UNIVERSITY OF GUELPH BOARD OF GOVERNORS MEETING …

UNIVERSITY OF GUELPHBOARD OF GOVERNORS MEETING

THURSDAY OCTOBER 27, 20051:00 - 4:00 p.m.

Boardroom 424, University Centre, 4 th Floor, University of Guelph

AGENDAtab#

• Pre-meeting presentation - Physical Plant Overview (N. Sullivan)

1. Approval of agenda (D. Derry) - Motion 19

2. Minutes of May 19, 2005 (D. Derry) - Motiona) Business Arising - Information

3. President's Report (A. Summerlee)

a) Status Report on University Activities - Information 20b) Faculty Policies - Proposed Changes - Motionc) Faculty Appointments - Informationd) Board of Governors 2005 Scholarship Recipients - Information

4. Audit Committee Report (G. Kilgour)

a) University of Guelph Summary of Financial Results andAudited Financial Statements, April 30, 2005 - Motion 21

b) University of Guelph-Humber Audited FinancialStatements, March 31, 2005 - Motion

5. Finance Committee Report (K. Bardswick)

a) Semester Financial Report, August 31, 2005 - Information 22

6. Development Committee Report (J. Lozon) - Information

a) Update on Fundraising Activities

7. Membership and Governance Committee Report (R. Burak)

a) 2005/2006 and 2006/2007 Board Meeting Schedule - Motion 23b) Calendar of Annual Board Business - Informationc) Mid-Summer Presidential Communication - Informationd) Proposed Amendments to Board Policy: General By-Laws - Information

8. Move to In-Camera Session (D. Derry) - Motion

Next Meeting: Wednesday, December 14, 2005, 1:30 p.m.

cc: D. Derry, R. Burak, A. Summerlee as at Oct.27/05

Attendance for OCTOBER 27, 2005BOARD OF GOVERNORS 1:00 p.m. MEETING

Boardroom 424, University Centre FILE COPYTo Attend Lincoln Alexander (Chancellor)

Aiden AbramKathy BardswickBrian BarringtonRita Burak (Vice-Chair)

Carolyn ClarkDouglas Deny (Chair)

Peter DevineDick FreeboroughStew HiltsAndrea ListerGail KilgourJeff LozonLinda MahoodKim NealeRobin-Lee NorrisNancy SchmidtEvan SiddallAlastair Summerlee (President)

Bill TeesdaleLyle Vanclief

Regrets Jonathan GussPat Shewen

Administrative supportBetsy Allan, Secretary of the Board of Governors

Cathy Beattie, Acting Director, Resource Planning & Analysis

Mary Childs, Legal Counsel

Lori Bona Hunt, Associate Director, News Service

Bob Carter, Executive Director, Physical Resources

Chuck Cunningham, Director, Communications & Public Affairs

Martha Harley, Assistant Vice-President, Human Resources

Pam Healey, Assistant Vice-President, Development

Vicki Hodgkinson, Executive Assistant, President's Office

Maureen Mancuso, Provost & Vice-President, Academic

John Miles, Assistant Vice-President, Finance and Services

Sandra Nervo, Manager, Audit Services

Chris Pickard, Director, Planning, Eng. & Construction

Kate Revington, Acting Secretary of Senate

Alan Shepard, Associate Vice-President, Academic

Joanne Shoveller, Vice-President, Alumni Affairs & Development

Nancy Sullivan, Vice-President, Finance & Administration

Brenda Whiteside, Associate Vice-President, Student Affairs

Alan Wildeman, Vice-President, Research

Ticket Holdersnone to date

UNIVERSITY/GUELPH

MEMORANDUM

BOARD OF GOVERNORS

TO: Members, Board of Governors

FROM: Betsy Allan, Secretary of the Board of Governors*

SUBJECT: • Pre-meeting presentation - Physical Plant Overview1. Approval of agenda - Motion2. Minutes of May 19, 2005 - Motion(a) Business Arising - Information

MEETING: Thursday October 27, 2005

• Pre-meeting presentation - Physical Plant Overview

An information presentation precedes the commencement of each Board meeting.

Ms. Nancy Sullivan, Vice-President, Finance and Administration, will present an overview of thecampus facilities. The presentation will orient members to the capital projects in progress,deferred maintenance, facilities renewal and energy efficiency initiatives.

1. Approval of agenda - Motion

The Board of Governors is asked to,

RESOLVE, that the agenda be approved.

2. Minutes of May 19, 2005 - Motion


RESOLVE, that the minutes of the May 19, 2005 meeting be approved.

(a) Business Arising - Information

The Senate Committee on University Planning (SCUP) and the Senate have accepted all of therecommendations in the Final Report by members of the Presidential Task Force onAccessibility. Campus committees are now reviewing the recommendations for implementationpurposes. An update will be presented at the December Board meeting.

GUELPH • ONTARIO • CANADA • N1G 2W1 • TEL: (519) 824-4120, EXT. 53438 • FAX (519) 767-1350

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QUICK FACTS AND FIGURES

Average age of buildings: 39 years; 7 yearsolder than Ontario university system averageNumber of buildings: 158; building area isfifth largest in the Ontario university systemOldest buildings: Alumni House (1879);President's House (1882);Raithby House(1882); Drew Hall (1887)Newest Buildings: East Village Residences,Hospitality &Tourism ManagementTeaching Kitchen and P.J.'s Restaurant,Rozanski Hall, Phase I ScienceWe're big! Our staff maintains 20 miles ofroads, 35 miles of sidewalks, 5.6 millionsquare feet of building space, 817 acres ofgrounds, including the Arboretum

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Deferred Maintenance° This is the bad and the ugly part.° Approximately 210 million for buildings alone, including our residences.

What are we doing about it?

Audit complete of all buildings on campus including residences to enable us toestablish priorities for facility renewalHealth and safety items addressed first as part of our risk management activitiesEnergy initiatives e.g. Crop Science building retrofitAllocation each year to increase our base operating budget allocationLobbying provincial government re: facilities funding

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FLYNN CLASSROOM, ROZANSKI HALL

Our Utility Infrastructure

° Utility infrastructure age parallels building age (at least 40 years old)

° We heat with steam

° Deferred maintenance now being audited

° N ew state of the art facilities place increased demand on utilities

° Major project to replace deteriorating underground services to OVC toprevent disruption to operations

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AMONOMEMMINNOMMEMNIK.,

Deferred Maintenance

Current Major Capital Projects

° This is the good part

Why?

° Change in use

Knrolment growth (double cohort)

° Address deferred maintenance

° Research success

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Science Complex

â Total project costs: $144 millionâProvincial government $50 millionâ University contributions $25 million.-- Balance $70 million

â Building plansâPhase I already constructed and

occupiedâPhase II under constructionâCompletion — Phase IIA: July 2006âCompletion — Phase II B: July 2007

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MacKinnon Extension

The primary function of this building is to provide the College of Arts andthe College of Social and Applied Human Sciences with 87 new facultyoffices. Completion: December 2005

The Biodiversity Institute of Ontario (BIO)â A research facility for over 30 university faculty, research groups and

related disciplines dedicated to pure, applied and interdisciplinaryscientific innovation. (DNA Barcode of Life/Limnotron)Completion: Summer 2006

The Biodiversity Institute of Ontario

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Chemical Management Centre

State of the art centralized hazardous chemical waste depot forcollection, analysis and shipping to better meet regulatory health andsafety requirements.Replaces non-compliant facility Completion: Spring 2006

Clinical Research 2The primary function of this new building is to accommodate diagnosticand surgical animal research functions for comparative medicine.

Attached to Central Animal Facility Completion: Early 2006

Sustainable Campus Initiatives

Crop Science Building Knergy Retrofit

Stack Heat Recovery

Upgrade Water Treatment Plant (Central Utilities Plant)

State of the Art Boiler Controls — Central Utilities Plant (Reliability/Efficiency)

Replace underground utilities servicing OVC

- 450 meters of tunnel and utilities

- Benefits = integrity of service for OVC; future

Plan to incorporate energy retrofits in major renovation projects

Developing priority plans for building retrofits

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Energy / Sustainability Initiativesâ Procurement

â Awareness campaign

â Replace HVAC automation panels

â L pgrade system control strategies

â 1Hapansion of stack heat recovery system

â Re-insulate chilled water pipes in tunnel

â Water conservation

â CBIP

â Fimergy retrofit projects

â Improve CUP efficiency

Note,:

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Global VisionImplementation

Phase 1Final

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Future ProjectsClassroom UpgradesAxelrod retrofit and adaptive re-use post Phase 2 Science ComplexResidencesAthleticsCampus Master Plan (includingArboretum), eg. Winegard WalkOVC RedevelopmentPhysical Accessibility

OVC REDEVELOPMENT

1_ 1 LI

UNIVERSITY OF GUELPHMinutes of the 287 th 1:30 p.m. meeting of the

BOARD OF GOVERNORS, THURSDAY, MAY 19, 2005Boardroom 424, University Centre, 4 th Floor, University of Guelph

Members PresentLincoln Alexander, Chancellor

Ted BilyeaSusan BrownRita Burak, Vice-Chair

Carolyn ClarkDouglas Derry, ChairMary-Elizabeth FlynnJonathan Guss

Stew HiltsGail KilgourJeff LozonRobin-Lee NorrisNancy SchmidtPat ShewenAlastair Summerlee, PresidentBill Teesdale

Hank Vander Pol (via conference call)Ryan White

RegretsBrett AllanKathy BardswickAndria Jones

Others PresentBetsy Allan, Secretary of the Board of Governors

John Armstrong, Director, Real Estate Division

Lori Bona Hunt, Associate Director, News ServiceBob Carter, Executive Director, Physical ResourcesGlenn Craney, Director, Resource Planning & AnalysisChuck Cunningham, Director, Communications & Public AffairsPam Healey, Assistant Vice-President, DevelopmentVicki Hodgkinson, Executive Assistant, President's OfficeHeidi Huisman, Acting Manager, Audit Services

Claude Macorin, Managing Director, Investments

Maureen Mancuso, Provost & Vice-President, Academic

Jill McCutcheon, Acting Associate Vice-President, Academic

John Miles, Assistant Vice-President, Finance and ServicesChris Pickard, Director, Planning, Eng. & Construction

Joanne Shoveller, Vice-President, Alumni Affairs & DevelopmentNancy Sullivan, Vice-President, Finance & Administration

Chris White, Director, Environmental Health & Safety

Brenda Whiteside, Associate Vice-President, Student AffairsAlan Wildeman, Vice-President, Research

Ticket Holders Aiden Abram, studentBarb Caswell, student

Neil McCallum, student

Pre-meeting presentation - Risk Management and the Research Enterprise

Dr. Wildeman presented an overview of risk management and the research enterprise.

1. APPROVAL OF AGENDA

On motion duly made and seconded, it was

[09/05] RESOLVED, that the agenda be approved.

2. MINUTES OF APRIL 6, 2005


[10/05] RESOLVED, that the minutes of the meeting held April 6, 2005 be approved.

Page 1

BOARD OF GOVERNORS Minutes May 19, 2005

(a) Business Arising from December 16, 2004

It was noted that the Final Report by members of the Presidential Task Force on Accessibility wasbeing tracked against recommendations in the Rae Report. An overview will be presented at a fallmeeting.

3. PRESIDENT'S REPORT(a) Update on Provincial Budget

Dr. Summerlee provided an overview of the Provincial Budget and the impact on the institution'sPreliminary Operating Budget, presented and approved by the Board on April 6, 2005. The final budgetallocation, which is the first major investment in higher education for many years, should be known bythe fall. The funding is expected to be front loaded, which is unusual as the Province normally providesfunding near or at the conclusion of a program. There is still no funding for inflation and no ongoingcommitment of investment for facilities. It was highlighted that there will be increased investment inuniversities, as recommended in the Rae Report. Accountability continues to be an issue andinstitutions expect that they will need to demonstrate their ability to meet certain goals. In theAdministration's view, the University's Operating Budget is conservative and appropriate.

(b) Status Report on University Activities

The President provided an update on building projects and renovations underway on campus. It waswith regret that he informed the Board of a number of deaths of members of the University community.

The President suggested that a low point this year was the disruption to the governance process atthe April Board of Governors meeting. He noted that many students, faculty and staff havecommunicated with him distanced themselves from the antics of those few who disrupted the meetingor are associated with web postings on the canon.ca site. He informed members that the Membershipand Governance Committee has already met and is engaged in a review of governance processes.

Next the President presented a power point presentation which reviewed University activities overthe past year, which included celebrating the institution's 40 th anniversary. Critical themes werereviewed and include: to preserve and enhance the national reputation; to develop an internationalreputation; to empower innovation and discovery capacity; to focus on accessible, affordable, qualityeducation; to align facility and resource planning with direction; to foster relationships with thecommunity of Guelph; to preserve the fiscal base and stability of the institution. The Presidentreviewed the successes of the year and noted that institutional advocacy efforts will be directed towardthe 2007/2008 provincial election.

(c) Student Organization Policy

The Student Organization Policy (SOP) (formerly named the Student Organization Registration Policy)recognizes student governments and specifies how they in turn accredit their clubs and otherorganizations on campus. This policy provides guidelines to the organizations' administrations whileoutlining rights and benefits which come with the recognition of their status. This document was lastreviewed and amended by the Board in 1997; it has been substantially rewritten.

Page 2



[11/05] RESOLVED, that the Student Organization Registration Policy be renamed theStudent Organization Policy and be amended as presented, effective immediately.

(d) Faculty Appointments

A list of faculty appointments was included for information.

(e) Appointment of Assistant Vice-President, Human Resources

It was reported for information that Martha Harley has been appointed Assistant Vice-President,Human Resources, effective July 2005. She has served in senior roles in the human resources divisionat the University of Western Ontario for the past 17 years, most recently as director of staff relations.

4. EXECUTIVE COMMITTEE REPORT(a) Completion of April 6, 2005 Board Meeting Agenda

The Executive Committee completed the Board meeting agenda of April 6, 2005. All business wasaccepted as presented. The Chair invited members to ask questions of any items of business notpresented at the April meeting.

5. FINANCE COMMITTEE REPORT(a) University of Guelph-Humber 2005/2006 Preliminary Budget

The Boards of Governors at the University of Guelph and Humber College Institute of Technology &Advanced Learning jointly consider the Guelph-Humber Preliminary Budget.

The 2005/2006 Preliminary Budget was presented. It was noted that as a start-up venture there havebeen some growing pains, which include not meeting enrolment targets and incurring a deficit. Toprovide some latitude to the enrolment sensitive budget, repayment of the deficit has been extended byone year to 2009/2010. It has now been confirmed that the Greater Toronto Area is the draw area forthis program and enhanced marketing efforts are in progress.

It was asked how many international students were enrolled at Guelph-Humber. In response it wassuggested that there might be a total of 10 international students.


[12/05] RESOLVED, that the Board of Governors approve the University of Guelph-Humber 2005/2006 Preliminary Budget.

6. AUDIT COMMITTEE REPORT(a) Legal Compliance and Institutional Risk Management

The Audit Committee, April 20, 2005, received an update from University administration concerningactions taken and underway in relation to a review of legal compliance and institutional risk

Page 3


management that had been completed in April 2004. A report summarizing key activities underwaywas included in the Board meeting package: Legal Compliance and Institutional Risk Management,May 2005 — Activity Report. The Committee is supportive of instituting the review and will beensuring that recommendations for follow-up are considered by the respective Board committee oradministration. It was noted that among the Report's recommendations was the proposal to establishin-house legal counsel, which has recently been put in place. In particular, the Audit Committee hasrecently asked to be kept informed about the role of legal counsel for research activities. TheCommittee wants to ensure that the University has process to protect and enhance opportunities forrevenue generation from intellectual property. Up-dates on the implementation of recommendationswill be provided to the Audit Committee by University administration on a regular basis.

7. DEVELOPMENT COMMITTEE REPORT(a) Update on Fundraising Activities

The Development Committee recently received an overview of fund raising targets and goals. Theyalso met members of the Science Complex Task Force and received an overview of the fund raisingplan for this important facility.

8. PENSIONS AND BENEFITS COMMITTEE(a) Audited Pension Plan Statements, September 30, 2004

The Pensions and Benefits and Audit Committees reviewed and accepted the Audited Pension PlanStatements as of September 30, 2004, which included the Combined, Professional,Non-Professional and Retirement Pension Plans. A copy has been filed with the Financial ServicesCommission of Ontario. It was confirmed that the Plans are in compliance with all provincial pensionlegislation.

(b) Investment Performance Report, December 31, 2004

The 2004 investment performance for the pension plans was included for information.

9. GOVERNORS RETIRING FROM THE BOARD

The Chair thanked retiring Governors for their service to the University. Members retiring as of June30, 2005 were noted to include: Brett Allan, Ted Bilyea, Susan Brown, Mary-Elizabeth Flynn, AndriaJones, Hank Vander Pol, Ryan White.

10. MOVE TO IN-CAMERA SESSION


[13/05] RESOLVED, that Maureen Mancuso, Joanne Shoveller and Nancy Sullivanremain for the in-camera session of the meeting.

end of open session

Page 4

UNIVERSITYc'GUELPH

MEMORANDUM

BOARD OF GOVERNORS


FROM: Betsy Allan, Secretary of the Board of Governors fa -

SUBJECT: 3. President's Reporta) Status Report on University Activities - Informationb) Faculty Policies - Proposed Changes - Motionc) Faculty Appointments - Informationd) Board of Governors 2005 Scholarship Recipients - Information


a) Status Report on University Activities - Information

An overview of the University's activities will be presented.

b) Faculty Policies - Proposed Changes - Motion

Along with the Special Plan Agreement, Faculty Policies articulate policies which impact theterms and conditions of employment for faculty. Faculty Policies are the mandate of the JointFaculty Policies Committee (JFPC). JFPC is responsible for proposing amendments to existingpolicy and writing new policy. As part of the process, all proposed amendments are circulated toall faculty members for their consideration and an opportunity to provide comment back to JFPC.Once JFPC has considered the feedback from faculty and is satisfied with the proposed policy(amendments to existing policies or new policy), it is recommended to the President. ThePresident, in turn, makes a recommendation to the Board of Governors.

The following proposed changes to Faculty Policies (attached) have been circulated to all facultyand have received the approval of the Joint Faculty Policies Committee, the Faculty Association,the Provost and the President. The changes reflect recent amendments to the Provost's Protocolfor the Administration of Teaching Evaluations (Conducted in Class or Electronically)(attached). Faculty Policies has always indicated that student assessment of teaching becompleted using a standard department instrument. The amendments capture the option forfaculty members and departments to conduct their teaching and course evaluations in writingand/or electronically.


RESOLVE, that the Board of Governors approve the amendments to Faculty PoliciesSection D, Tenure and Promotion, Part 1.04(v), Information for Tenure, Promotion andEvaluation for Time and Performance Step Increase, as presented.


3. President's Report Page 2

c) Faculty Appointments - Information

Attached is a list of faculty appointments brought forward for information.

d) Board of Governors 2005 Scholarship Recipients - Information

This fall, 15 Board of Governors Entrance Scholarships were awarded to outstanding studentsentering semester one. The award has a total value of $8,000 paid out over eight semesters.Students must continue to be enrolled in full-time studies and maintain a minimum average of80% . This year's recipients include:

Katherine Abrams - Bachelor of Arts (Honours), DramaKatrina Bin - Bachelor of Commerce, Hotel and Food AdministrationRebecca Brill - Bachelor of Science (Honours), Animal BiologyJoseph Brunsting - Bachelor of Science in Engineering, Water Resources EngineeringAlexandra Chan - Bachelor of Science in Environmental SciencesJenn Dowhaniuk - Bachelor of Applied Science, Applied Human NutritionLeslie Johnstone - Bachelor of Arts (Honours), FrenchDiane Kissick - Bachelor of Arts, International DevelopmentRobert Miller - Bachelor of Landscape ArchitectureEmily Robinson - Bachelor of Science (Honours), EcologyEmily Santander - Bachelor of Science (Honours), Biology ScienceJessica Schmidt - Bachelor of Arts (Honours), Art HistoryAndrea Weerdenburg - Bachelor of Arts (Honours), International DevelopmentAndrea Wereha - Bachelor of Applied Science, Applied Human NutritionAdam Zuiani - Bachelor of Science (Honours), Molecular Biology and Genetics

3.b) Faculty Policies- Proposed Changes

PROPOSED AMENDMENTS TO FACULTY POLICY: (indicated in BOLD)

SECTION D, PART 1.04 (v)

1.04(v) Student assessment of teaching will form part of the information used by theDepartment Committee in evaluating the faculty member's contribution in the area ofteaching. Student assessment of teaching will be completed using a standard departmentinstrument agreed to by at least a two-thirds majority of the faculty members in adepartment using the voting procedures outlined in paragraph 1.02. This instrument willbe administered as per the protocol (see Appendix X) determined by the Provost andVice-President Academic, with the approval of the Joint Faculty Policies Committee. Theinstrument may solicit written student comments as well as numerically quantifiable data.Written (including electronically submitted) student comments may be received as partof the Department's assessment of teaching process or as submitted by studentsindependent of the Department's assessment process.

(a) The name of the author must be verifiable (through legible handwrittensignature or electronic verification) for all student comments submitted as part ofthe Department's assessment of teaching process if they are to be provided to theChair and subsequently to the Department Committee as part of the Tenure,Promotion and Time and Performance Step Increase evaluation process.

(b) The name of the author must be verifiable (through legible handwrittensignature or electronic verification) for all student comments submitted outside theDepartment's assessment of teaching process if they are to be provided to the Chairand subsequently to the Department Committee as part of the Tenure, Promotionand Time and Performance Step Increase evaluation process.

In either case (a) or (b), all information gathered, including student identities, will bemade available to the Chair, the Department Committee and the faculty member. Anopportunity will be provided to the faculty member to append written comments beforethe material is taken into consideration by the Department Committee as specified inArticle 27 of the Special Plan Agreement.

In either case (a) or (b), any student comments that do not include the author's legiblesignature or where electronic verification of the author's identity is not possible willonly be seen by the faculty member, unless the faculty member specifically chooses tosubmit the unsigned comments to his/her Chair and/or his/her Tenure and Promotion File.Questionnaires soliciting student comments will make clear that written comments mustinclude a legible handwritten signature or electronic verification of the author'sidentity, if they are to be submitted to the Chair for use in the Tenure, Promotion, andTAPSI evaluation process and that the identity of the students will be made available tothe faculty member, after the final submission of grades, for all signed commentssubmitted.

(vi) The faculty member will provide information relating to her/his contributions to thegeneral life of the University, such as academic administration, departmental studentcounselling, secondary school liaison activities, participation in extension, continuingeducation and international programs, and in professional, cultural and communityorganizations related to the faculty member's academic interests. The Department Chair,after discussion with the faculty member may seek assessment of the faculty member'saccomplishments in any of these activities.

