the
ENGAGED
UNIVERSITY
ENGAGING
COMMUNITIES
CONTRIBUTE IN EVERY
WAY POSSIBLE
ENGAGING
RESEARCH
UNLEASH THE
CREATIVITY
ENGAGING
STUDENTS
UNLOCK TALENTS
AND POTENTIAL
SURREY
CAMPUS
CONTRIBUTING
TO A THRIVING
NEW CITY
CENTRE
VANCOU VER
CAMPUS
THE INTELLECTUAL
HEART OF THE CITY
SKYTRAIN
BURNABY CAMPUS
BRINGING THE COMMUNITy
UP TO THE CAMPUS
G
E
E
s
BIG IDEAS
Ah-ha
LAB
OPEN
ANNUAL FINANCIAL REPORT
March 31, 2012
S.12-160
UNDERLYING PRINCIPLES
ACADEMIC AND INTELLECTUAL FREEDOM
DIVERSITY
INTERNATIONALIZATION
RESPECT FOR ABORIGINAL
PEOPLES AND CULTURES
SUPPORTIVE AND HEALTHY WORK
ENVIRONMENT
SUSTAINABILITY
1
Table of Contents
President’s Message
2
Vice President’s Message
4
An Engaged University
6
Engaging Students
8
Engaging Research
10
Engaging Communities
12
Underlying Principles
14
Management Discussion
and Analysis (Unaudited)
17
Forward-Looking Statements
18
Planning and Management
20
Financial Highlights
21
Financial Information
22
Operating Environment
26
Risks and Uncertainties
27
Related Entities
28
Financial Statements
31
Management Responsibility
32
Independent Auditor’s Report
33
Financial Position
34
Operations 35
Changes in Net Assets
36
Cash Flows
37
Notes
38
Board of Governors
56
TABLE OF
CONTENTS
2
PROF. ANDREW PETTER
PRESIDENT AND VICE-CHANCELLOR
PROF. ANDREW PETTER
PRESIDENT AND VICE-CHANCELLOR
2011/12 saw the completion of the broadly based
en
vision>SFU
consultation
process and the release of an exciting new strategic vision for SFU.
We listened to thousands of students, faculty, staff, alumni, community partners
and supporters. We completed one of the most extensive consultations ever by
a Canadian university.
What we heard was both reassuring and energizing. People told us they
appreciated SFU for our adventurous spirit and willingness to embrace bold
initiatives. They liked our commitment to teaching and learning and to the
quality and mobility of our research. They hugely valued our connection
to communities.
The
en
vision>SFU
process revealed another insight – our commitments to
students, research and communities are mutually supportive and a source
of great strength for the University. This insight became the central element
in our new vision:
This vision has the capacity to defne and distinguish SFU
as the best university of its kind. It has three overarching goals:
Engaging Students
To equip SFU students with the knowledge, skills, and experiences that prepare
them for life in an ever-changing and challenging world.
Engaging Research
To be a world leader in knowledge mobilization building on a strong foundation
of fundamental research.
Engaging Communities
To be Canada’s most community-engaged research university.
The success of these goals depends not just on their individual attainment
but on their integration – on the degree to which each contributes to the
others. Students will aid and inspire research and contribute to community.
Research will enhance the learning experience while enriching the community,
socially, economically, scientifcally and artistically. And the SFU community
of communities – local and global – will serve as a dynamic and limitless
classroom, offering context and applicability for students, as well as
partnerships, challenges and opportunities for research.
The vision commits to underlying principles that include ecological, social and
economic sustainability, and a supportive and healthy work environment.
Our challenge now is to make SFU’s vision a reality. And it is OUR challenge…
a challenge for all of us who value SFU’s past, to be excited by its potential,
and believe in its future.
“To be the leading engaged university defined
by its dynamic integration of innovative education,
cutting-edge research, and far-reaching
community engagement.”
PRESIDENT’S
MESSAGE
3
“We used to talk about ivory towers.
The kind of university we see ourselves
as is an engaged university. Not an ivory
tower by any stretch of the imagination.”
– Andrew Petter
4
DR. PAT HIBBITTS
VICE PRESIDENT, FINANCE AND ADMINISTRATION
The 2011/12 year was a period of both stability and growth for SFU – stability
in our levels of government grants, fundraising, and operating expenses;
growth in our enrolment and research revenues.
Provincial government revenue/grants were essentially unchanged, refecting
the capacity of government to support the broader public sector – this is our
reality and we are adapting to it. Community and alumni fnancial support
remain strong, with the Bill Reid Foundation’s recent gift to SFU – a stunning
collection of Northwest Coast art – worth more than $10 million. Through
effective cost control, we maintained one of the lowest administrative cost ratios
among Canadian comprehensive universities.
Demand for our educational services is strong, and consequently, SFU saw
growth in both domestic enrolment (per provincial government targets) and
international enrolment, refecting the strength of our academic programs.
Growth in our international tuition revenue assisted us in addressing cost
pressures within the University and our sustained and growing research
revenue demonstrated the credibility and outstanding reputation of our faculty
researchers. Investment revenue has been less than past experience refecting
market performance, however, comparative to benchmarks, SFU’s prudent
investment approach is producing superior returns.
Enrolment has us operating at capacity which optimizes our utilization of
physical assets and personnel resources. In this environment, cost control
is critical and consciously exercised, with any increase in expense focused on
areas that are considered critical to the central mission of the University or that
offer the possibility of corresponding revenue opportunity.
The University has two important fnancial issues that we are actively addressing:
• Deferredmaintenance
occurs
in
the
broader
public
sector
during
periods
of economic stress in order to sustain core programs. In the long term, the
accumulation of deferred maintenance needs to be addressed, and that is
the case at SFU in relation to protecting our $1.4 billion (replacement value)
of University capital assets.
• Unfundedliabilities
related
to
defned
beneft
pension
plans
are
common
during periods of low investment return, as retiree benefts are fxed. The
structure of SFU’s staff defned beneft plans with 100% employer funding
and a joint Pension Trust allows little fexibility. We are actively engaged
in seeking appropriate, balanced solutions to address both the unfunded
liabilities that have developed and the underlying structural problems.
Overall, based on strong enrolment, effective cost control, healthy fnancial
results, and active engagement regarding the two key fnancial issues above, we
believe SFU is well positioned to continue serving our community in a fnancially
responsible manner.
In this Annual Financial Report we present the University’s Audited Financial
Statements for the fscal year ended March 31, 2012. Chief among my priorities
is the fnancial sustainability and well-being of the University. The University
ended fscal 2011/2012 in a strong fnancial position with assets of $1.4
billion and consolidated revenue of $638 million, increases of 4.8% and 3.6%
respectively over the prior fscal year.
DR. PAT HIBBITTS
VICE PRESIDENT,
FINANCE AND ADMINISTRATION
VICE PRESIDENT’S
MESSAGE
5
6
To be the leading engaged university
defined by its dynamic integration
of innovative education, cutting-
edge research, and far-reaching
community engagement.
Simon Fraser University, with three distinct campuses, is
a public university with a diverse student population from
both local and global regions. One of Canada’s leading
comprehensive universities, SFU is frmly committed
to undergraduate student learning, advanced research,
graduate studies and community engagement. This
commitment to being student-engaged, research-engaged,
and community-engaged refects the sentiments of both
the internal and external community, as indicated in
the consultations undertaken in relation to the strategic
visioning project,
en
vision>SFU
.
SFU currently enrolls 26,552 program-based full-time
equivalent (FTE) credit students and more than 20,000
students in non-credit courses. SFU meets the needs of a
diverse community of students with our tri-semester system,
fexible curriculum including night and weekend courses,
and experiential learning programs where approximately
20% of eligible students participate in co-op practicums
or international courses and opportunities. By providing
students with opportunities to extend their learning through
engagement with both local communities and global
partners, and by incorporating research into the curriculum
and providing an opportunity for undergraduate and graduate
students to perform research, the University enriches the
student experience.
SFU has been successful in identifying new research funding
opportunities, resulting in a signifcant increase in research
income over the past decade. SFU now ranks among the top
twenty Canadian post-secondary institutions in research and
within the top fve comprehensive universities. By bringing
together the necessary teams to capitalize on new funding
opportunities, expanding and optimizing our physical and
personnel infrastructure, developing collaborative networks,
and promoting our faculty for prestigious awards,
SFU has ensured that our researchers remain competitive
in attracting external support for their research projects.
Each of SFU’s three campuses offers
a distinctive model for community
engagement. The Burnaby campus
provides academic and research
space for all Faculties as well as
residences for 1,766 students. It also
includes UniverCity, a sustainable
urban community that supports and
enhances the University environment.
SFU Surrey is uniquely situated in the
middle of BC’s next great metropolitan
centre. With the support of the City
of Surrey, the campus is forming the
nucleus of a vibrant new Surrey city
centre. The Surrey campus offers a
modern learning environment with
courses from all Faculties and with
progressive programs in science,
technology, communication, and
engineering.
The Vancouver campus encompasses
Harbour Centre, Wosk Centre for
Dialogue, Segal Building, and the
Goldcorp Centre for the Arts. In
Vancouver, the University is reaching
out to residents of the Downtown
Eastside through community
programming at the Woodward’s
Cultural Unit, located at the Goldcorp
Centre for the Arts. The Vancouver
campus provides a home for SFU’s
business programs, Offce of Lifelong
Learning, as well as numerous other
graduate programs, credit and
non-credit courses.
Ultimately, our vision to be “an
engaged university” is an appeal to
our better selves, a call to become
something more, and an invitation
to engage.
AN ENGAGED
UNIVERSITY
7
Seeking vision –
not division
8
To equip SFU students with the
knowledge, skills, and experiences
that prepare them for life in an
ever-changing and challenging world.
In 2011/12, SFU’s enrolment was 35,604 full and part-time
students, composed of 30,091 undergraduates and 5,513
graduates, an increase of over 18% from fve-years ago.
In an era when some post-secondary institutions are
focusing on undergraduate teaching and others are directing
their energies to research and graduate studies, SFU is
committed to integrating both. We seek to enrich the
undergraduate student experience even as our bright and
motivated students unleash their creativity and stimulate
the research environment - this integration aids students
and communities.
Providing opportunities for research training to our
undergraduate and graduate students is central to our
mission of a research-engaged university and to our ability
to beneft the communities we serve. Through participation
in research – both local and international - our students
acquire valuable workplace skills, cultural knowledge,
and civic understanding. At the same time, our strong
international partnerships draw students from around the
world, while allowing Canadian students to study abroad.
The frst Canadian university to be admitted to the National
Collegiate Athletic Association (NCAA), SFU also provides
our students with a rich and rewarding environment for
athletics and recreation.
We are constantly redefning our programs to better meet
the needs of students; for example, the redefned
Environmental Science program at SFU offers four new
concentrations: Applied Biology, Environmental Earth
Systems, Environmetrics, and Water Science. Similarly,
we’ve introduced more collaborative teaching programs such
as our group-directed studies course called The ChangeLab,
which redefnes the instructor/student relationship to inspire
students’ creativity. Additionally, undergraduates interested
in becoming high-tech entrepreneurs now have a new
resource for achieving their dreams. The Ken Spencer
Entrepreneur Incubator offers students options for
developing potentially marketable high-tech products during
their academic studies and provides access to industry
mentors through the new product design studio
at Surrey campus.
A priority for SFU is to build upon our
considerable success in Surrey. To this
end, we are working to implement the
2006 Memorandum of Understanding
between SFU and the BC Ministry of
Advanced Education, which provided
for doubling the size of the SFU Surrey
campus from 2,500 to 5,000 full-
time students equivalents by 2015.
With a rapidly growing population (a
third of which is under 19 years old),
signifcantly lower post-secondary
participation rates than other Lower
Mainland regions, and less than half
the number of post-secondary seats
per capita than the provincial average,
Surrey and the South Fraser region
are in desperate need of increased
university spaces.
Our principles include celebrating the
diversity and multi-ethnic character
refected among our students, faculty,
staff, and society; engendering
an active global citizenship; and,
ensuring SFU is an active partner and
contributor on the international stage.
One example of all three principles in
action is our program to position SFU
as Canada’s “bridge to India” which
enables high school students from
Delhi to spend several weeks at SFU,
living in residence, and participating
in activities inside and outside
the classroom.
