FINANCIAL ACCOUNTABILITY

For the year ending June 30, 2022

The academic and fiscal year ending June 30, 2022 has been the beginning of a financial recovery for Pickering College (PC) with the global pandemic continuing throughout most of the 2021/22 academic year.

Overall, financially, our excess (deficiency) of revenue over expenses, before amortization, government subsidies, realized gains on long-term investments and the net change in unrealized gains on long-term investments for the 2022 fiscal year was $412,927 as compared to the prior year deficit of ($866,257). After government support, in the form of the Canada Emergency Wage Subsidy, PC had an excess of revenue over expenses of $1,381,818. This excess is important to the school as from this we allocate interest earned to our endowment and internally restricted funds, which totaled $130,520, and we funded $439,408 in regular annual capital projects. The remaining $811,890 has gone into operating reserves to fund next year’s anticipated capital projects, which total approximately $720,000. We are pleased with our overall financial results, but 2022 was a challenge. Our results are better than planned, which will put us in a more favourable position to recover from COVID-19 over the next couple of years.

We began the school year with an enrolment of 94 boarding students and 345 day students for a total of 439 students. In the 2020/2021 school year we had a total of 420 students (93 boarders, 327 day). With the growth in enrolment, it is a start to financial recovery. The global pandemic continued to impact our operations and we began the year with only 60% of our boarding students on campus. We continued to run an offsite isolation program to ensure they were supported from their arrival in Canada to their arrival at PC. The boarding program remained open throughout the year until graduation in June 2022.

The environment continued to be uncertain as government regulations around the world continued to change with both vaccines and variants being introduced throughout the world. Staffing shortages and illness had an impact on our operations. The school’s operations were guided by federal, provincial and health authority guidelines and followed best practices from industry experts as they evolved. Safety, community, and flexibility were the cornerstones of our decision-making for the second pandemic year. We continued to be flexible in our operations. Just as the government regulations related to COVID-19 were lifting in February/March 2022, war broke out in Ukraine. The economic impacts of the war became a new variable that would impact current families and families enrolled for September 2023. In addition to emotional support through our boarding staff and faculty, we were able to provide some financial support to our Ukrainian families through the PC Power of Community, which was very much needed. Having worked through the various challenges, all of our Ukrainian and Russian students, except for one, were able to make it to PC in the fall of 2022.

The 2022 audit was successfully completed by Grant Thornton. Please note that the auditors have provided a clean opinion.

During 2022, several capital projects were underway, which resulted in a total of $1,336,125 of investment in property, building and equipment. Regular completed projects totaled $439,408, which included regular technology replacements, a new commercial dishwasher for the kitchen, the start of renovations to the Head’s house and the New House roof replacement. PC also incurred $896,717 in soft costs for West Lake House.

In 2022, PC reported total tuition and other program-related revenues of $18,434,471 on 439 students. This compares to $16,243,789 on 420 students in 2021.

In 2022, actual enrollment was 439 students, consisting of 94 boarders and 345 day students. This was an increase from 2021 when we had 420 students of which 93 were boarders and 327 were day students. With the global pandemic continuing, we were able to recruit 38 new boarding students (increased from 33 the year before) and that, coupled with a 98% retention rate, resulted in a boarding population of 94. This continues to be below our regular 110-120 enrolment. Our plan is to re-establish our boarding population over the next three years. We did, however, maximize the day student population to compensate for the decline in boarding with the recruitment of 62 new day students and a 93% retention rate for a total day population of 345. Of the $18.4 million in revenues, $17.2 million represents the tuition and fee revenue. This reflects an increase in tuition, an increase in enrolment and significantly less rebates issued for short-duration school closures. During the school year we did have a few COVID-19 protocol-related closures for specific cohorts in the fall of 2021 and one government-mandated closure period in January 2022. We started the school year with only 60% of our boarding students at PC and continued to run an off-site isolation program to the end of November when most of our students finally arrived.

In terms of diversifying our revenue sources, the national benchmark targets 90% of total revenue to come from tuition and fees and 10% from other sources. In 2022, parents paid tuition and fees representing 85.5% (83.58% in 2021) of PC’s total revenue. Auxiliary programs represented 5.5% (3.8% in 2021), investment income represented 0.7% (1.3% in 2021) and donations and fundraising revenue was 2.9% (1.5% in 2021) of total income. Rental and other income represented 0.6% (0.6% in 2021) of total income and the Canada Emergency Wage Subsidy represented 4.8% (8.9% in 2021) of total income.

During 2022, we continued to have a generous PC community, raising a total of $7,380,053. Our 2022 funds raised can be broken down as $419,929 raised through annual giving, $1,212,412 raised in restricted donations, $328,274 donated to endowments and $5,419,387 received in support of West Lake House.

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The above Statement of Operations is an excerpt from the complete Audited Financial Statements. Complete Audited Financial Statements, including notes, are available upon request from the school’s Business Office.

