Brock University, 2025-26 Trimester 2 Report

September 1 to December 31, 2025

Executive summary

At the completion of the second trimester of 2025-26 Brock is projecting a funding shortfall of $5.1 million. While some time remains in fiscal 2025-26 to further reduce this shortfall, it is likely that some use of the contingency reserve will be required. An estimated $8.5 million in mitigation coupled with an additional $1.5 million in additional unbudgeted ancillary capital contributions for a total $10 million in positive funding results was a significant achievement for this year’s mitigation efforts. These results reflect similar positive funding results in 2024-25 where $10.1 million in mitigation was also achieved. The implications of achieving $10 million in mitigation for a second year provides insight into future budget strategies. Deficits beyond $10 million should reasonably be expected to require funding from reserves. Developing budget scenarios to stress test the durations which the reserves will remain available will be prepared to inform upcoming budget decisions. The contingency reserve currently has $7 million in available funds coupled with $17 million in strategic initiative reserves for a total of $24 million in flexible reserves.

Student fees are forecasted to be ahead of budget by $2.2 million or 1.2 per cent, due to higher than anticipated domestic student enrolment, offset by lower than budgeted international student revenue mainly a result of unbudgeted declines in Goodman Shool of Business graduate programs.

Ancillary and Housing Services revenue is forecasted ahead of budget by $1.7 million or 4.3 per cent. Net contribution back to the University by Ancillary and Housing Services is flat to budget as a result of a forecasted $1.47 million additional capital reserve contribution (reflected in inter-fund expense) to support proposed repairs and maintenance for residences. If Brock decides to defer the repairs and maintenance, the $1.47 million additional capital contribution could be used to reduce the overall funding deficit.

Budget controls to manage personnel costs have been in place throughout the year. Personnel costs, which represent approximately two thirds of the University expenditures, have been mitigated with a forecasted $4.1 million savings compared to budget. Other operating costs are over budget by $9.0 million or 8.6 per cent for various reasons including:

• A $2.8 million holdback for the completion of the Burlington facility, which was offset by inter-fund revenue (funding was planned from the proceeds of sale from the Hamilton campus).

• Utilities over budget by $1.2 million because of the extreme cold weather and the cost associated with the SPARK initiative that was approved after the budget was finalized.

• Bad debt expense is higher than budget by $2.2 million mainly a result of uncollectible balances from international students who have left Brock.

While we experienced strong cost containment for another year, as well as additional one-time funding, we recognize that Brock, along with the entire sector, remains under significant financial pressures and we must ensure our ability to continue to fund operations through realistic mitigation targets and that planned reserve use does not exceed available funds.

Financial results

The following table illustrates the trimester two revenue and expense forecast for the University compared to budget. The information is presented on a funding basis, which represents committed cash, and based on the audited financial statements prepared in accordance with accounting standards for not for-profit organizations (NFPS). A reconciliation of the two presentations can be found on page 20

Figure 1

Taking a closer look at some of the numbers

Overview

The 2025-26 trimester two forecast estimates use of $5.1 million of contingency reserve funds, which represents an improvement from an $8.7 million funding shortfall at Trimester One. While work will continue to be done to limit the use of the contingency reserve, this fiscal position reflects $8.5 million in mitigation realized against the $13.6 million budget deficit.

Input and recommendations for future budget decisions are encouraged and may be emailed to budgetreport@brocku.ca

Review of overall revenue

As shown in Figure 2, overall revenue is forecast at $400.4 million versus the budget of $380.2 million, showing a variance of $20.1 million, driven mainly by forecasted increases in student fees, grants, gains in investment income and funding from reserves. These variances will be discussed in the following sections.

Figure 2: Revenue ($000s)

Student fees and enrolment

As shown in Figures 3 and 4, overall enrolment is forecast to be higher than budget, with 710 more students. This positive variance is seen in both undergraduate and graduate domestic students forecast at 4.2 per cent and 4.5 per cent more than budget or 660 and 55 students, respectively, as well as in undergraduate international students forecasted 8.7 per cent more than budget or 91 students. Graduate international enrolment is forecast lower than budget by 18.5 per cent or 96 students. Overall, the higher enrolment forecast translates into tuition fee revenue from credit courses showing a positive variance to budget of $1.7 million. As shown in Figure 5 domestic tuition forecasted higher than budget by $3.6 million, driven by higher enrolment in Faculty of Applied Health Science undergraduate programs as

well as the Faculty of Education Teacher Education program. This positive variance was offset by international tuition forecasted lower than budget by $1.9 million, driven by lower than budgeted enrolment in graduate Goodman School of Business programs, specifically the Master of Business Administration which carries a significantly higher tuition rate. Figure 6 details global tuition by session – spring/summer and fall/winter for the forecast and the past two years.