Just as we offer our students a high
quality classroom environment in
which to acquire knowledge and
critical thinking skills, so too will we
harness our research strengths to help
students learn the joy of discovery and
develop aptitudes for lifelong learning.
ENGAGING
STUDENTS
9
Today’s young
people are looking
to universities to
give them educational
opportunities that
extend well beyond
the classroom.
10
To be a world leader in knowledge
mobilization by building on a
strong foundation of
fundamental research.
In 2011/12, SFU’s funding from total research activities
reached $90 million, an increase of 16% over fve years
and almost four times that of ten years ago.
SFU ranks in the top three canadian comprehensive
universities in research publication intensity, based upon
the average number of publications per full-time faculty
member, with close to a 29% gain over a fve year period. We
rank frst among comprehensive universities for publication
impact, a measure of the probability of an article being
cited in journals. SFU researchers consistently exceed the
national success rates in Social Sciences and Humanities
Research Council and Natural Sciences and Engineering
Research Council competitions, and our research intensity,
as defned by research income per full-time faculty position,
increased 7% over the previous year compared with an
average national growth of 2.3%. Not content to rest on
our laurels, we are mobilizing our Strategic Research Plan
to capitalize on our strengths in independent scholarly
efforts, in pan-disciplinary initiatives, and to train the next
generation of researchers.
SFU engages communities in university research in order
to illuminate the public and address issues of community
concern. For example, we bring remote and Aboriginal
communities together to collaborate on research projects
that aim to preserve BC’s heritage and ecosystems.
Likewise, through research SFU engages with industry
and builds a culture of entrepreneurship and innovation
through startup ventures. With each new startup company
generating an average of fve jobs, SFU creates, mentors,
incubates and assists over 400 local early-stage businesses
contribute 2,300 jobs to our economy, with resulting annual
tax revenues of approximately $186 million.
We are one of few Canadian research universities to have
gained candidacy for US accreditation, a process that
will enable us to further heighten and validate our high
educational standards, and to increase our profle abroad.
Two recent international surveys place the Beedie School
of Business among the world’s top 100 post-secondary
institutions for business and management research:
Shanghai Jiao Tong University’s 2011 Academic Ranking of
the Top 500 World Universities rated us among the top 75
schools internationally in economics/business; the University
of Texas at Dallas rated us 22nd in management research
in its Top 100 World Rankings of Business Schools.
SFU has an active Climate Change
Research Program. Areas of research
include greenhouse gas mitigation,
sustainable energy systems, climate
change affects, adaptation to climate
change and alternative energy.
As a founding member of the Pacifc
Institute for Climate Solutions, SFU
researchers are well positioned to
contribute to the development of
innovative climate change solutions,
seek new opportunities for positive
adaptation to climate change solutions,
and lead the way to a vibrant low
carbon economy in BC and globally.
Named one of BC’s 100 most
infuential women by The Vancouver
Sun, Lynne Quarmby is a SFU
scientist with a passion for promoting
the importance of science to life’s
sustenance. “Without basic research
and the willingness of society to fund
it, we wouldn’t have cell phones,
cancer cures, better roads and
hospitals and other inventions that
have game changing results in
society,” explains Quarmby. The cell
biologist offered her perspectives
at the American Junior Academy of
Science’s 2012 annual conference.
A trio of SFU researchers has been
awarded new Canada Research Chairs
(CRC) funding to carry out research
related to health, mathematics
learning, and global communication.
Communication professor Yuezhi
Zhao received $1.4 million towards
her Social Sciences and Humanities
CRC in Political Economy of Global
Communication. SFU faculty now
possess 42 CRC appointments.
Just as we offer our researchers
endless opportunities for discovery-
based research in the laboratory and
the library, so too do we support our
researchers in their community-
based research where community is
both a source and a destination. By
becoming a world leader in knowledge
mobilization SFU will gain support for
all our research activities.
ENGAGING
RESEARCH
11
“Without basic research and the
willingness of society to fund
it, we wouldn’t have cell phones,
cancer cures, better roads and
hospitals and other inventions
that have game changing results
in society.” – Lynne Quarmby.
12
ENGAGING
COMMUNITIES
To be Canada’s most community-
engaged research university.
While it’s true that all universities make some effort to serve
communities, for us, it’s in our DNA. With our Wosk Centre
for Dialogue, Philosophers’ Café series, Semester
in Dialogue program, and many community conferences and
forums, SFU is already doing more than most universities
to foster public engagement on the issues of the day.
Additionally, SFU actively engages our many communities
in university research: the technology industry, the business
community, the preschool to grade twelve education sector,
the francophone community, the immigrant community, and
Aboriginal communities. Our track record of community
engagement includes creating a fusion of university and
community by combining the iconic structures of the
Burnaby campus and the UniverCity residential development,
helping transform suburban Surrey into a vibrant city centre,
developing an educational precinct through an extended
Vancouver campus, and redefning Vancouver industrial
lands through a bold urban renewal of the Great Northern
Way facility.
Our School for the Contemporary Arts is uniquely positioned
within the Downtown Eastside to establish SFU as the
cultural and intellectual heart of that community. The Bill
Reid Foundation’s recent gift to SFU – a stunning collection
of Northwest Coast art – also reinforces SFU’s cultural
presence in downtown Vancouver. With this generous
gift, the people of British Columbia are assured that this
important collection of 158 works of art remains intact as
a cultural legacy to our province.
2011/12 was a busy time on Burnaby Mountain as
UniverCity’s third phase of development kicked into high
gear with fve new residential projects, which will bring the
population to about 4,000 residents in just two to three years.
Also signifcant was the recent opening of the UniverCity
Childcare Centre, which was built to meet the Living Building
Challenge, cementing UniverCity’s place as one of the most
sustainable planned communities in Canada.
SFU’s strong community connections
broaden the scope of educational and
research endeavours and increase
the benefts to the communities we
interact with. Our students acquire
valuable workplace knowledge and
civic awareness and our faculty gain
unique opportunities to participate
in community-based research and
research partnerships. For example,
fve SFU student projects - all social
ventures aimed at creating positive
change in our communities - were
chosen from ten fnalists to win
Ashoka Canada’s Be a Changemaker
Challenge. Most entrants were from
SFU lecturer Shawn Smith’s Business
class in social entrepreneurship
and innovation, which teaches the
fundamentals of creating sustainable
businesses. Specifc projects include:
Fusion Kitchen, a project to employ
immigrant women to teach culturally
authentic cooking classes; Green Dirt,
a restaurant composting service to
turn organic waste into rich fertilizer
for local farms and gardens; and
Aspire, a project that aims to provide
employment opportunities in the
software testing industry for people
with Autism Spectrum Disorder by
leveraging characteristics of the
disorder for a competitive advantage.
It is clear from our track record,
that at SFU, we’ve always been
community-engaged. It is apparent
though, that when it comes to
community-engagement, the best
is yet to come.
13
“More than just community
engagement, I think it is
entirely critical to instill a
sense of responsibility, and
possibility, in our emerging
leaders.” – Shawn Smith.
14
UNDERLYING
PRINCIPLES
Underlying the central element of an engaged university
and the goals of engaging students, engaging research, and
engaging communities are the following principles:
Academic and Intellectual Freedom
SFU will be an open and inclusive university whose
foundation is intellectual and academic freedom.
To that end, we start with the acknowledgements that
“we celebrate discovery, diversity and dialogue”, and
that universities are diverse institutions that function on
a basis of collegial governance.
Diversity
SFU will foster a culture of inclusion and mutual respect,
celebrating the diversity and multi-ethnic character refected
amongst its students, staff, faculty, and our society.
We live in a pluralistic society: culturally, racially, and
ethnically. SFU must provide leadership in educating about
human differences in an increasingly diversifed world
in order to help develop a civil citizen and a civil society.
While our University has much to offer new students,
faculty, and staff, they too have much to offer us - indeed
their enthusiasm and ideas are critical to maintaining our
relevance and vibrancy.
Internationalization
SFU will value international knowledge, understanding and
engagement, and will seek to engender an active global
citizenship among its students, faculty and staff, and to
ensure that SFU is an engaged partner and contributor on
the international stage.
Our strong international partnerships draw students from
around the world while allowing Canadian students to study
abroad. Abroad, our students and faculty gain educational
experiences while learning frst-hand about life in the global
arena and at the same time, act as ambassadors for SFU
and Canada!
Respect for Aboriginal Peoples and Cultures
SFU will honour the history, culture and presence of
Aboriginal peoples. The University will welcome and nurture
Aboriginal students and seek opportunities for greater
representation of Aboriginal peoples amongst its faculty
and staff.
In 2007, the University adopted its First Nations Strategic
Plan. Signifcant strides have been made under this Plan,
although much remains to be done.
Supportive and Healthy Work
Environment
SFU will recognize, respect and value
the essential contribution made by
staff and faculty, and will seek to build
and sustain a work environment that
is equitable, supportive, rewarding and
enjoyable.
Simply put: staff are critical to the
success of this University, and we
have much to gain much from their
ideas on how best to shape and to set
course for the future.
Sustainability
SFU will pursue ecological, social and
economic sustainability through its
programs and operations. Through
teaching and learning, research and
community engagement, SFU will
seek and share solutions. In its own
operations it will develop and model
best practices, from minimizing its
ecological footprint, to maximizing its
social health and economic strength.
SFU is committed to serving
our community in a fnancially
responsible manner while striving to
be a community leader in sustainable
practices and implementing
sustainable energy solutions. Many
initiatives, both big and small, have
been undertaken toward improved
economic and environmental
sustainability; to name a few: the
Go Green Container Exchange,
Kill A Watt Contest, Sustainability
Festival/Week, and Sweater Day.
As a result of these many initiatives,
SFU has achieved a silver rating in the
Association for the Advancement of
Sustainability in Higher Education’s
(AASHE) STARS Program.
15
16
17
MANAGEMENT
DISCUSSION AND
ANAL YSIS
18
MANAGEMENT
DISCUSS
IO
N &
ANALYSIS
Forward-Looking Statements
Objective of Forward-Looking Statements
The objective of this Management Discussion and Analysis (MD&A) is to assist
readers of SFU’s fnancial statements to better understand the fnancial
position of the University and operating activities for the fscal year ended
March 31, 2012. It provides a look at the internal and external factors that
infuenced the year’s fnancial results and a basis for future performance.
Although the MD&A is
unaudited
, this discussion should be read in conjunction
with the annual audited fnancial statements and accompanying notes.
The MD&A provides an overview
of the University’s:
•Planning and Management
•Financial Highlights
•Financial Information
•Operating Environment
•Risks and Uncertainties
•Related Entities
Cautionary Note on Forward-Looking Statements
Some statements in this MD&A are forward-looking statements, based on
assumptions and addressing future events and conditions, and by their nature
involve risks and uncertainties. Actual results could differ materially from
those anticipated in forward-looking statements. Readers should not place
undue reliance on any forward-looking statements. Factors that could cause
results to differ materially from expectations include, but are not limited to:
the performance of fnancial markets, interest rate fuctuations, changes in
legislation and regulations, the effects of competition, and business continuity
risks. SFU does not undertake any obligation to update or revise these
forward-looking statements to refect events or circumstances after the date
of this report, or to refect the occurrence of unanticipated events, except
as required by law.
19
20
Planning and Management
SFU has a dynamic planning process with SFU’s Strategic
Vision at its core further supported by other institutional
plans, such as the Academic Plan and the Strategic
Research Plan, that are renewed as part of the cyclical
planning process. The Strategic Vision is the culmination
of the
en
vision>SFU
visioning process championed by
the President throughout 2011/12, involving extensive
consultation within and beyond the University, and is
intended to serve as the University’s road map for the next
fve years. The Strategic Vision centres on SFU being An
Engaged University, as defned by its dynamic integration
of innovative education, cutting-edge research, and
far-reaching community engagement which forms the
central element and overarching goals refected in
the vision document.
SFU remains dedicated to fostering a university
environment in which there is positive and productive
interplay amongst these goals, and the degree to which
each goal contributes to the others will determine our
success. The energy and motivation of undergraduate
students - stimulated through intellectual engagement and
academic enquiry resulting from exposure to accomplished
scholars, talented graduate student mentors, and advanced
research practices - refects an interplay that enhances
the dynamic exchange between students, research,
and communities.
The University Planning Framework is the mechanism
for communicating how SFU’s vision and mission is to
be achieved and supported through the contributions of
other institutional plans and planning processes, and their
alignment with
en
vision>SFU
.