(PROVIDED FOR INFORMATION PURPOSES ONLY)

Provost's Protocol for the Administration of Teaching Evaluations(Conducted in Class or Electronically)

Student assessment of teaching will be completed using a standard department instrumentagreed to by at least a two-thirds majority of the faculty members. This instrument willbe administered as per the following protocol, which has been determined by the Provostand Vice-President Academic, with the approval of the Joint Faculty Policies Committee

1. To allow students to understand fully the purpose and goals of the evaluations andto generate more thoughtful responses, course evaluation instruments (or a précisthereof) will be available to the students at the beginning of the semester eitherelectronically or as part of the introductory course package. Each departmentmust make available to students a concise statement of the policies andprocedures involved in the evaluation of courses and its administration. Thisstatement should be available to students via hard copy, web pages, or othermeans. This protocol does not suggest distribution to classes; it suggestsavailability to interested individuals.

2. Questionnaires will be filled out during the last two weeks of classes; when morethan one professor is assigned to the course, then questionaires will be filled outfor each faculty member in turn within the final two weeks of each professor'ssegment of the course or at the end of the semester, as each faculty memberchooses.

3. Sufficient time must be allowed for the student to complete the questionnaire in athoughtful manner.

4. Each department must have an independent third party (called herein the"Administrator") designated by the Chair, who will be responsible for theadministration of the course evaluation process. The independent third party isdefined as someone not involved in the instruction or grading of the course andnot a member of the Tenure and Promotions Committee. All teaching evaluationwill be conducted in the absence of anyone involved in the grading of the course.

5. Completed questionnaires are provided to the Administrator for processing.Processing will be in accordance with Faculty Policy (Section D, Part 1.04 (v)).

6. Students should be informed of the purpose of the evaluation and the value of theprocess to the department, the program and the instructor. It should be stated thatprofessors do not see these evaluations until after the assignment of final grades.It should also be stated that teaching evaluations are looked at by the University inthe context of the instructor's teaching dossier. This is done to ensure that there isno disincentive to strategic innovation.

7. All questionnaires will begin with a clear statement of the following provisions ofFaculty Policy concerning signed student comments: (i) that only signedcomments (with a clearly legible handwritten or appropriately authenticatedelectronic signature) will be provided to the Chair of the Department and theTenure and Promotion Committee and (ii) that unsigned comments will beprovided only to the faculty member (but NOT to the Chair or the Tenure andPromotion Committee unless the faculty member so wishes).

8. It is the responsibility of the Chair to ensure that teaching evaluations arecompleted for all courses and conducted in accordance with Faculty Policy.

9. Prior to the administration of teaching evaluations in each semester, each facultymember will elect to have his or her courses evaluated in one of two ways—inhard copy during a class session or by electronic means. When there is more thanone section of the course or more than one faculty member assigned to teach inthe course, however, then the faculty members who will be evaluated will choosea single method of evaluation—either the in-class or the electronic method—inorder to ensure consistency in the process. In the event that the faculty membersconcerned cannot agree, then the Chair of the Department will choose the methodof evaluation.

3.c) Faculty Appointments

(For Information)BOARD OF GOVERNORS

REPORT OF THE PRESIDENTFACULTY APPOINTMENTS

May 11 - October 6, 2005

FACULTY APPOINTMENTS

NAME

DEPARTMENT/RANK DATE OF APPOINTMENT

July 1, 2005July 1, 2005July 1, 2005July 1, 2005

Karen HoulePatricia FloodJohn PotvinPaul Anglin

Steffan GraetherMatthew KimberAndrew MacDougallShelley HuntFlavio SchenkelAlexander ValverdeDavid PearlRonald JohnsonRalf Gellert

Asst. Prof., PhilosophyAsst. Prof., English & Theatre StudiesAsst. Prof., Fine Art & MusicAssoc. Prof. with tenure, Marketing & ConsumerStudiesAsst. Prof., Molecular & Cellular BiologyAsst. Prof., Molecular & Cellular BiologyAsst. Prof., Integrative BiologyAsst. Prof., Environmental BiologyAsst. Prof., Animal & Poultry ScienceAssoc. Prof., Clinical StudiesAsst. Prof., Population MedicineAssoc. Prof. with tenure, Biomedical SciencesAsst. Prof., Physics

January 1, 2006July 1, 2005July 1, 2006May 1, 2006September 1, 2005September 1, 2005September 1, 2005

September 1, 2005July 1, 2005

ADMINISTRATIVE APPOINTMENTS

Brian Allen

Dan ThomasRobert BrooksMarcel CoutureNeil MacLusky

Reappointed as Chair for 2 nd term, Mathematics &StatisticsAssociate Dean, BSc. ProgramChair, PhysicsInterim Director, Alfred CollegeChair & Professor with tenure, Biomedical Sciences

September 1, 2005

September 1, 2005July 1, 2005August 22, 2005 - August 21, 2006September 1, 2005

ADJUNCT APPOINTMENTS

Thomas McKaigTom FunkMichael RockGerardo Sanchez-TorresPeter WoodShelley HuntDragan RoganAngela Hofstra

Marketing & Consumer StudiesMarketing & Consumer StudiesMarketing & Consumer StudiesEngineeringFood ScienceEnvironmental BiologyPathobiologyClinical Studies

September 1, 2005 - 3 yearsAugust 1, 2005 - 3 yearsAugust 1, 2005 - 3 yearsAugust 1, 2005 - 3 yearsJune 1, 2005 - 2 yearsJune 16, 2005 - 1 yearJune 1, 2005 - 3 yearsJune 1, 2005 - 3 years

UNIVERSITYg'GUELPH

Joint Faculty Policies Committee

June 9, 2005

Dr. Alastair SummerleePresidentUniversity of Guelph

Dear Alastair:

In accordance with Article 10.7 of the Special Plan Agreement, I am pleased to presentfor your consideration the following proposed revisions to Faculty Policy. The proposedamendments have been circulated to all faculty members for comment, and have receivedJoint Faculty Policies Committee approval (at its meeting of June 8, 2005).

The proposed amendments to Section D, Part 1.04 (v) of Faculty Policy simply reflect theProvost's recently amended "Protocol for the Administration of Teaching Evaluations"Document (also attached) and permit the option of conducting teaching and courseevaluations electronically.

The proposed amendments to the Policy, as outlined above, are attached for yourconsideration.

Yours sincerely,

Alan Shepard,Professorand Chair, JFPC

Attach. (4)c. M. Mancuso, Provost and Vice President Academic

E. Carter, President, UGFAT. Alberico, Secretary, JFPC

GUELPH • ONTARIO • CANADA • N1G 2W1 • (519) 824-4120

Faculty Policies: D. Tenure and Promotion

University of Guelph - Faculty Policies

Section D: Tenure and Promotion

Section D: Part 1

Information for Tenure, Promotion and Evaluation for Time and PerformanceStep Increased (Approved on: October 18, 2001; 105 amended April 7, 2004)

1.01

When considering each faculty member for time and performance step increase,promotion or tenure, the Department Committee shall have before it a currentsummary of the relevant activities of that faculty member plus the distribution ofeffort for each faculty member for the period under review, as specified in theDepartment Guidelines, or where appropriate as approved by the Chair. Each Collegewill devise a form, suitable to its particular needs and those of its departments, onwhich each faculty member will document his/her activities. The completed form (inthe form in which it will be considered by the Committee) must be provided to theDepartment Chair, or designate, by August 31st of the year in which the review isoccurring. The College will adopt a systematic approach and document uniform ruleswith regard to whether books, monographs, and edited books should be creditedmore than once in the performance review process. The College will also adopt across College mechanism to ensure that publications are not credited more than onceas being new material.

Consideration will be given to the individual faculty member's contribution in thefollowing areas:

(i) teaching at all levels, including advising of undergraduate andgraduate students and supervision of their research projects;

(ii) research, scholarly, and other creative activities;

(iii) service to the University such as administrative and committeeduties and other professional activities which contribute to the operationsor the public stature of the University;

(iv) service to society, such as extension activities; industrial researchand development contracts, consultancies or collaborations withgovernments, international development agencies, or the private sectoror participation in scholarly and professional organizations and otheractivities which further the University's mission of service to society.

The faculty member's performance will be evaluated solely on the basis of (1) thematerial contained in the Tenure and Promotion file, and therefore accessible to thefaculty member prior to the meeting of the Department Committee and (2) thejudgement of the members of the Committee bearing on matters of which they havedirect knowledge. The Committee will issue to the faculty member a letter whichindicates the reasons for the decision. (See also Section G, Part 3.04 (iii)).

1.02

Within the categories of faculty responsibilities for: teaching at all levels; research,

1 of 18 10/11/2005 4:35 PM

UNIVERSITY/GUELPH

MEMORANDUM

BOARD OF GOVERNORS


FROM: Betsy Allan, Secretary of the Board of Governors

SUBJECT: 4. Audit Committee Reporta) University of Guelph Summary of Financial Results and Audited

Financial Statements, April 30, 2005 - Motionb) University of Guelph-Humber Audited Financial Statements,

March 31, 2005 - Motion


The Finance Committee (September 30) and Audit Committee (October 5) have reviewed andaccepted both Statements and they are being recommended to the Board of Governors for finalapproval. Both External Audit firms have confirmed their independence and providedunqualified opinions on the Statements, which were prepared in accordance with generallyaccepted auditing procedures.

a) University of Guelph Summary of Financial Results and Audited FinancialStatements, April 30, 2005 - Motion

PricewaterhouseCoopers (PwC) is the University's External Audit firm.


RESOLVE, that the Board of Governors approve the University of Guelph Summaryof Financial Results and Audited Financial Statements for the fiscal year endedApril 30, 2005.

b) University of Guelph-Humber Audited Financial Statements, March 31, 2005- Motion

The University of Guelph-Humber Statements reflect the operating results for the joint venturebetween the University of Guelph and Humber College Institute of Technology and AdvancedLearning. Ernst&Young is the External Audit firm for Guelph-Humber and audited theStatements attached here. At the time of mailing, Humber's Audit Committee and Board had notreviewed these Statements; however, any comments from Humber will be forwarded to theUniversity's Audit Committee for consideration. An update will be provided at the meeting.


RESOLVE, that the Board of Governors approve the University of Guelph-HumberAudited Financial Statements for the fiscal year ended March 31, 2005.


UNIVERSITY OF GUELPH

SUMMARY OF FINANCIAL RESULTS ANDAUDITED FINANCIAL STATEMENTS

For Fiscal Year EndedApril 30, 2005

18,000

16,000

14,000 —

12,000 —

10,000

8,000 —

6,000

4,000 —

2,000

Amortization of

CapitalContributions

3%0%)OMAF Agreement

10%(10°A)

Other Grants andContracts plus

Donations,16%05%)

Tuition (credit andnon-credit)18%(18%)

MTCU ProvincialGrants

27%(27%)

Other4%(3%

University of GuelphSUMMARY OF FINANCIAL RESULTS

For the fiscal year May 1, 2004 to April 30, 2005

The following report summarizes University financialresults for the year ended April 30, 2005 (referred to asfiscal 2005) as presented in the audited financialstatements. Unless otherwise noted, all dollars areexpressed in millions - "M"

The University of Guelph receives funds from a variety ofdifferent sources (see Graph A). Many of these funds arerestricted by the agency, organization or donor as to use andmay not be used for general operating expenses. As a result,the University records its financial activities on a fundaccounting basis where financial transactions are segregatedaccording to major University activities, externalrestrictions on funding and the expendability of funds. (Afund is a self-balancing set of financial accounts includingboth balance sheet and income statement accounts.) TheUniversity currently reports on five different funds:Operating, Capital, Ancillary Enterprises, Research andTrust and Endowment. A description of each of these fundscan be found on page 17.

Graph A

2004/2005 University Revenues - $499.7 M

(2003/2004 $476.5 M)*

2003/2004 Comparatives in (J

Summary of Significant Events

The fiscal 2005 fmancial statements reflect the financialimpact of several significant events. The following is asummary of these events; further detailed analysis of theseand other highlights of fiscal 2005 results are contained inthe balance of this report.

® Consolidation of Growth in Enrolment: In the priorfiscal year, 2003/2004, the University absorbed thefirst-year impact of the "double cohort" (elimination ofgrade 13 in Ontario) where a new curriculum grade 12and the final year of grade 13 students graduatedtogether in the spring of 2003. In response to theresulting increased demand for post-secondaryeducation, the University increased its main campusintake of first-year students to 4,700 (24% increase).

In fiscal 2005, the University reduced its first-yearintake to 3,900 as part of its overall strategic plan tohold total main campus enrolment to 18,000 FTE's(Full-Time Equivalents where part-time and part-yearstudent enrolments are converted to full-timeequivalents). The reduction in the intake of first-yearstudents in 2004/2005 did not result in a reduction intotal enrolment because of the progression of prioryears' relatively large first-year enrolments through tograduation. The University's total enrolment increasedin fiscal 2005 by 2.4% to 17,653 FTEs (refer to GraphB).

Graph B

Full-Time Equivalent (FIE) Enrolment

iu

01/02 02/03 03/04 04/05

1,668 1,783 1,890 1,958

13,388 14,153 15,357 15,695

15,056 15,936 17,247 17,653

This increase is the continuation of growingenrolments at the University (22% increase since2000/2001), reflecting the University's commitment torespond to the increasing demand for universityeducation in the province and the provincialgovernment's willingness to fund this growth througha number of targeted grant programs. Financially, theresult was a combined increase in provincial operatinggrants and tuition revenue of $10.6 million or 45% ofthe total University's increase in revenues in fiscal2005. Ministry of Training, Colleges and Universities(MTCU) Operating grants increased by $8.6 M or6.8% and credit 1 tuition revenues increased by $2.1 Mor 2.7 %. (MTCU Operating grants were allocated topost-secondary institutions mainly based on eachinstitution's share of enrolment increases. The2004/2005 level of these grants at the University ofGuelph reflects both increases in enrolment in

The University receives tuition revenues under a variety ofdifferent programs. "Credit" programs refers to those graduateand undergraduate programs whose tuition rates are regulatedand for which the University receives operating grant fundingunder specific guidelines set by the provincial government andadministered by the Ministry of Training, Colleges andUniversities (MTCU). 90% or $80.1 M of the University's totaltuition revenue of $88.8 M received in 2004/2005 was earnedunder credit programs.

InvestmentIncome Sales of Goods

2%(2%)

and Services 20%(21%)

00/01

in Graduate 1,619

WI Undergraduate 12,855

—6— Total 14,474

Page 1



2004/2005 and a retroactive allocation made for priorincreases. In addition, the university received a $1.7-million grant to offset a provincially mandated"freeze" on all regulated tuition fees in 2004/2005.)

Research Grants and Contracts: Revenuesrecognized in the financial statements as being earnedfrom Other Grants and Contracts increased by $10.6million or 16% in fiscal 2005. This increase, which is45% of the total increase in University revenues in2004/2005, reflects the recent success of theUniversity in attracting new research funding primarilyfrom competitive peer-reviewed federal governmentagencies including NSERC (Natural Sciences andEngineering Research Council), SSHRC (SocialSciences and Humanities Research Council) and CFI(the Canada Foundation for Innovation). Refer to thesection on the Research and Trust Fund for furtherdetails. The following chart (Chart C) shows thegrowth in research funding actually received by theUniversity which now stands at $124.0 million fromall sources. This level of funding maintains theUniversity's position as one of the most research -intensive universities in Canada.

Graph C

Research Funding Receivedby Major Source

(includes research funding from the OMAF Agreement)

2002 2003 2004 2005

I= Other 21.8 22.4 22.6 22.3

- Ontario 50.8 50.9 53.9 49.5

Mit Federal 34.1 33.5 44.8 52.2

-,r--- Total 108.5 108.8 121.3 124.0

Of the total funding received, $33 million wasrecorded in the Operating Fund as part of theagreement with the Ontario Ministry of Agricultureand Food (refer to the section on "revenues" on page3). The balance of the funding received was mainlyfrom external sponsors and was restricted for specificresearch projects/expenses, and therefore, could not beimmediately recognized as revenue. 2

2 Research funding is restricted for specific purposes mainly byexternal sponsors, and under accounting rules, cannot berecognized as revenue in the financial statements until thedesignated expenses are incurred. Therefore, while actual funding(cash) may be received in a fiscal year, it may not be recognizedor recorded as revenue until future years. In the interim, the

o Salaries and estructuring Costs: In fiscal 2005, theUniversity's total recorded salaries increased by $20.5million or 8.7%. (This increase alone accounts for 80%of the University's increase in total expenses of $25.8million or 5.3%.) Of the increase in salaries, $11.2million or 55% were restructuring costs3 associatedwith the University's budget plan to discontinuecertain positions over the 2004/2005 and 2005/2006fiscal years. The University has received Board ofGovernors approval to repay these costs by 2010/2011at a minimum rate of $2 million per year, starting infiscal 2005/2006. The balance of the net increase insalaries of $9.3 million reflects a 4% increase in costsconsisting of both negotiated increases and certainadditional appointments made to address the growth inenrolments and research activity.

Capital Acquisitions: The University initiated anumber of major capital projects starting in 2002/2003to meet its strategic planning objectives to improveexisting facilities, including the reduction of deferredmaintenance and to provide new space to meet theneeds of additional planned enrolments. In support ofthese plans, the University recorded a major increasein its external debt in fiscal 2003 as the result of itsissuance of a $100-million, 40-year debenture. Theproceeds of this additional debt are designated tofinance major capital projects in the context of long-term strategic plans. Fiscal 2005 saw the continuationof this major capital construction program with theacquisition of $80.4 million ($88.3 million in fiscal2004) in capital assets, over half or $42 million ofwhich were related to the University's major"SuperBuild"4 project. Other acquisitions reflect thecombined impact of both increased research fundingunder the federal government's CFI program and a

funding is recorded as a Deferred Contribution on theUniversity's Statement of Financial Position (refer to page 19 forthe accounting policy on revenue recognition.)3 Restructuring costs are lump sum payments made to employeesapproved by the University under incentive programs to eitherresign or accept early retirement. Two programs in each of2004/2005 and 2005/2006 were approved by the board with totalcosts of each program not to exceed $12 million. Note that someof the costs of the 2005/2006 program have been accrued in2004/2005, reflecting accounting rules which require recording ofexpenses when a buy-out arrangement is approved and signed byboth the University and the employee.4 "SuperBuild" refers to the provincial government's 2001capital program designed to create new physical space for the"double cohort". Under this program, the University received$45.0 million in 2002 toward the construction of new teaching(Rozanski Hall) and science buildings and smaller amounts insubsequent years for a number of deferred-maintenance andacademic building projects.

140.0

120.0

100.0

80.0

60.0

40,0

20.0

Page 2



general increase in teaching equipment purchases andrenovations funded from new enrolment revenues.

By the end of fiscal 2004, most of the financing forthese capital acquisitions had been provided fromgovernment grants (in the case of SuperBuild projects)and operating/research fund revenues (teaching andresearch equipment). By the end of fiscal 2005, theUniversity had used $40 million of the $100-milliondebenture, which had been previously invested inshort-term high-quality investments. The use of thesefunds is reflected in the decline in recordedinvestments, specifically the "Short-Term Note andBonds" category which declined $35.8 million over thecourse of fiscal 2005.

More Details on Major Changes in Fiscal 2005 - AllFunds

REVENUES:

Revenues from all sources were $499.7 million, an increaseof 4.8% or $23.2 million from fiscal 2004 ($476.5 million).Increases were recorded in most major categories ofrevenues as a result of several years of growth inenrolments and research funding. The followingsummarizes the major changes in revenues compared tofiscal 2004:

• Provincial grants from the Ministry of TrainingColleges and Universities (27% of total revenues)increased by $8.6 million or 6.8%. Additional grantswere received under MTCU's Accessibility andQuality Assurance Fund programs. Under theseprograms, revenues were earned only if institutionsaccepted additional enrolments (mainly undergraduate).No additional provincial funding was received to coveron-going operating cost increases due to inflation.

• Tuition Revenue (18% of total revenues) increased by$2.0 million or 2.3% to $88.8 million. Tuition Revenueconsists of revenues earned for both credit courses(offered under MTCU funding guidelines) and non-credit courses, which include a wide variety of coursesranging from general continuing education to OMAFdiploma and professional certification programs. (Non-credit courses are not eligible for funding support fromMTCU.)Tuition revenue earned from MTCU credit-courserevenues increased by $2.1 million to $80.1 million.This increase was almost totally due to the increasednumber of students (all regulated and most of theremaining credit-course tuition rates were not increasedin fiscal 2005). Offsetting this increase wasa small

decrease in non-credit tuition of $0.1 million, due tothe net impact of the wind-up of the OMAF DiplomaProgram at the Guelph campus (reduction of $0.5million) and offset by increases ($0.4 million) in allother non-credit programs.

• Sales of Goods and Services (20% of total revenues)decreased by $2.5 million or 2.5% and included:- a $2.2-million decrease in the sale of

produce/livestock, royalties and laboratoryservices under the OMAF agreement (described inmore detail below);

- a $1.8-million decrease in revenues from housingand food services mainly as the result of theplanned decreased enrolment of first-year students(refer to section on Ancillary Enterprises onPage 9);

- a $1.4-million net increase in revenues fromservices provided to the University of Guelph-Humber;a $0.lmillion net increase from a large variety ofactivities such as user fees charged for OVC(Ontario Veterinary College) teaching hospitalservices, laboratory, printing and the recovery ofmiscellaneous service costs.

• Provincial funding recognized under the research,teaching and laboratory contract agreement with theOntario Ministry of Agriculture and Food (OMAF)(10% of total revenues) decreased by $0.9 million or2%, reflecting a decrease in provincial cash spent byoperating units. Expenses reflected an equivalentreduction consistent with both restructuring efforts toreallocate resources to the direct support of programsand the completion of a major testing project in theLaboratory Services Division. OMAF agreementactivities at the University have two sources offunding: funds from the province s and generalrevenues earned from the sale of goods and servicesusing provincial facilities. The general revenues arederived mainly from the sale of produce, tuitionrevenues and laboratory fees. Since fiscal 2000, thesesources of revenue have grown significantly, which is atrend consistent with the objectives to both grow anddiversify revenues under the contract. In fiscal 2005,however, sales of goods and services decreased by $2.2million, reflecting the completion of a major (limited-term) testing contract in the Laboratory ServicesDivision. Business development plans are continuingwith the objective of replacing this revenue andgrowing non-provincial revenues for all operations

5 Because of the restricted nature of provincial funding under thecontract with OMAF, recognition of revenue from provincial fundsoccurs only as these funds are spent. Unused provincial funds arerecorded as deferred revenue on the University's balance sheetuntil required.

Page 3

Debt Servicing2% (2%)Plant (Equipment

7% (7%)

Student4% (4%)

Operating26%(26%) Salaries

49% (48%)



under the contract. This decrease in revenue was offsetto some extent by a one-time payment from OMAF(non-contract) described in further detail under OtherRevenue.

• Other Revenue (4 % of total University revenues)increased by $3.4 million over fiscal 2004. Included inthis increase was a $2.2-million one-time paymentfrom OMAF to fund repair and maintenance work onthe research stations operated by the University underthe agreement with OMAF. The remaining increase of$1.2 million reflects an increase in a general level ofactivity across a wide variety of areas.

EXPENSES:

University Expenses totaled $516.9 million (see Graph D),an increase of 5.3% or $25.8 million from fiscal 2004($491.1 million).

