A message from Tom Duever, Interim Vice-President Academic and Provost; and Jacinda Reitsma, Vice-President, Administration and Finance
At its October meeting, the Board of Governors approved the University’s audited financial statements for the year ended April 30, 2026. The audited results, together with our latest forecast for the current fiscal year, show that Waterloo’s financial position has improved.
The new provincial funding framework has strengthened our revenue outlook, and the budget reductions and other measures we have implemented across the University have reduced our expenses. We are now closer to balancing the operating budget than we anticipated when our multi-year plan was established. Balancing our budget remains an ongoing responsibility, however, as inflation and wage increases will continue to put pressure on our costs.
This improvement allows us to conclude several extraordinary measures introduced during the period of greatest financial constraint, while we continue to focus on ongoing expense reductions to meet our budget commitments. It does not remove the need for careful financial management. Our continuing responsibility is to ensure that recurring revenues can support recurring expenses while preserving our capacity to invest in teaching, research, the student experience and the infrastructure on which the University depends.
Understanding the audited results
The audited financial statements report an overall surplus of around $93 million across all University funds. The consolidated surplus should not be understood as a surplus available for general operating purposes.
Approximately 85 per cent of the surplus came from two sources:
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$57.5 million in endowment investment returns. Endowment funds must be used for the purposes established by donors, including research chairs, professorships and student financial support.
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A $21.6 million gain from the sale of North Campus land to the Waterloo Regional Health Network for the future hospital site. The proceeds will be received over several years and have been restricted.
Within the operating fund, results were better than we budgeted for. Revenue was higher than forecast, principally because tuition, interest income and other revenues exceeded our estimates. Expenses were also below budget as units implemented their assigned reductions and constrained hiring and other spending.
These results represent important progress, but not all of the improvement will be repeated in the years to come. Some savings arose because purchases and other expenditures were deferred. Tuition remained below the previous year, primarily because of lower international student enrolment. Although revenues exceeded our budget assumptions, the pressures affecting international enrolment have not been resolved.
The full audited financial statements include plain-language commentary intended to help readers understand the results across the University’s different funds. The Annual Financial Report is currently available for review in the Board of Governors meeting package and will be posted at a later date on the Audited Financial Reports webpage. We encourage members of the community to review the statements and commentary.
The current operating budget outlook
Our current fiscal year picture has also improved. Work is still required throughout the year to realize the expense reductions included in the budget, and we will continue to monitor results closely. Current information on fall enrolment and provincial funding for priority growth programs mean that we now expect modest improvements to revenue are likely. These improvements could allow us to achieve a balanced operating budget result in 2026/27.
The provincial funding framework announced in February has provided a meaningful contribution of provincial operating grant revenue and a framework for annual inflationary increases in domestic tuition. Combined with the changes Waterloo has made through its multi-year budget plan, this support gives us a clearer and more manageable path to sustained operating balance.
Maintaining that balance will require annual revenue growth to keep pace with inflation and other cost increases. Where it does not, we will need to adjust expenses through the regular budget and planning process.
Adopting a stance of sustainable continuous improvement
The measures we have taken over the past several years to move towards a more sustainable financial footing have had substantial effects across Waterloo. We recognize what these changes have required of our community and the uncertainty they created. We are grateful to the employees and leaders who maintained Waterloo’s teaching, research and services during this period.
Organizational and role changes will remain part of managing a large institution. Our intention, however, is to address them through regular, more predictable planning and improvement processes, with appropriate engagement and support for the people affected.
This means that the current cycle of large-scale functional reviews is also coming to an end. Ongoing processes to review functions including finance, marketing and communications, information technology, human resources and student services will continue their work to implement necessary changes. These reviews examined the University’s administrative structures at a particular point in time and supported significant organizational change. They also required considerable time and effort from the employees and leaders involved.
Beyond our functional reviews, the Innovation Action Group has completed its work. We thank its members and the employees who contributed their expertise to its initiatives. The group helped advance practical improvements in areas including travel administration, technology procurement, access to information and administrative processes. Work that needs to continue will now be carried forward by the units responsible for those activities.
The Academic Innovation Working Group has also advanced work on how academic programs are developed and brought forward. Ideas that engage Senate’s academic responsibilities will continue through the University’s established collegial governance processes. Continuous improvement will increasingly include the thoughtful use of data as well as artificial intelligence and other digital tools. This work must be undertaken with appropriate oversight and with a clear focus on improving service, supporting employees and strengthening teaching and research.
The need to refine and optimize our operations continues. Future work will take place through regular planning, budgeting and service-improvement processes. This will allow units to make changes on an ongoing basis, informed by operational needs, institutional priorities and the experience of the people who perform the work.
Resuming hiring practises to meet organizational need
The improvement in our financial health means that we can now end the University-wide staff hiring freeze. Regular recruitment may resume through the University’s established approval and budgeting processes. We are grateful to those who served on working groups to support hiring processes during this period.
This change does not mean a return to the hiring practices that preceded the budget constraints. Leaders will continue to assess staffing needs carefully and ensure that hiring decisions are consistent with approved staff plans, operational priorities, organizational design and available resources.
Human Resources will continue to work with units on workforce planning and organizational design. This includes the ongoing work to align job titles, University Support Group levels and job descriptions so that roles are structured more consistently across Waterloo. Further guidance will be provided to hiring managers.
Continuing financial discipline and investment
The conclusion of these time-limited initiatives does not mark the end of financial discipline at Waterloo.
Salaries and benefits account for approximately 77 per cent of operating expenses. Compensation increases and the outcome of future salary negotiations will continue to place pressure on the budget. The University also needs to invest in deferred capital renewal, classrooms and learning spaces, and the information technology infrastructure required for teaching, research and administration.
These needs must be considered alongside continued uncertainty in international enrolment and the possibility that revenues and costs will not grow at the same rate. Careful expense management, workforce planning, service improvement and revenue development will therefore remain part of the University’s annual planning. The difference is that this work will now be incorporated into our regular processes rather than carried out through a continuing series of extraordinary measures.
As this work moves into the University’s normal planning and operating processes, our approach to budget communications will also change.
The Waterloo Budget Plan website will close at the end of February 2027. Its content will be preserved in an archive so that the information remains available. Future budget updates will be communicated through established University channels, including faculty and unit leaders and the Daily Bulletin.
The combination of new provincial investment and the changes made across Waterloo has materially improved our financial position. The task now is to preserve that progress through disciplined planning, selective investment and careful management of the University’s resources.