21
Financial Highlights
Financial Health
Continuing last year’s economic recovery, growth in
revenues and effective cost control has allowed internally
restricted net operating assets to grow to $64.9 million.
This level refects a recovery from the market losses
incurred in 2008/09, and provides the University with some
reserves to fund one-time commitments and strategic
project initiatives in order to sustain University operations
and advance the University’s strategic goals.
The Endowment Fund which supports faculty, academic
and other programs, student fnancial aid, research
chairs, professorships, library collections and athletics,
has increased 58% since the market crash in 2008/09.
This year’s growth refects a very successful year, as
contribution levels exceed past amounts. Combined with
the capitalization of a portion of investment income,
the fund has reached an all-time high of $235.0 million.
Investments
Investment balances grew by $69.5 million reaching a total
of $498.7 million market value at year-end. The growth is
mainly attributed to the strong performance of fxed income
investments, and new long term investments converted
from accumulated operating cash.
Operations and Fiscal Restraint
The University’s academic operations are funded
primarily by government grants and tuition fees. The
provincial operating grant funded 17,766 undergraduate
and 2,449 graduate program-based full-time equivalent
student spaces. Total student enrolment exceeded plans
particularly with international students, and resulted in
tuition and student fee revenues of $200.7 million (2010/11:
$190.2 million). A large gift-in-kind donation of 158 works
of Northwest Coast art from the Bill Reid Foundation was
received during the year and contributes to the overall
increase in revenues. Research contributions benefted
from increased activity, with $68.2 million reported, while
revenues from the sale of goods and services decreased
by $1.5 million.
While SFU continues to actively manage costs, increased
student enrolments have led to increased sessions to meet
student demand. The University’s total expense, refected
an increase of 1.6% to $572.5 million. Salary and benefts
expense represents 63.1% of total expense remaining
relatively stable year-over-year.
Government Grants
The provincial operating grants refect a slight decrease
to $219.0 million, due primarily to additional one-time
payments for French language programs received last year.
There was no increase for student growth.
Capital
Capital investment in property and equipment was
$59.2 million for the year. Most of the expenditures relate
to purchases for computers and other equipment, as well
as renovations of space and classroom renewal.
22
Dollars in Thousands
2012
2011
Current assets
35,818
51,399
Due from related party
9,581
9,663
Investments
498,738
429,270
Investment in related entity
13,309
11,438
Property & equipment
839,539
831,142
Prepaid lease
1,808
2,122
Total Assets
1,398,793
1,335,034
Dollars in Thousands
2012
2011
Current liabilities
39,551
49,549
Employee future benefts
61,043
54,970
Long term debt
150,913
154,202
Deferred contributions
44,943
68,117
Deferred contributions
for property & equipment
403,709
402,873
Deferred lease proceeds
24,465
22,980
Total Liabilities
724,624
752,691
Increased 4.8% to $1,399M.
Decreased 3.7% to $725M.
Dollars in Millions
2012
2011
2010
2009
2008
Dollars in Millions
2012
2011
2010
2009
2008
1,113
693
1,335
753
1,399
725
1,173
696
1,200
693
Current liabilities are lower due to the decrease in
construction activity and related liabilities, and accounts
payable and liability accruals.
Employee future benefts liability increased by $6M as a
result of the actuarial valuation as of March 31, 2012, which
included an actuarial loss of $4.4M.
Deferred contributions are externally restricted resources
not recognized as revenue until related expenses are
incurred. The decrease is due to a reduction in deferred
income related to endowment accounts as well as
completion of several signifcant research projects.
Long term debt decreased by $3.3M due to the payment
of a $3M debenture within the year.
ASSETS
LIABILITIES
Current assets have signifcantly reduced as cash
in the prior year included a $20M cash equivalent which
now appears in investments. Investments increased by
$70M to a market value of $499M which is due to both
a strong performance of fxed income investments and
new investments from accumulated operating cash.
Property and equipment includes capital projects for
buildings, leasehold improvements, library acquisitions,
computers and furniture and equipment. The increase
was due mainly to equipment purchases for operating
and research purposes.
Financial Information
23
Donations of $21.6M and reinvestment of $6M of earnings
helped grow the endowment net assets balance to $235M.
Investment income earned on the endowment principal is
externally restricted and must be spent as stipulated by
donors. There are 760 individual endowment funds that
provided $9.4M (2011: $8.4M) in funding support.
The income stabilization account, which is a component
of deferred contributions, protects endowment spending
against market fuctuations in the endowment investment
fund, and has a defcit of $1.6M (2011: $12.1M).
Internally restricted, operating include balances derived
from operating budget carryforward amounts at the
department level, as well as internally restricted funds
for research and other projects. These funds increased
due to positive net revenue for the year.
Internally restricted, lease and other are for non-operating
commitments which relate to long term lease
commitments for our Harbour Centre facility, and reserves
designated for contracts for specifc purpose activities.
Invested in property and equipment represents the amount
of net assets that are not available for other purposes
because they have been invested in capital assets.
Endowment net assets is the capital held in perpetutity
to generate investment income in support of faculty
programs, students, research chairs, professorships,
library collections and athletics. The purchasing power
of the endowment capital is preserved through reinvesting
a portion of earnings.
Dollars in Thousands
2012
2011
Internally restricted, operating
64,896
45,026
Internally restricted, lease
& other commitments
34,673
33,380
Invested in property &
equipment
339,589
295,344
Endowment
235,011
208,593
Total Net Assets
674,169
582,343
Dollars in Thousands
2012
2011
Faculty, academic &
other programs
80,637
66,923
Student fnancial aid
69,283
60,318
Research chairs
64,472
61,939
Professorships
12,853
11,881
Library collections
4,883
4,713
Athletics
2,883
2,819
Total Endowment Net Assets
235,011
208,593
Increased 15.8% to $674M
Increased 12.7% to $235M
Dollars in Millions
2012
2011
2010
2009
2008
Dollars in Millions
2012
2011
2010
2009
2008
420
149
582
209
674
235
478
177
507
186
NET ASSETS
ENDOWMENT NET ASSETS
24
Dollars in Thousands
2012
2011
%
Government grants
& contracts
302,278
300,336
0.6
Tuition & student fees
200,658
190,160
5.5
Sales of goods & services
42,992
44,463
(3.3)
Gifts, grants & contracts
47,703
35,435
34.6
Investment income
22,750
20,735
9.7
Amortization of deferred
capital contributions
14,211
14,126
0.6
Other revenue
7,601
10,864
(30.0)
Total Revenue
638,193
616,119
3.6
Dollars in Thousands
2012
2011
%
Salaries & benefts
361,021
351,042
2.8
Supplies & operating
54,891
54,197
1.3
Amortization of capital
assets
50,067
51,687
(3.1)
Professional services
32,342
31,830
1.6
Scholarships & bursaries
29,160
28,606
1.9
Training & travel
15,792
14,470
9.1
Cost of goods sold
10,926
13,596
(19.6)
Interest on long term debt
9,920
10,090
(1.7)
Utilities
8,426
8,281
1.8
Total Expense
572,545
563,799
1.6
Increased 3.6% to $638M.
Increased 1.6% to $573M.
Dollars in Millions
2012
2011
2010
2009
2008
Dollars in Millions
2012
2011
2010
2009
2008
483
545
616
564
638
573
519
512
591
536
Government grants and contracts including sponsored
research revenue increased by 0.6% over the year.
Provincial funding decreased by 1.5% offset by an increase
of 8.9% in federal research funding.
Tuition and student fees increased by 5.5% as a result
of a 2% domestic fee increase and an increase in both
domestic and international enrolment.
Sales of goods and services are primarily sales from
Ancillary Services. Bookstore sales are reduced
due to the shift to electronic media.
Gifts, grants and contracts increased by 34.6%
including a $10M donation of works of art from
the Bill Reid Foundation.
Other revenue includes fees for facility rental and
other services. Last year’s amount included a one time
contribution from SFU Community Trust.
Salaries and benefts represent 63.1% of expenses;
approximately the same proportion as the prior year.
Compensation costs increased based on progression
through the ranks, step increases, and minor growth
in faculty and staff complements.
Amortization of captial assets is down by 3.1% because of
a large pool of computer equipment now fully amortized.
Scholarships and bursaries were funded 64% from
operating and 36% from endowments.
Training and travel includes travel for research, athletics
and feld schools. The increase is a result of increased
activity in feld schools and internally funded research.
Cost of goods sold decreased by 19.6% primarily as a result
of reduced Bookstore sales.
REVENUE
ExPENSE
25
Research is primarily funded by three federal granting
agencies: Natural Sciences and Engineering Research
Council, Social Sciences and Humanities Research
Council, and Canadian Institutes of Health Research.
Sponsored research contributions, as they have an
externally restricted purpose, are recorded as deferred
contributions and are recognized as revenue in the year
related expenditures are incurred. Thus sponsored
research revenue and expenditures are equal.
Revenue recognition of sponsored research increased
from $63.5M to $72.2M and deferred contributions for
sponsored research at the end of the year decreased
from $40.2M to $30.5M.
Revenue is generated to cover operating expenses, debt
service payments, and to provide reinvestment necessary
to ensure long term fnancial viability. Ancillary Services
has contributed $3.1M to the University. Revenues refected
include both internal and external sources.
Residences have accommodation capacity for 1,766
students and provide 14 hotel rooms.
Bookstores have experienced a decline in consumer
purchases due to competitive online vendors.
MECS provides comprehensive conference services.
Parking Services revenue declined due to reduced demand,
which is in line with the University’s sustainability strategy.
Document Solutions continues to experience a market
shift away from print material and towards digital media.
There has been a decrease in print volume within the
campus community, but an increase in demand for external
business and value added products.
Dollars in Thousands
2012
2011
Federal government
46,118
44,378
Canadian not-for-proft
10,658
8,807
BC government
4,437
5,687
Foreign not-for-proft
852
1,628
Industry
3,704
3,131
Other
2,470
1,985
Total Sponsored
Research Contributions
68,239
65,616
Dollars in Thousands
2012
2011
Residences
14,995
14,354
Bookstores
14,903
17,483
Meeting, Event & Conference
Services (MECS)
6,960
6,236
Parking Services
3,990
4,256
Food Services
563
508
Document Solutions
2,120
2,357
Total Ancillary Revenue
43,531
45,194
Increased 4% to $68M
Decreased 3.7% to $44M
Dollars in Millions
2012
2011
2010
2009
2008
Dollars in Millions
2012
2011
2010
2009
2008
65
44
66
45
68
44
67
43
62
45
SPONSORED RESEARCH CONTRIBUTIONS
ANCILLARY REVENUE
26
Operating Environment
Many factors contribute to SFU’s operating environment
including BC’s changing student demographic,
government funding and priorities, and the economy.
Student Demographic
According to Statistics Canada, BC’s population
experienced a growth of 9.6 per thousand for the period
July 1, 2010 to June 30, 2011, with approximately 27.0%
of BC’s population comprising the age range 15-34.
Between 2011 and 2036, BC Statistics forecasts the
population will increase by approximately 34% with
international migration accounting for 53.9%, and
the median age will increase from 41.1 to 45.4 years.
The changing demographic of BC’s population creates a
shift in demand for education. A decline in post-secondary
school age population (18 – 24 years) is expected. Despite
the population decline of our key student demographic,
the Association of Universities and Colleges of Canada
expects enrolment to increase as the participation rate
rises (based on their historical trend data).
Our total planned enrolment for 2012/13 is 26,317
program-based FTEs, a 0.1% increase from 2011/12
planned enrolments but still well in excess of government
funded targets.
SFU has experienced high international demand and our
challenge is to manage international enrolment to ensure
excellent education for all students. This year SFU will be
developing a strategic enrolment management process.
Government Funding and Priorities
The mandate of the Ministry of Advanced Education is to
help British Columbians develop the knowledge and skills
needed to reach their full potential and to ensure that BC
successfully competes in the global knowledge economy.
The Ministry plays a crucial role in supporting the provincial
government’s new strategy Canada Starts Here: The BC
Jobs Plan, by ensuring that the BC university system aligns
with and supports the future needs of the workforce.
It is forecast that over 77% of all job openings up to 2019
will require a university degree, college credential, or trade
certifcate. Provincial funding for education is therefore
focused on educational needs to align graduates with
employers’ demands for workers. The 2010/11 Annual
Service Plan Report produced by the Ministry of Advanced
Education highlighted that funding for student spaces
will be targeted to graduate students, skilled trades,
and to health care and medical education.