Graph D

2004/2005 University Expenses - $516.9 M(2003/2004 $491.1 M) *

Benefits12%(13%) • 2003/2004 Comparatives in ( )

Major components of this change over last year are:

• Salaries (49% of total expenses) increased by $20.5million or 8.7%. One-time payments to employees forrestructuring purposes accounted for over 55% of thisincrease. The remaining increase was due mainly tothe impact of negotiated salary agreements andadditional positions to support the total enrolmentgrowth.

• Benefits (12% of total expenses) decreased by $0.7million to $62.3 million or 24.4% of salaries (from$63.0 million or 26.8% of salaries in fiscal 2004). Foraudited statement purposes, the University is requiredto follow specific accounting rules that are set by theCanadian Institute of Chartered Accountants (CICA)for post-employment benefit costs (both pension andpost-retirement benefits for dental and extended health

programs). These rules require that all employer futureobligations for employee post-employment benefits beaccounted for as they are earned (accrued), not as theyare actually paid (cash). Application of this standardcan create significant changes in accounting expensefrom year to year. For example, under CICA rules, infiscal 2003 post-employment benefits expense (non-cash) was $18.0 million. The following year, it was$34.2 million (refer to Graph E). This year, the post-employment expense was calculated as $32.8 million,reflecting a small decline in expense because of animprovement in the market value of pension assets andpartially offset by the impact of higher liabilities forboth all post-employment benefits mainly due to lowerlong term interest rates. In recording the impact ofthese credits/charges, the University has (whenapplication of the accounting rules created large non-cash credits) followed the practice of appropriating anymajor accounting credits for the purpose of coveringthe expected increases in calculated pension expense.In fiscal 2005, the remaining appropriation of $1.1million was drawn down to nil. (refer to Statement 3,page 15 in the audited financial statements.)

Graph E

Benefits Accounting Expense as a Percentage of Salaries

-.-60.0

50.0

040.0 40.0

'f'

30.0

20.0

10.0

0.0

PP""

till,1" MET,MMEMIIIIIINIZIM=E=1=Post-Enylor”.. .111111==113=1111111111MME1111111=IIECMIMMZMNIIIIIZIIIIIIMZIIIMIIIEEIIIIIIIMEMEMIIMILEMOIMMEZEINMEMIIIIIIIIMENI

Also introduced in fiscal 2005 were new accountingstandards for expanding the disclosure of costs andpotential changes in post-employment benefits costs(refer to Note 12 - Employee Future Benefits on Page30).

On a cash basis, total cash payments for benefitsdecreased from $51.9 million in fiscal 2004 to $43.4million in fiscal 2005. Cash contributions for post-employment liabilities decreased by $9.2 million from$23.1 million in fiscal 2004 to $13.9 million in fiscal

30.0%

25.0%

29.0%

15.0%

10.0%

5.0%

0.0%

Page 4



2005 (fiscal 2004 contained a $10-million one-timepension contribution to maintain the positive financialconditions of the pension plans). Cash expenses forother (statutory and negotiated) employer benefit costs(non-post employment related) increased by 2.5% or$0.7 million to $29.5 million ($28.8 million in fiscal2004).

• Operating Expenses (26% of total expenses) increasedby $6.6 million or 5.3%. Higher utility costs from bothincreased usage (new space and colder than averagewinter temperatures in 2004/2005) and rate increasesaccounted for $3.0 million of this increase. Theremaining increase reflects purchases of supplies,services and equipment due to increases in bothenrolment and externally funded research activity.

• Scholarships and Bursaries: Total Universityspending on Scholarships and Bursaries decreased by$2.3 million or 10.4% to $19.4 million ($21.7 millionin fiscal 2004; refer to Graph F). Scholarships andBursaries have two main sources of funding: theOperating Fund and externally restricted funds, e.g.,grants, donations and endowments. The decrease in2005 was within the Operating Fund ($2.5 million), butwas partially offset by an increase from externallyrestricted funds ($0.2 million). This decrease reflectsthe lower number of first-year entrance awards as adirect result of lower intakes in the fall of 2005(compared to the fall of 2004 - the year of the doublecohort.). Student aid funding is now approximately24.2% (27.8% in 2004) of total credit tuition revenues.Of the $19.4 million, 45% is funded from theOperating Fund and 55% from trust (restricted) funds,including endowments.

Graph F

Student Aid: Scholarships, Bursariesas a Percentage of Tuition Revenue (Credit)

25.0 - -30.0%

35,denlA1d rri01000)

20.0 -25.0% % Reven."(''500)

20.0%

15.0

15.0%

10.0 TI10.0%

5.0 00%

0.0%tUUJ 2004 2005

ME Student Aid 15.8 17.1 21.7 19.4

of Revenu 23.9% 24.4% 27.8% 24.2%

Capital Asset Amortization: In accordance with CICAaccounting requirements, the cash costs of majorequipment and building acquisitions are not charged to

income as they occur but over the expected useful life ofthe related asset. (Refer to note 2 (f) on page 18 of thefinancial statements for the specific policy). The chargeto income is called amortization (sometimes alsoreferred to as depreciation). In fiscal 2005 this chargeincreased by $1.7 million or 5% over 2004. Thisincrease is the direct result of capital acquisitions(equipment, buildings and major renovations) over thepast several years funded in large part by externalgrants. (Refer to the section on the Capital Fund on page7).

L NG-TERM DEBT AND INTEREST:

In fiscal 2003, the University issued a $100 million6.24% unsecured debenture due in 2042. Debentureproceeds will continue to provide financing for majorcapital projects identified by the University as part ofits strategic planning process. Projects targeted toreceive these funds are Rozanski Hall, a major teachingclassroom complex completed in the fall of 2003; anextension to the MacKinnon Building to providefaculty offices for the arts and social science, to becompleted in fiscal 2006 and the new science complexto be completed in fiscal 2008. The total combined costof these three projects is estimated at $171.0 million.Funds from the provincial SuperBuild Growth Fundprogram, targeted federal and provincial grants anddonations will also provide a significant portion of thefunding for these costs.

Graph G

Total Debt and Debt Servicingas a Percentage of Total Revenue

IOVAI

160.0 -

140.0

120.0

. 100.02EE 80.0 -

ill

60.0

0.04

20.0

0.02002 2003 2004 2005

OM Total Debt 76.6 168.0 164.7 161.2--•-% debt to revenues 18.5% 37.6% 34.6% 32.3%

% debt servicing torevenues

2.1% 3.9% 3.0% 2.8%

Note: policy limits for % debt to revenues and % debt servicing to revenues are45% and 4.5% respectively.

The cost of the debenture is reflected in the interestexpense of $10.7 million ($10.8 million in 2004).Total external debt and debt servicing as a percentageof total University revenue are 32.3% (34.6% in 2004)and 2.8% (3.0% in 2004) respectively (refer to GraphG). The decline in total debt and both percentages

45.0%

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

Page 5

160.0

140.0

120.0

100.0

80.0 -

60.0 --

40.0 -

20.0 -


For the fiscaa year May 1, 2004 to April 30, 2005

from 2004 reflects both growth in total income andrepayment of $3.5 million in external debt. 6 Noadditional debt was incurred in fiscal 2005. Bothpercentages are well within University policy limits of45% and 4.5%, respectively.

The Endowment Fund:

The General Endowment Fund contains all remainingUniversity endowments recorded in 800 separate accountsand consisting of external and Board-designated donationsdirected mainly to student aid. Approximately 59% of allUniversity endowments are allocated to student assistance(refer to Graph I.)

Graph I

Allocation of University Endowments

The Endowment Fund (total investments of $149.7 million,market values) is composed of restricted segregated fundsprovided by external benefactors or established by theBoard of Governors. Under University policy, onlyaccumulated investment income earned on these funds,after having provided for inflation protection, and inspecific cases, growth, may be expended for the designatedpurpose. While all University endowments are pooled forinvestment purposes, there are two major endowment fundswith different spending objectives: the Heritage Fund(investments of $45.0 million) and the General EndowmentFund (investments of $104.7 million). (Refer to Graph H).

University Endowment AssetsMarket Values at April 30th

2002 2003 2004 2005

3111118 Heritage 42.8 36.0 41.8 45.0

I= General 91.0 84.7 97.9 104.7

0 Total 133.8 120.7 139.5 149.7

The Heritage Fund was created in 1991 by a declaration oftrust of the Board of Governors with the intention that thecapital of the fund be held in perpetuity for Universitystrategic purposes. The main sources of growth for the fundare proceeds of University real estate sales, leases fromBoard-designated properties and investment income earnedon the capital of the fund. Distributions from the fund aremade in accordance with a formula based on a five-yearaverage of market returns after providing for inflationprotection and growth. Management of the fund wasdelegated by the Board of Governors to the Board ofTrustees.

6 Total external debt repayment excludes internal "sinking" fundinvestments ($6.4 million in fiscal 2005) that have been set up toretire interest- only debt. In the 2005 fiscal year, the Universityhas started an investment portfolio with $0.5 million for thepurpose of retiring the $100- million debenture debt owed in2042.)

35.0

z 120.0

g 105.0

t29%

_A

30% 31%90.0 30%75.0

t, 60.05 59% 58% 59%.2 45.0--

58%

E 30.0

16.0

0.0

-

2002 2003 2004 2005

III Other 14.3 14.9 17.5 14.5

0 Heritage 41.8 36.0 41.8 45.0

0 Student Aid 77.7 69.8 80.4 90.2

Total 133.8 120.7 139.5 149.7

The University's General Endowment Fund managementpolicy uses long-term investment assumptions in whichinvestments are averaged over a moving four-year period indetermining both investment performance and disbursementtargets. The annual spending rate of the GeneralEndowment Fund is restricted (4.5% in fiscal 2005). Thedifference between actual returns and the spending rate isaccumulated each year in the endowment fund to providefor capital protection, growth, and if required, tosupplement annual returns to meet the annual disbursementtargets.

• In total, the market value at April 30th of allendowment investments had increased by $10.2 millionor 7.3% from $139.5 million in 2004 to $149.7 millionin 2005 (refer to Graph I). The increase in market valueis the result of investment returns of 6.7% (17.5% infiscal 2004) and net capital additions of $8.5 millionless cash required for disbursements made inaccordance with restrictions. (Gross capital additionsfor the year were $12.2 million, but were partiallyoffset by the transfer of the Cutten Club ($3.7 million)into the Capital Fund.7)

7 In fiscal 2005, the Guelph Golf & Recreation Club Limited(Cutten Club), which was wholly owned by the Universitydiscontinued operations. The land, buildings and equipmentwere donated to the University and a new legal entity operatedby the members was established. The University has entered intoan arrangement with the new entity, which leases back the assets.To reflect this transaction, the University's existing Cutten Clubinvestment of $3.655 million, previously recorded in theEndowment Fund, has been eliminated. The related endowmentfund balance has been transferred to the Capital Fund andadditional capital assets of $3.655 million have been recorded.

Graph H

Page 6



• Total 2005 investment income (realized andunrealized) from all endowments was $9.5 million,reflecting annual investment returns (compared to a$20.1-million return in 2004). In fiscal 2005, inaccordance with the University's spending policy,approximately $5.1 million of the total accumulatedinvestment earnings were made available fordisbursement. The remaining investment income of$4.4 million was added to the accumulated earningsfrom prior years (refer to Graph J).

Graph .1Annual Allocation of Endowment Invest Income

At April 30th

25.0

20.0

15.0

10.0

2 5.0

(5S)

(10.0)

(15.0)

(20.0)

(25.0)2002 2003 2004

is Capital Protection (0.5) (19.1) 15.2

n Spending Allocation 6. 3.5 4.9

• Endowment Contributions:Endowment Contributions record the annual impact onthe Endowment Fund of investment income and newdonations.

Total net endowment contributions for fiscal 2005 were$12.9 million ($19.5 million in fiscal 2004). Theincrease of $12.9 million recorded in fiscal 2005consisted of:- $1.8 million ($0.9 million in 2004) transferred to

the Heritage Fund from real estate net proceeds;- $8.9 million ($3.3 million in 2004) in additional

donations to capital received during the year;- $4.4 million ($15.1 million in 2004) due to 2005

investment income endowed to provide for long-term capital protection in accordance withUniversity policy;

- $1.5 million in unspent endowment investmentincome made available for spending in prior yearsthat was permanently endowed in fiscal 2005;

- Less $3.7 million recording the transfer of theCutten Club endowed fund balance to the CapitalFund. This transaction reflects the discontinuanceof Cutten Club operations and the donation ofmajor Cutten Club capital assets to the University(which were subsequently leased back to a newprivate golf club owned and managed by itsmembers.)

The Capital Fut d:

Financial Statement Presentation: The Capital Fundrecords the University's capital building, major equipmentand library acquisition costs for all funds except forAncillary Enterprises. For financial statement purposes inaccordance with CICA rules, external funding received forcapital projects is not recorded as capital fund revenue untilthe related capital asset is amortized. (Until recognized asrevenues, external capital contributions are recorded asdeferred contributions in the liability section of thestatements.) The major expense of the Capital Fund is theamortization (or depreciation) of capital asset costs. Thecost of newly acquired capital assets in the fiscal year arerecorded in major asset classes; land, land improvements,buildings, computer equipment, construction in progress,equipment, and library and art collections. Expenses arecharged (amortized) in the Capital Fund over the estimateduseful life of each asset class (refer to Note 2(f) on page 18for the amortization period of each asset class). In theequity section or fund balance of the Capital Fund, theaccount Investment in Capital Assets records the net bookvalue less any debt or restricted contributions associatedwith capital assets. This represents the University's residual(net of amortization and any external debt) equity in itscapital assets.

In the fiscal 2005 financial statements, the net book value ofcapital assets increased by $47.2 million ($56.9 million in2004), reflecting expenditures on capital and work-in-progress in several building/renovation projects of $80.4million ($88.3 million in 2004; refer to Graph K) lesscapital asset amortization of $33.1 million. Theseacquisitions will be funded through a combination ofexternal grant or contract funding, e.g., the Ontariogovernment's SuperBuild Growth Fund, endowments,donations and student residence user fees.

Capital Contributions and Acquisitions: Following is adescription of the major capital acquisitions and fundingactivity that occurred during the year. Although this activityis not apparent in the audited fmancial statements, it isreflected in the cash flow - additions and deletions relatedto capital assets.

® Major capital contributions received (total $21.6million) during the year;-$10.0 million ($1.7 million in 2004) in facilities

renewal grants were received from MTCU. Thecontribution is restricted for deferred maintenancerepairs and renovations for the campus physicalplant infrastructure. Given the age and usage ofUniversity buildings and past deficiencies infunding, at least $200 million in deferredmaintenance costs fo:r buildings alone have been

n

2005

4.4

5.1

Page 7

- $6.3 million on the transgenic greenhouse project,the new magnetic resonance imaging facility inOVC, Clinical Research II and the OVC enhancedhealth renovations funded by CFI and OIT;$5.1 million for the development of the StoneRoad retail by the Real Estate Division;

- $3.7 million from the donated land, buildings andequipment of the Cutten Club (previously recordedin the Endowment Fund as an investment);

- $2.9 million for the OVC master plandevelopment, which is funded by $37.3 millionreceived from the federal government in 2003;

- $2.3 million in expenses for the integratedvoice/data communications system, bringing theproject-to-date costs to $14 million (total projectwhen completed in 2006 will be $14.2 million)funded from the Heritage Fund, grants and userfees;$1.5 million for the MacKinnon addition, which isfinanced from the debenture;$1.3 million on the Lennox-Addington coffee anddining room which is funded by HospitalityServices;

- A balance of $6.4 million, which consisted of acombination of smaller renovation projects,equipment purchases in ancillary operations, in-kind donations and library acquisitions.

Graph K

Capital Acquistions by Major Fund

451v. -

$80

7

y $60E'E•- $40

$20

$02002 2003 2004 2005

=Ancillary 29.7 4.1 2.9 8.1

NM Capital 49.8 43.0 85.4 72.3

--,- Total 79.5 47.1 88.3 80.4



estimated. Facilities renewal funding is normallyallocated to deal with the highest priority itemssuch as safety and emergency repairs;

- $0.5 million from the province was received forthe Hospitality and Tourism Management teachingkitchen and restaurant project.$1.5 million transferred from the Heritage Fund toassist in funding the University's new integrateddata and voice communication system wasapproved and allocated in 2004/05.

- $2.2 million was allocated from the researchinfrastructure grants to support a number ofongoing capital projects, such as critical deferredmaintenance, upgrades to the University's centralutilities plant, and an energy conservation retrofit.

- $1 million ($1.1 million in 2004) earned oninvested funds received for the Ontario VeterinaryCollege (OVC) pre-development project. (During2003, $37.3 million was received from the federalgovernment for OVC redevelopment. The grant isinvested according to the federal governmentinvestment guidelines, and these funds arerestricted for the renovation and expansion of theveterinary hospital, laboratories and researchbuildings. This project is in the early stage ofdevelopment, and to the end of fiscal 2005, $3.5million had been spent.)

- $5.6 million was allocated from CFI and OIT(Ontario Innovation Trust) for the OVC magneticresonance imaging (MRI) equipment ($1.2million), the Clinical Research II project ($1.2million), the Enhanced Health Assessment Lab($2.7 million) and some smaller projects ($0.5million).

- Remaining capital contributions of $0.8 million arecampaign donations used for the Hospitality andTourism Management (teaching kitchen andrestaurant) project, Rozanski Hall and the sciencecomplex.

• Major acquisitions during the year ($80.4 million,refer to Graph K) include:- $23.7 million for the science and teaching facilities

financed with the SuperBuild provincial grant,campaign donations and the debenture (externaldebt);$19.6 million in major equipment purchases andrenovations funded by both departmental transfersfrom the Operating Fund and external researchgrant/contract funding transferred from theResearch and Trust Fund;

- $7.6 million for the University's critical deferredmaintenance projects, which are funded from theadditional MTCU facilities renewal funding andthe debenture financing;

Page 8

120.0

100.0

80.0

60.0

40.0

20.0

0.0



Graph L

The Research and Trust Fund:

This fund reports contributions made primarily byoutside organizations in the form of restricted researchcontracts and grants. Although reported as one fund onthe financial statements (refer to Schedule 1), theResearch and Trust Fund consists of about 5,000individual accounts that record both revenues andexpenses for each grant, contract or special purpose.Major sources of funding include federal researchgrants such as those from NSERC, SSHRC and CIHR(Canadian Institute of Health Research) and contractsfrom industry for sponsored-research projects. In fiscal2005, the University continued to receive significantfunding of approximately $16.0 million ($19.1 millionin 2004) under the CFI/OIT/ORDCF programs(ORDCF-Ontario Research and DevelopmentChallenge Fund).

It is important to note that this fund records only aportion of the estimated total University researchactivity of $124.0 million in fiscal 2005 ($121.3million in 2004). Approximately $33.0 million of thisresearch activity in 2005 was funded as part of theOMAF contract and is reported in the Operating Fundin these statements.

• Revenues recognized in the fmancial statements inthis fund increased by $12.4 million or 17% to$85.4 million ($73.0 million in 2004), reflectingthe increased level of research activity. (Note:Because research receipts are mainly restricted bythe contributor, they are not recognized as revenueuntil spent, in accordance with CICA rules forfinancial statement reporting.) On a purely cashflow basis, research receipts, excluding the OMAFcontract and funds designated for capital, totaled$82.9 million (refer to Graph L). This represents a5% increase from the previous year when $78.9million in research operating grants and contractfunding was received.

• Expenditures in this fund increased in proportionto revenues reflecting the restricted nature of theserevenues. Additional major expenditures in thisfund included scholarships and bursaries of $10.7million ($10.5 million in fiscal 2004) funded fromgrants, annual donations and endowmentinvestment income transferred to this fund fromendowments for disbursement.

Contracts and Grants Received for Capital and Research*

* Note: "research" in the above chart excludes $8.1 million incapital-related research receipts recorded under "capital" andapproximately $33.0 million in research funding received underthe contract with OMAF in the Operating Fund. Total research-related funding received in fiscal 2005 was $124.0 million.

The Ancillary Enterprises Fund:

The Ancillary Enterprises Fund with revenues of$61.4 million or 12% of total University revenues(2004 revenues of $63.0 million) reports financialresults of University activities not related to academicand direct-support functions reported in the OperatingFund. Ancillary units are responsible for any netoperating shortfalls, capital amortization costs, interestcosts and all other support costs incurred in theiroperations. Individual annual budgets are prepared andapproved for each of these operations. Results by unitare detailed in Schedule 2 of the annual auditedfinancial statements.

In comparison to 2004, total revenues in the AncillaryFund decreased by $1.6 million to $61.4 million.Student Housing revenues decreased in 2005 by $0.5million ($1.7 million increase in 2004) as a result of thedecline in first-year students following the 2004"double cohort" when additional specialaccommodations were added to increase the number ofstudents in residence. Revenues in Hospitality Servicesdecreased by $1.3 million ($4.0-million increase in2004), due again to the decrease in first-year studentsand also a decline in conference contracts (2004experienced a better-than-average summer conferenceseason). Other Ancillary Fund operations reported aincrease in revenue of $0.2 million. Ancillary totalexpenses decreased by 1.7% or $1.0 million over 2004.This decrease was mainly in Hospitality and StudentHousing, proportionate to their decline in revenues andoffset by a small increase in the other Ancillary Fund

Page 9

MTCUGrant

40%(39%)

L

Salaries60% (59%)--\

Benefits16% (18%)

StudentAwards3% (3%) * 2003/2004 comparatives in ( )

Operating21% (20%)

Other7%(6%)

Sales ofGoods andServices11%(12°A)

Tuition27%(27%)

2003/2004 comparatives in ( )



expenses. Net income in all ancillary units waspositive with the exception of the University Centre,which had a small loss of $0.15 million.

The Operati g Fund:

The Operating Fund records the revenues andexpenses for most of the University's day-to-dayacademic and institutional infrastructure activities. It isthe largest fund, with approximately 66% of totalUniversity revenues (refer to Schedule 1, page 34, fordetails of Operating Fund revenues and expenses).

Operating Fund Revenues: (total 2005 revenues of$331.4 million, refer to Graph M) Operating grantsfrom MTCU, funds received under the agreement withOMAF and tuition, both credit and non-creditrevenues, provide the three largest components ofrevenue in this fund. Together they account for 40%,15% and 27%, respectively, of total Operating Fundrevenues. Remaining revenues of 18% are frommiscellaneous fees, sales of goods and services raisedby a variety of academic and service units, investmentincome and general external cost-recoveries.

Graph M

2004/2005 Operating Fund Revenue - $331.4 M(2003/2004 - $320.0 M) *

from teaching, research and laboratory test operations)of total Operating Fund revenues. Under the terms ofthe agreement, OMAF revenues and expenses aretreated as a separate restricted account within theOperating Fund and must be fiscally balanced. Ittherefore has no direct financial impact on the netincome of the Operating Fund. For detailed results ofthe OMAF agreement see Schedule 3 of the annualaudited financial statements.