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Annual giving was impacted as we could not hold the Gala, Road Rally or in-person Holiday Home Tour. We did attempt a virtual Holiday Home Tour and a fall and spring golf tournament. The support to the capital campaign was extraordinary in 2022 with multiple multi-million dollar gifts from Rathlyn Investments Ltd., facilitated by Roger Warren ’51.

Auxiliary program revenue increased significantly to $1,114,378 ($693,641 in 2021) without an ESL Summer Camp. The increase comes from the return of Experience Canada students with 11 in 2021/22, increase in summer day camp revenue and Hilltop Shop revenue. We continued to run a boarding isolation camp offsite from mid-August to the end of November 2021 and then again in January 2022. This revenue won’t be repeated in 2022/23. We also plan to begin rebuilding the summer ESL Camp in the summer of 2022. With our summer program revenue being so low, without our ESL Boarding camp and rentals, we still qualified for the Canada Emergency Wage Subsidy for the summer months. We received $968,891 in grant funding in 2022.

Rental and other income of $114,046 was consistent with 2021, as we were unable to rent any school facilities, including the arena.

Deferred educational program revenue represents the recognition of donations that have been given for specific purposes. In 2022, PC recognized $168,498 ($79,792 in 2021) in revenue, from donations in support of the PC Power of Community and specific programs. The amount to be recognized varies from year to year depending on the donations received.

Overall total revenue (not including the realized investment gains or the Canada Emergency Wage Subsidy) has increased by $2,499,037 or 15% based on 19 more students, a tuition increase, less rebates issued, the partial return of special events and fundraising revenue and the partial return of some auxiliary programs. Revenue is also $710,148 or 3.9% above budget.

$5,419,387

$1,212,412

$419,929

$328,325

TOTAL $7,380,053

WHERE DID WE SPEND OUR MONEY?

56%PROGRAMS

4%SCHOLARSHIPS

14%FACILITIES

11%ADVANCEMENT

10%ADMINISTRATIVE

5%AUXILIARY PROGRAMS

In recognition of the loss of revenue due to the pandemic, we continued with a detailed review of spending in all areas. We began to rebuild some of our budgets in anticipation of a return to a more normal school year, with regular in-person learning and less remote learning. For example, we rebuilt the co-curricular budget to reflect the return of competitive teams, and reduced costs by eliminating offsite classroom rental costs and bringing all students back to the PC campus. Although the physical distancing rules were not as stringent as the previous year, we did maximize physical distancing and continued to use the meeting room, staff room and library as classrooms. We operated without visitors or events on campus until our graduation ceremonies in June. We continued with enhanced cleaning and sanitizing and operated in cohorts. Overall, while we spent more in 2022 than in 2021, we were under budget in many areas, with many pandemic restrictions still in place.

Instructional expenses totaled approximately $10.4 million in 2022 ($9.9 million in 2021). PC spends approximately 55%-60% of its total operational budget on direct instructional and co-curricular program costs, with salaries and benefits representing 78% of that total. This year we had a 2% salary increase after freezing salaries in 2020/21. Health Centre costs remained high with PPE purchases and a new staffing model implemented mid-way through the year.

Scholarships and bursaries decreased over the previous year, from $896,778 in 2021 to $829,695 in 2022. In 2022, 18% (31% in 2021) of all boarding students received financial aid. To fund these awards, $195,616 was drawn from the income on endowed funds and $6,030 was drawn from restricted donations. Scholarships and bursaries awarded will increase as we rebuild our boarding population. Already in 2022/23 with 103 boarders, financial aid has increased to 26.5% of all boarding students.

Advancement costs (Admission, Development, Alumni and Parent Relations and Communications) have increased by $220,101 over last year, totaling $ 2,072,043 ($1,851,942 in 2021). We implemented a new staffing model with the retirement of the Executive Director, Development and implemented an Assistant Head, Advancement, had a 2% salary increase and in 2022 had a Major Gifts position that was shared between operations and the capital campaign. Staffing increases totaled about $100K, and we saw another $100K in cost increases in areas such as the printing and production of The Pillars

Facility costs (instructional and residential buildings maintenance) for 2022 were $2,690,678, which is $329,908 higher than 2021. We have begun to rebuild and undertake facility projects that we deferred in the first year of the pandemic. Salaries increased with the 2% increase and part-time staffing increased with all of the in-person learning and no significant government closures. Insurance increased with the market reacting to the pandemic and utilities increased as the government ended some of the financial support programs that were in place.

Management, administration and operations costs were 6.1% ($106,641) higher than in the prior year. This line includes costs related to the operation of the Head of School’s office, Assistant Heads, Business Office, Human Resources and Reception. In addition, school-wide infrastructure costs are charged here and professional fees, such as legal and audit fees, are reflected in this cost centre. Legal fees and human resource costs increased this year.

Overall, total expenditures have increased by $1,298,603 or 7.5% in 2022 but were $462,575 or 2.4% under budget.