There is clear demand for post-secondary education;
however, due to the fnancial realities of the current
economy, there is no growth planned for SFU’s operating
grant in 2012/13. The 2012 Provincial Budget Speech
announced a $70 million reduction to the post-secondary
budget, across the sector, with the frst reduction occurring
in 2013/14 and a further reduction in 2014/15. It was
also announced that there would be an investment in the
sector’s deferred maintenance challenge, with additional
funding directed to ensuring safe, functional and effcient
facilities to support the delivery of post secondary
programs. With Annual Capital Allowance funding reduced
to $0.5 million, additional government support for cyclical
and preventative building maintenance is welcome.
Economy
The local economy experienced a large housing boom
together with large infrastructure improvement projects
undertaken in preparation for the Vancouver 2010 Olympic
and Paralympic Winter Games. While the pace has slowed,
looking ahead, the BC economy is expected to grow a
modest 2.2% in 2012, based upon the projections of the BC
Economic Forecast Council.
The 2011 Towers Watson survey of economists, strategists,
market analysts, and investment managers, provides a
modest economic outlook for the coming year. GDP growth
of 2 – 2.5% combined with a low infation expectation
of 1 – 2% refects the continuation of a slow economic
recovery. A full economic recovery may take several years
but will continue to trend upwards. Investment returns
are anticipated to be marginal albeit positive. Similarly,
interest rates will remain relatively low and are not
expected to climb higher than 3.5%. Despite the positive
predictions, the majority of survey respondents expect
the economic recovery to continue to be slower than in
previous cycles.
Overall, the economic forecast allows SFU to have an
optimistic outlook both fscally and with regard to our
ability to continue successfully serving our communities.
27
Risks and Uncertainties
SFU manages risk through a framework of risk
identifcation, measurement, and monitoring. The following
is an overview of the most signifcant fnancial risks
currently facing the University.
Deferred Maintenance
Provincial government funding for cyclical maintenance,
renovations and upgrades to buildings has been
progressively reduced over the last several years
from $6 million to $0.5 million. This funding reached
its lowest level in 2010/11 and is expected to remain
unchanged through 2012/13. As a result, deferred
maintenance on our Burnaby campus buildings has been
growing. The renewal of existing facilities is an identifed
priority of government and is of particular concern for
the Burnaby campus which is now over 45 years old.
These aging facilities are beginning to experience lack
of functionality, reliability and energy effciency.
Affordability of Pensions
SFU has two pension plans:
• PensionPlan
for
Administrative/Union
Staff
(Administrative/Union Plan), and
• PensionPlan
for
Members
of
the
Academic
Staff
(Academic Plan).
The Administrative/Union Plan is a defned beneft pension
plan requiring an actuarial valuation at least every three
years. A valuation was completed for the year ended
December 31, 2010 refecting a $16.3 million going concern
unfunded liability and a $64 million solvency defcit.
The University has elected to cover the solvency defcit
by Letters of Credit.
The Academic Plan is primarily a defned contribution plan
with comparatively lower risks and uncertainties than the
Administrative/Union Plan.
Economic Environment and Investment Returns
The recession and decline of markets in 2008/09 caused
SFU to experience signifcant market value losses in its
investment portfolios. While investment returns were
higher than expected in subsequent years, there continues
to be ongoing volatility that threatens endowment
fund market values, spending allocations, and income
stabilization. While there were healthy operating returns
in 2011/12, endowment returns, which are more heavily
weighted in equities, did not fare as well.
International Students
As global forces reduce the size of the world and
increase the need for culturally informed graduates,
internationalization of higher education in Canada has
become imperative. SFU has been successful in attracting
international students, in part due to the contractual
arrangement with Fraser International College (FIC), which
is a private college adjacent to the Burnaby campus that
provides transition programs for international students. In
2011/12, international enrolments exceeded our target of
17.5% of domestic students. Reliance upon international
student revenues to help alleviate budgetary constraints
has been integral, and with large numbers of international
students arising from specifc demographic regions, an
exposure to international markets in a global economy
is high.
IT Infrastructure Costs
With a constantly growing demand for easily accessible
information, available at all times and from all global
locations, the requirements for effective technologies
and services becomes imperative. Combined with the
desire from all departments for more streamlined and
effective service delivery, the challenge is to advance SFU’s
capabilities with effective technologies and services within
fscal constraints, and balance that against the risks of not
keeping current with technology.
28
Related Entities
The University’s fnancial statements include the following
related entities:
Simon Fraser University Foundation
The purpose of Simon Fraser University Foundation
is to encourage public awareness of, and support for,
SFU and its benefts to the people of British Columbia.
The Foundation is an agent of the Crown and is therefore
exempt from income taxes under section 149 of the
Income Tax Act. The majority of the Foundation’s revenue
is rental income from the ten rental units in the Verdant
housing complex which are owned by the Foundation
for the purposes of leasing to SFU’s faculty and staff.
The Foundation is consolidated in the University’s
fnancial statements.
TRIUMF and WCUMSS
SFU participates with other universities in two research
joint venture entities.
Tri-University Meson Facility (TRIUMF) is a joint operation
of eleven Canadian universities that form Canada’s national
laboratory for particle and nuclear physics.
Western Canadian Universities Marine Sciences Society
(WCUMSS) is a society in which the University is one of fve
members. WCUMSS provides a permanent base for marine
and coastal-oriented feld operations from its location in
Bamfeld, BC.
These two joint ventures are accounted for in the
University’s fnancial statements by proportionate
consolidation of its interest.
SFU Community Trust
SFU Community Trust’s mandate is to oversee the
development of UniverCity, a compact, mixed-use
residential neighbourhood founded on the Four
Cornerstones of Sustainability: Equity, Economy, Education
and Environment. The Offcial Community Plan (OCP)
allows for up to 4,536 residential units in two distinct
neighbourhoods to the south and east of SFU’s Burnaby
campus, each with its own elementary school and
neighbourhood park. The OCP includes provisions for a
commercial core, community facilities, and an extensive
network of pedestrian paths and bike trails.
The Trust oversees the development of UniverCity through
the provision of zoned, serviced, subdivided sites to
private sector developers on prepaid, long term (99-year)
leasehold basis.
The Trust is presided over by a Board of Directors
comprising key SFU stakeholders, faculty and student
representatives as well as a number of prominent real
estate and development professionals from in and around
Vancouver and the Lower Mainland. The Board of Directors
establishes policy for SFU Community Trust and plays a
very active role in shaping the planning and development
of UniverCity.
The University’s interest in the Trust is accounted
for using the equity method.
Great Northern Way Campus Trust
The Great Northern Way Campus Trust (GNWCT)
collaborative university campus combines the strengths
of four academic institutions: Simon Fraser University,
University of British Columbia, Emily Carr University of Art
+ Design, and the British Columbia Institute of Technology.
GNWCT has the mandate to intersect arts, technology
and the environment in a manner that bridges academia
with industry, artists with technology, and innovation with
development. It is an integrative environment that builds
community and celebrates innovation.
The University’s interest in GNWCT is accounted for using
the equity method.
29
30
F
31
FINANCIAL
ST A TEMENTS
32
Statement of Management Responsibility
The University is responsible for the preparation of the fnancial statements and
has prepared them in accordance with Canadian Generally Accepted Accounting
Principles. The fnancial statements present fairly the fnancial position of the
University as at March 31, 2012 and the results of its operations and its cash
fows for the year then ended.
In fulflling its responsibilities and recognizing the limits inherent in all systems,
the University has developed and maintains a system of internal controls
designed to provide reasonable assurance that University assets are safeguarded
from loss and that the accounting records are a reliable basis for the preparation
of fnancial statements.
The Board of Governors carries out its responsibility for review of the fnancial
statements and oversight of management’s performance of its fnancial reporting
responsibilities principally through its Audit Committee. Members of the Audit
Committee are not offcers or employees of the University.
The Committee meets with Management, the internal auditor and the external
auditors to discuss the results of audit examinations and fnancial reporting
matters. The external auditors have full access to the Audit Committee, with
and without the presence of Management.
The fnancial statements for the year ended March 31, 2012 have been reported
on by the Auditor General of British Columbia. The Independent Auditor’s Report
outlines the scope of their examination and provides their opinion on the fairness
of presentation of the information in the statements.
PROF. ANDREW PETTER
PRESIDENT AND VICE-CHANCELLOR
DR. PAT HIBBITTS
VICE PRESIDENT, FINANCE AND ADMINISTRATION
MAY 31, 2012
33
INDEPENDENT AUDITOR'S REPORT
To the Board of Governors of Simon Fraser University, and
To the Minister of Advanced Education, Province of British Columbia
I have audited the accompanying financial statements of Simon Fraser University (“the
University”), which comprise the statement of financial position as at March 31, 2012, and the
statements of operations, changes in net assets and cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with Canadian generally accepted accounting principles, and for such internal
control as management determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
My responsibility is to express an opinion on these financial statements based on my audit. I
conducted my audit in accordance with Canadian generally accepted auditing standards. Those
standards require that I comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
In my view, the audit evidence I have obtained in my audit is sufficient and appropriate to
provide a basis for my audit opinion.
Opinion
In my opinion, the financial statements present fairly, in all material respects, the financial
position of Simon Fraser University as at March 31, 2012, and its financial performance and its
cash flows for the year then ended in accordance with Canadian generally accepted accounting
principles.
