Category: Funding and Finances

  • Student Aid in Canada: The Long View

    Student Aid in Canada: The Long View

    Note: this is a short version of a paper which has just appeared in issue 72:4 the Canadian Tax Journal. How short? I’m trying for under 1000 words. Let’s see how I do.

    Canadian student aid programs existed in scattered forms since just after World War I but became a “national program” when the Dominion-Canadian Student Aid Program (DCSAP) was created in 1939. Under this program, the Government of Canada provided block cash grants to provinces who administered their own scholarship programs which provided aid based on some combination of need and merit. The actual details of the program varied significantly from one province to another; at the time, the government of Canada did not place much importance on “national programs” with common elements.

    In 1964, this DCSAP was replaced by the Canada Student Loans Program (CSLP)—recently re-named the Canada Student Financial Assistance Program (CSFAP). This has always been a joint federal-provincial enterprise. But where the earlier program was a block grant, this program would be a single national entity run more or less consistently across all provinces, albeit with provincial governments still in place as responsible administrative agencies able to supplement the plan as they wished. Some provinces would opt out of this program and received compensation to run their own solo programs (Quebec at the program’s birth, the Northwest Territories in 1984 and Nunavut in 1999). The others, for the most part, built grant programs that kicked in once a student had exhausted their Canada Student Loan eligibility.

    Meanwhile, a complimentary student aid program grew up in the tax system, mainly because it was a way to give money to students that didn’t involve negotiations with provinces. Tuition fees plus a monthly education amount were made into a tax deduction in 1961 and then converted to a tax credit in 1987. Registered Education Savings Plans (RESPs), which are basically tax-free growth savings accounts, showed up in 1971.

    Although the CSLP was made somewhat more generous over time in order to keep up with rising student costs, program rules went largely unchanged between 1964 and 1993. Then, during the extremely short Kim Campbell government, a new system came into being. The federal government decided to make loans much larger, but also to force provinces in participating provinces to start cost-sharing in a different manner—basically, they had to step up from a student’s first dollar of need instead of just taking students with high need. Since this was the era of stupidly high deficits, provinces responded to these additional responsibilities by cutting the generosity of their programs, transforming from pure grants to forgivable loans. For the rest of the decade, student debt rose—in some cases quite quickly: in total loans issued doubled between 1993 and 1997.

    And then, everything went into reverse.

    In a series of federal budgets between 1996 and 2000, billions of dollars were thrown into grants, tax credits and a new program called “Canada Education Savings Grants,” which were a form of matching grant for contributions to RESPs. Grants and total aid rose; loans issued fell by a third, mainly between 1997 and 2001 (a recovering economy helped quite a bit). Tax expenditures soared, which due to a rule change allowing tax credits to be carried forward meant either students got to keep more of their work income or got to reduce their taxes once they started working.

    Since this period of rapid change at the turn of the century, student aid has doubled in real terms. And nearly all of that has been an increase in non-repayable aid. Institutional scholarships? Tripled. Education scholarships? Quadrupled. Loans? They are up, too, but there the story is a bit more complicated.

    Figure 1: Student Aid by Source, Canada, 1993-94 to 2022-23, in thousands of constant $2022

    For the period from about 2000 to 2015, all forms of aid were increasing at about inflation plus 3%. Then, in 2016, we entered another period of rapid change. The Governments of Canada and Ontario eliminated a bunch of tax credits and re-invested the money into grants. Briefly, this led to targeted free tuition in Ontario, before the Ford government took an axe to the system. Then, COVID hit and the CSFAP doubled grants. Briefly, in 2020-21, total student aid exceeded $23 billion/year (the figure above does not include the $4 billion per year paid out through the Canada Emergency Student Benefit), with less than 30% of it made up of loans.