Operating Fund Expenses: (total of $346.1 million,refer to Graph N) Salaries and benefits compose 76.5%of total Operating Fund expenses (76.3% in fiscal2004). Salaries increased by 9.3% or $17.8 million.$11.3 million of this increase was attributable to one-time payments to former employees for restructuringpurposes. The remaining 3.4% increase or $6.5 millionwas due mainly to negotiated settlements withemployee groups, and to a lesser extent, an increase inthe number of teaching and support staff needed to dealwith increased enrolment. Net benefit expenses in 2005decreased by 2.4% or $1.4 million reflecting therelative decline in accrued post-employment costs.Overall, benefit costs incurred by the University fornon-post-employment benefits increased by 2.5%.

Graph N

2004/2005 Operating Fund Expenses - $346.1 M(2003/2004 -$325.7 M) *

OMAF Agreement: Included in the Operating Fund isOMAF agreement activity (2005 total expenses of$74.4 million). The OMAF agreement under which theUniversity delivers research, education and laboratorytesting programs, is unique in the Ontario universitysystem. The University of Guelph and OMAF renewedthe agreement for five years on April 1, 2002. Fiscal2005 OMAF-agreement-related expenses were fundedfrom provincial transfers of $49.5 and related non-provincial revenues from the sale of goods and servicesand diploma and training enrolments of $24.9 million.In total, the OMAF contract generates 22% (15% fromprovincial funds and 7% earned from sales and fees

Operating expenses within the Operating Fundincreased by $6.4 million or 9.7%, with utility costsaccounting for $3.0 million of this increase.Specifically, fuel costs increased by $1.6 million due toboth the addition of new square footage (mainly thescience complex Phase 1) and a colder than averagewinter in fiscal 2005. The increase in hydro usageresulting from the occupation of the new sciencecomplex in the fall of 2004 contributed significantly tothe $1.4-million increase in hydro costs. Maintenancecosts for buildings, vehicles and equipment increasedby $0.9 million, due in part, to the significant capital

Page 10



expansions in the past few years and the increasing ageof other facilities. Remaining operating expensesincreased by 3.5%, reflecting a general increase in thepurchase of supplies, services and equipment.

Operating Fund - Fund Balances: Operating Fundbalances (appropriated and unappropriated) record thefund's accumulated net financial results. In fiscal 2005,the Operating Fund experienced a $26.7-million netdecrease in fund balances ($16.7 million in fiscal2004). Included in this result was a transfer of $12.0million ($11.0 million in fiscal 2004) made from theOperating Fund to the Capital and Research and TrustFunds for expenses such as new-faculty start-up funds,teaching equipment and deferred maintenance. Thesetransfers reflect the implementation of planning fornew enrohnents. In addition to the $26.7-million netexpense, $1.8 million was transferred to appropriations(previous year's accumulated funds). The transferconsisted of:

• $2.9 million was transferred to appropriationsfor the Equipment and Supplies funds. Thisappropriation stands at $15.3 million at theend of fiscal 2005. (A portion of these fundswill be carried into fiscal 2006 to assist inmeeting the overall target approved in theUniversity's 2005/2006 budget).

• $1.1 million was used to fund a portion of thecosts of post-employment benefits. Thisappropriation has now been reduced to $-nil.8

Total Operating Fund appropriations at the end offiscal 2005 hold a balance of $21.9 million (referto Statement 3 on page 15).

Unappropriated Operating Fund Balances:After adjustments to appropriations, the OperatingFund unappropriated deficit has increased to $31.4million ($2.9 million deficit in 2004). Theunappropriated deficit consists of the following:

• $18.1 million in unappropriated deficitrepresents the accounting accrual of pensionand other post-employment benefits. Thisamount is the difference between benefitexpenses funded through the University'sannual budget process (which is based on longterm "normal costs") and accounting expenseswhich can be relatively volatile depending onmarket conditions.

• $9.4 million in unappropriated deficit relatesto costs incurred from the 2004/2005 and2005/2006 Voluntary Early RetirementPrograms. These costs were approved by theBoard of Governors as part of a multi-yearrestructuring program using incentives andvoluntary departures to reduce the number ofpersonnel in certain program areas. Thisdeficit will be repaid starting in 2005/2006 ata rate of no less than $2.0 million per year andmay not exceed $10.0 million in accumulatedcosts.

• $4.0 million in unappropriated deficit is theUniversity's share of the net costs of theUniversity of Guelph-Humber joint venture(refer to note 9 on page 27). This net cost isattributable to start-up costs for the newprograms. The University plans to recoverthese costs in future years from the netrevenues of Guelph-Humber programs.

8 (Note: In the years immediately preceding fiscal 2003, largenon-cash accounting credits were recorded mainly as the result ofhigh market values of pension plan assets. The University followedthe practice of appropriating the difference between accountingand budgeted costs of post-employment benefits until such time asmarket conditions returned to "normal" or closer to long-termassumptions. Starting in fiscal 2003, market conditions led to therecording of large non-cash expenses rapidly consuming theappropriation of prior years. The cumulative amount of all non-cash expenses has now surpassed prior years' non-cashcumulative appropriated credits, leading to the recording of an$18.1-million accrued post-employment deficit balance (refer tothe section on Unappropriated Operating Fund Balances).

Page 11



Summary, all University Funds - FundBalances:

Total University income received in fiscal 2005 fromall funds was $499.7 million ($476.5 million in fiscal2004). Total expenses were $516.9 million ($491.1million in fiscal 2004). The net of revenues lessexpenses was a deficit of $17.2 million ($14.6 millionnet deficit in 2004). In order to complete the totalcalculation of changes in fund balances, the $13.3-million contribution to endowments was added. Theresulting $3.9-million net decrease in funds wasallocated in accordance with external restrictions,Board policy, and future budget and expenditurerequirements.

The following notes and table summarize thedistribution of changes to fund balances based on fiscal2005 financial results:

• Invested in Capital Assets - an increase of $7.4 million(2004, increase of $3.6 million) records the net changein the University's equity in its capital assets. Thisaccount increased as a result of an increase in net bookvalue of capital assets (acquisitions greater thanamortization) and the reduction in debt on theUniversity's capital assets (which increases our equity).

• Endowed Funds - an increase of $12.9 million (2004,$19.5 million increase) records the net change inendowments due to $14.8 million in new donations,contributions and capitalized interest, plus $1.8 millionin net proceeds from real estate proceeds less $3.7million in the reclassification of the Cutten endowmentto capital assets. (Note: The Endowed Fund Balance of$137.1 million is that portion of endowed investmentsof $149.7 million designated for initial donated capital,plus accumulated investment earnings allocated forinflation protection and growth. The balance ofinvestments have been either designated for spendingin accordance with Board policies or have beenadvanced to the endowment fund for investmentpurposes only.)

• Appropriations - records net funds committed or usedfor specific purposes such as outstanding purchasecommitments, departmental funds, research, capitalreplacement expenses and stabilization funds (refer toStatement 3 on page 15). In total, the University'sappropriations increased by $4.4 million ($19.9 milliondecrease in 2004).

• Unappropriated Funds - reports the accumulated netincome or deficit of University operations afterappropriations under University policy and restrictions.In total, the University's unappropriated fundsdecreased by $28.6 million. The Operating Funddeficit accounted for $28.5 million of this decrease,

consisting of an $18.1-million deficit from theaccounting accrual (non-cash expense) of post-employment benefits, a deficit of $9.4 million fromemployee restructuring programs, and an increase inthe deficit of $1.0 million from the new University ofGuelph-Humber program. In addition, unappropriatedfunds decreased by $0.1 million from the combinedancillary unit operations.

The following table summarizes total Universityfinancial results for the fiscal year ended April 30,2005:

2004/2005 UNIVERSITY RESULTSSummary of All Funds

(Smillions)

Opening 2004/ Closing

Fund 2005 Fund

Balances Results BalancesTotal University Revenues 499.7Total University Expenses 516.9

Revenues Less Expenses

(17.2)

Add: Endowment Contributions:

13.3recorded as a direct increase(decrease) inFund Balance.

Equals: Increase (decrease) inFund Balances (3.9)

UNIVERSITY FUND BALANCES:

Invested In Capital Assets 68.6 7.4 76.0Endowed Funds 124.2 12.9 137.1

Appropriated (all funds) 54.2 4.4 58.6

Unappropriated- Ancillaries 4.3 (0.1) 4.2

Unappropriated- Operating Fund (2.9) (28.5) (31.4)

Total Fund Balances 248.4 (3.9) 244.5

Page 12

PRICEVVATER ►OUsOOPERS

PricewaterhouseCoopers LLP

Chartered Accountants

55 King Street West, Suite 900Kitchener, OntarioCanada N2G 4W1Telephone +1 (519) 570 5700Facsimile +1 (519) 570 5730

June 30, 2005

Auditors' Report

To the Governors of theUniversity of Guelph

We have audited the statement of financial position of the University of Guelph as at April 30, 2005and the statements of operations and changes in fund balances (unappropriated, endowed, and investedin capital assets), changes in appropriated expendable fund balances and cash flows for the year thenended. These financial statements are the responsibility of the management of the University ofGuelph. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards. Thosestandards require that we plan and perform an audit to obtain reasonable assurance whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial positionof the University of Guelph as at April 30, 2005 and the results of its operations and its cash flows forthe year then ended in accordance with Canadian generally accepted accounting principles.

RA.u.ti,Ad--(nAirti-gafvelov P

Chartered Accountants

Page 13

PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers LLP and the other member firms of PricewaterhouseCoopersInternational Limited, each of which is a separate and independent legal entity.

A. Summ lee President

Statement 1UNIVERSITY OF GUELPH

STATEMENT OF FINANCIAL POSITIONAS AT APRIL 30, 2005

(in thousands of dollars)

2005 2004

50,867 48,82521,950 23,158

3,191 3,6592,0001,608 728

79,616 76,370

55,960 58,888741 5,502288 2,312863 887

262,617 287,221320,469 354,810

456,624 409,421

856,709 840,601

44,325 51,3222,572 3,458

12,073 12,30758,970 67,087

53,524 37,655158,625 161,206341,103 326,288612,222 592,236

75,962 68,619137,098 124,20658,643 54,152

(27,216) 1,388244 487 248,365

856,709 840,601

ASSETSCurrent

Cash and Short Term InvestmentsAccounts ReceivableInventoriesMortgage ReceivablePrepaid Expenses

Long-termDeferred Pension Costs (Note 12)Real Estate Projects in ProgressLong Term ReceivablesDeferred Charge (Note 14)Investments (Note 3)

Capital Assets (Note 6)

LIABILITIESCurrent

Accounts Payable and Accrued ChargesCurrent Portion of Long-term Debt (Note 7)Current Portion of Deferred Revenue and Contributions (Note 8)

Employee Future Benefits (Note 12)Long-term Debt (Note 7)Deferred Revenue and Contributions (Note 8)

FUND BALANCES Invested in Capital AssetsEndowed (Note 10)Appropriated (Statement 3)Unappropriated Surplus (Deficit) (Note 9)

Page 14

Statement 1

UNIVERSITY OF GUELPHSTATEMENT OF FINANCIAL POSITION

AS AT APRIL 30, 2005(in thousands of dollars)

2005 2004

ASSETSCurrent

Cash and Short Term Investments 50,867 48,825Accounts Receivable 21,950 23,158Inventories 3,191 3,659Mortgage Receivable 2,000Prepaid Expenses 1 608 728

79 616 76,370

Long-termDeferred Pension Costs (Note 12) 55,960 58,888Real Estate Projects in Progress 741 5,502Long Term Receivables 288 2,312Deferred Charge (Note 14) 863 887Investments (Note 3) 262 617 287 221

320,469 354 810

Capital Assets (Note 6) 456 624 409 421

856,709 840,601

LIA ; ILITIESCurrent

Accounts Payable and Accrued Charges 44,325 51,322Current Portion of Long-term Debt (Note 7) 2,572 3,458Current Portion of Deferred Revenue and Contributions (Note 8) 12 073 12 307

58,970 67,087

Employee Future Benefits (Note 12) 53,524 37,655Long-term Debt (Note 7) 158,625 161,206Deferred Revenue and Contributions (Note 8) 341,103 326,288

612 222 592,236

FUND BALANCESInvested in Capital Assets 75,962 68,619Endowed (Note 10) 137,098 124,206Appropriated (Statement 3) 58,643 54,152Unappropriated Surplus (Deficit) (Note 9) (27,216) 1 388

244 487 248,365

856,709 840,601

D. Deny Chair A. Summerlee President

Page 14


STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCES(UNAPPROPRIATED, ENDOWED AND INVESTED IN CAPITAL ASSETS)

FOR THE YEAR ENDED APRIL 30, 2005(in thousands of dollars)

2005 2004

REVENUEMinistry of Training, Colleges and Universities 134,983 126,387Ministry of Agriculture and Food (Schedule 3) 49,541 50,401Tuition (Credit and Non-Credit) 88,805 86,816Donations (Note 13) 5,153 4,054Sales of Goods and Services 97,326 99,786Investment Income (Note 4) 11,654 11,077Other Grants and Contracts 75,830 65,241Amortization of Deferred Capital Contributions (Note 8) 16,977 16,667Other 19,470 16,058

499,739 476,487

EXPENSESSalaries 255,422 234,878Benefits 62,329 63,035Travel 12,119 11,680Operating 119,775 113,541Minor Renovations and Repairs 3,994 4,043Interest 10,686 10,807Scholarships and Bursaries 19,425 21,684Capital Asset Amortization 33,143 31,416

516,893 491,084

Revenue Less Expenses (17,154) (14,597)

Endowment Contributions (Note 10) 13,276 18,644

Increase (Decrease) in Fund Balance (3,878) 4,047

Transfer (To) From Appropriations (Statement 3) (4,491) 19,903

Net Increase (Decrease) in Fund Balances (8,369) 23,950

Fund Balances, Beginning of YearUnappropriated, Endowed and Invested in Capital Assets 194,213 170,263

Fund Balances, End of YearUnappropriated, Endowed and Invested in Capital Assets (Schedule 1) 185,844 jam_

Page 15


STATEMENT OF CHANGES IN APPROPRIATEDEXPENDABLE FUND BALANCES


Balance, Beginning Transfer To (From) Balance, EndOPERATING FUND of Year Appropriations of Year

Equipment and Supplies 12,463 2,860 15,323Self Insured Losses 550 550Pension and Benefits 1,064 (1,064) 0Stabilization Fund 6,000 6,000

20,077 1,796 21,873

CAPITAL FUND

Capital Projects and Renovations 5,224 (675) 4,549Minor Renovations 2,334 (198) 2,136

7,558 (873) 6,685

ANCILLARY ENTERPRISES

Real Estate Division 2,098 20 2,118Student Housing Services 500 500Hospitality Services 209 209University Centre 206 4 210

2,804 233 3,037

RESEARCH AND TRUST FUND

Research and Trust 23,713 3,335 27,048

TOTAL 54,152 4,491 58,643

Page 16


STATEMENT OF CASH FLOWSFOR THE YEAR ENDED APRIL 30, 2005


OPERATING ACTIVITIES

2005 2004

Increase (Decrease) in Fund Balance (Statement 2) (3,878) 4,047Add (Deduct) Non-Cash Items:

Capital Asset Amortization (Statement 2) 33,143 31,416Amortization of Deferred Capital Contributions (Statement 2) (16,977) (16,667)Change in Unrealized Gain on Investments (8,612) (19,488)(Increase) Decrease in Long Term Receivables 24 (312)(Increase) Decrease in Deferred Pension Costs 2,928 (426)Increase in Employee Future Benefits 15,869 11,511(Increase) Decrease in Non-cash Working Capital (1,440) 11,188

21,057 21,269

FINANCING ACTIVITIES

Decrease in Deferred Charges 24 23Repayment of Long-term Debt (3,467) (3,301)Deferred Capital Contributions Received During the Year 23,375 23,066Increase in Deferred Contributions 8,183 4,170

28,115 23,958

INVESTING ACTIVITIES

Disposal of Investments 33,216 26,665Acquisition of Capital Assets (80,346) (88,308)

(47,130) (61,643)

Change in Cash and Short Term Investments 2,042 (16,416)

CASH AND SHORT TERM INVESTMENTS,

BEGINNING OF THE YEAR 48,825 65,241

CASH AND SHORT TERM INVESTMENTS,END OF THE YEAR (Statement 1) 50,867 48,825

Page 17

UNIVERSITY OF GUELPHNOTES TO THE FINANCIAL STATEMENTS


1. AUTHORITY AND PURPOSE

The University of Guelph operates as a not-for-profit entity under the authority of the University of Guelph Act(1964). The University is a comprehensive, research intensive university offering a range of undergraduate andgraduate programs. With the exception of academic governance, which is vested in the University's Senate, theUniversity is governed by the Board of Governors. The University is a registered charity and is thereforeexempt from income taxes under section 149 of the Income Tax Act.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES

These financial statements have been prepared by management in accordance with generally acceptedaccounting principles, applied consistently within the framework of the accounting policies summarized below:

(a) Fund AccountingThe accounts of the University are maintained in accordance with the principles of fund accounting in order toobserve the limitations and restrictions placed on the use of available resources. Under fund accounting,resources for various purposes are classified for accounting and reporting purposes into separate funds inaccordance with specified activities or objectives. For financial reporting purposes, the University hascombined funds with similar characteristics into five major fund groups:

i. The Operating Fund presents the academic, administrative and other operating activities of the University.

ii. The Capital Fund presents the funds received and expended on property, plant and equipment exceptcapital expenditures related to ancillary operations.

iii. The Ancillary Enterprises Fund presents the operations of services carried on by the University that aresupportive of but not directly related to the University's primary functions of teaching and research. Anydeficits incurred are recoverable from each ancillary's future operations. The Ancillary Enterprises Fundincludes the following:

Hospitality ServicesParking ServicesReal Estate DivisionStudent Housing ServicesUniversity Centre

iv. The Research and Trust Fund includes those funds provided by benefactors and external contracts, theexpenditure of which is restricted to a specific purpose. Also included is that portion of investment incomeon endowments which has been made available for expenses under University Policy.

v. The Endowment Fund records donations provided by benefactors or funds designated by the Board, whichare restricted as to purpose and expendability. Only the accumulated investment income earned on thesefunds, after having provided for inflation protection and, in specific cases, growth may be expended for thedesignated purpose. The endowment capital remains intact. Endowment earnings available for expenditureare recorded in the Research and Trust Fund.

The Endowment Fund consists of two major groups of investments each with different spending objectives:the Heritage Fund and the General Endowment Fund.

The Heritage Fund was created in 1991 by a declaration of trust of the Board of Governors with the soleintention that the capital of the Fund will be held in perpetuity for University strategic purposes. The mainsources of growth for the Fund are proceeds of University real estate sales and leases from designatedproperties and investment income earned on the capital of the Fund.

Page 18



Distributions from the Fund are made in accordance with a formula based on a five-year average of marketreturns after having provided for inflation protection and gowth. Management of the Fund is delegated bythe Board of Governors to the Board of Trustees of the Heritage Fund.

The General Endowment Fund contains all remaining University endowments which consist of private andBoard designated donations directed primarily for student aid.

(b) Investments

The University reports its investments at market value with the exception of the capital fund and ancillaryenterprises investments which are recorded at book value whereby the investments are initially recorded at costand the earnings from such investments are recognized only to the extent received or receivable.

(c) Related Entity

With the approval of the Ontario Ministry of Training, Colleges and Universities, the University of Guelph andThe Humber College Institute of Technology and Advanced Learning entered into a Memorandum ofUnderstanding dated June 10, 1999, to develop and deliver joint programming as the University of Guelph-Humber (the Joint Venture). Under the Joint Venture, the University is represented on the Executive Committeeof the Joint Venture. The Joint Venture has not been consolidated in the University financial statements,however the University recognizes 50% of the total net operating results in the Statement of Operations andChanges in Fund Balances of the Joint Venture.

(d) Financial Instruments

Accounts receivables are recorded at estimated net realizable value, which approximates fair value. Accountspayable and long-term debt are recorded at their cost amounts, which approximates fair value.

(e) Inventory Valuation

Inventories are recorded at the lower of cost and market.

(f) Capital Assets

Capital assets are recorded at cost less accumulated amortization, except for the donated assets which arerecorded at appraised values with the exception of art, rare books and artifacts. These are recorded at a nominalvalue of $1,000 and are not amortized.

The cost of capital assets is amortized on a straight-line basis over the estimated useful life as follows:

Land Improvements 10 to 60 YearsBuildings 40 YearsFurniture and Equipment 10 YearsLibrary Acquisitions 5 YearsComputer Equipment 3 Years

(g) Leases Payable

The University has entered into certain equipment and building leases for which title to the related assets willvest in the University on the termination of the leases. The cost of these assets is reflected in capital assets andthe present value of the lease commitments is reflected as a liability.

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(h) Appropriations of Fund Balances

Appropriations are restrictions of fund balances designated for: future purchase order commitments; capital andrenovation projects committed but not completed; unspent organizational unit funds permitted to be carriedforward at the end of each year for expenditure in the following year; and contingencies in such amounts as aredeemed necessary by the Board.

(i) Recognition of Revenue

The University accounts for restricted contributions in accordance with the deferral method.

Externally restricted contributions received for:

• purposes other than endowment or the acquisition of capital assets are deferred and recognized asrevenue in the year in which the related expenses are incurred.

• the acquisition of capital assets having limited life are initially recorded as deferred contributions in theperiod in which they are received. They are recognized as revenue over the useful life of the relatedassets.

• the acquisition of unlimited life assets such as land and collections are recognized as direct increases innet assets in the period in which they are received.

Endowment contributions and related investment income or loss allocated to endowment capital preservationand growth are recognized as direct increases or decreases in net assets in the period in which they are receivedor earned.

Unrestricted contributions are recognized as revenue when received.

Revenues received for the provision of goods and services are recognized in the period in which the goods orservices are provided by the University. Revenues received for a future period are deferred until the goods orservices are provided.

(j) Employee Future Benefits

The University maintains three defined benefit pension plans for its employees: Professional Plan, RetirementPlan and Non-Professional Plan. Pension plan assets, liabilities and changes in net assets are reported in therespective financial statements of these plans. The assets of the plans are held by an independent custodian andare not recorded in the accounts of the University.

Additionally, the University provides extended health care and dental benefits to retirees and their eligibledependents on a cost-sharing basis.

The cost of the pension and other retirement benefits earned by employees is actuarially determine using theprojected benefit method prorated on service and management's best estimate of expected plan investmentperformance, salary escalation, retirement ages of employees and other actuarial factors. Future plan obligationsare discounted using current market interest rates.

As allowed under generally accepted accounting principles, the University has exercised a three-monthaccelerated measurement date for financial reporting purposes. Accordingly, January 31 of each year is themeasurement date used for determining the benefit obligation and value of plan assets.

For the purpose of calculating the expected return of plan assets, the assets are valued at fair value. Actuarialgains (losses) arise from actual experience differing from expected or from changes in actuarial assumptionsused to determine the accrued benefit obligation. The excess of the net accumulated actuarial gain (loss) over 10percent of the greater of the accrued benefit obligation and the fair value of plan assets is amortized over the

Page 20



average remaining service period of the active employees (or, if applicable, the average remaining lifeexpectancy of the former employees). Past service costs arising from plan amendments are amortized over theaverage remaining service period of employees active at the date of amendment.