Overall 2025-26 enrolment is forecast higher than 2024-25 actual enrolment with growth in the Faculties of Applied Health Science and Education, offset by lower forecasted enrolment in Goodman School of Business, and the Faculties of Math and Science, Humanities and Social Sciences, as shown in Figure 4.

Figure 5 also details tuition related to non-credit courses. Professional and Continuing Studies and Continuing Teacher Education are forecasting higher than budgeted tuition revenue of $0.3 million each. This increase is offset by Goodman Group forecasting lower than budget tuition revenue of $0.3 million. Continuing Teacher Education is now supported through Professional and Continuing Studies along with all noncredit programming offered.

Grant revenue

Grant revenue is forecasted to be higher than budget by $2.9 million, as shown in Figure 7, mainly related to additional funding received for two grants.

MCURES Operating Grants

Initial Teacher Education grant:

The budget for the Initial Teacher Education grant was $1.2 million based on what was received in 2024-25 as this funding had not been confirmed by the Ministry of Colleges, Universities, Research Excellence and Security (MCURES) for 2025-26 at the time of developing the budget. In May 2025 the Province communicated that Brock would receive one-time funding of $2.3 million over two years ($1.4 million in 2025-26) and in June 2025 the Province communicated a commitment to an additional $2.93 million over two years ($1.8 million in 2025-26), resulting in a total $3.2 million in 2025-26, $2.0 million more than the budget, shown as part of the Special Purpose Operating Grant Envelope in Figure 7.

Facilities Renewal Program (FRP) funding:

Communication regarding the provincial FRP funding for 2025-26 was not received at the time of budget preparation. Consistent with prior years where FRP funding has been relatively flat, the budget assumed the same funding received in 2024-25 at $4.2 million. It was subsequently announced by the province that the sector-wide funding would be increased for 2025-26 resulting in Brock’s allocation increasing by $0.2 million. This additional funding was allocated against exiting Deferred Capital Renewal and Major Maintenance (DCRM) projects that were already included in the budget to be funded from general operations. As a result, this $0.2 million favorable variance contributed to the mitigation target. This funding is shown as part of Other MCURES and specific purpose grants in Figure 7.

Other additional funding from agencies as compared to the budget included: $0.4 million from the Co-operative Education and Work-Integrated Learning Canada (CEWIL Canada) as well as small variances is other grants.

Other revenue

Other revenue, as shown in Figure 8 is forecast to be $67.9 million, $7.5 million more than the budget of $60.4 million.

Stronger than budgeted investment income accounts for $4.3 million of this positive variance, which is more fully described in the Treasury section of this report. Ancillary revenue is also forecasted to be higher than budget by $1.7 million. The ancillary revenue increase is driven by higher Housing Services, Conference Services, Parking and Dining revenue. The net contribution back to the University by Ancillary and Housing Services is flat to budget as a result of a $1.47 million additional capital reserve contribution (reflected in inter-fund expense) to support recommended repairs and maintenance for residences. Increases are also seen in sales and services which is forecasting higher than budget by $1.5 million.

Review of overall costs

Personnel costs

Our people are what make everything possible at our University. Figure 9 below illustrates personnel costs in aggregate by personnel group. Overall personnel costs are forecasted to be under budget by $4.1 million due to ongoing mitigation efforts through not filling or deferring the replacement of vacant positions included in the budget. This level of mitigation has been declining. Saving related to unfilled budgeted positions are now being included in the budget plans, reducing the overall gapping dollars realized during the year.

(1) Faculty & Professional Librarians – BUFA members, Associate Deans and Associate Librarian; Admin/Professional – ongoing administrative/professional and exempt staff; OSSTF – support and technical staff; CUPE 1295 FT – full-time maintenance, trades and custodial staff; SAC – Senior Administrative Council; Other ongoing – CUPE 4207-2, CUPE 4207-3 & IATSE; CUPE 4207 – Unit 1 – instructors, teaching assistants, lab demonstrators, course co-ordinators and marker/graders; Other temporary – all other part-time teaching and non-teaching positions, Faculty overloads and stipend transfers.