    One important thing to understand about all this is that while the system became much larger and much less loan-based, something else was going on, too. It was becoming much more federal. Over the past three decades, provincial outlays have risen about 30% in real terms; meanwhile, federal ones have quadrupled. In the early 1990s, the system was about 45-55 federal-provincial; now, it’s about 70-30 federal. It’s a stunning example of “uploading” of responsibilities in an area of shared-jurisdiction.

    Figure 2: Government Student Aid by Source, Figure 1: Student Aid by Source, Canada, 1993-94 to 2022-23, in thousands of constant $2022

    So there you go: a century of Canadian student aid in less than 850 words. Hope you enjoyed it.

    Source link

  • Ontario in 2029 | HESA

    Ontario in 2029 | HESA

    Back in 2022, just after the last provincial election, I wrote a piece looking forward a few years and predicted that the years 2023-25 were going to be chaos for Ontario postsecondary institutions. And I was right, although I can’t claim to have anticipated any of the specifics. Given that we are now going back into an election, I thought I would try to look into a crystal ball and look at what the province’s postsecondary system will look like financially if our glorious premier is re-elected for another four years.

    To do this, of course, requires making a few assumptions, not just about what will happen in the future but, given the inevitable Canadian delays in producing data, what’s been happening in the past two years as well. Hard data on the student numbers which drive aggregate tuition income does not exist beyond 2022 because the provincial government is deliberately suppressing data on this subject. Yes, really. Until last year, Ontario had one of the best records in the country when it came to openness on enrolment stats, usually publishing quite detailed data within six months of end of the calendar year. As of today, it has now been twenty-one months since the last update. By complete coincidence, the data that has not been updated covers the exact period where provincial government was asleep at the wheel in terms of oversight of international student intake. Can’t have that data going out before an election, I guess.

    Anyways, that means the following projections require a bit more educated guess work than usual. For transparency, here are my assumptions:

    • I have based student number projections for 2023-24 and 2024-25 on data I could find from the Ontario Universities Application Centre (OUAC) and from federal open data on student visas issued up to fall 2024.
    • I am assuming that international student enrolment will bottom out in 2025-26 and resume 10% annual growth thereafter, and that domestic enrolment will grow 2% per year, in line with projected increases in the 18-21 population. The assumptions on international students might be too generous, in which case all my projections will be too optimistic. Keep that in mind as you read this.
    • I am assuming that the provincial government will not add any new funding to the system beyond what was announced in the run-up to the 2024 budget, but that the extra funding announced as a response to the Blue-Ribbon Panel will be maintained past 2027.
    • I am assuming the freeze on tuition will be maintained, but a gentle (but below-inflation) rise in average tuition will continue due to students switching from cheaper humanities courses to more expensive STEM ones.
    • I am going to focus on the main sources of institutional operating income, which are tuition fees and provincial operating government. I am excluding from this analysis anything to do with income from federal or private non-student sources.

    Let’s start with public expenditures on postsecondary education. The problem of falling real public expenditures began well before Ford took power, but this trend has worsened under Ford. Until last year, he consistently allowed inflation to erode funding. The only time he increased institutional funding was in 2024, after the report of the blue-ribbon panel, and even then the three-year package he announced barely allows funding to keep up with inflation. When this new funding evaporates in 2027, the prospects for any new funding are uncertain: I think it is more likely that the government will revert to its previous practice of holding funding constant in nominal dollars but fail to provide any help to offset inflation. Assuming this is true, the path of government funding for Ontario postsecondary institutions will be as shown below in Figure 1.

    Figure 1: Ontario Government Transfers to Post-Secondary Education, 2001-02 to 2028-29 (projected) in Billions of $2023

    Now of course, public funding only makes up about a third of total funding in Ontario postsecondary education. What happens when you include tuition fees? Well, it looks like the graph below, Figure 2. Again, as you can see, the “take-off” point for the system we have today clearly lies in the McGuinty/ Wynne period, but boy howdy did the Ford team double-down on the model it inherited.