On May 1, 2000, the University adopted the new accounting standard on employee future benefits using theprospective application method. The University is amortizing the resulting transitional asset/obligation over theaverage remaining service period of employees expected to receive benefits under the benefit plans as of May 1,2000. (refer to Note 12)

(k) Real Estate Projects

The Real Estate Division is included in the ancillary enterprises fund. The Real Estate Division was establishedto develop certain real estate properties owned by the University and designated as Heritage Fund properties.

Real Estate projects in progress are carried at the lower of total cost and estimated net realizable value.

Costs, including capitalized interest (2005 $18; 2004 $220) of projects not yet completed are deferred andrecorded as "Real Estate Projects in Progress" on the Statement of Financial Position. It is anticipated that theseproject costs will be recovered from future Real Estate Division revenues.

3. INVESTMENTSBook Value Market Value

2005 2004 2005 2004

Short Term Notes and Bonds 97,718 133,535 98,019 133,792

Investments Held for Debt Repayment 6,365 5,478 7,317 6,306

Research & Trust FundOMAF Post Retirement 2,277 2,438 4,019 3,952OMAF Early Retirement 2,715 2,953 4,802 4 793

Total Research & Trust Fund 4,992 5,391 8,821 8,745

General and Heritage Endowment FundsCash and Short Tenn Notes 13,508 5,188 13,508 5,188Canadian Equities 24,670 22,895 38,053 29,682Canadian Pooled Equity 2,016 1,573 2,479 1,911Canadian Fixed Income 35,481 35,002 37,291 36,284Foreign Equities 50,393 47,751 46,527 44,147Foreign Pooled Equity 10,585 18,476 11,855 18,596Cutter Club 3,655 3,655

136,653 134,540 149,713 139,463

Total Investments 245,728 278,944 263,870 288,306

Investment values as reported on the Statement of Financial Position, are as follows:

Investments2004

Short Tenn Notes and Bonds (Book) 97,718 133,535Investments Held for Debt Repayment (Book) 6,365 5,478Research & Trust Fund (Market) 8,821 8,745General and Heritage Endowment Funds (Market) 149,713 139,463

262,617 287,221

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3. INVESTMENTS, continued

Pooled investments held by the General and Heritage Endowment Funds refer to the value of units held inexternally managed investment funds specializing in equities, fixed income and international investments.

In April 1997, as part of the enhanced partnership agreement with OMAF, the University received funds whichmay only be used to cover the post retirement and early retirement benefit costs related to past service forformer Ministry employees, now employed by the University. The OMAF Post Retirement and the OMAFEarly Retirement Funds are invested in a diversified pooled fund of Canadian equities, bonds, foreign equitiesand cash investments.

The assets of the General and Heritage Endowment Funds have been pooled for investment purposes. Eachfund's interest in the pooled investments is calculated based on the units held by each fund in the investmentpool using market values. The respective values of the assets of the General and Heritage Endowment Funds,based on the number of units held by each fund, are as follows:

Book Value Market Value2005 2004 2005 2004

General Endowment 96,643 95,310 104,747 97,863Heritage Fund 40,010 39,230 44,966 41,600

136,653 134,540 149,713 139,463

4. INVESTMENT INCOME

Investment income is earned from operations and endowments. The income from endowments is recorded inoperations as the income becomes available for expenditure in accordance with the University's endowmentspending policy.

Investment Income Total TotalOperations Endowment 2005 2004

Net Realized Investment Income 5,550 1,343 6,893 9,465Increase in Unrealized Investment Income 391 8,137 8 528 19,511Total Investment Income 5,941 9,480 15,421 28,976Increase in Accumulated Endowed Investment Income (4,394) (4,394) (15,170)Investment Income Available for Expenditure 5,086 (5,086)Net (Increase) Decrease in Deferred Contributions 627 627 (2,729)

Total 11,654 11,654 11,077

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5. RELATED ENTITIES

a) GUELPH GOLF & RECREATION CLUB LIMITED (CUTTEN CLUB)

The Guelph Golf & Recreation Club Limited (Cutten Club) was wholly owned by the University. As of March31, 2005, the Guelph Golf & Recreation Club Limited (Cutten Club) discontinued operations. The land,buildings and equipment were donated to the University, and a new arms length legal entity operated andcontrolled by the members was established. The University has entered into a lease arrangement with the newentity, whereby the University leases the assets to the new entity.

To reflect this transaction, the University's existing Cutten Club investment of $3,655, previously recorded inthe Endowment Fund, is now recorded in the Capital Fund as land, land improvements, buildings, and furnitureand equipment. The related endowment fund balance has been transferred to the Capital Fund as an investmentin capital assets.

As part of the Cutten Club agreement, the University will guarantee a loan of up to $2,500 for the new legalentity. As of April 30, 2005 there was no actual loan amount outstanding.

b) JOINT VENTURE, UNIVERSITY OF GUELPH -HUMBER

With the approval of the Ontario Ministry of Training, Colleges and Universities, the University of Guelph andThe Humber College Institute of Technology and Advanced Learning entered into a Memorandum ofUnderstanding dated June 10, 1999, to develop and deliver joint programming as the University of Guelph-Humber (the Joint Venture). Under the Joint Venture, the University is represented on the Executive Committeeof the Joint Venture.

As part of its participation in the Joint Venture, the University also provides certain services including academicadministration, student recruitment and admissions, curriculum development and student aid and coursedelivery. The University has advanced funds equal to the cost of these services to the Joint Venture. At April30, 2005, there is a total advance of $5,751 (2004 $6,435) representing the cumulative amount of all servicesprovided by the University, relating to the Joint Venture, since the inception of the program. The Universityexpects to collect on these advanced funds when the Joint Venture begins to recover its cumulative deficitcurrently expected to begin in fiscal 2006/2007.

The Joint Venture has not been consolidated in the University financial statements however the Universityrecognized 50% of the total net deficit of the Joint Venture as a cost. Separately audited financial statements areprepared for the Joint Venture (year-ended March 31, 2005). The total cumulative deficit recorded as a cost tothe University is $3,982 (2004 $2,943). The University expects to recover this cost from future Joint Venturenet revenues.

Page 23

6.



CAPITAL ASSETS

a) Details 2005 2004Accumulated Net Book Net Book

Cost Amortization Value Value

Land 8,241 8,241 6,473Land improvements 23,393 7,812 15,581 9,433Buildings 469,934 181,016 288,918 232,970Furniture and equipment 191,876 109,373 82,503 79,921Construction in progress 44,355 44,355 70,874Computer equipment 34,708 21,632 13,076 5,459Library and art collection 27,566 23,616 3,950 4,291

b) Change in Net Book Value

800,073 343,449 456,624 409,421

2005 2004Balance, beginning 409,421 352,529Purchase of capital assets 80,346 88,308Less: Amortization of capital assets (33,143) (31,416)Balance, ending

c) Insured Values

456,624 409,421

2005 2005 2004 2004Net Book Insured Net Book Insured

Value Value Value ValueBuildings 288,918 1,044,000 232,970 951,299Furniture, equipment and library books 99,529 826,597 89,671 803,723Art and artifacts collection 1 11,729 1 11,729

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7. a) LONG-TERM DEBT

2005 2004Interest Issue DueRate Date Date Total Total

%

Series A Unsecured Debenture 6.24 11-Oct-02 10-Oct-42 100,000 100,000

Banker's AcceptanceCanadian Imperial Bank of Commerce 7.88 1-May-96 1-May-06 4,221 4,893

Canadian Imperial Bank of Commerce 5.89 6-Jul-98 6-Jul-07 2,404 3,379

Bank of Montreal 7.01 16-Oct-00 16-Jun-25 32,600 33,00039,225 41,272

Leases payableOntario Student Housing Corp. 6.13 1-Jan-69 1-Dec-18 697 729Canada Mortgage and Housing Corp. 5.88 1-Jan-69 1-Dec-18 6,159 6,436Hewlett-Packard 6.3 1-Sep-00 31-Aug-04 0 1,064

6,856 8,229Mortgages payableCanada Mortgage and Housing Corp. 5.38 1-Jan-67 1-Dec-16 811 858Ontario Housing Corp.(interest only) 10.36 1-Oct-90 1-Apr-10 1,225 1,225Ontario Housing Corp.(interest only) 9.86 1-Dec-92 1-Jun-11 13,080 13,080

15,116 15,163

161,197 164,664

Current Portion (2,572) (3,458)

158,625 161,206

The repayments required in the next five years for the debt listed above are summarized as follows:

Principal Interest Total

2006 2,572 10,769 13,3412007 5,549 10,428 15,9772008 1,214 10,275 11,4892009 947 10,188 11,1352010 2,198 10,127 12,325

12,480 51,787 64,267

Thereafter 148,717161,197

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7. b) SERIES A UNSECURED DEBENTURE

On October 11, 2002 the University issued a Series A senior unsecured debenture in the aggregate principalamount of $100,000 at a price of $998.69 for proceeds of $99,869. The debenture bears interest at 6.24%,which is payable semi-annually on April 10 and October 10 with the principal amount to be repaid on October10, 2042. The proceeds of the issue are primarily being used to finance capital projects including theconstruction of new classrooms and a science complex.

7. c) INTEREST RATE RISK

The University entered into interest rate exchange (swap) contracts with the Bank of Montreal and CanadianImperial Bank of Commerce in order to convert variable-rate borrowings to fixed rates, thereby reducinginterest rate risk associated with its outstanding debt. The interest rate swap contract involves an exchange offloating rate to fixed rate interest payments between the University and the financial institutions. Under theterms of these agreements, the University pays a fixed rate and receives a variable rate on each swap's notionalprincipal amount. The swap transactions are completely independent and have no direct effect on therelationship between the University and its lenders.

During the fiscal year, the University entered into a future dated interest rate exchange (swap) contract with theCanadian Imperial Bank of Commerce. The start date of this new contract is May 1, 2006.

The notional amount of the interest rate swap and the net unrealized gain (loss) on these contracts outstandingat April 30, 2005 are:

NotionalDue Date Amount Gain/(Loss)

Canadian Imperial Bank of Commerce 1-May-06 4,167 (227)

Canadian Imperial Bank of Commerce 6-Jul-07 2,401 (72)

Canadian Imperial Bank of Commerce 2-May-16 6,000 (88)

Bank of Montreal 16-Jun-25 32,538 (6,925)

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8. DEFERRED REVENUE, CONTRIBUTIONS AND CAPITAL CONTRIBUTIONS

a) Deferred Revenue

Total2005

Total2004

Prepaid Leases, Fees and Grants 11,320 10,779OMAF Advance 10,011 9,053Other 817 1,959

22,148 21,791Less: Current Deferred Revenue (12,073) (12,307)

b) Deferred Contributions10,075 9,484

Changes in Deferred Contributions are as follows:Balance, beginning of year 55,944 48,744Contributions received during the year 107,174 102,393Contributions recognized in the year (99,348) (95,193)Balance, end of year

c) Deferred Capital Contributions

63,770 55,944

Changes in Deferred Capital Contributions are as follows:Balance, beginning of year 260,860 254,461Contributions received during the year 23,375 23,066Amortization of deferred capital contributions (16,977) (16,667)Balance, end of year 267,258 260,860Total Deferred Revenue, Contributionsand Capital Contributions 341,103 326,288

Page 27

9.



UNAPPROPRIATED FUND BALANCE (Schedule 1)

2005 2004

Operating FundAccrual for Employee Future Benefits (18,068)Voluntary Early Retirement Programs:2004/2005 Program (5,974)2005/2006 Program (3,404)

(9,378)University of Guelph-Humber (Note 5 (b)) (3,982) (2,943)

(31,428) (2,943)

Ancillary Enterprises (Schedule 2) 4.212 4.331

Balance, end of year (27,216) 1,388

The University's total Unappropriated Fund Balance for the Operating Fund at the end of fiscal 2004/2005shows a deficit of $31,428 consisting of:

• Accrual for Employee Future Benefits: The University has costs associated with its sponsorship ofthree pension plans and other post-retirement benefits. These costs are actuarially determined andcharged to the University's Statement of Operations. (Refer to Note 12)

• Voluntary Early Retirement Programs: As part of a plan to meet 2004/05 and 2005/06 budgettargets, the Board of Governors approved one-time deficits incurred as a result of buyout costs forcertain University faculty and staff. The 2004/05 program costs incurred are $5,974 and as at April 30,2005 costs of the 2005/06 program are $3,404. The maximum approved deficit under these programs is$10,000 and the University will repay these costs by no later then 2010/2011 at an annual rate of notless than $2,000.

• University of Guelph-Humber: This deficit is associated with the University's share of the start-upcosts of the University's joint venture with The Humber College Institute of Technology andAdvanced Learning. It is planned to have these costs recovered from future operations of the jointventure. Repayment is estimated to begin in 2006/2007.

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10. CHANGES IN FUND BALANCE – ENDOWMENTS

Endowment Fund Balances include externally restricted donations received by the University and donationsdesignated by the Board to be endowed for specific purposes. The University endowment policy has theobjective of protecting the real spending value of the endowed principal by limiting spending of investmentincome earned on endowments. The balance of annual investment income is recorded as a direct change to theendowed fund balance.

Externally BoardRestricted Restricted

Total2005

Total2004

Investment income (loss) on endowments 8,263 1,218 9,481 20,090Less: available for expenditure (4,275) (811) (5,086) (4,920)Increase (Decrease) in

accumulated endowed investment income 3,988 407 4,395 15,170Contributions received during year 8,443 438 8,881 3,319Equity adjustment - Cutten Club (Note 5 (a)) 0 155Endowment Contributions 12,431 845 13,276 18,644Transfers in 3,214 57 3,271 867Transfer to Capital Fund (3,655) (3,655)Net Increase (Decrease) in Fund Balance 15,645 (2,753) 12,892 19,511Balance, beginning of year 103,200 21,006 124,206 104,695Balance, end of year 118,845 18,253 137,098 124,206

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11. ONTARIO STUDENT OPPORTUNITY TRUST FUND (PHASE I)

The Ontario Student Opportunity Trust Fund (Phase I) program was established by the Government of Ontarioto encourage companies and individuals to contribute to funds for Ontario's college and university students.Under this program, donations received from companies and individuals were matched by the province on adollar for dollar basis. In response to this provincial initiative, the University established the ACCESS Fundwithin the endowed portfolio. Investment income from the funds will be used for student financial assistance.

The following are the balances of the Ontario Student Opportunity Trust Fund (Phase I) recorded at cost, andthe related transactions for the year ended April 30, 2005:

Access Endowment Fund 2005 2004

Opening balance - May 1 21,815 22,498

Net Investment income endowed - realized (829) (683)

Closing balance - April 30 * 20,986 21,815====.

Access Expendable Fund 2005 2004Opening balance - May 1 2,222 2,305

Investment income available for expenditure 1,011 1,024Bursaries awarded ** (850) (1,107)

Closing balance - April 30 2,383 2,222.

* Includes original donated capital of $20,529 (2004 $20,529) and accumulated realized net preservation ofcapital of $457 (2004 $1,286)

** The total number of bursaries awarded for the year ended April 30, 2005 was 664 (857 in 2004).

The market value of the endowment as at April 30, 2005 was $20,606 (2004 $20,139).

This information relates to Phase I of the Ontario Student Opportunity Trust Fund and not Phase II which isseparately audited.

Page 30


For the Year Ended April 30, 2005

12. EMPLOYEE FUTURE BENEFITS

a) Description of Plans

The University has a number of funded and unfunded defined benefit programs that provide pension and otherpost-employment benefits to its employees. The pension programs provide benefits that are based on years ofservice and best average earnings. The benefit rates are adjusted annually to reflect any increase in theConsumer Price Index (limited to 8%) that is in excess of 2%. The University's other benefit plans provideextended health care and dental plan benefits to retirees and their eligible dependents on a cost-sharing basis.Retiree contributions to the health and dental programs cover 30% and 50% of the costs respectively.

b) Accrued Benefit Obligations and Plan Assets

The University measures the accrued benefit obligations (ABOs) and the fair value of plan assets for accountingpurposes as at January 31 of each year. Information about the University's defined benefit plans, in aggregate, isas follows:

[ in thousands of dollars] Pension Plans* Other Benefit Plans

2005 2004 2005 2004Change In Benefit ObligationBenefit obligation - beginning of measurement period 726,381 654,317 131,169 92,427

Current service cost (employer) 20,488 15,238 5,070 2,794

Interest cost 42,961 42,912 7,806 6,115

Employee contributions 9,420 8,437

Past Service Costs 8,893 497

Actuarial loss 26,630 37,815 11,522 32,167

Benefits paid (33,186) (32,835) (2,761) (2,334)Benefit obligation - end of measurement period 801,587 726,381 152,806 131,169

Change in Plan AssetsMarket value of plan assets - beginning of measurement period 671,423 570,791

Actual return on plan assets, net of expenses 39,470 104,809 -

Employer contribution 10,824 20,221 2,761 2,334

Employee contributions 9,420 8,437

Benefits paid (33,186) (32,835) (2,761) (2,334)Market value of plan assets - end of measurement period 697,951 671,423

Reconciliation of funded status

Funded status - surplus (deficit) (103,636) (54,958) (152,806) (131,169)

Estimated employer contributions after measurement date 2,378 2,599 690 592Unamortized transitional obligation (asset) (101,980) (114,577) 42,773 47,051

Unamortized past service costs 23,679 16,636 -

Unamortized net actuarial loss 238,011 211,874 53,162 43,607Accrued benefit asset (liability), before Valuation Allowance 58,452 61,574 (56,181) (39,919)

Total Valuation Allowance (VA) (3,018) (3,246) -

Accrued benefit asset (liability), net of VA 55,434 58,328 (56,181)) (39,919)

Statement of Financial PositionDeferred pension costs 55,960 58,888Accounts payable (employee future benefits - current liability) (146) (257) (3,037) (2,567)

Employee future benefits (long-term liability) (380) (303) (53,144) (37,352)

Accrued benefit asset (liability), net of VA 55,434 58,328 (56,181) (39,919)

*Pension plans include accrued benefit obligations and plan assets in respect of plans that are not fully funded of$791,709 and $684,591 respectively ($716,962 and $658,272 respectively for 2004).

Page 31



12. EMPLOYEE FUTURE BENEFITS (CONTINUED)

c) Net Benefit Plan Costs

[ in thousands of dollars] Pension Plans Other Benefit Plans

2005 2004 2005 2004Components of costCurrent service cost (employer) 20,488 15,238 5,070 2,794

Interest cost 42,961 42,912 7,806 6,115

Actual return on assets (39,470) (104,809) - -Actuarial (gains) losses 26,630 37,815 11,522 32,167Past service costs 8,893 497

Settlements/curtailments - 68Difference between actual and expected return (10,410) 62,153Difference between actual and

recognized actuarial gains (losses) (15,727) (23,233) (9,555) (32,010)Difference between actual and

recognized past service costs in year (7,043) 1,043 _

Amortization of transitional obligation (asset) (12,597) (12,591) 4,278 4,278

Amortization of transitional increase in VA 5 5 -

Current increase (decrease) in VA (233) 1,652

Net benefit cost 13,497 20,750 19,121 13,344

The net benefit plan costs are recorded in the Statement of Operations and Changes in Fund Balances as abenefit expense.

d) Cash Payments

Total cash payments for employee future benefits for the 12-months ended January 31, 2005, consisting ofcash contributions by the University to the funded pension plans and cash payments directly to beneficiariesfor the unfunded other benefit plans, was $13,585,000 (2004 $22,555,000).

e) Asset Allocation

The asset allocation of the pension plans pooled funds, at the measurement date of January 31, is asfollows:

2005 2004Percentage plan assets at January 31Equity securites 65.9% 61.7%Debt Securites 31.9% 36.5%Cash and short term investments 1.8% 1.4%Other 0.4% 0.4%

100.0% 100.0%

0 Actuarial Valuations

The most recent actuarial valuations for the University's defined benefit plans are as follows:

Registered Pension Plans September 30, 2003Other Plans January 31, 2004

For the University's registered pension plans, the next funding valuation is required to be prepared with aneffective date no later than September 30, 2006.

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12. EMPLOYEE FUTURE BENEFITS (CONTINUED)

g) Significant Assumptions

The significant actuarial assumptions adopted are as follows:Pension Plans Other Benefit Plans

2005 2004 2005 2004For determining accrued benefit obligation at end of fiscal period:Discount rate 5.65% 5.90% 5.65% 5.90%Rate of increase in future compensation 3.50% 3.50% n/a n/aRate of increase in national average wage 3.50% 3.50% n/a n/aRate of increase in Consumer Price Index (CPI) 3.00% 3.00% n/a n/a

For determining benefit cost during fiscal period:Discount rate 5.90% 6.60% 5.90% 6.60%Rate of increase in future compensation 4.00% 4.00% n/a n/aRate of increase in national average wage 3.50% 4.00% n/a n/aRate of increase in Consumer Price Index (CPI) 3.00% 3.50% n/a n/aExpected long-term rate of return on plan assets 7.50% 7.50% n/a n/a

Assumed health care cost trend rate at end of fiscal period:

Dental inflation n/a n/a 4.50% 4.50%Initial health care cost trend rate n/a n/a 10.00% 10.00%Annual rate of decline in health care cost trend rate n/a n/a 0.50% 0.50%Year of initial decline in health care cost trend rate n/a n/a 2007 2006Ultimate health care cost trend rate n/a n/a 5.00% 5.00%

h) Sensitivity Analysis

Assumed discount rate and health care cost trend rates have a significant effect on the amounts reported forthe benefit plans. The sensitivities of each assumption have been calculated independently of changes inother assumptions. Actual experience may result in changes in multiple assumptions simultaneously, whichcould magnify or reduce certain sensitivities.

[ in thousands of dollars]

Impact of discount rate change:

Pension Plans Other Benefit Plans Benefit Net Benefit Net

Obligation Benefit Cost Obligation Benefit Cost2005 2006 2005 2006

Increase (Decrease) Increase (Decrease)

1% increase (101,934) (12,464) (25,645) (3,071)

1% decrease 116,897 13,645 30,816 3,535

Impact of health care cost trend rate change:1% increase n/a n/a 31,020 5,437

1% decrease n/a n/a (25,824) (4,375)

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13. DONATIONS

2005 2004

Donations received during the year 8,825 6,900Donations recorded as a direct addition to endowments (3,490) (2,562)Donations recorded as deferred capital contibutions (182) (284)Donations recognized as revenue 5,153 4,054

14. DEFERRED CHARGE

Transaction costs and discount totaling $934 incurred in connection with the $100 million, 6.24%Series A unsecured debenture issue are being amortized over the term of the debt (40 years).Amortization costs recognized in fiscal 2005 are $23 (2004 $23).

15. COMMITMENTS

Costs to complete major capital projects in progress as at April 30, 2005 are estimated to be $94,220(2004 $37,930) and will be funded by government grants, gifts and University resources.