Operating costs

Total operating costs are forecasted to be $134.0 million as compared to a budget of $123.4 million, which represents an increase from the budget of $10.6 million. This increase is seen in repair and maintenance and capital replacement costs of $3.7 million, mainly due to a $2.8 million holdback for the completion of the Burlington facility, which is fully offset by inter-fund revenue (funding was planned from the proceeds of sale from the Hamilton campus). Utilities and taxes are forecasted $1.2 million more than budget driven by the extreme cold weather and the cost associated with the SPARK initiative that was approved after the budget was finalized. Other expenses are forecasted $2.7 million more than budget, mainly due to bad debt expense from increased write-offs associated with past due international student fee balances; while inter-fund expenses are forecast $1.7 million more than budget mainly due to $1.5 million of additional ancillary revenues being transferred to the capital reserve to address recommended repairs and maintenance of Village Residences.

Unit and budget forecasts

Figure 11 on the following page details the funding by responsibility centre by grouping the forecast and budget into one of the following categories: Teaching Faculties, Academic Support, Student Specific, Shared Services, Ancillary, Space and Global. Please note that Figure 11 includes certain reclassifications to the 2025-26 budget as compared to the figures presented in the 2025-26 Budget Report. All reclassifications will be fully reconciled in the future 2026-27 Budget Report, noting the changes did not impact the net reported budget. Savings were realized in many units throughout the University including the Teaching Faculties, University Marketing and Communications, Facilities Management and Information Technology Services.

Funding budget by responsibility centre

Figure 11 details the funding budget by responsibility centre, where all personnel costs, operating costs and revenue have been grouped by their responsibility centre, which in turn are grouped into one of the following categories: Teaching Faculties, Academic Support, Student Specific, Ancillary, Shared Services, Space and Global.

Figure 11: Funding budget by responsibility centre ($000s)

(7,631) (24,151) 8,169

(1) Includes the following: the offices of the President; the Provost and the Vice-President, Academic; the Vice-President, Administration and Services; the Vice-President, Research; the Vice-President, External, the Vice-Provost and Associate Vice-President, Academic; the Associate Vice-President, Students; the Vice-Provost, Indigenous Education and Community Engagement; and the Vice-Provost, Teaching and Learning.

Treasury

Operating fund investment scorecard

Government of Canada ten-year bond yield was 3.42 per cent at Dec. 31, 2025 (3.23 per cent at Dec. 31, 2024). This compares to the yield on the operating investment portfolio of 3.45 per cent with an average duration of 11-months (4.31 per cent yield and 8-month average duration at the same time last year). The cash deposit rates are linked to the Bank of Canada overnight target rate plus an adjustment factor. As at Dec. 31, 2025 the deposit interest rate was 2.80 per cent for general deposits and 2.95 per cent for the 30 day notice account. Our operating investment income is on track to exceed budget by $4.3 million. A summary of investment holdings as of Dec. 31, 2025 is shown in Figure 15. Figure 13 outlines

Figure 12: Summary investment income – Operating Funds

monthly investment income performance compared to 2024-25. As detailed in Figure 12, operating investments have achieved 231 per cent of budget as we reach 67 per cent of the way through the fiscal year. The sinking fund during the first eight months of fiscal 2025-26 has seen strong returns reporting an annualized 11.2 per cent gain (13.5 per cent gain at the same time last year). Short-term volatility is common and expected with this fund. We continue to support this fund as a long-term investment strategy to fund the 2045/2060 payout of the University's two debentures and the employee future benefits reserve. The fund requires a 5 per cent annual rate of return for the series A $93 million debenture and a 5.2 per cent rate of return for the series B $125 million debenture to achieve its goal and this rate of return is aligned with the asset mix and skill of the fund manager.

10,000 9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000

Figure 13: Cumulative monthly investment income performance

Figure 14: Monthly cash flow – historical trend month-end balances ($000s)

Figure 15: Summary of investment holdings

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Our debt

Figure 16 details the current and projected external debt of the University, which is within financial metric ranges of the University’s current credit rating. The 2022-23 Fiscal Framework Update continued with the holistic approach to Brock’s capital financing strategy that allows for decisions to be made in support of strategic priorities in a fiscally sustainable manner. Maintaining the University’s credit rating at A (high) or better is a strategic priority that remains in the Fiscal Framework. The impact on the University’s credit rating will be considered for any new debt and will be supported by a complete repayment plan, including Board-approved assumptions for sinking fund strategies if required. On Jan. 27, 2026, Brock University presented its financial results, strategic plan updates, and financial and debt forecast to Morningstar DBRS. Morningstar DBRS will evaluate if Brock’s credit rating should change. This presentation follows Morningstar DBRS maintaining