Victoria, British Columbia
John Doyle, MAcc, CA
May 31, 2012
Auditor General
34
Dollars in Thousands
2012
2011
Assets
Current assets
Cash & cash equivalents (notes 3, 4)
8,950
27,597
Accounts receivable (note 3)
22,451
19,351
Inventories
2,257
2,443
Prepaid expense
2,160
2,008
35,818
51,399
Due from related party (notes 3, 5)
9,581
9,663
Investments (notes 3, 6)
498,738
429,270
Investment in related entity (note 7)
13,309
11,438
Property & equipment (note 8)
839,539
831,142
Prepaid lease (note 9)
1,808
2,122
Total Assets
1,398,793
1,335,034
Liabilities and net assets
Current liabilities
Accounts payable & accrued liabilities
35,568
45,676
Current portion of long term debt (note 10)
3,983
3,873
39,551
49,549
Employee future benefts (note 11)
61,043
54,970
Long term debt (note 10)
150,913
154,202
Deferred contributions (note 13)
44,943
68,117
Deferred contributions for property & equipment (note 13)
403,709
402,873
Deferred lease proceeds (note 14)
24,465
22,980
724,624
752,691
Net assets (note 15)
Internally restricted for commitments
Operating (note 16)
64,896
45,026
Lease & other (note 17)
34,673
33,380
99,569
78,406
Invested in property & equipment
339,589
295,344
Endowment (note 18)
235,011
208,593
674,169
582,343
Total Liabilities & Net Assets
1,398,793
1,335,034
Statement of Financial Position
AS AT MARCH 31, 2012
The accompanying notes are an integral part of these fnancial statements
Approved:
ROBERT G ELTON
CHAIR, BOARD OF GOVERNORS
DR. PAT HIBBITTS
VICE PRESIDENT, FINANCE AND ADMINISTRATION
35
Dollars in Thousands
2012
2011
Revenue
Government grants & contracts (note 19)
Province of British Columbia
229,319
232,918
Government of Canada
71,889
65,985
Other governments
1,070
1,433
Tuition
Credit courses
176,367
167,060
Non-credit courses & other student fees
24,291
23,100
Sales of goods & services
42,992
44,463
Donations, non-government grants & contracts
47,703
35,435
Investment income (note 20)
22,750
20,735
Amortization of deferred contributions: property & equipment
14,211
14,126
Other revenue
7,601
10,864
638,193
616,119
Expense
Salaries
297,711
290,717
Employee benefts
63,310
60,325
361,021
351,042
Supplies & other operational expense
54,891
54,197
Amortization of property & equipment
50,067
51,687
Professional & contracted services
32,342
31,830
Scholarships & bursaries
29,160
28,606
Training & travel
15,792
14,470
Cost of goods sold
10,926
13,596
Interest on long term debt
9,920
10,090
Utilities
8,426
8,281
572,545
563,799
Net revenue from continuing operations
65,648
52,320
Loss on disposal of equipment
(240)
Net Revenue for the Year
65,408
52,320
Net revenue for the year was applied to increase net assets
internally restricted for:
Operating commitments
19,870
35,709
Lease & other commitments
1,293
3,007
Investment in property & equipment
44,245
13,604
Statement of Operations
FOR THE YEAR ENDED MARCH 31, 2012
The accompanying notes are an integral part of these fnancial statements
36
Statement of Changes in Net Assets
FOR THE YEAR ENDED MARCH 31, 2012
Dollars in Thousands
General
Operating
Operating
Lease &
Other
Invested in
Property &
Equipment
Restricted
for
Endowment
Principal
Net assets, beginning of year
45,026
33,380
295,344
208,593
Changes for the year
Net revenue for the year
65,408
Increase in investment in property & equipment
(44,245)
44,245
Change in restricted for specifc commitments
(21,163)
19,870
1,293
Endowment transactions
26,418
Net Assets, End of Year
64,896
34,673
339,589
235,011
(note 16)
(note 17)
below
(note 18)
Invested in property & equipment is represented by
Property & equipment
839,539
Sinking fund investment
4,884
Long term debt, before current portion
(154,896)
Deferred contributions for property & equipment
(403,709)
Net current assets & current liabilities invested in Capital Fund
46,132
Due from related party, parking displacement
4,549
Due from related party, sale proceeds
3,090
Invested in Property & Equipment
339,589
The accompanying notes are an integral part of these fnancial statements
Internally Restricted
Commitments
37
Dollars in Thousands
2012
2011
Operating activities
Net revenue for the year
65,408
52,320
Items not involving cash
Amortization of property & equipment
50,067
51,687
Loss on disposal of equipment
240
Unrealized portion of investment losses (gains)
14,728
(12,113)
Amortization of deferred contributions - property & equipment
(14,211)
(14,126)
Employee future benefts increase
6,073
6,340
Investment income from related entity
(1,871)
(211)
120,434
83,987
Changes in non-cash operating balances
Accounts receivable
(3,100)
(525)
Due from related party
82
(4,630)
Inventories
186
(239)
Prepaid expense
(152)
88
Prepaid lease
314
315
Accounts payable & accrued liabilities
(10,108)
13,408
Deferred contributions, less unrealized gains
(23,174)
6,230
Cash Provided by Operating Activities
84,482
98,544
Investing activities
Net increase in long term investments, net of market adjustment
(84,196)
(51,788)
Proceeds from sale of equipment
490
Property & equipment acquisitions
(59,194)
(85,154)
Endowment contributions
26,418
22,751
Deferred lease contributions
1,485
1,447
Cash Used in Investing Activities
(114,997)
(112,744)
Financing activities
Deferred contributions for property & equipment
15,047
41,524
Debt principal repaid
(3,179)
(2,975)
Cash Provided by Financing Activities
11,868
38,549
Net increase (decrease) in cash & cash equivalents
(18,647)
24,349
Cash & cash equivalents, beginning of year
27,597
3,248
Cash & Cash Equivalents, End of Year
8,950
27,597
SUPPLEMENTAL CASH FLOW INFORMATION
Cash interest paid during the year was $9,695,000 (2011: $9,821,000).
Statement of Cash Flows
FOR THE YEAR ENDED MARCH 31, 2012
The accompanying notes are an integral part of these fnancial statements
38
1. Authority and Purpose
Simon Fraser University operates under the authority of the
University Act of British Columbia. It is a comprehensive
research university engaged in research and delivering
a full range of undergraduate, graduate and Lifelong
Learning programs from campuses in Burnaby, Vancouver
and Surrey, BC. Simon Fraser University is a not-for-proft
entity governed by a Board of Governors, the majority of
whom are appointed by the provincial government of British
Columbia. The academic governance of the University is
vested in the Senate. The University is a registered charity
and is therefore exempt from income taxes under section
149 of the Income Tax Act.
2. Signifcant Accounting Policies and Reporting Practices
Accounting Method
The fnancial statements are prepared in accordance
with Canadian Generally Accepted Accounting Principles
using the not-for-proft organization reporting standards
as recommended by the Canadian Institute of Chartered
Accountants (CICA). These principles are consistent with
those used in prior years.
The deferral method of accounting for contributions
is used. Net assets are reported in relation to general
operating, internally restricted, invested in property &
equipment and endowments. Revenue and expense
are recorded on a gross and accrual basis.
Related Entities
The fnancial statements include related entities that
have been accounted for by the following methods:
•
Consolidation:
SFU
Foundation
(100%
interest)
•
Proportionate
Consolidation:
Tri-Universities
Meson
Facility (TRIUMF) (9% interest) and Western Canada
Universities Marine Sciences Society (WCUMSS) (20%
interest)
•
Equity
Method:
SFU
Community
Trust
(SFUCT)
(100% interest) and Great Northern Way Campus Trust
(GNWCT) (25% interest)
Two entities are 100% controlled; but not consolidated
as they are not material to these fnancial statements:
•
SFU
Community
Corporation
has
no
business
operations
and its sole purpose is to act as the trustee of SFU
Community Trust; and
•
SF
Univentures
Corporation
promotes
technology
transfer to the private sector and has very limited
business operations and assets.
Notes to the Financial Statements
FOR THE YEAR ENDED MARCH 31, 2012
Revenue Recognition
Operating government grants not restricted in use are
recognized when received or receivable. Such grants, if
contributed for a future period, are deferred and reported
as deferred contributions until that future period. Other
unrestricted revenue, including student tuition and sales
of goods and services, are reported as revenue at the
time the services or products are provided. Unrestricted
contributions and pledges are recognized as revenue
when received.
Gifts-in-kind are recorded at fair market value on the date
of their donation or at nominal value when the fair market
value cannot be reasonably determined.
Externally restricted contributions (grants and donations)
are reported as revenue depending on the nature of
restrictions specifed by the contributors:
•
Contributions
for
specifc
purposes
other
than
endowment or the acquisition of property and equipment
are recorded as deferred contributions and recognized
as revenue in the year related expenses are incurred.
•
Contributions
restricted
for
capital
purposes
are
recorded
as deferred contributions for property and equipment
until the amount is invested as such.
❙
If the property and equipment acquired is land,
property rights or a special collection item, the amount
is recorded as a direct increase to net assets invested
in property and equipment.
❙
If the property and equipment has a limited life,
the amount invested is recorded as a deferred
capital contribution and amortized over the useful
life of the asset to net assets invested in property
and equipment. Amortization of deferred capital
contributions for property and equipment is recorded
once put into use on a straight-line basis over the
estimated life of the related assets.
•
Endowment
contributions,
matching
contributions
and
investment income allocated for endowment capital
preservation are recognized as direct increases in net
assets held for endowments in the period in which they
are received or earned.
39
Financial Instruments
The University has elected to apply CICA Handbook section
3861 in relation to reporting on fnancial instruments
with some additional disclosures in relation to risk. The
University’s fnancial instruments consist of cash and cash
equivalents, accounts receivable, investments, accounts
payable and accrued liabilities and long term debt. These
fnancial instruments are accounted for as follows:
Held-for-Trading
The University has designated cash, cash equivalents and
investments, except for long term annuity and long term
promissory note, as held-for-trading. These instruments
are recognized at their fair value, determined by published
price quotations in an active market. Transaction costs to
buy or sell these items are recognized in income on the
settlement date. Net gains and losses arising from changes
in fair value are recognized immediately in income unless
funds are externally restricted.
Loans and Receivables and Other Financial Liabilities
The University has classifed accounts receivable and due
from related party as loans and receivables. Accounts
payable and accrued liabilities and long term debt are
classifed as other fnancial liabilities for fnancial
reporting purposes.
These instruments are initially recognized at their fair
value and are subsequently measured at their amortized
cost, using the effective interest method. Gains and losses
arising from changes in fair value are recognized in net
income upon derecognition or impairment. Given the short
term nature of accounts receivable, and accounts payable
and accrued liabilities, their carrying value equates to their
fair value.
Held-to-Maturity
The University has classifed its investment in
long term annuity as held-to-maturity for fnancial
reporting purposes.
These fnancial instruments are initially recognized at
their fair value and subsequently measured at their
amortized cost, using the effective interest method.
Inventories
Inventories of merchandise held for resale in the
Bookstores are recorded at the lower of acquisition
cost and net realizable value.
Property and Equipment
Property and equipment acquisitions are recorded on the
Statement of Financial Position at amortized cost. Donated
assets are recorded at fair market value at the date of
acquisition. Amortization of property and equipment is
recorded on a straight line basis over the estimated life
of the asset.
2a / Estimated Useful Life
No amortization is taken on land, property rights or
works of art and collections, which include that portion
of library assets considered to have permanent value,
as they are considered to have an unlimited useful life.
Impairment of Long-Lived Assets
Long-lived assets are tested for impairment whenever
circumstances indicate that the service potential has
declined. When events or circumstance indicate that
the service potential has declined, the long-lived assets
are written down based upon the relative loss
of service potential and a related expense recognized in
the Statement of Operations. A long-lived asset taken
completely out of use is written down to its residual value.
There was no write down of long-lived assets in 2011/12.
Prepaid Lease
Prepaid lease expense is capitalized and amortized over
the term of the related lease.
Time inYears
Buildings - concrete
50
Buildings - wood
30
Site services
50
Leasehold improvements
Term of Lease
Computer equipment
3
Equipment & furnishings
8
Library books
10
40
Pension Plans
The University contributes to two pension plans, whose
Boards of Trustees, representing the members and the
employer, manage the plans including the investment of
assets, and administration of benefts. Accordingly, the
pension plans have separate fnancial statements.
The cost of pension and post-retirement benefts earned
by employees is actuarially determined using the accrued
beneft cost method pro-rated based on services and
management’s best estimate of expected plan investment
performance, compensation levels and retirement ages
of employees.
The expected return on plan assets is calculated using
the expected long-term rate of return on plan assets and
the fair value of the assets.
Employee Future Benefts
The University operates three employee future beneft
plans providing post retirement medical and dental
benefts, early retirement benefts and a long term
disability plan. The cost of employee future benefts is
determined using the projected beneft method prorated on
employment services and is expensed to employee benefts
expense as employees provide services. Adjustments
arising from changes in assumptions and experience
gains and losses are recognized immediately in the year
in which they occur.
Use of Estimates
The preparation of fnancial statements in accordance
with Canadian Generally Accepted Accounting Principles
(GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets
and liabilities at the date of the fnancial statements,
and revenue and expenses during the reporting period.
Signifcant areas requiring the use of management
estimates include the impairment of assets, provision for
doubtful accounts, amortization period for property and
equipment, and actuarial assumptions for employee future
benefts and pension plans. Actual results could differ from
management’s best estimates as additional information
becomes available in the future.
New Accounting & Regulatory Pronouncements
The University’s fnancial reporting is currently based
on the CICA Handbook’s private enterprise standards
which include the section 4400 series on not-for-proft
accounting standards.
For the fscal year commencing April 1, 2012, the
University, as a government not-for-proft organization
(GNPO), will be required to prepare fnancial statements
in accordance with Canadian Public Sector Accounting
Standards (PSAS) established by the Canadian Public
Sector Accounting Board (PSAB) with restatement
of comparative fgures. The change to public sector
accounting standards will result in different fnancial
measurement, format of fnancial statements, and
fnancial disclosure as they are based on different
principles and concepts.
PSAB enables GNPOs to apply or not apply the PSAS
section 4200 series which are similar to the section 4400
series of the private enterprise standards. Pursuant to
the Budget Transparency and Accountability Act, the
British Columbia Treasury Board has issued directive 1/11
which instructs the University to adopt PSAS without the
not-for-proft provisions contained in the PSAS section
4200 series, and to consult the Comptroller General in the
following circumstances: prior to exercising an election or
choice under accounting standards or guidelines and when
adopting accounting policies and practices to implement
applicable accounting standards or guidelines.
The effect of these future changes has not been
determined at this time, as PSAS for GNPOs are continuing
to be developed by PSAB, and the University is currently
working through application of the standards with
provincial authorities. The areas that may be most
affected by the change in the reporting framework include
accounting for: government transfers, endowment funds,
employee future benefts, pension obligations, fnancial
instruments and related entities.