16. CONTINGENCY

a) The University is a defendant in a number of legal proceedings. Claims against the University inthese proceedings have not been reflected in these financial statements. It is the opinion of themanagement and the University's legal counsel that the resolution of these claims will not have amaterial effect on the fmancial position of the University.

b) The University is a member in a self-insurance co-operative in association with other Canadianuniversities to provide property and general liability insurance coverage. Under this arrangementreferred to as the Canadian University Reciprocal Insurance Exchange (C.U.R.I.E.), the Universityis required to share in any net losses experienced by C.U.R.I.E. The commitment was recentlyrenewed to January 1, 2008.

c) The University allows a licensee to extract aggregate from its Puslinch property. Under the termsof the license agreement, the licensee is responsible for site restoration after extraction iscomplete, according to an agreed upon plan of restoration. Site restoration is regularly carried outby the licensee as extraction from portions of property is complete. While management is of theview that the licensee will meet its obligations under the agreement with respect to site restoration,should the licensee be unable to do so, the University as property owner would be responsible.

17. COMPARATIVE NUMBERS

Certain comparative numbers have been reclassified to conform with the presentation adopted for thecurrent year.

Page 34

Schedule I


STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCES

(UNAPPROPRIATED, ENDOWED AND INVESTED IN CAPITAL ASSETS)FOR THE YEAR ENDED APRIL 30, 2005


OPERATING CAPITAL ANCILLARY RESEARCH ENDOWMENT TOTAL TOTAL

FUND FUND ENTERPRISES & TRUST FUND FUND 2005 2004(Schedule 2)

REVENUEMinistry of Training, Colleges and Universities 133,122 1,644 217 134,983 126,387Ministry of Agriculture and Food 49,541 49,541 50,401Tuition (Credit and Non-Credit) 88,805 88,805 86,816Donations (Note 13) 30 5,123 5,153 4,054Sales of Goods and Services 37,109 60,217 97,326 99,786Investment Income (Note 4) 1,944 3,012 381 6,317 11,654 11,077Other Grants and Contracts 1,829 74,001 75,830 65,241Amortization of Deferred Capital Contributions (Note 8) 16,748 229 16,977 16,667Other 19,049 20 401 19,470 16,058

331,429 21,424 61,445 85,441 499,739 476,487

EXPENSESSalaries 208,999 13,293 33,130 255,422 234,878Benefits 55,830 2,532 3,967 62,329 63,035Travel 6,461 146 5,512 12,119 11,680Operating 74,320 64 23,062 22,329 119,775 113,541Minor Renovations and Repairs 2,617 1,377 3,994 4,043Interest 6,409 4,277 10,686 10,807

Scholarships and Bursaries 8,750 10,675 19,425 21,684

Institutional (Recovery) Charges (8,220) 8,220 - -Capital Asset Amortization 29,196 3,947 33,143 31,416

346,140 38,286 56,854 75,613 516,893 491,084

Revenue Less Expenses (14,711) (16,862) 4,591 9,828 (17,154) (14,597)

Endowment Contributions (Note 10) 13,276 13,276 18,644

Interfund Transactions (11,978) 22,376 (3,521) (6,493) (384)

Change in Fund Balance (26,689) 5,514 1,070 3,335 12,892 (3,878) 4,047

Transfer (To) From Appropriations (Statement 3) (1,796) 873 (233) (3,335) (4,491) 19,903

Net Increase (Decrease) in Fund Balances (28,485) 6,387 837 12,892 (8,369) 23,950

Fund Balances, Beginning of YearUnappropriated, Endowed and Invested in Capital Assets (2,943) 58,398 14,552 124,206 194,213 170,263

Fund Balances, End of YearUnappropriated, Endowed and Invested in Capital AssetsSurplus (Deficit) (31,428) 64,785 15,389 137,098 185,844 194,213

Page 35

Schedu ►.UNIVERSITY OF GUELPH

STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCESFOR ANCILLARY ENTERPRISES

FOR THE YEAR ENDED APRIL 30, 2005


HOSPITALITY

SERVICES

REAL

ESTATE

STUDENT

HOUSING

SERVICES PARKING

UNIVERSITY TOTAL

CENTRE 2005

TOTAL

2004

REVENUE 30,687 3,596 23,256 2,088 1,818 61,445 63,027

EXPENSESCost of Materials 13,463 320 13,783 14,498Salaries 8,397 251 3,733 197 715 13,293 13,246Benefits 1,599 59 687 46 141 2,532 2,463Institutional Charges 1,595 6,022 186 417 8,220 7,972Operating 4,244 560 3,865 265 345 9,279 10,030Travel 43 11 80 3 9 146 135Minor Renovations and Repairs 108 917 343 9 1,377 1,422Interest 108 4,169 4,277 4,262

Capital Asset Amortization 564 394 2,855 120 14 3,947 3,806

Total Operating Expenses 30,013 1,383 22,328 1,160 1 970 56,854 57,834

Revenue Less Expenses 674 2,213 928 928 (152) 4,591 5,193

Interfund Transactions (418) (1,604) (841) (842) 184 (3,521) (827)

Change in Fund Balance 256 609 87 86 32 1,070 4,366

Transfers (To) From Appropriations (209) (20) (4) (233) 115

Net Increase (Decrease) in Fund Balances 47 589 87 86 28 837 4,481

Fund Balance, Beginning of Year 4,975 9,510 (3,882) 3,617 332 14,552 10,071

Fund Balance, End of Year 5,022 10,099 (3,795) 3,703 360 15,389 14,552

Fund Balance Components:Invested in Capital Assets * 5,057 8,468 (5,276) 2,853 75 11,177 10,221

Unappropriated ** (35) 1,631 1,481 850 285 4 212 4,331Fund Balance, End of Year, Surplus (Deficit) 5,022 10,099 (3,795) 3,703 360 15,389 14,552

* Fund Balance "Invested in Capital Assets" presents the funds expended on capital assets less accumulated amortization,related debt and deferred capital contributions.

** Accumulated net results for operations are presented in the Unappropriated Fund Balance.

Page 36

Schedule 3

UNIVERSITY OF GUELPHSTATEMENT OF OMAF REVENUES AND EXPENSES BY OBJECT



The University's research and education agreement with the Ontario Ministry of Agriculture and Food (OMAF) includes the research and education programs atGuelph, the operation of 3 campuses of the Ontario Agricultural College (OAC) at Alfred, Kemptville and Ridgetown, Ontario and a laboratory services' facility.This agreement was renewed for another five years effective April 1, 2002. The following figures reflect the revenues and expenses of the OMAF agreement for2004/2005.

OACGuelph

OACAlfred

OACKemptville

OACRidgetown

OVCGuelph

OtherCollegesGuelph

LabServicesDivision

Stations &AcademicServicesGuelph

InstitutionalRevenue &

Expenses

TotalOMAF2005

TotalOMAF2004

IncomeProvincial 10,873 2,249 3,613 3,800 7,406 1,203 9,736 4,251 6,410 49,541 50,401Tuition 267 268 1,577 1,091 3,203 3,541Sales of Goods and Services 2 364 1,878 2,783 9,091 1,984 16,102 18,329Other 78 711 1,376 1,212 2 29 2,116 5,524 3,033

Total Income 11,220 3,592 8,444 8,886 7,408 1,203 18,856 8,351 6,410 74,370 75,304

ExpensesSalaries 4,619 1,964 4,348 4,961 2,057 294 9,900 3,766 31,909 34,063

Benefits 947 413 942 1,109 458 40 2,250 249 6,408 7,046

Total Personnel Costs 5,566 2,377 5,290 6,070 2,515 334 12,150 4,015 38,317 41,109

Travel 161 63 105 134 280 24 99 31 897 903

Operating 1,075 1,151 2,765 2,679 1,316 166 6,260 3,867 19,279 17,152

Equipment 68 14 360 106 37 814 510 1,909 3,321

Support for Faculty Costs 4,508 2,850 557 7,915 7,210

Service Costs 6,410 6,410 6,600

Expenses before Transfers 11,378 3,605 8,520 8,989 6,961 1,118 19,323 8,423 6,410 74,727 76,295

Interfund Transfers (158) (13) (76) (103) 447 85 (467) (72) (357) (991)

Total Contract Expenses 11,220 3,592 8,444 8,886 7,408 1,203 18,856 8,351 6,410 74,370 75,304

Net Income (Expense)

Page 37

Financial Statements

University of Guelph-HumberMarch 31, 2005

September 29, 2005 12:58 PM DRAFT FOR DISCUSSION

AUDITORS' REPORT

To the Boards of Governors ofUniversity of Guelph and The Humber College Institute of Technology andAdvanced Learning

We have audited the balance sheet of University of Guelph-Humber as atMarch 31, 2005 and the statements of revenue and expenses and changes in netdeficit and cash flows for the year then ended. These financial statements are theresponsibility of the Joint Venture's management. Our responsibility is to expressan opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditingstandards. Those standards require that we plan and perform an audit to obtainreasonable assurance whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects,the financial position of the Joint Venture as at March 31, 2005 and the results ofits operations and its cash flows for the year then ended in accordance withCanadian generally accepted accounting principles.

Thornhill, Canada,June 3, 2005. Chartered Accountants

September 29, 2005 12:58 PM DRAFT FOR DISCUSSION

Page 1 of 12

University of Guelph-Humber

TABLE OF CONTENTS

March 31, 2005

Financial Statements

Auditors' Report

Statement 1 Balance Sheet

Statement 2

Statement of Revenue and Expenses

Statement 3

Statement of Changes in Net Deficit

Statement 4

Statement of Cash Flows

Notes to Financial Statements

Page 2 of 12September 29, 2005 DRAFT FOR DISCUSSION

University of Guelph-Humber Statement I

BALANCE SHEET

As at March 31

2005 2004

ASSETSCurrentAdvances held by University of Guelph for University of Guelph-Humber (note 3) 123,810 19,731

Grants receivable (note 3) 3,745,336Total current assets 3,869,146 19,731

Capital assets, net (note 4) 3,554,284 3,106,5757,423,430 3,126,306

LIABILITIES AND NET DEFICITCurrentDeferred revenue 34,161 19,731

Loan from The Humber College Institute of Technology and Advanced Learning (note 3) 4,948,385 3,480,129

Advances from The Humber College Institute of Technology and Advanced Learning (note 3) 4,786,540 (469,579)

Advances from University of Guelph (note 3) 5,618,268 5,981,885

Total liabilities 15,387,354 9,012,166

Net deficitDeficit (11,518,208) (8,992,435)

Invested in capital assets (note 5) 3,554,284 3,106,575

Total net deficit (7,963,924) (5,885,860)

7,423,430 3,126,306

See accompanying notes

On behalf of the Joint Venture:

9/29/2005

DRAFT FOR DISCUSSION

Page 3 of 12

University of Guelph-Humber Statement 2

STATEMENT OF REVENUE AND EXPENSES

12 months endedMarch 31, 2005

S


s

REVENUEGovernment grants 7,814,172 4,252,196

Student fees 6,593,563 4,098,499

Other 41,315 21,53614,449,050 8,372,231

EXPENSESAcademic 8,430,949 5,472,589

Registrarial services 995,993 858,859

Library services 1,160,445 673,865

Administrative services 1,925,035 1,563,309

Recruitment 1,324,034 940,048

Technical services 1,244,450 974,655

Interest on loan payable to The Humber College Institute ofTechnology and Advanced Learning (note 3) 128,011 -

Amortization of capital assets 1,318,197 521,607

16,527,114 11,004,932

Deficiency of revenue over expenses for the period (2,078,064) (2,632,701)


9/29/2005 DRAFT FOR DISCUSSION

Page 4 of 12


STATEMENT OF CHANGES IN NET DEFICIT


Deficit$

Invested incapital assets

$Total

$

Balance, beginning of year (8,992,435) 3,106,575 (5,885,860)Deficiency of revenue over expenses for the year (2,078,064) (2,078,064)Change in invested in capital assets (note 5) (447,709) 447,709Balance, end of year (11,518,208) 3,554,284 (7,963,924)


Invested inDeficit capital assets Total

$ $ $

Balance, beginning of period (3,404,569) 151,410 (3,253,159)Deficiency of revenue over expenses for the period (2,632,701) (2,632,701)Change in invested in capital assets (note 5) (2,955,165) 2,955,165Balance, end of period (8,992,435) 3,106,575 (5,885,860)



Page 5 of 12


STATEMENT OF CASH FLOWS


$


$

OPERATING ACTIVITIESDeficiency of revenue over expenses for the period (2,078,064) (2,632,701)Add non-cash itemsAmortization of capital assets 1,318,197 521,607Loss on disposal of capital assets 3,357

Net change in non-cash working capital balances related to operations (note 6) (3,834,985) 287,031Cash used in operating activities (4,594,852) (1,820,706)

INVESTING AND FINANCING ACTIVITIESIncrease (decrease) in advances from The Humber College Institute of Technology and Advz 5,256,119 (2,094,302)Increase (decrease) in advances from University of Guelph (363,617) 3,915,008Loan from The Humber College Institute of Technology and Advanced Learning 1,468,256 3,480,129Purchase of capital assets (1,765,906) (3,480,129)Cash provided by investing and financing activities 4,594,852 1,820,706

Net change in cash during the period and cash, end of period



Page 6 of 12


NOTES TO FINANCIAL STATEMENTS

March 31, 2005

1. DESCRIPTION OF THE ORGANIZATION

With the approval of the Ontario Ministry of Training, Colleges and Universities("Ministry"), the University of Guelph ("Guelph") and The Humber College Institute ofTechnology and Advanced Learning ("Humber") entered into a Memorandum ofUnderstanding dated June 10, 1999, to develop and deliver joint programming as theUniversity of Guelph-Humber, an unincorporated joint venture (the "Joint Venture").The first classes commenced September, 2002.

Commencing May 1, 2003, the Joint Venture changed its year end from April 30 toMarch 31. The comparative amounts are for the 11-month period ended March 31, 2004.

The Joint Venture undertakes to:

• Serve the needs of students who intend to enter the workforce upon graduation byproviding unique educational experiences, resulting in well-educated and trainedindividuals.

• Improve accessibility to quality post-secondary education by making relevanteducation more affordable to non-residential students.

• Expand programmatic and vocational learning opportunities for students byproviding students in the Greater Toronto Area with increased accessibility toprograms at the University of Guelph.

• Create a unique partnership between Humber and Guelph in first class facilities onthe Humber campus.

• Unite the strength of theoretical and applied studies.• Focus on learning outcomes relevant to societal demands.• Develop diploma/degree programs that will be delivered in a compressed format to

reduce the overall time commitment for undergraduate students in the combineddiploma/degree programs.

• Use joint admission standards to attract and admit students demonstrating acapacity for high academic achievement.

• Outline the processes that will be used to monitor and review progress and the highquality of the programs.

2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Joint Venture have been prepared in accordance withCanadian generally accepted accounting principles ("GAAP"), the most significant ofwhich are as follows:




March 31, 2005

(a) Capital assets

Purchased capital assets are recorded at cost while contributed capital assets are recordedat their fair value at the date of contribution. Capital assets are amortized on a straight-line basis using the following annual rates:

Furniture and equipment 10-20Computer equipment 33Computer software 100

(b) Revenue recognition

Government grants and student tuition fees are recorded as revenue when the programsare delivered.

(c) Pension benefit plans and employee future benefits

The human resources of the Joint Venture are the employees of either Guelph or Humber.Liabilities with respect to pension benefit plans and employee future benefits vest withthe employer and, as such, are not reflected in these financial statements. Expensesrelated to these benefit plans and employee future benefits are expensed when the relatedcosts are charged to the Joint Venture by Guelph or Humber.

(d) Use of estimates

The preparation of financial statements in conformity with Canadian GAAP requiresmanagement to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenue and expenses during thereporting period. Due to inherent uncertainty involved in making such estimates, actualresults could differ from those estimates.

(e) Financial instruments

The financial instruments in these financial statements reflect their fair value due to theirshort-term nature.




March 31, 2005

3. RELATED PARTY TRANSACTIONS AND ECONOMICDEPENDENCE

As described in note 1, Guelph and Humber are separate organizations from the JointVenture in which each entity is responsible for various ongoing financial arrangements.The transactions amongst the entities are in the way of expenses incurred or fundingreceived for the purposes of the Joint Venture.

(a) Advances from Guelph and Humber are provided on an interest-free basis with nospecific terms of repayment. Repayment will not be demanded prior to April 1, 2006. Thefair value of the advances cannot be reasonably determined as there are no fixed terms ofrepayment.

(b) Grants receivable are amounts due from the Ministry, payable to Guelph on behalf ofthe Joint Venture. The fair value approximates their carrying value due to their short-termmaturity.

(c) During the year, the loan from Humber became interest bearing at 3% per annum andhas no fixed terms of repayment. Repayment will not be demanded prior to April 1, 2006.The fair value of the loan cannot be reasonably determined as there are no fixed terms ofrepayment.

4. CAPITAL ASSETS

Capital assets consist of the following:

2005Accumulatedamortization

2004 Accumulatedamortization Cost Cost

Furniture and equipment 3,524,766 873,774 2,227,547 155,086

Computer equipmentand software

1,903,791 1,000,499 1,435,104 400,990

Less accumulatedamortization (1,874,273) (556,076)

Net book value 3,554,284 3,106,575

September 29, 2005 DRAFT FOR DISCUSSION Page 9 of 12



March 31, 2005

The change in net book value of capital assets is due to the following:

2005$

2004$

Balance, beginning of period 3,106,575 151,410Purchase of capital assets internally funded 1,765,906 3,480,129Amortization of capital assets (1,318,197) (521,607)Loss on disposal of capital assets (3,357)Balance, end of period 3,554,284 3,106,575

September 29, 2005 DRAFT FOR DISCUSSION Page 10 of 12



March 31, 2005

5. INVESTED IN CAPITAL ASSETS

Invested in capital assets consists of the following:

2005 2004

$ $

Capital assets, net (note 4)

3,554,284 3,106,575

The change in invested in capital assets is calculated as follows:

12 months 11 months ended

ended March 31, 2004

March 31, 2005 $

Purchase of capital assets internally funded 1,765,906 3,480,129Amortization of capital assets (1,318,197) (521,607)Loss on disposal of capital assets - (3,357)

447,709 2,955,165

6. STATEMENT OF CASH FLOWS

The net change in non-cash working capital balances related to operations consists of thefollowing:

12 months 11 months ended

ended March 31, 2004

March 31, 2005 $

Advances held by University of Guelph forUniversity of Guelph-Humber (104,079) 4,646,526

Prepaid expenses 316,916Grant receivable (3,745,336)Accrued liabilities (29,885)Deferred revenue 14,430 (4,646,526)

(3,834,985) 287,031

Page 11 of 12

September 29, 2005 DRAFT FOR DISCUSSION



March 31, 2005

7. FINANCIAL INSTRUMENTS

The fair value of the Joint Ventures financial instruments is not significantly differentfrom their carrying value at March 31, 2005 unless otherwise noted.

8. COMPARATIVE FINANCIAL STATEMENTS

The comparative financial statements have been reclassified from statements previouslypresented to conform to the presentation of the 2005 financial statements.

Page 12 of 12

September 29, 2005 DRAFT FOR DISCUSSION

UNIVERSITY.c/GUELPH

MEMORANDUM

BOARD OF GOVERNORS


FROM: Betsy Allan, Secretary of the Board of Governors 33---

SUBJECT: 5. Finance Committee Report - Informationa) Semester Financial Report, August 31, 20056. Development Committee Report - Informationa) Update on Fundraising Activities


5. Finance Committee Report - Informationa) Semester Financial Report, August 31, 2005

A copy of the Semester Financial Report, August 31, 2005 is enclosed for information.

6. Development Committee Report - Informationa) Update on Fundraising Activities

Mr. Lozon will provide an update about Development activities, including the planning andprogress of the Science Complex Campaign.



SEMESTER FINANCIAL REPORT(Including budget update)

For the Period Ended August 31, 2005

SEMESTER FINANCIAL REPORT - AUGUST 31, 2005

Introduction:

The attached statements are prepared as information to the Finance Committee and the Board of Governorson the financial results of major University operations to August 31, 2005. The University's fiscal year isfrom May 1 to April 30 and normal financial reporting dates are August 31 (semester 1), December 31(semester 2) and April 30 (semester 3 or year-end). These dates are based on the main academic teachingperiods. This presentation includes 7 statements which summarize the MTCU (Ministry of Training,Colleges and Universities) Operating Fund, OMAFRA (Ontario Ministry of Agriculture Food & RuralAffairs) Agreement, and the five Ancillary Enterprises units which together comprise over 80% of totalUniversity revenues and expenses. The following is a summary of the results for the period for each fundcomparing actual results to both the expected position (at reporting date) and the annual budget.

MTCU Operating Budget: (Statement 1)

2005/2006 Preliminary MTCU Budget:

On April 6, 2005 the Board of Governors approved the 2005/2006 Preliminary MTCU Budget whichcontained a number of significant assumptions. During the course of the fiscal year it is the University'spractice to update budget assumptions as new information such as provincial grant announcements orenrolment numbers are received. In the budget key assumptions were made regarding cost recoveries andan enhanced voluntary retirement/resignation program offered to certain employees to assist in theimplementation of a 4.5% budget reduction across all MTCU funded operations (refer to the PreliminaryMTCU Operating Budget approved by the Board of Governors on April 6, 2005.).

The following summarizes major changes to the budget arising from both the impact of carry forwardfunds and revised budget assumptions based on information the University has received to date. (Thereremains significant uncertainty in the budget assumptions including lack of confirmation regarding certainprovincial operating grants, enrolment confirmation for the winter semester and potential impact on theUniversity's utility bill as a result of recent significant energy price increases. As further informationbecomes available it will be factored into the University's budget and forecasted position for the year.)The changes recognized in this report are not expected to alter the overall University budget target asapproved in the Preliminary MTCU Operating Budget

In addition to changes in budget assumptions, 2005/2006 unit budgets have been adjusted to reflect the

prior year's (2004/2005 results) under the University's "Carry Forward" policy 1 . Over the past severalyears the University also has applied any institutional unallocated funds e.g. from grants, enrolments,utilities, contingency, that were not required to meet a given fiscal year's budget commitment specificallyto help meet the University's overall MTCU budget target in the next fiscal year. In the 2005/2006Preliminary budget this target was $2.000 million. 2004/2005 results confirmed sufficient funds were

1 Under the University's 'carry forward' policy, departments may carry forward unspent funds calculated at the endof a fiscal year (up to 5% of net budget) into the following fiscal year. (Carry-forwards are reported in theUniversity's audited financial statements as "appropriations") Historically, University carry-forwards have totalledbetween 1% and 3% of the budget. Eligible departmental carry-forwards include funds committed for one-timeexpenses such as outstanding purchase orders or renovations, funds allocated for specific approved projects such asnew faculty research support funds, equipment replacement, student assistance, and library acquisitions. For budgetpresentation purposes, carry-forward funds plus current year allotments equal the Annual Budget. This budget is themaximum approved unit spending for the year. Under this policy departments are also responsible for any deficitsincurred in the year. Carry-forwards are one-time funds only and are not considered part of the University's base orstructural budget.

1


available from these institutional accounts to meet the 2005/2006 budget target (refer to the followingsection on actual 2005/2006 carry-forward funds.)

