for purposes of the calculation, unless there is some information that suggests it will be dealt with otherwise. He also questioned whether the 30% discounting figure referred to by Dr. Moran works for or against the University in this competition.
Dr. Davenport stated that the 30% reduction related to efficiencies works in Western's favor competitively because it drives down the cost per student. For example, using 2300 students, apply the formula to calculate the gross square feet in space required to accommodate the students and reduce it by 30%. Western wishes to be competitive but does not want to ask for more money than is absolutely necessary to accommodate the students.
In light of a number of questions that raised matters of competitive strategies of Ontario universities for SuperBuild Fund support, the Chair directed that the meeting be moved into confidential session.
Signed by:
W.W. Peel, Chair
J.K. Van Fleet, Secretary of the Board