41
Market Risks
Financial instrument
Credit Risk
Liquidity Risk
Currency
Interest Rate
Other Price
Cash & cash equivalents
X
Accounts receivable
X
Due from related party
X
Investments
X
X
X
X
X
Accounts payable & accrued liabilities
X
X
Long term debt
X
X
X
3a / Financial Instrument Risks
3. Financial Instrument Risks
The fair value of a fnancial instrument is the estimated
amount that the University would receive or pay to settle a
fnancial asset or liability at the reporting date.
The fnancial instruments of the University and the nature
of risks that they may be subject to are as follows:
Credit Risk
The University is exposed to credit risk resulting from
the possibility that parties may default on their fnancial
obligations, or if there is a concentration of transactions
carried out with the same party, or if there is a
concentration of fnancial obligations which have similar
economic characteristics such that they could be similarly
affected by changes in economic conditions. The University
does not directly hold any collateral as security for
fnancial obligations.
Cash and Cash Equivalents
Credit risk associated with cash and cash equivalents
investments is minimized substantially by ensuring
that these assets are invested in Schedule A Canadian
chartered banks.
Accounts Receivable
Management believes concentrations of risk with respect
to accounts receivable is limited due to:
•
Student
accounts
receivable
being
a
large
population
of
limited amounts, the leverage to stop further enrolment
and the granting of transcripts until payment is made and
pro-active collections management.
•
Other
receivables,
advances
and
tax
recoveries
are
generally with governments, major institutions and other
credit-worthy institutions.
The University maintains allowances for potential credit
losses, and such losses to date have been within the
University’s expectations. In making estimates in respect
to the allowance for doubtful accounts, current economic
conditions, historical information, reasons for the accounts
being past due and the line of business from which the
receivable arose are all considered in the determination
of when to allow for past due accounts. The same factors
are considered when determining whether to write off
amounts charged to the allowance account against the
amounts receivable.
Due from Related Party
The University believes its receivable from SFU Community
Trust is collectible based on its understanding of the
business plans of the Trust.
Investments
The University has investment policies to ensure
investments are managed appropriately in order to balance
preservation of capital, liquidity requirements and achieving
returns. The University retains several external investment
frms to invest funds in accordance with its investment
policies utilizing diverse agreed upon investment strategies
primarily in active trading markets. Applying the CICA fair
value hierarchy for fair value measurements provides an
indication of the overall types of investments held at March
31, 2012 being: 97% quoted prices in active markets
for identical investments (level 1), 3% direct or indirect
observable prices that are not quoted prices (level 2)
and 0% inputs that are not observable market data (level 3).
42
Liquidity Risk
Liquidity risk is the risk that the University will not be
able to meet a demand for cash or fund its obligations as
they come due. Liquidity risk also includes the risk of the
University not being able to liquidate assets in a timely
manner at a reasonable price.
The University meets its liquidity requirements by
holding assets that can be readily converted into cash
and preparing annual operating and capital expenditure
budgets, which are monitored and updated as required.
In addition, the University requires authorizations of
expenditures on projects to assist with the management
of capital.
Market Risk
Market risk is the risk that the value of a fnancial
instrument will fuctuate as a result of changes in market
prices, whether those changes are caused by factors
specifc to the individual fnancial instrument, or by factors
affecting fnancial instruments traded in the market. The
signifcant market risks to which the University is exposed
are currency risk, interest rate risk and other price risk.
Currency Risk
Currency risk refers to the risk that the fair value of
fnancial instruments or future cash fows associated
with the instruments will fuctuate in Canadian dollar
value due to changes in foreign exchange rates.
The functional currency of the University is the Canadian
dollar. The University transacts some revenue expenditure
activity in US dollars and other currencies due to certain
operating costs being denominated in US dollars and
other currencies.
The University uses foreign exchange forward contracts
only as a defensive strategy for known future obligations
to manage foreign exchange transaction exposures.
Interest Rate Risk
Interest rate risk refers to the risk that the fair value of
fnancial instruments or future cash fows associated with
the instruments will fuctuate due to changes in market
interest rates.
The interest rate exposure of the University arises from
its interest bearing assets and its fxed income investments
including bonds and mortgages.
The University’s cash includes amounts on deposit with
fnancial institutions that earn interest at market rates.
The University manages its exposure to the interest rate
risk of its cash by maximizing the interest income earned
on excess funds while maintaining the minimum liquidity
necessary to conduct operations on a day-to-day basis.
Fluctuations in market rates of interest on cash do not have
a signifcant effects on the University’s results of operations.
The primary objective of the University with respect to its
investments in fxed income investments is to ensure the
security of principal amounts invested and provide for a
high degree of liquidity, while achieving a satisfactory
investment return.
Other Price Risk
Other price risk refers to the risk that the fair value of
fnancial instruments or future cash fows associated
with the instruments will fuctuate because of changes in
market prices (other than those arising from currency risk
or interest rate risk). The University is exposed to price risk
through its investment in equities. The price risk associated
with bonds is considered as part of interest rate risk for
these purposes.
4. Cash and Cash Equivalents
Cash and cash equivalents are demand deposits in Canadian
fnancial institutions, primarily in Canadian currency, and
presented net of outstanding items including cheques
written but not cleared by the bank as at the date of the
Statement of Financial Position.
5. Due from Related Party
Due from related party is a receivable from SFU Community
Trust and is without interest or fxed repayment terms
except for $4,549,000 that bears interest at the bank
prime rate and is repayable on an event-driven basis. The
University is a benefciary of SFU Community Trust and
accounts for it by the equity method as discussed in note 14.
43
6. Investments
Bonds in the actively managed bond fund mature between
2012 and 2049 and have coupon rates between 0.75%
and 11.9%.
The indexed bond fund is based on the DEX Universe Bond
index which references 1,159 bonds that are 43% federal
government, 29% provincial and municipal government,
and 28% corporate debentures. As at March 31, 2012,
the portfolio’s one year return was 9.69% and the duration
was 6.67 years.
Canadian equities are managed by two investment
management frms, each with a separate investment style.
One manager uses a growth based stock selection process,
while the other uses a combination of value and growth in
a core selection process.
Foreign equity investments are invested approximately
51% in United States markets and 49% outside of Canada
and the United States.
Private equities consist of six pooled private equity funds
in which the University participates.
The long term annuity is receivable in installments of
$1,457,000 from 2012 to 2013, $2,257,000 from 2014 to
2017 and $8,257,000 in 2018.
The Student Investment Advisory Fund manages a portfolio
with a balanced mandate. The portfolio follows the same
asset allocation proportions as the overall endowment
fund, investing in fxed income, Canadian equities, and
foreign equities.
The Vancouver Foundation investment is in its Consolidated
Trust Fund pool which invests in several investment pools
of equities, fxed income, and real estate.
The Beedie Endowment Asset Management Fund,
established in the current fscal year, follows a balanced
fund mandate with three actively managed asset classes:
Canadian equity, cash, and Canadian fxed income.
Sinking fund investments are held and invested by the
Province of British Columbia. These funds totalled
$4,884,000 (2011:$7,145,000) and will provide for
the retirement of debentures issued to the Province at
maturity. Annual sinking fund payments due within
the next fve years are included in the note 10 annual
payments schedule.
Dollars in Thousands
2012
2011
Operating market adjustment
Balance, beginning of year
13,532
8,553
Change in the year (note 20)
(338)
4,979
Balance, end of year
13,194
13,532
Endowment market adjustment
Balance, beginning of year
35,788
21,068
Change in the year (note 20)
(14,390)
14,720
Balance, end of year
21,398
35,788
Total Market Adjustment
End of Year
34,592
49,320
Investments, at cost, end of year
464,146
379,950
Investments, at Market,
End of Year
498,738
429,270
Dollars in Thousands
2012
2011
Actively managed bond fund
95,518
67,995
Indexed bond fund
94,373
97,005
Total bonds
189,891
165,000
Canadian equities
137,122
127,981
Foreign equities
116,885
86,371
Private equities
15,513
13,347
Long term annuity
11,837
11,925
Student investment advisory fund
11,043
10,793
Vancouver Foundation
6,571
6,708
Beedie endowment asset
management fund
4,992
Sinking fund
4,884
7,145
Total
498,738
429,270
Dollars in Thousands
2012
2011
Government bonds
Federal
20,231
21,493
Provincial & municipal
27,824
24,338
48,055
45,831
Corporate debentures
47,463
22,164
Total
95,518
67,995
6c / Market Adjustment Analysis
6a / Long Term Investments at Market
6b / Actively Managed Bond Fund at Market
44
7. Investment in Related Entity
The investment in related entity is the University’s 25%
interest in Great Northern Way Campus Trust (GNWCT)
which is accounted for on the equity basis utilizing the
annual audited fnancial statements of GNWCT prepared
as at December 31. As the fscal periods of GNWCT and
SFU are not coterminous, signifcant fnancial transactions
of GNWCT that occurred during the intervening period
are recorded in these fnancial statements. Accordingly,
$1,915,000 has been recorded as investment income as a
result of a sale of an investment property by GNWCT.
Dollars in Thousands
2012
2011
Balance, beginning of year
11,438
11,227
Net revenue
1,871
211
Balance, End of Year
13,309
11,438
7a / Investment in Related Entity
Dollars in Thousands
Cost
Accumulated
Amortization
2012
2011
Buildings - concrete
813,178
195,337
617,841
553,329
Buildings - wood
21,352
10,190
11,162
10,174
Site services
37,792
13,368
24,424
24,829
Leasehold improvements
12,015
8,723
3,292
3,884
Computer equipment
27,962
12,232
15,730
9,978
Equipment & furnishings
121,321
61,014
60,307
60,522
Library books
86,829
39,348
47,481
47,358
Special collections
19,385
19,385
8,712
Land
19,974
19,974
19,974
Buildings under construction
19,943
19,943
92,382
Total
1,179,751
340,212
839,539
831,142
8. Property and Equipment
8a / Property, Plant and Equipment
Net Book Value
45
Dollars in Thousands
2012
2011
Debentures, senior unsecured
141,327
141,046
Debentures, Province of BC
7,920
10,912
Term loan
4,108
4,327
Mortgages, Verdant
1,541
1,790
154,896
158,075
Current portion
(3,983)
(3,873)
Total
150,913
154,202
Dollars in Thousands
Principal
Sinking Fund
Interest
2013
490
493
9,245
2014
514
44
9,080
2015
3,931
44
8,981
2016
305
44
8,888
2017
322
44
8,872
10a / Long Term Debt
10b / Annual Payments
Space in the Central City complex for the Surrey campus
is included in buildings. The Burnaby campus, 429 acres
of land, is recorded in the fnancial statements at its 1965
assessed value of $572,000. A portion of this land is set
aside for development by the SFU Community Trust in the
development known as UniverCity.
As at March 31, 2012, the University had committed to
contracts for the construction and acquisition of buildings
with future expenditures of approximately $29,600,000.
Special collections include the University’s art collection.
The art collection, managed by a curator, primarily consists
of donated art and is insured at a replacement value of
$28,000,000.
Gains and losses on disposals of property and equipment
are recorded as the net difference between the carrying
amount of the asset and the net sale proceeds. During
the year, the University recorded a loss of $240,000 on the
disposal of printing equipment.
9. Prepaid Lease
The University prepaid a liability due on the expiry of the
Harbour Centre lease in December 2017. The prepaid
lease amount is being amortized over the remainder of
the lease. Commitments in relation to the Harbour Centre
lease are $4,739,000 per year until the end of the lease in
December 2017. See note 25.
10. Long Term Debt
Debentures, senior unsecured issued by the University
for $150,000,000 bear interest at 5.613%, interest paid
semi annually, due June 10, 2043, and are recorded using
the effective interest method. Net proceeds of the issue
were used to fnance capital projects. The debentures are
neither obligations of, nor guaranteed by, the Province
of British Columbia.
Two debentures obtained from the Province of British
Columbia are unsecured, bear interest at rates of 8.75%
and 9.45% and are due in 2012 and 2022.
Term loan bears interest at 4.26%, with annual payments
of $400,000 including principal and interest, due
September 30, 2014.
Mortgage collateralized by the Verdant rental units bears
interest at 5.20%, has quarterly payments of $84,165,
including principal and interest and is due June 1, 2017.