2005/2006 MTCU Carry—Forwards:

A total of $15.323 million (compares to $12.463 million last year) were carried forward into the 2005/2006budget from 2004/2005 net revenues and cost savings. The following Table shows the major categories ofcarry-forward funds:

$ millions

• Funds to meet University's overall budget target(refer to Preliminary MTCU Budget approved in April, 2005)

• Departmental Carry Forwards: designated for future departmentalpurchases such as outstanding purchase orders, renovations and one-time capital projects

• Contingency Account: funds to be added to the University's account tocover items such as one-time recruitment costs, start-up costs for newfaculty, capital fund-raising costs and any unexpected costs related toitems such as utilities, legal fees or emergency maintenance. Any fundsremaining in the Contingency Account at year-end will be used to assistin meeting the next year's overall budget target.

• Total

2005/2006 2004/2005$2.000 $3.672

$11.233 $8.365

$2.090 $0.426

$15.323 $12.463

2


Changes to MTCU Budget Assumptions:

The table on the following page summarizes the major changes to budget assumptions that have beenquantified and incorporated into the annual budget. These changes do not change the University's overalltarget. Overall the changes net to a $0.630 million or 0.2% positive variance to the overall revenue budgetof $279.3 million. The $0.630 million adjustment will be added to the University's Contingency account tobe used for unexpected expense/revenue shortfalls or assisting in meeting future years' budget targets.

Note: 0's indicates costs or use of funds. No O's indicate revenues or costsavings All figures are in $millions.

Prelim.Budget

Revised.Budget

BudgetChange

Provincial Operating Grants• Basic Operating Grant: The Basic grant in the 2005/2006 Preliminary 0.000 1.800 1.800

MTCU Budget included an estimate for the Accessibility grant to be rolledinto the Basic Operating grant at a discounted amount due to fundinguncertainties. However, the University received confirmation that fullfunding for the Accessibility grant would be provided resulting in anestimated additional $1.8 million.

• Accessibility Fund: This funding envelope was created by the Province tofund increased enrolments for both undergraduate and graduate students. The

0.600 1.600 1.000

University estimates an additional $1.0 million from the expanded provincialfunding for growth in 2005/2006 which was not expected when the2005/2006 Preliminary MTCU Budget was approved.

• "Rae" Grant: Despite no formal announcement, the University hadestimated $5.0 million in provincial grants as the province's response torecommendations in the Rae Report including the funds for improvement of

5.000 4.000 (1.000)

"quality". Recently released information indicates that the overall universitysystem funding envelope for this grant is less than estimated resulting in adrop in the University's share of $1.0 million.

• ATOP Grant: There is an additional $0.200 million expected to be receivedfor the ATOP (Access To Opportunities Program - for Engineering and 0.000 0.200 0.200

Computer Science students) as a result of the Ministry allowing full fundingfor ATOP enrolment growth.

• Research Infrastructure Grant: Based on a relative share of competitiveresearch, this is expected to decrease by $0.070 million in 2005/2006. 0.000 (0.070) (0.070)

Total Change in Provincial Grants: 1.930

Enrolments and Tuition: The 2005/2006 Preliminary MTCU Budgetincluded an estimate for undergraduate intake of 3,400 students and a 4%tuition increase for international student fees. The revised undergraduatetuition revenue target has been adjusted downward by $0.750 million due tothe "flow through" impact from slightly lower mainly undergraduateenrolments in the winter 2005 semester than initially forecast when preparingthe preliminary budget.

0.750 0.000 (0.750)

Information Technology Student Fee: The 2005/2006 Preliminary MTCUBudget included $0.550 million from a new non-tuition compulsory studentfee which required a student referendum. This fee was not approved in thestudent referendum.

0.550 0.000 (0.550)

Net Additional Revenue 0.630

3

SEMESTER FINANCIAL REPORT – AUGUST 31, 2005

2005/2006 Enhanced Buyout Program:

In February 2005, an enhanced buy-out program was offered to faculty and staff in order to createflexibility in the budget to meet a 4.5% base budget reduction in the 2005/2006 MTCU PreliminaryOperating budget and to assist in meeting the OMAFRA (Ontario Ministry of Agriculture, Food and RuralAffairs) budget.

As part of this plan, a maximum of $6.5 million in one-time costs would be financed by an additional one-time budget deficit increase. The total accumulated deficit from both the 2004/2005 and 2005/2006programs was not to exceed $10.0 million and would have to be repaid within 5 years according to theBoard approved schedule. As of August 31, 2005, $4.038 million of costs have been incurred under theprogram for 62 approved positions ($3.404 million of this was recorded as an expense in fiscal 2004/2005in accordance with accounting rules. Refer to Statement 1 on page 5.) leaving up to $2.462 millionavailable for remaining costs. The balance of the planned position reductions and costs are expected tooccur over the next several months. There are no expected variances to the deficit repayment plan and unitsare on track to meet their targeted reductions using these position reductions as well as other solutions suchas increased revenue and reduced operating expenses. The following table presents the total financialposition of the 2005/2006 enhanced buyout program at August 31, 2005.

2005/2006 Enhanced Buy-out Program(in millions of dollars)

Postion Position ProgramCount Funds Released Costs Notes:

Total Program Plan 83 5.828 6.500 #1

Total Program to Aug 31, 2005 62 4.810 4.038 #2

Remaining 21 1.018 2.462

Notes:#1 Of the 83 positions identified in this program, 30 have some component of their position funding within the

OMAFRA agreement. The Position Funds Released include approx. $1.5 million in OMAFRA Agreementfunds.

#2 Of the total program costs to date, $3.404 million was expensed in fiscal 2004/2005 and $0.634 million to Aug31, 2005 for a total of $4.038 million.

Statement 1– MTCU Operating Fund:

The following page contains Statement 1 – financial results for the MTCU Operating Fund. Overall resultsto August 31, 2005 show a small positive variance of $0.985 million (0.4% of total budget) to the expectedposition at this time in the fiscal year. There is no single significant variance contributing to this positionand overall the University is expected to be on budget at fiscal year end. The Annual Budget columnincorporates both carry-forwards results and the budget changes described above.

4


Statement 1

UNIVERSITY OF GUELPHMTCU Operating Fund

Statement of Revenue & ExpendituresFor the Four Months Ended August 31, 2005


Year To

Date Budget

Year To

Date Actual

Annual

Variance Budget

RevenueMTCU Grants 46,395 46,465 70 139,185

Tuition (Credit & Non-Credit) 7,651 7,693 42 85,009

Sales of Goods and Services 4,712 4,591 (121) 15,201

Investment Income 664 675 11 2,013

Other 2,554 2,687 133 13,443

Total Revenue 61,976 62,111 135 254,851

Cost RecoveriesOMAFRA Cost Transfer 2,137 2,137 6,410

Ancillary Services Recovery 3,024 3,024 9,070FICP/RPF Research Support 3,000 3,000 9,000

Total Institutional Recoveries 8,161 8,161 24,480

Total Revenues and Recoveries 70,137 70,272 135 279,331

ExpensesSalaries 51,558 51,310 248 169,279

Benefits 11,257 11,158 99 36,314

Operating 13,730 13,168 562 45,765

Utilities 5,990 6,289 (299) 19,965

Scholarships and Bursaries 350 212 138 8,747

University Contingency 148 148 0 2,684

Other Institutional Transfers 3,102 3,000 102 9,400

Restructuring Costs 634 634 0 3,096 #1

Total Expenses 86,769 85,919 850 295,250

Change in Fund Balance (16,632) (15,647) 985 (15,919)

Add: Funds Available From Prior Year 15,323 15,323 15,323

Net Increase (Decrease) in Fund Balance (1,309) (324) 985 (596) #2

Restructuring Program Accumulated Deficit2004/2005 2005/2006 Total

04/05 VERR Program (5,974) (5,974)05/06 Enhanced Buy-outs (3,404) (3,096) # (6,500)

Deficit Repayment 2,500 2,500

Accumulated Program Deficit (9,378) (596) #2 (9,974)

#1 The Preliminary Budget of $6.5 million for restructuring has been adjusted to reflect the recording of $3.404million in program costs accrued in 2004/2005. Under accounting rules, cost were accrued based on thecontractual commitments with individual employees. The remaining budget for restructuring in 2005/2006 is a

balance of $3.096 million.#2 The net change in fund balance is budgeted at -$0.596 million representing the remaining restructuring

program budget of $3.096 million less the planned repayment of $2.5 million.

5


Statement 2: OMAFRA Agreement Programs

Funding for the OMAFRA agreement has two major sources: provincial funding and revenues earned fromtuition for diploma and non-credit programs at the regional campuses, laboratory fees and miscellaneoussales of good and services at research locations. Expenditures, net of revenues are "claimed" against theannual provincial allocation of $50.5 million. In Statement 2, overall agreement revenue is greater thanbudget, equal to the amount expenses are over the expected budget. This reflects the fact that theUniversity has claimed more of the provincial funding. Overall, agreement expenditures indicate a negativevariance to budget of $0.333 million mainly as the result of a delay in the implementation of positionreductions. Efforts are underway to complete these reductions/savings as soon as possible. Any one-timeadditional net costs will be covered from additional savings in the contract and, if necessary, as part of theoverall University deficit repayment plan (refer to Statement 1). Budgeted net funds of $0.500 million infiscal 2005/2006 are required to repay one-time restructuring costs incurred in fiscals 2002/2003 and2003/2004. (This is part of the Board of Governors approved 2005/2006 OMAFRA Budget.) Theaccumulated transition costs were $1.456 million before the 2005/2006 budgeted repayment. At this time,the contract is expected to be within the approved overall budget target by year-end.

Statement 2

UNIVERSITY OF GUELPHOMAFRA Programs



Year To

Date Budget

Year ToDate Actual Variance

AnnualBudget

REVENUEOntario Ministry of Agriculture Food & Rural Affairs 19,939 20,359 420 50,500

Tuition (Credit & Non-Credit) 273 238 (35) 3,134

Sales of Goods and Services 3,578 3,520 (58) 17,029

Other Revenue 421 427 6 2,809Revenue for Repayment of Accum. Transition 167 167 0 500

24,378 24,711 333 73,972

EXPENSESSalaries 10,574 10,868 (294) 30,339

Benefits 2,310 2,380 (70) 7,219

Operating 9,357 9,326 31 32,594

Central Support Costs 2,137 2,137 0 6,410

24,378 24,711 (333) 76,562

Change in Fund Balance (2,590)

Add: Program Funds Available From Prior Year 3,090

Net Repayment 500

Accumulated Transition CostsBalance: Beginning of 2005/2006 Fiscal Year (1,456)

Net Repayment 500Balance: End of 2005/2006 Fiscal Year (956)

6

SEMESTER FINANCIAL REPORT — AUGUST 31, 2005


Student Housing ServicesStatement of Revenue & Expenditures

For the Four Months Ended August 31, 2005(in thousands of dollars)

This unit offers approximately 4,800 beds for single students and 340 units for student family residenceaccommodation making the University of Guelph the most residentially-intensive university in Canada.Over 31% of its undergraduate students and 92% of its first year students are in on-campus housing. Inaddition, conference activities assist in providing net revenues in the summer semester. 35% of theStudent Housing income is directed toward capital or renovation expenses including debt repayment onbuildings, reflecting the capital-intensive character of these operations.

The "Year to Date Actual" column for "Renovations" includes costs incurred and committed to August 31,2005. At this time, there are no major variances expected by year end.

Year toDate

Budget

Year toDate

Actual VarianceAnnualBudget

RevenueStudent Contracts 16 76 60 19,508

Family Housing 1,050 1,070 20 3,150

Miscellaneous 440 408 (32) 1,330

1,506 1,554 48 23,988

ExpensesPersonnel 1,449 1,293 156 4,540

Institutional Charges 2,067 2,067 6,209

Operating 715 698 17 4,517

Travel 12 12 75

Renovations 518 528 (10) 1,847

Debt Servicing - external 1,468 1,468 5,016

Net Transfers 564 564 0 1,684

6,793 6,630 163 73,888

Net Increase (Decrease) in Fund Balance (5,287) (5,076) 211 100

Unappropriated Fund Balance - Opening 1,481 1,481 1,481

Unappropriated Fund Balance - Closing (3,806) (3,595) 211 1,581

7


Statement 4UNIVERSITY OF GUELPHHospitality & Retail Services



This unit operates food services, printing, retail outlets and a University book store. 45% of this unit'sexpenditures are variable costs of products sold. In addition to paying institutional charges for services,this unit contributes $0.250 million annually towards the financing of academic buildings.

The "Year to Date Actual" column for renovations includes costs incurred and committed to August 31,2005. At this time, there are no major variances expected by year end.

Year toDate

Budget

Year toDate


RevenueFood Services 2,950 2,861 (89) 21,165Bookstore 515 473 (42) 7,220Retail Services 296 326 30 2,037Express Copy and Graphics 332 306 (26) 1,288

4,093 3,966 (127) 31,710ExpensesCost of Materials 1,510 1,476 34 13,869Personnel 2,110 2,078 32 10,258Institutional Charges 548 548 1,643Operating 1,420 1,351 69 4,333Travel 24 26 (2) 60Renovations 347 322 25 365Equipment 65 45 20 250Net Transfers 213 213 880

6,237 6,059 178 31,658

Net Increase (Decrease) in Fund Balance (2,144) (2,093) 51 52

Unappropriated Fund Balance - Opening (35) (35) (35)

Unappropriated Fund Balance - Closing (2,179) (2,128) 51 17

8



Parking AdministrationStatement of Revenue & Expenditures


Parking Administration manages the University's on-campus parking services. 70% of this unit's revenuesare from semester or annual permits with the balance from cash sales in metered lots. In addition to payingfor centrally-provided services and parking lot construction and repair, Parking Administration contributes$0.442 million annually towards the repayment of academic building projects.

The "Year to Date Actual" column for "Renovations" includes costs incurred and committed to August 31,2005. There are no major variances expected by year-end at this time.

Year toDate

Budget

Year toDate


RevenueSales and Services 580 685 105 2,085

ExpensesPersonnel 93 88 5 270

Institutional Charges 133 133 192

Operating 95 91 4 288Travel 2 4 (2) 5

Renovations 120 130 (10) 790

Equipment 28

Net Transfers 281 281 1,042

724 727 (3) 2,615

Net Increase (Decrease) in Fund Balance (144) (42) 102 (530)

Unappropriated Fund Balance - Opening 850 850 850

Unappropriated Fund Balance - Closing 706 808 102 320

9



Real Estate DivisionStatement of Revenue & Expenditures


The Real Estate Division was formed to manage specific University properties designated for developmentunder the terms of the Heritage Trust established in 1991/92. Some properties were designated for sale;others were intended for long-term lease development. Real Estate Division operations are overseen by theReal Estate Development Committee of the Board of Trustees. Net annual proceeds of the Real Estatedivision are transferred into the Heritage Trust endowment fund in accordance with the trust agreement.

At this time there are no major expected variances to budget at year end.

Year toDate

Budget

Year toDate


RevenueSales and Services 957 951 (6) 3,749

ExpensesPersonnel 109 105 4 327Operating 305 283 22 506Travel 11Debt Servicing - external 63 30 33 236Amortization 125 126 (1) 428Operating Costs Capitalized (29) (21) (8) (77)Net Transfers 0 0 3,783

573 523 50 5,214

Net Increase (Decrease) in Fund Balance 384 428 44 (1,465)

Unappropriated Fund Balance - Opening 1,631 1,631 1,631

Unappropriated Fund Balance - Closing 2,015 2,059 44 166

1 0



University Centre AdministrationStatement of Revenue & Expenditures


The University Centre is responsible for managing both designated building space and programmingactivities in the University Centre building. The Centre has its own management and Board, which in turn,is responsible to the University Board of Governors.

There are no major variances expected by year end at this time.

Year to

Date

Budget

Year to

Date

Actual Variance

Annual

Budget

Revenue

Brass Taps 40 36 (4) 800

All Other Sources 167 164 (3) 1,061

207 200 (7) 1,861

ExpensesCost of Materials 12 11 1 335

Personnel 197 195 2 880

Institutional Charges 144 144 431

Operating 40 42 (2) 340

Travel 3 3 15

Equipment 170

Net Transfers (40) (40) (230)

356 355 1 1,941

Net Increase (Decrease) in Fund Balance (149) (155) (6) (80)

Unappropriated Fund Balance - Opening 285 285 285

Unappropriated Fund Balance - Closing 136 130 (6) 205

11

UNIVERSITY.V'GUELPH

TO:

FROM:

SUBJECT:

MEMORANDUM

BOARD OF GOVERNORS

Members, Board of Governors

Betsy Allan, Secretary of the Board of Governors

7. Membership and Governance Committee Reporta) 2005/2006 and 2006/2007 Board Meeting Schedule - Motionb) Calendar of Annual Board Business - Informationc) Mid-Summer Presidential Communication - Informationd) Proposed Amendments to Board Policy - Informationi. General By-lawsii. Terms of Appointment8. Move to In-Camera Session - Motion


7. Membership and Governance Committee Reporta) 2005/2006 and 2006/2007 Board Meeting Schedule - Motion

A new initiative has been implemented whereby the Board meeting schedule is planned twoyears in advance. The meeting schedule tries to take into account the cycle of business at theCommittee level, campus activities (e.g., Convocation, Senate meetings, Winter Break) andexternal activities which might be known in advance. The proposed 2005/2006 and 2006/2007schedule follows a pattern well established for Board meetings.

The 2005/2006 and 2006/2007 Board of Governors meeting schedule is proposed here.

2005/2006 TermThursday October 27, 2005Wednesday December 14, 2005Thursday April 20, 2006Thursday May 25, 2006

2006/2007 TermThursday October 26, 2006Thursday December 7, 2006Thursday April 19, 2007Thursday May 24, 2007


1:00-4:00pm1:30-5:00pm9:30-1:00pm9:30-1:00pm

1:30-5:00pm1:30-5:00pm1:30-5:00pm1:30-5:00pm

RESOLVE, that the Board of Governors approve the 2005/2006 and 2006/2007 Board ofGovernors meeting schedule, as presented.


7. Membership and Governance Committee Report Page 2

Subsequent to the Board's consideration of its meeting schedule, a list of the Committee meetingdates for the 2006/2007 term will be finalized and circulated with each Committees next meetingpackage.

b) Calendar of Annual Board Business - Information

Last term, a calendar of the Board's calendar of annual business and meeting schedule wascirculated. This term, a calendar of annual business has been prepared for each Board Committeeand is being included in the first fall meeting package. Attached for information is a copy of the2005/2006 Calendar of Annual Board Business.

c) Mid-Summer Presidential Communication - Information

It has been agreed that in the future, the President will circulate to the Board a mid-summerupdate, which will serve as a communication vehicle between the Board's last spring meetingand first fall meeting.

d) Proposed Amendments to Board Policy - Informationi. General By-laws

The Membership and Governance Committee has considered and is recommending changes tothe General By-laws of the Board of Governors.

This item is brought forward for information. The document will be presented for considerationand approval at the next meeting.

Proposed Changes In keeping with the Board's practice to review mandates annually, the Board has approvedchanges in the recent past to a number of Board committee mandates (such as the AuditCommittee and Membership and Governance Committee) and Board policies (such as ElectoralProcedures). It is necessary to amend the General By-laws to make similar changes, which willensure that Board documents are consistent.

As part of the review, it was decided that the General Board By-laws document would benefitfrom a thorough reorganization and this has been undertaken. As part of the overall refreshing ofthe document, a by-law numbering system has been established. The General By-laws have beendesignated as No 1. This change will make it unnecessary to open the overarching General By-law document to consider amendments to separate Board rules. As Board policy is reviewed andrevised, or indeed created, the number system will be applied (see item ii. below for new By-lawNo. 2 respecting Terms of Appointment). In addition, minor editorial changes are proposed to theGeneral By-laws and include updating titles and rewriting text to achieve greater clarity while notremoving the directive. It is important to note that special consideration has been given to currentsection number (4) Disqualification of Members (new section 5. Board Membership) to ensurethat this section of the By-laws reflects current legislation, adheres to the Human Rights Codeand is useful to the Board. The proposed revised document has been reviewed with both internaland external Legal Counsel.

7. Membership and Governance Committee Report Page 3

Amendment Approval Process for advance informationAmendment of the General By-laws of the Board of Governors requires two readings by theBoard. The first reading is notification of intent to present an amendment (October 27 Boardmeeting) and the second reading is for consideration of approval (December 14 Board meeting).

The motion to be presented to the Board at the next meeting follows here for advanceinformation:

FIRST READING - NOTIFICATION OF INTENT TO PRESENT AMENDMENTS TOTHE BY-LAWSAt the next meeting, the Board of Governors will be asked to,

RESOLVE, that amendments to the University of Guelph's Board of Governors GeneralBy-law No.1, as presented, be approved.

i. Terms of Appointment

This item is brought forward for information. The document will be presented for considerationand approval at the next meeting.

In keeping with the new approach and numbering system for the Board's By-laws, a new By-lawhas been written to articulate the terms of appointment for all Board members. The detailcaptured in this document is currently dispersed in the General By-laws (111,2,3), the ElectoralProcedures (Staff, Undergraduate Student, Graduate Student) and Senate regulations (election ofthe Chancellor and Faculty to the Board). Attached is new By-law No. 2.

The motion to be presented to the Board at the next meeting follows here for advanceinformation:

FIRST READING - NOTIFICATION OF INTENT TO PRESENT AMENDMENTS TOTHE BY-LAWSAt the next meeting, the Board of Governors will be asked to,

RESOLVE, that the University of Guelph's Board of Governors General By-law No.2,regarding Terms of Appointment, as presented, be approved.

8. Move to In-Camera Session - Motion

The Board will move into closed session.


RESOLVE, that the Board of Governors move into the in-camera session of the meeting.

BOARD OF GOVERNORS2005/2006 Calendar of Business coming forward (linked to mandate)

KEY: BOG - Board of Governors AC - Audit Committee

DEV - Development CommitteeMGC - Membership and Governance Committee P&B - Pensions and Benefits Committee FIN - Finance CommitteePRPC - Physical Resources and Property Committee OVC - Ontario Veterinary CollegeBOT - Board of Trustees REDC - Real Estate Development Committee of the Board of TrusteesIMC - Investment Management Committee of the Board of Trustees

Business Coming Forward Notes

Standing Items - annual mandate review (fall orientation)- audited financial statements- audited pension statements- semester statements- annual budgets and fees- capital project updates (as required)- annual Campus Master Plan, operational plan review- semi-annual BOT- Code of Conduct for Suppliers (annual spring review)- review policy as required

Pending Items - integrated planning exercise update- Campus Master Plan implementation strategy and budget (includes Arboretum Master Plan)- OVC redevelopment plan- 2-year deferred maintenance plan update- new construction and maintenance projects to be considered as they arise- land acquisition/disposal as they arise

S:\Calendr - Skill Charts - Survey\2005-2006 material\05 BOG cal of biz cht.wpd

Page 1 of 3

IBusiness Coming Forward Notes

October 27, 2005 - annual mandate review (fall orientation) - Board Retreat precedes meeting1:30-4:40 pm Executive Committee

- exercise of executive authority over the summerAudit Committee- audited financial statementsFinance Committee- semester financial reportDevelopment Committee- fund raising campaign/s updateMembership and Governance Committee- policySenior Compensation and Negotiations Committee- reportPresident's Report- Status Report on University Activity- Faculty Appointments

December 14, 2005 Audit Committee1:30-5:00 pm - enterprise wide risk management

- environmental health & safety report- Campus Community Policy report- compliance with Agreement with Guelph Police Services BoardDevelopment Committee- regular reportMembership and Governance Committee- policyPensions and Benefits Committee- reportPhysical Resources and Property Committee- facilities reportBoard of Trustees- semi-annual reportPresident's Report- Status Report on University Activity- Faculty Appointments

February, 2006 - meeting called as required

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Business Coming Forward Notes

April 20, 2006 Audit Committee9:30-1:00 pm - enterprise wide risk management

- environmental health & safety reportDevelopment Committee- regular reportFinance Committee- annual budgets and fees reportMembership and Governance Committee- membership reportPensions and Benefits Committee- audited pension statementsPhysical Resources and Property Committee- facilities reportBoard of Trustees- semi-annual reportPresident's Report- Status Report on University Activity- Faculty Appointments

May 25, 2006 Development Committee9:30-1:00 pm - regular report

Finance Committee- regular reportMembership and Governance Committee- membership reportPhysical Resources and Property Committee- facilities reportPresident's Report- Status Report on University Activity- Faculty AppointmentsCode of Conduct for Suppliers- annual review

June 2006 June 30 is end of 2005/2006 term. July 1 is beginning of 2006/2007 term.