Brock’s credit rating of “A (high),” with a trend of “Stable” on Feb. 21, 2025. Morningstar DBRS noted “the credit ratings are underpinned by the University’s position as a midsize comprehensive university in the Province of Ontario (rated “AA” with a “Stable” trend), and its track record of strong fiscal management.” “The credit ratings remain constrained by the current challenging operating environment, which can be characterized by the restrictive funding and tuition framework and recent changes to federal immigration policy negatively affecting international student enrolment.” Morningstar DBRS noted although unlikely, a positive credit rating action depends on a combination of sustained improvement in financial risk assessment metrics and an improvement in Morningstar DBRS’ assessment of one or more critical rating factors. “A negative credit rating action could arise from continued deterioration in financial risk assessment metrics.”

Figure 17: Long-term debt

Pension

The actuarial valuation on the pension plan completed as at July 1, 2025, indicated the plan was 101 per cent funded on a going-concern basis (99 per cent as at July 1, 2022 valuation) and 106 per cent on a solvency basis (105 per cent as at July 1, 2022 valuation). The going concern deficit improved to a small surplus, largely due to favorable investment returns over the past 3 years. The actuary sets the expected rates of returns based on industry best practices guided by the Canadian Institute of Actuaries. The University has no control or influence over these assumptions used by the actuary. The going concern surplus of $4.5 million (deficit of $5.3 million as at July 1, 2022 valuation) has eliminated the required special payments into the plan of $0.5 million representing an annual savings compared to the last valuation. Current service cost payments for the plan total $16.7 million annually. Employees also contribute to the money purchase component of the plan (defined contribution) an additional $9.7 million resulting in an employer to employee funding ratio of 1.7 to 1.0. An updated valuation is required before the next triannual valuation date of July 1, 2028.

The investment returns and investment balance for the last eight years are detailed in Figure 19. Additional information on the pension plan may be found at brocku.ca/about/universityfinancials/#auditedpension-statements

Figure 19: Pension Plan as of June 30 pension year end ($000s)

Capital

University infrastructure investment is ongoing as we invest in new and current space and technology to support and improve the student, academic and research experience. Figure 20 illustrates the number of open capital and related projects. These projects include all 2025-26 projects as well as uncompleted prior year projects. Note: the majority of the 2025-26 projects were opened prior to May 1, 2025. Figure 21 illustrates the activity to Dec. 31, 2025, with respect to the type and dollar amount of projects. The established 2025-26 capital and related projects budget is $9.7 million (Information Technology Services Projects – $5.1 million; Facilities Management Projects – $4.6 million).

Figure 20: Status of capital projects as of Dec. 31, 2025

Figure 21: Capital and related project summary

* AODA – Accessibility for Ontarians with Disabilities. (1) Funding revenue represents total expected funding and cash received. This amount is not reflective of all funding received to date.

Trimester 2 and remaining year activity

Figure 22 details the in-year activity and forecast on a funding basis for Trimester 2.

Figure 22: Funding in-year activity and forecast

Funding forecast presented in accordance with NFPS

Throughout this report financial information has been reported on a funding basis (sometimes referred to as committed cash basis). Figures 23 and 24 detail the entries and reclassifications required to convert the funding budget to be in accordance with the Canadian accounting standards for not-for-profit organizations (NFPS). Please refer to page 86 and 87 of the 2025-26 Budget Report for detailed explanations of all the

adjustments, reclassifications, and eliminations. The adjustments, reclassifications, and eliminations for the 2025-26 forecast were consistently applied with those of the 2025-26 budget with the following changes: the SPARK initiative payment was added to adjustment #7 as it will be considered part of capital for NFPS. The remaining adjustments were updated based on estimates for trimester two. It is interesting to note that Brock is one of the only Morningstar DBRS rated University that fully reconciles and converts budget and forecast to NFPS.

Reserves

Figure 25 outlines internally restricted reserve balances that have been established for strategic priorities. As at Dec. 31, 2025, Brock has $34.7 million in unspent internally-funded research, professional development and strategic fund support dollars for faculty and other units including the President, Provost and Vice-President, Academic, Vice-President, Research, Vice-President, Administration and Services, Vice-President, External and Faculty Deans. This amount compares to $38.6 million available in the same accounts at this time last year. These balances are not reduced to account for future commitments.

Appendix 1

Multi-year financial results on a funding basis