Annual payments of principal, sinking fund installments
and interest due within the next fve years are as follows:
46
11. Employee Future Benefts
Some beneft plans for employees involve payments to
be made after the provision of service and are described
as employee future benefts. The immediate attribution
method is utilized to recognize the expense and determine
the accrued beneft obligation/liability. Estimating the
expense for the current fscal period of these future
benefts involves an actuarial valuation to determine the
accrued beneft obligation. As the immediate attribution
method is utilized, there is no unamortized net actuarial
gain or loss. The University does not segregate assets to
specifcally offset this liability.
Description of Beneft Plans
The University has three defned beneft plans that provide
retirement and post-employment benefts to employees.
Non-Pension Benefts
Non-pension benefts represent the obligation/liability for
portions of future premiums payable to eligible current
employees and retirees for Medical Services Plan, Extended
Health Benefts and Dental Benefts. Only employees hired
before dates between July 1, 2001 and May 1, 2003,
depending on employee group, are eligible for this beneft.
Early Retirement
Early Retirement represents the obligation/liability to
employees that took early retirement in the mid-1990’s and
other employees that receive supplementary pensions.
Long Term Disability
Long Term Disability represents the obligation/liability
to employees who are being paid or have made claims
pursuant to the University’s self insured long term
disability plans. An insurance company administers the
plans and is reimbursed for disability claims payments
plus service fees.
Defned Employee Future Beneft Plans
The University measures the accrued beneft obligations
for accounting purposes through actuarial valuations.
The most recent actuarial valuations of all three plans
was as of March 31, 2012 and reported an actuarial loss
of $4,385,000 which has been immediately recognized
as expense.
The discount rate assumptions utilized in the actuarial
valuations were 4.25% in 2012 and 5.25% in 2011.
Dollars in Thousands
Non-Pension
Benefts
Early
Retirement
Long Term
Disability
2012
2011
Current service cost
654
21
1,433
2,108
2,843
Interest cost
2,214
161
481
2,856
2,739
Actuarial loss (gain)
4,154
378
(147)
4,385
4,032
Expense for the year
7,022
560
1,767
9,349
9,614
Balance, beginning of year
42,384
3,203
9,383
54,970
48,630
Benefts paid
(1,093)
(301)
(1,882)
(3,276)
(3,274)
Balance, End of Year
48,313
3,462
9,268
61,043
54,970
11a / Accrued Beneft Obligation
Medical
Services
Plan
Extended
Health
Benefts
Dental
Initial trend rate
including infation
at 2.25%
4.25%
8.25%
4.25%
Cost trend rate
declines to
n/a
5.00%
n/a
Year rate reaches
the rate it is assumed
to remain at
n/a
2025
n/a
11b / Health Care Cost Trend Rates
Sensitivity Analysis
Assumed health care cost trend rates have a signifcant
effect on the amounts reported for the health care plans.
A 1% change would have the following effects for the
fscal year:
1%
increase
1%
decrease
Total of service & interest cost
549
(428)
Accrued beneft obligation,
end of year
8,252
(6,556)
11c / Non-Pension Benefts Sensitivity Analysis
Total
47
12. Pension Plans
SFU has two registered pension plans providing pension
benefts to its employees: the Academic Plan, and the
Administrative/Union Plan. The provisions of these plans
stipulate that the University has no formal claim to any
pension plan surplus or asset. The assets and liabilities
of these pension plans are not included in the University’s
fnancial statements.
The Boards of Trustees for each of these plans represent
plan members and the University. The trustees are fully
responsible for the management of the plans including the
investment of assets and administration of benefts. The
University is responsible for funding the pension plans.
For funding purposes, and to determine the contribution
rate, The BC Pension Benefts Standards Act (the Act)
requires an actuarial valuation of plan liabilities of each
defned beneft pension plan at intervals of not more
than three years. The actuarial valuations provide two
measurements, a going concern valuation and a solvency
valuation. The going concern valuation considers liabilities
for benefts earned up to the valuation date assuming the
plan continues indefnitely; whereas the solvency valuation
assesses whether all future liabilities would be fully funded
if the plan was wound up immediately.
Going concern valuation actuarial gains and losses are
amortized to employee benefts expense over the Estimated
Average Remaining Service Lifetime of eligible employees
(EARSL).
Solvency valuation defcits, under the Act, may be
addressed by either: contributions over a maximum of fve
years, or by the provision of increasing Letters of Credit
over the same period. The University has chosen to address
solvency valuation defcits with Letters of Credit.
The last tri-annual valuation for the Academic Plan
was carried out as at December 31, 2009, while the
Administrative/Union Plan was December 31, 2010.
Pension Plan for Members of the Academic Staff
(Academic Plan)
The Academic Plan provides pension benefts primarily as
a defned contribution plan whereby funding is directed to
individual Money Purchase Accounts (MPA). An actuarial
valuation is not required for the MPA plan.
The Academic Plan also includes a grandfathered Formula
Retirement Beneft plan (FRB). The Academic FRB plan
is a defned beneft plan which provides benefts based
on earnings and years of service at SFU, indexed relative
to the increase in the Consumer Price Index (CPI) up to a
maximum of 3% per annum. All contributions made to the
Academic FRB plan are by the University.
During the 2011 calendar year, contributions made by
the University to the Academic MPA Pension Plan were
$11,304,000 (2010: $11,107,000), and $204,000 (2010:
$8,000) to the Academic FRB plan.
The most recent actuarial valuation for the Academic FRB
plan was completed as at December 31, 2009. Signifcant
actuarial assumptions included investment return of 6.00%,
salary increases of 2.3%, and price infation of 2.30%. The
next actuarial valuation of the Academic FRB plan will be
completed as at December 31, 2012.
Pursuant to the Act, instead of making solvency defciency
payments of $1,313,500 for fve years commencing in
2010, the University chose to arrange Letters of Credit in
the cumulative amount of $2,731,436 (2010: $1,340,000)
to satisfy the Academic Plan solvency contribution
requirements. In the calendar years 2012 to 2014,
contributions or further Letters of Credit of $1,313,500
per year will be required to satisfy solvency contribution
requirements.
Pension Plan for Administrative/Union Staff
(Administrative/Union Plan)
The Administrative/Union Plan provides a defned beneft,
Formula Retirement Beneft plan (FRB), based on a
combination of years of service, and the average of the
highest sixty consecutive months’ salary. Pensions are
indexed to CPI up to a maximum of 3% per annum.
Dollars in Thousands
Actuarial Valuation
as at December 31, 2009
Going concern fnancial position
Adjusted value of assets
(smoothed value)
26,763
Actuarial value of liabilities
27,526
Going Concern Surplus
(Unfunded Liability)
(763)
Solvency fnancial position
Market value of assets, net
of wind-up expenses
24,230
Actuarial liabilities
32,868
Solvency Surplus (Defcit)
(8,638)
12a / Academic Plan
48
Additional contributions to the Administrative/Union Plan
may be made to individual Money Purchase Accounts
(MPA) by employees. Pursuant to an agreement between
the University and the employee organizations, in certain
circumstances, a portion of assets in excess of liabilities
may be payable to plan members. In such circumstances,
these payments would be directed to the MPA plan. No
contributions were directed to the Administrative/Union
MPA plan by the University in the current or prior year.
An actuarial valuation is not required for the MPA plan.
The Administrative/Union FRB Plan had an actuarial
valuation as of December 31, 2010 which was extrapolated
to March 31, 2012.
Administrative/
Union Plan
Beginning of year
Discount rate
5.60%
Expected long-term rate of return
on plan assets
6.50%
Assumed rate of salary escalation
3.10%
End of year
Discount rate
4.50%
Expected long-term rate of return
on plan assets
6.50%
Assumed rate of salary escalation
2.50%
Other assumptions
Estimated Average Remaining
Service Lifetime of eligible
employees (EARSL).
10 years
Price infation
2.10%
12b / Signifcant assumptions
12d / Administrative/Union FRB Pension Plan:
Financial Summary
All contributions to the Administrative/Union FRB Pension
Plan are made by the University and for the fscal year 2012
were $15,991,000 (2011: $12,159,000).
Dollars in Thousands
Current service cost
(net of employee contributions)
12,667
Interest cost on accrued
beneft obligation
12,715
Expected return on plan assets
(13,321)
Amortization of transitional balance
2,377
Pension Expense
14,438
University's contribution
15,991
Accrued Beneft Asset, End of Year
1,553
12c / Administrative/Union Pension Plan Expense
Pension expense is reported within employee benefts on
the Statement of Operations, while the accrued pension
beneft asset is reported within accounts receivable on the
Statement of Financial Position.
Dollars in Thousands
Plan assets
Fair value, beginning of year
202,800
Actual return on plan assets
5,308
Employer contributions
15,991
Employees' contributions
22
Benefts paid
(11,724)
Fair value, end of year
212,397
Accrued beneft obligation
Balance, beginning of year
226,572
Current service cost
(net of employee contributions)
12,667
Employees' contributions
22
Interest cost
12,715
Actuarial losses
25,063
Benefts paid
(11,724)
Balance, end of year
265,315
Funded Status - Plan Defcit
(52,918)
Unamortized net actuarial loss
33,076
Unamortized transitional obligation
21,395
Accrued Beneft Asset
1,553
49
Year Ending
March 31
Dollars in Thousands
Annual Solvency
Defciency Payment
Cumulative LOC
Requirements
2011
4,855
15,580
2012
15,213
48,500
2013
15,213
61,000
2014
10,358
73,900
2015
10,358
*
2016
10,358
*
12e / Solvency Defciency Payment and Letters of Credit Requirements as per 2007 and 2010 Actuarial Reports
Dollars in Thousands
Sponsored
Research
Specifc
Purpose
Subtotal
Property &
Equipment
2012
2011
Balance, beginning of year
40,192
27,925
68,117
402,873
470,990
429,776
Contributions in the year
61,156
25,314
86,470
15,047
101,517
134,363
Transferred to revenue
(70,855)
(25,092)
(95,947)
(14,211)
(110,158)
(105,214)
(Decrease)/increase in
endowment income account
in the year
(13,697)
(13,697)
(13,697)
13,940
Loss (gain) on endowment
investments allocated to
endowment principal
(1,875)
Balance, End of Year
30,493
14,450
44,943
403,709
448,652
470,990
13a / Changes in Deferred Contributions
13. Deferred Contributions
Under the deferral method of accounting for contributions,
restricted contributions related to expenses of future
periods are deferred and recognized as revenue in the
period in which the related expenses are incurred.
The $403,709,000 of deferred contributions for property and
equipment represents the unamortized portion of restricted
capital advances relating to assets which were purchased
with restricted contributions.
Total
Pursuant to the Act, instead of making solvency defciency
payments the University chose to arrange Letters of Credit
to satisfy the solvency contribution requirement in the
cumulative amount as outlined below:
* The next actuarial valuation, effective December 31, 2013, will establish
the Letter of Credit requirements for 2015 and beyond.
50
The endowment income stabilization account is externally
restricted by donors and represents the cumulative
difference between endowment investment income and
the funding applied to: (a) individual endowment spending
accounts and (b) the amounts applied to endowment
principal to preserve the spending power of the capital.
Dollars in Thousands
2012
2011
External non-research
contracts
7,373
7,194
Endowment spending
accounts & other externally
restricted funds
8,709
8,666
Endowment income
stabilization account (note 13e)
(1,632)
12,065
Balance, End of Year
14,450
27,925
13d / Deferred Contributions for Specifc Purposes
Dollars in Thousands
Sponsored
Research
Property &
Equipment
2012
2011
Balance, beginning of year
40,192
40,192
38,092
Contributions in the year
61,156
7,083
68,239
65,617
Transferred to revenue
(70,855)
(1,364)
(72,219)
(63,517)
Balance, End of Year
30,493
5,719
36,212
40,192
Dollars in Thousands
Sponsored
Research
Specifc
Purpose
Subtotal
Property &
Equipment
2012
2011
Province of British Columbia
631
3,811
4,442
306,490
310,932
321,487
Government of Canada
30,406
3,066
33,472
50,229
83,701
82,733
Other
(544)
7,573
7,029
46,990
54,019
66,770
Balance, End of Year
30,493
14,450
44,943
403,709
448,652
470,990
13b / Sponsored Research is Accounted for as Two Components of the Foregoing
13c / Source of Deferred Contributions, End of Year
Total
Total
The University’s total research activities include the following:
•
External
research
grants
with
stipulations
recorded
in
deferred contributions for sponsored research and property
and equipment as described in note 13b;
•
External
research
grants
without
stipulations;
•
Internally
sponsored
research
activities;
and
•
Research
joint
ventures
that
are
proportionately
consolidated.