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Page 3 of 3

General By-law No. 1 ofThe Board of Governors of the University of Guelph

TABLE OF CONTENTS

1. DEFINITIONS1.1 Act1.2 Board1.3 Board Member1.4 Board of Trustees1.5 Chair1.6 Chancellor1.7 Committee1.8 Committee Member1.9 President1.10 Secretary1.11 University1.12 Vice-Chair2. OFFICERS OF THE UNIVERSITY2.1 Officer of the University2.2 The President2.3 The Secretary3. CHAIR AND VICE-CHAIR(S)4. BOARD COMPOSITION AND VACANCIES4.1 Composition4.2 Vacancies5. BOARD MEMBERSHIP5.1 Board Members Office is Deemed Vacated5.2 Board Members Office is Vacated6. BOARD MEETINGS6.1 Regular Meetings6.2 Special Meetings6.3 Open and Closed Meetings6.4 Notice of Regular Meetings6.5 Place of Meetings6.6 Attendance6.7 Quorum6.8 Voting6.9 Matters for Inclusion in the Agenda6.10 Evidence of Resolution6.11 Record of the Proceedings7. COMMITTEES7.1 Committees7.2 Standing Committees

University of Guelph Board of Governors - General By-law No. 1 Page 1 of 2

7.3 Membership of Standing Committees

7.4 Special Committees

7.4 Closed Meetings

7.5 Notice of Meetings

7.6 Place of Meetings

7.7 Attendance7.8 Quorum

7.9 Voting7.10 Record of the Proceedings8. CONFIDENTIALITY AND CONFLICT OF INTEREST

8.1 Undertaking

8.2 Confidentiality

8.3 Conflict of Interest9. INDEMNIFICATION AND INSURANCE10. REIMBURSEMENT OF EXPENSES11. CORPORATE SEAL12. EXECUTION OF DOCUMENTS13. HEAD OFFICE14. FISCAL YEAR15. AUDITOR16. MAKING, AMENDING OR REPEALING BY-LAWS17. INTERPRETATION18. REPEAL19. COMMENCEMENT


By-law No. 1 ofThe Board of Governors of the University of Guelph

In accordance with the power vested in the Board of Governors by The University of Guelph Act,1964 (as amended), the Board of Governors makes the following By-law:

1. DEFINITIONS

1.1 Act, means The University of Guelph Act, 1964 (as amended);1.2 Board, means the Board of Governors of the University of Guelph;1.3 Board Member, means a duly appointed Member of the Board;1.4 Board of Trustees, means the Board of Trustees of the University of Guelph Heritage

Fund;1.5 Chair, means the Chair of the Board;1.6 Chancellor, means the Chancellor of the University;1.7 Committee, means a Committee of the Board;1.8 Committee Member, means a Board Member, or an individual who is not a Board

Member, appointed to serve on a Committee;1.9 President, means the President and Vice-Chancellor of the University;1.10 Secretary, means the Secretary of the Board;1.11 University, means the University of Guelph;1.12 Vice-Chair, means a Vice-Chair of the Board.

2. OFFICERS OF THE UNIVERSITY

2.1 Officer of the University, means any of the Chair, a Vice-Chair, the President, theProvost and Vice-President (Academic), the Vice-President (Finance andAdministration), the Vice-President (Research), the Assistant Vice-President (Financeand Services), the Controller, the Chairs of each of the Audit, Finance, Pensions andBenefits, Physical Resources and Property Committees, the Secretary, and such otherofficers as the Board may designate from time to time.

2.2 The President, in addition to the powers set forth in the Act, shall have authority:

a) to recommend to the Board the appointment or promotion to the office of theVice-Presidents, Assistant Vice-Presidents, Associate Vice-Presidents and Deans;

b) to appoint, to promote, or to remove (or to delegate to one or more individual orindividuals the authority to appoint, to promote or to remove) all other faculty andstaff of the University.

2.3 The Secretary shall be entitled to attend all meetings of the Board and each Committeeand shall record or cause to be recorded all proceedings of all meetings of the Board andeach Committee.


3. CHAIR AND VICE-CHAIR(S)

The Board shall appoint the Chair and shall appoint one or more Vice-Chairs fromamong the Board Members for such period as may be determined by the Board.

a) The Chair, when present, shall preside at all Board meetings, shall sign suchdocuments as may require the Chair's signature in accordance with the By-laws orotherwise, and may perform such other duties as may be assigned from time totime by the Board.

b) The Vice-Chair earliest appointed who is present shall perform the duties of theChair when the latter is unable for any reason to perform such duties.

c) Each Vice-Chair may perform such other duties as may be assigned from time totime by the Board.

4. BOARD COMPOSITION AND VACANCIES

4.1 Composition

The Board is composed of not more than twenty-four (24) Board Members.

4.2 Vacancies

Where a vacancy on the Board occurs before the term of office for which a BoardMember has been appointed or elected expires, the vacancy shall be filled by the Board atits earliest convenience, and the Board Member so appointed or elected shall hold officefor the remainder of the term of office of the Board Member whose Board membership isvacant. Notwithstanding any vacancy on the Board, as long as a quorum of BoardMembers remains in office, the Board may exercise all or any of its powers.

5. BOARD MEMBERSHIP

5.1 Board Members Office is Deemed Vacated

A Board Members office may be deemed to be vacated if:

a) such Board Member becomes bankrupt;

b) such Board Member is convicted of a criminal offense under the Criminal Codeof Canada (for which a pardon has not been granted) as a result of which theBoard determines such individual to be unfit or inappropriate to act as a BoardMember;


c) an order or a decision of a court or tribunal of competent jurisdiction order ismade declaring such Board Member to be a mentally incompetent person orincapable of managing his or her own affairs;

d) as provided under the Act, after thirty (30) days notice to such Board Member, aresolution to that effect is passed at a Board meeting by at least two-thirds (2/3) ofthe total Board Members;

e) such Board Member contravenes any University By-law or policy as a result ofwhich the Board determines such individual to be unfit or inappropriate to act as aBoard Member.

5.2 Board Members Office is Vacated

A Board Members office is vacated if:

a) by notice in writing to the Chair or the President such Board Member resigns suchoffice;

b) in the case of a Board Member who is a student, such Board Member ceases to beregistered in either the fall semester or the winter semester;

c) in the case of a Board Member who is faculty or staff of the University, suchBoard Member ceases to be faculty or staff of the University.

6. BOARD MEETINGS

6.1 Regular Meetings

The Board shall hold regular meetings not less than four (4) times a year on a schedule tobe accepted by the Board.

6.2 Special Meetings

Special meetings may be called to address an issue of immediate concern and may beheld at any time at the call of the Chair, or in case of the Chair's inability for any reasonto perform the Chair's functions, at the call of the Vice-Chair, or in case of the Vice-Chair's inability for any reason to perform the Vice-Chair's functions, at the call of thePresident and any three (3) Board Members.

6.3 Open and Closed Meetings

Board meetings shall be open to the public except for matters which may be deemed tobe confidential including without limiting the generality of the foregoing, matters relatingto labour relations, personnel, nominations of Board Members or Committee Members,


real estate, and confidential government policies. Minutes of those Board meetingswhich are open to the public shall be available for inspection by the public, byappointment with the Secretary, at the office of the Secretary during regular businesshours.

6.4 Notice of Regular Meetings

Notice in writing of the time and place of any regular Board meetings shall be sent toeach Board Member at least three (3) days prior to the day appointed for the meeting.Notice may be sent by campus mail services, courier, email, facsimile or pre-paid regularmail. The accidental failure to give notice of a Board meeting to any Board Member orany accidental irregularity in connection with the giving of notice of a Board meetingshall not invalidate the proceedings at the relevant meeting.


All Board meetings shall normally be held on the University's main campus.

6.6 Attendance

Board Members may attend meetings in person or by telephone, electronic or othercommunication facilities, as permit all individuals participating in the meeting tocommunicate.

6.7 Quorum

Ten (10) Board Members shall constitute a quorum at any Board meeting.

6.8 Voting

a) All questions at a Board meeting shall be decided by a majority of the votes ofBoard Members present and eligible to vote. The Chair may vote on all motionsand if regarding any motion there is a tie, that motion is deemed to be defeated.The Chair does not have a second or casting vote.

b) Recommendation to accept a mediated settlement regarding the Special PlanAgreement with the Faculty Association need only be approved by more thanone-third (1/3) of Board Members present and eligible to vote.

c) No Board Member may use a proxy or be represented by a proxy-holder.

d) A resolution or By-law signed by all of the Board Members is as valid andeffective as if passed or made at a Board meeting duly called, constituted and heldfor that purpose.


6.9 Matters for Inclusion in the Agenda

All matters for inclusion in the agenda for Regular Board meetings must be delivered tothe Secretary at least three (3) days prior to the day of the meeting at which they are to bepresented. Inclusion of matters in the agenda is at the discretion of the Chair. No othermatter, other than that of privilege or petition, shall be dealt with at any regular Boardmeeting, unless the introduction of such matter is approved by a majority of all BoardMembers present at such meeting.

6.10 Evidence of Resolution

Whenever a vote has been taken upon a question, a declaration by the Chair that aresolution has been carried or lost by a particular majority is determinative and an entryto that effect in the Board's minutes is conclusive evidence of that fact without proof ofthe number or proportion of votes recorded in favour of or against the motion.

6.11 Record of the Proceedings

A record of the proceedings of all Board meetings shall be kept in a book provided forthat purpose and the minutes of every such meeting shall be submitted at the next Boardmeeting, and after adoption by the Board, the minutes shall be signed by the Chair andSecretary. Minutes of Board meetings held in Open Session shall be available forinspection by appointment with the Secretary, at the office of the Secretary duringregular business hours. Minutes of Board meetings held in Closed Session shall beavailable only to those authorized.

7. COMMITTEES

7.1 Committees

The Board has the power to appoint Standing Committees and Special Committees and todelegate to any such Committee any of its powers.

7.2 Standing Committees

a) There shall be an Executive Committee.

b) There shall be other Standing Committees as established from time to time:

i) the Audit Committee;

ii) the Development Committee;

iii) the Finance Committee;


iv) the Membership and Governance Committee;

v) the Pensions and Benefits Committee;

vi) the Physical Resources and Property Committee;

vii) the Senior Compensation and Negotiations Committee; and

viii) the Board of Trustees of the University of Guelph Heritage Fund; and

ix) such other Committees as are designated as Standing Committees byresolution of the Board.

c) The Terms of Reference for each Standing Committee shall be established byresolution of the Board.

7.3 Membership of Standing Committees

a) The membership for each Standing Committee shall be established by resolutionof the Board, in accordance with the Terms of Reference for each Committee. AllStanding Committee Members shall hold such office at the pleasure of the Board.The Chair and the President shall each be a member of all Standing Committees(except that only the Chair (and not the President) shall be a member of the AuditCommittee).

b) Vacancies occurring in the membership of a Standing Committee shall be filledby the Board at its earliest convenience. Notwithstanding any vacancy on aCommittee, the Committee may exercise all or any of its powers, as long as aquorum is maintained.

7.4 Special Committees

Special Committees may be appointed from time to time as the Board may determine.The membership of and Terms of Reference for each Special Committee shall beestablished by resolution of the Board.

7.4 Closed Meetings

Attendance at Committee meetings is limited to committee members and appropriateresource people.

7.5 Notice of Meetings

Notice in writing of the time and place of meetings of a Committee shall be sent to eachCommittee Member at least three (3) days prior to the day appointed for the meeting.


Notice may be sent by campus mail services, courier, email, facsimile or pre-paid regularmail. The accidental failure to give notice of a Committee meeting to any CommitteeMember or any accidental irregularity in connection with the giving of notice of aCommittee meeting shall not invalidate the proceedings at the relevant meeting.


All Committee meetings shall normally be held on the University's main campus.

7.7 Attendance

Committee Members may attend meetings in person or by telephone, electronic or othercommunication facilities, as permit all individuals participating in the meeting tocommunicate.

7.8 Quorum

Subject to exceptions provided for in a resolution of the Board or in a Committee's Termsof Reference, quorum for each Committee shall be two-fifths (2/5) of the membership ofsuch Committee.

7.9 Voting

a) All questions at a Committee meeting shall be decided by a majority of the votesof the Committee Members present. The Committee's Chair may vote on allmotions and if regarding any motion there is a tie, that motion is deemed to bedefeated. The Committee's Chair does not have a second or casting vote.

b) No Committee Member may use a proxy or be represented by a proxy-holder.

c) A resolution signed by all of the Committee Members is as valid and effective asif passed at a Committee meeting duly called, constituted and held for thatpurpose.

7.10 Record of the Proceedings

A record of the proceedings of each Committee meeting shall be kept and the minutes ofevery such meeting shall be submitted at the next meeting of that Committee. Minutes ofeach Committee's meetings shall be available for inspection by any individual who is aCommittee Member of that Committee and appropriate resource persons, by appointmentwith the Secretary, at the office of the Secretary during regular business hours.


8. CONFIDENTIALITY AND CONFLICT OF INTEREST

8.1 Undertaking

After appointment and prior to the term commencing, each Board Member or CommitteeMember shall sign an Undertaking regarding Confidentiality and Conflict of Interest in aform approved by the Board.

8.2 Confidentiality

All proceedings of any Board or Committee meeting which is closed shall be confidentialsuch that any person attending any such meeting shall not disclose any informationrelated to any matter discussed or decision made at such a meeting to anyone who wasnot properly present at such meeting.

8.3 Conflict of Interest

a) Subject to Subsection (b) below, a Board Member or Committee Member whohas in any way, directly or indirectly, an interest in a contract, transaction,proposed contract or proposed transaction (each a "Matter") with the Universityshall:

i. declare the nature of the interest as soon as possible, and not later than atthe relevant meeting at which the Matter is first considered; and

ii. either voluntarily or if required to do so by a resolution of the Board orCommittee withdraw from the portion of the relevant meeting duringwhich the Matter is considered ; and

iii. refrain from voting on any resolution regarding such Matter.

If a declaration is made as referred to in Clause (a)(i) above and the Board Member orCommittee Member has not voted in respect of the Matter, such Board Member orCommittee Member is not accountable to the University or to any of its creditors for anyprofit realized from that Matter.

Disclosure by a Board Member or a Committee Member to the Secretary that such BoardMember or Committee Member is interested in any company or is a member of aspecified firm and is to be regarded as interested in any contract made with such othercompany or firm, shall be deemed to be a sufficient declaration of interest in relation to acontract so made, and the Secretary shall notify the Board of such a disclosure (and, inthe event such declaration is made by a Committee Member, the Secretary shall alsonotify the other Committee Members of the relevant Committee).


b) Notwithstanding Subsection (a) above and subject to Subsection (c) below, aBoard Member or a Committee Member who is faculty, staff or a student of theUniversity or whose spouse is faculty, staff or a student of the University mayparticipate in the consideration of and any vote at a Board meeting or aCommittee meeting (as the case may be) regarding any matter related generally tothe University's financial operation other than any matter regarding which theinterest of such Board Member or Committee Member differs from the interest ofUniversity faculty, staff or students generally.

c) Notwithstanding Subsection (b) above, if a Board Member or a CommitteeMember is an employee of the University or if a member of such Board Member'sor Committee Member's immediate family is an employee of the University, suchBoard Member or Committee Member (at a Board meeting or Committeemeeting, as the case may be) shall not participate in the consideration of nor voteregarding any matter related to the terms of employment, remuneration, benefits,rights or privileges available to employees of the University. The term"immediate family" means any spouse, parent, sibling or child (including byadoption).

d) Where the Board or a Committee determines (by resolution passed by a two-thirds (2/3) majority of those entitled to vote on such resolution) that a conflict ofinterest exists that has not been declared, the Board or Committee may resolve(by a two-thirds (2/3) majority of those entitled to vote on such resolution) thatthe Board Member or Committee Member determined to be in conflict shall:

i. withdraw from the portion of the relevant meeting during which therelevant Matter is considered; and

ii. refrain from voting on any resolution regarding such Matter.

9. INDEMNIFICATION AND INSURANCE

a) Except where otherwise prohibited by law, each Board Member and CommitteeMember (each an "Indemnified Person"), and their heirs, executors, andadministrators, and estate and effects, respectively, is hereby indemnified andsaved harmless out of the funds of the University, from and against:

all costs, charges and expenses whatsoever (including amounts paid tosettle an action or to satisfy a judgement) that such Indemnified Personsustains or incurs in or about any action, suit or proceeding that is brought,commenced or prosecuted against such Indemnified Person, for or inrespect of any act, deed, matter or thing whatsoever made, done orpermitted by such Indemnified Person, in or about the execution of theduties of such Indemnified Person's office; and


ii. all other costs, charges and expenses that such Indemnified Personsustains or incurs in or about or in relation to the affairs thereof, exceptsuch costs, charges or expenses as are occasioned by the willful neglect ordefault of such Indemnified Person.

b) Notwithstanding the foregoing, each Indemnified Person shall only beindemnified in such cases where such Indemnified Person had reasonable groundsfor believing that the act, deed, matter or thing made, done or permitted by suchIndemnified Person was lawful and in the best interests of the University. If anIndemnified Person incurs any costs, charges or expenses as provided abovebecause of the act, receipt, neglect or default of any other Board Member orCommittee Member, or officer or employee of the University, such IndemnifiedPerson shall be indemnified as provided above.

c) The University may purchase and maintain insurance for the Board Members andCommittee Members (each an "Indemnified Person") against any liabilityincurred by such Board Members and Committee Members, in such capacities,except where the liability relates to the person's failure to act honestly and ingood faith with a view to the best interests of the University.

d) The preceding provisions regarding indemnification and insurance are subject toany limitations contained in any applicable statute or regulation.

10. REIMBURSEMENT OF EXPENSES

Each Board Member and Committee Member may be reimbursed for all reasonableexpenses (including reasonable travel expenses) incurred in connection with theperformance of such Member's duties.

11. CORPORATE SEAL

There shall be a corporate seal of the University and it shall be in the custody of theVice- President (Finance and Administration), or such other person or persons as theBoard may from time to time designate.

12. EXECUTION OF DOCUMENTS

a) All contracts, documents or instruments in writing requiring execution by theUniversity shall be signed by any two (2) Officers of the University. TheUniversity's corporate seal shall, when required, be affixed to such signedcontracts, documents or other instruments by any Officer of the University.

b) The Board may from time to time by resolution appoint any Officer or Officers ofthe University or any person or persons on behalf of the University to signcontracts, documents or instruments in writing generally, or to sign specific


classes of contracts, documents or instruments in writing, or to affix theUniversity's corporate seal, or any combination of the preceding.

c) All cheques, drafts or orders of payment of money, and all notes and acceptancesand bills or exchange received or issued by the University, shall be signed bysuch Officer or Officers of the University or such person or persons on behalf ofthe University, and in such manner as may be designated from time to time byresolution of the Board.

13. HEAD OFFICE

The University's head office shall be in the City of Guelph in the Regional Municipalityof Wellington County in the Province of Ontario.

14. FISCAL YEAR

The University's fiscal year shall terminate on April 30 in each year.

15. AUDITOR

The Board shall each year appoint an external audit firm to audit the University'saccounts.

16. MAKING, AMENDING OR REPEALING BY-LAWS

a) A proposed By-law may only be made effectively if notice of such proposed By-law has been given to the Board not later than at the Board meeting preceding theBoard meeting at which the proposed By-law is to be considered.

b) A By-law may only be amended or repealed by By-law.

c) A By-law may be made:

i) at a Board meeting at which at least fifty percent (50%) of the BoardMembers are present; or

ii) by resolution signed by all Board Members.

17. INTERPRETATION

In all By-laws, where the context requires, the singular shall include the plural and theplural the singular, and the word "person" shall include firms and corporations.


18. REPEAL

The General By-Laws of the Board of Governors of the University of Guelph whichcame into force on July 1, 1968 and all amendments thereto are hereby repealed.

19. COMMENCEMENT

This By-law shall come into effect on the day it is enacted by the Board.

PASSED this day of , 2005.


By-law No. 2 ofThe Board of Governors of the University of Guelph

A By-law respecting Terms of Appointment for Members of the Board of Governors of theUniversity of Guelph.

Be it enacted as a By-law of the Board of Governors, University of Guelph that:

1. COMPOSITION

The Board's composition of not more than 24 members shall consist of,

a) the President appointed by the Board; andb) the Chancellor elected by Senate; andc) three persons appointed by the Board who are graduates of the University; andd) four persons appointed by the Lieutenant Governor in Council; ande) seven persons appointed by the Board; andf) three members of the Faculty elected by the Senate; and

g) two members of the Staff elected by the staff, one of whom is a graduate of theUniversity; and

h) three students, one of whom will be a graduate student elected by the graduatestudents, and, two of whom will be undergraduate students elected by theundergraduate students.

2. CHANCELLOR AND PRESIDENT AND BOARD CHAIR

a) The Chancellor and President shall be members of the Board for as long as s/heshall hold office.

b) The Chair shall be appointed from among the Board Members for such period asmay be determined by the Board. This appointment may be in addition to thenormal term of office for a Board Member.

3. TERM OF OFFICE

a) Members per Section 1. Subsections c) to h) shall serve terms which normally endon June 30th in a year named at such time of appointment or election.

b) Members per Section 1. Subsections c) to g) shall normally hold office for a termof three-years and shall be eligible for reappointment or re-election, as the casemay be, for one additional consecutive term.

c) Members per Section 1. Subsection h) shall normally hold office for a term of one

University of Guelph Board of Governors - By-law No. 2 Page 1 of 2

year and shall be eligible for re-election for a total of three consecutive one yearterms.

d) The Board may appoint a member for a term of less than three years to provide forstaggered terms and continuity.

4. COMMENCEMENT

This By-law shall come into effect on the day it is enacted by the Board.

PASSED this day of 2005.

University of Guelph Board of Governors - By-law No. 2 Page 2 of 2

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