51
Dollars in Thousands
2012
2011
Endowment investment income for the year
Realized income from portfolio (note 20)
14,085
14,844
Unrealized investment income (loss) (notes 6, 20)
(14,390)
14,720
(305)
29,564
Endowment income allocated to
Individual endowment spending accounts
(9,392)
(8,446)
Endowment principal to preserve purchasing power
(4,000)
(7,178)
Increase (decrease) in endowment income stabilization account during the year (note 20)
(13,697)
13,940
Balance, beginning of year
12,065
Gain on endowment investments returned to endowment principal (note 18)
(1,875)
Balance, End of Year
(1,632)
12,065
13e / Endowment Income Stabilization Account
14. Deferred Lease Proceeds / Related Entity
Accounted for by the Equity Method
SFU Community Trust is developing land on Burnaby
Mountain known as UniverCity. The land was provided to
the Trust by the University. The Trust is a taxable business
trust and must pay income taxes on any taxable income
that is not allocated to benefciaries. The majority of the
development is being accomplished by the sale of 99-year
leases to developers who develop residential housing.
SFU Community Trust has two benefciaries, the
University and Simon Fraser University Foundation, whose
benefciary is also the University. The University’s interest
in the Trust is accounted for by the equity method with
the income amortized over the 99-year terms of the
related leases.
Since its inception, the Trust has distributed
earnings of $23,560,000 (2011: $22,244,000),
accrued $1,095,000 (2011: $1,095,000) of base
rent to the University and distributed earnings
of $2,060,000 (2011: $2,060,000) to the Foundation.
Cumulatively, the University has, on an equity accounting
basis, recognized $677,000 (2011: $2,162,000) as income
capitalized to the endowment. The funds received,
$23,560,000, are invested for the beneft of the endowment.
SFU Community Corporation, a company wholly-owned
by the University, has the sole purpose of being Trustee of
the Trust and has no business operations.
Audited fnancial statements of the Trust as at December
31st are separately prepared. Information on the equity
accounting in the University and a fnancial summary of
the Trust’s activities are provided below.
Equity in SFU Community Trust
The University records its equity accounted interest
in the income of the Trust as a direct increase in net assets
held as endowment principal as described in note 18.
This amounted to a net loss of $1,485,000
(2011: net income $271,000).
Dollars in Thousands
2012
2011
Net income (loss) as reported by the Trust
(1,753)
1,287
Adjustment of land value on transfer to Trust realized through sale of leases
921
Adjustment of base rent expense in the Trust due to SFU
694
Deferred current net loss from the Trust
(2,873)
Income (loss) of current year recognized this year
(1,753)
29
Portion of Trust income of prior years recognized this year
268
242
Net Income (Loss) to University from Trust, Recorded as Increase
(Decrease) in Net Assets Held as Endowment Principal (Note 18)
(1,485)
271
14a / Net Income (Loss) from Trust
52
Dollars in Thousands
Trust
Equity
Consolidation
Adjustments
2012
2011
Net income (loss) reported by Trust
(1,753)
(1,753)
1,287
Adjustment of land value on transfer
to Trust realized through sale of leases
921
Base rent elimination
694
Deferred current year's net income
(2,902)
Income of current year recognized
in the year
29
Income of prior years recognized
in the year
268
268
242
Prior year base rent receivable
(401)
Bad debts recognized
(176)
(176)
Revised deferred income for bad debts
176
176
Allocation to benefciaries
(1,317)
Change in the year
(1,929)
444
(1,485)
(1,447)
Balance, beginning of year
11,846
(34,826)
(22,980)
(21,533)
Balance, End of Year
9,917
(34,382)
(24,465)
(22,980)
14b / Trust’s Equity Reconciled to University’s Deferred Lease Proceeds / Equity in Trust
Consolidation adjustments relate to two factors: land was
transferred to the Trust that was recorded at fair market
value, but is retained in the University’s records at cost
until realized by third party transactions; and income from
Dollars in Thousands
2012
2011
Financial Position
Total assets
68,110
67,459
Total liabilities
58,193
55,613
Trust Balance, End of Year
9,917
11,846
Operation & Trust Balance
Revenue
1,586
11,677
Expense
3,339
10,390
Net income (loss) for the year
(1,753)
1,287
Trust balance, beginning of year
11,846
11,876
Prior period adjustment
(176)
Allocations to benefciaries during the year
(1,317)
Trust Balance, End of Year
9,917
11,846
Cash Flows
Operating activities
4,554
5,041
Investing activities
(6,334)
(6,122)
Financing activities
618
1,692
Increase (Decrease) in Cash During the Year
(1,162)
611
14c / SFU Community Trust: Financial Summary
the sale of leases by the Trust is recognized in the Trust at
the same time of the lease sale, but is recognized by the
University over the 99-year terms of the related leases.
Deferred Lease Proceeds
53
15. Capital Disclosures
The University considers its capital to be its net assets
excluding endowments. The University’s objective when
managing its capital is to safeguard its ability to continue as
a going concern so it can continue to provide services to its
students and research funding agencies. Annual budgets
are developed and monitored to ensure the University’s
capital is maintained at an appropriate level. The University
has no external restrictions imposed on its capital.
16. Internally Restricted for Commitments : Operating
Internally restricted amounts are subject to funds
being available.
Dollars in Thousands
2012
2011
Balance, beginning of year
45,026
9,317
Increase in the year
19,870
35,709
Balance, End of Year
64,896
45,026
Dollars in Thousands
2012
2011
Operating budget carryover
35,826
20,255
Operating special projects
12,838
8,317
Internally funded research
16,232
16,454
Balance, End of Year
64,896
45,026
16a / Internally Restricted for Commitments: Operating
16b / Components of Internally Restricted for
Commitments: Operating
The Ancillary enterprises represent accumulated funds
held for the ongoing operations of the Residences,
Bookstores, Meeting, Event and Conference Services,
Parking Services, Food Services, and Document Solutions.
Specifc purpose represents funds from various sources
that are allocated internally to specifc activities.
Dollars in Thousands
2012
2011
Ancillary enterprises
8,944
5,803
Specifc purpose
12,790
13,567
Long term lease commitment
12,154
13,227
Self insurance
785
783
Balance, End of Year
34,673
33,380
17a / Internally Restricted for Commitments:
Lease & Other
17. Internally Restricted for Commitments:
Lease & Other
Dollars in Thousands
2012
2011
Donations
21,584
9,254
Capitalized investment income
(note 20)
5,969
8,602
Equity income (loss) for the year
from SFU Community Trust
(note 14)
(1,485)
271
Rent receivable in SFU
Community Trust
694
Matching & other funds
capitalized
350
2,644
Capital reduction from loss on
specifc related investment
(589)
Recovery of endowment
investments allocated to
endowment principal (note 13)
1,875
Change in the year
26,418
22,751
Balance, beginning of year
208,593
185,842
Balance, End of Year
235,011
208,593
18a / Endowment Net Assets
Income from the University’s benefcial interest in SFU
Community Trust is recognized as a direct increase in net
assets held as endowment principal. Note 14 describes
the Trust’s sale of 99-year leases that result in recognition
of deferred lease proceeds which are amortized to income
over the remaining term of the leases. Funds from the
Trust are invested to generate income for the beneft of
the endowment.
Long term lease commitment funds provide for obligations
entered into for the occupancy of the University’s Harbour
Centre facility, which include: lease payments, tenant
loan payments, a contribution towards operating costs,
and funding for amortization of the prepaid lease that
is reported as an asset on the University’s Statement of
Financial Position (note 9). Self insurance funds are held
to pay self insured property and liability losses.
18. Endowment Net Assets
Endowment consists of restricted donations to the
University. The investment income generated from
endowments must be used in accordance with purposes
established by donors. Donors, as well as University policy,
stipulate that the economic value of the endowments must
be protected by limiting the amount of income that may
be expended, and capitalizing a portion of investment
income in order to maintain purchasing power.
54
Dollars in Thousands
2012
2011
Province of British Columbia
Operating
219,493
221,945
Sponsored research
2,250
5,687
Specifc purpose
4,888
7,035
Property & equipment
4,844
19,063
Recorded as net deferred contributions
(2,156)
(20,812)
229,319
232,918
Government of Canada
Operating
6,776
6,571
Sponsored research
46,895
49,623
Specifc purpose
10,886
11,646
Property & equipment
8,527
20,876
Recorded as net deferred contributions
(1,195)
(22,731)
71,889
65,985
Other governments
Sponsored research
1,070
637
Specifc purpose
631
Property & equipment
165
1,070
1,433
Total
302,278
300,336
19a / Revenue: Government Grants and Contracts
19. Revenue: Government Grants and Contracts
During the year, the University recorded the following
government grants and contracts as they became receivable
in accordance with the deferral method of accounting for
contributions:
55
21. Pledges
Pledges are not recognized as revenue in the fnancial
statements until the donations are received. Pledges for
future years are estimated at: cash donations $47,660,000
(2011: $57,400,000) and gifts in kind $3,910,000
(2011: $780,000).
22. Contingencies
From time to time, the University is involved in litigation or
proceedings relating to claims arising out of its operations
in the ordinary course of business. It is expected that the
ultimate outcome of these claims will not have a material
effect on the fnancial position of the University. The
majority of these claims are covered by the University’s
insurance coverage. Any University payouts that may result
from these claims will be recorded in the period when it
becomes likely and determinable.
The University is a member in a self insurance cooperative
in association with other Canadian universities to
provide property and general liability insurance coverage.
Under this arrangement, referred to as the Canadian
University Reciprocal Insurance Exchange (CURIE),
the University is required to share in any net losses
experienced by CURIE, beyond the reserves that CURIE
has accumulated from member premiums. Subscribers to
CURIE have exposure to premium retroactive assessments
should the premiums be insuffcient to cover losses and
expenses. The University is committed to this insurance
arrangement until December 31, 2012.
The University is liable for Letters of Credit in the amount
of $51,231,436 in relation to its pension plans as further
described in note 12.
20. Investment Income
Dollars in Thousands
General
Operating
Operating
Other
Endowment
2012
2011
Realized investment income (note 13)
11,255
4,385
14,085
29,725
23,466
Unrealized investment income (loss)
(notes 6,13)
(338)
(14,390)
(14,728)
19,699
Change in deferred contributions for
endowment specifc purpose accounts
25
25
112
Income capitalization to endowment
equity (note 18)
(5,969)
(5,969)
(8,602)
Change in deferred contributions for endowment
income stabilization account (note 13)
13,697
13,697
(12,065)
Recovery of endowment income
stabilization loss of prior years applied
to endowment principal
(1,875)
Total
10,917
4,385
7,448
22,750
20,735
20a / Investment Income
23. Asset Retirement Obligation
In accordance with Canadian Generally Accepted
Accounting Principles (GAAP), the University recognizes
asset retirement obligations where a reasonable estimate
of the fair market value of the obligation and the future
settlement date of the retirement of the asset can be
determined. The University has identifed potential asset
retirement obligations relating to removal and disposal
of environmentally hazardous building materials in some
facilities that may be incurred upon major upgrades or
demolition in the future. At this time, the University has
not recognized these asset retirement obligations as there
is an indeterminate settlement date of any potential future
demolition or renovation of the facilities and therefore the
fair value cannot be reasonably estimated.
24. Comparative Amounts
Certain amounts on the fnancial statements for the year
ended March 31, 2011 have been reclassifed in order to
conform to the presentation adopted in the current year.
25. Subsequent Event
In April 2012, the University extended its lease of the
Harbour Centre facility. Minimum annual rent for the
period January 1, 2018 to December 31, 2022 is $2,900,000
and $3,200,000 for January 1, 2023 to December 31, 2027.
Total
56
Board of Governors
Front Row left to right:
Dr. Nancy MacKay
Dr. Carole Taylor (Chancellor)
Professor Andrew Petter (President)
Ms. Anne Giardini, Q.C.
Dr. Paul Percival
Back Row left to right:
Mr. Bill Cunningham
Mr. Marc Fontaine
Mr. Pasha Tashakor
Ms. Jo Hinchliffe
Mr. Bob Elton (Board Chair)
Mr. Brian Taylor
Dr. Gordon Myers
Members not appearing in the photograph
Ms. Lynda Brown-Ganzert
Mr. Jagmohan Singh
57
58
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A CALL TO BECOME
SOMETHING MORE
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