    Figure 2: Total Operating Income by Source and Sector, Ontario Public Postsecondary Institutions, 2001-02 to 2028-29 (projected) in Billions of $2023

    Now, this is one of those cases where it helps to disaggregate what is going on in the system and look separately at what’s going on in the universities and colleges. Let’s start with colleges in Figure 3.

    Figure 3: Total Operating Income by Source, Ontario Colleges, 2001-02 to 2028-29 (projected) in Billions of $2023

    I’ve been writing about the big fall in college revenues for a few months now, but even I find this graph shocking. Total operating income to the college system is going to crash by about a third between 2023-24 and 2024-25 and then probably will start to recover thereafter. Basically, you should consider the period 2015-2025 as a huge fever dream that is now breaking and sending the system back to exactly where it was a decade ago, minus about 15% of its public funding and a similar drop in the number of students (domestic enrolment really crashed over the past decade).

    Figure 4 repeats the exercise for universities. This one might seem puzzling for many, because it appears to show very little drop in funding in the 2020s. I mean, yes, there’s a teeny dip in 2024, but absolutely nothing like what we see in the colleges—so why are universities screaming about their untenable financial positions?

    Figure 4: Total Operating Income by Source, Ontario Universities, 2001-02 to 2028-29 (projected) in Billions of $2023

    Well, the answer is that universities don’t have a revenue challenge so much as a cost challenge. Colleges have an enormous amount of freedom to rearrange or reduce staff. Universities, to put it mildly, do not, partly because of tenure and partly because collective agreements between universities and faculty contain clauses about layoffs and financial exigency which impose very high barriers and costs to any institution that tries to reduce academic headcount. This forces institutions to force as many cuts as possible on non-academic staff and services, but there are limits to how much you can do before students start turning away.

    Plus, of course, universities simply got in the habit of getting ever larger. Looke at what happened in the 18 years before the Ford government took power: 17 straight years where the average annual income growth after inflation was 5%. The internal political economy of Ontario universities simply evolved so that growth less than 5% was believed to be “austerity.” Since Ford came to power, annual growth has been effectively zero, even as institutions are dealing with the costs of accommodating the major shift in students from humanities to STEM. The gears inside universities are grinding to a halt and even going in reverse this year and next. And universities are—by design—poorly engineered to deal with a lack of growth.

    So, what can be done? Well, in the world we all wished we lived in, this situation would be attracting serious political attention. But it’s not. Ontarians quite like having world-class universities and colleges; they just don’t feel like paying for it. Had the cuts started a few weeks earlier, or had the election been called a few weeks later, the current Program Apocalypse (which seems more than on course to deliver the closure of over 1000 programs across the province) might have become what political animals call “a kitchen-table issue,” that is an issue so important than voters talk about it at the kitchen table. Kids not being able to get into the programs they want to get into because they have been shut due to budget cuts? Yeah, that’s a kitchen table issue. One that might yet have some impact on the election, though probably not a decisive one.

    Could institutions do more to make this a kitchen table issue? Yes, they could. At the university level, institutions could be more overt in saying they will no longer be able to support as many spots in expensive, high-demand programs. At the college level, institutions could be more aggressive about closing programs in the skilled trades. So far, they have been very reluctant to do this even though their high cost-per-student should probably lead a lot more of them to be on the chopping block if financial sustainability were a major issue. But institutions are reluctant to do this because it’s hard to play chicken with the government without seeming to play chicken with the general public. And the only way things could get worse for institutions right now is if they lose what’s left of the public sympathy they have. Which is to say: yes, they could be doing more, but it’s easy enough to explain their hesitation in doing so.

    Anyways, sorry to readers in the rest of the country for all the Ontario-centricity. If you’d like to know more about how the mess in Ontario—partly due to inept oversight by the Ford team and partly due to an inept response by federal immigration minister Marc Miller—affects the rest of the country (and it does), have a listen to my guest appearance on the Missing Middle podcast last week. Good fun.

    Source link

  • Re-capturing the early 80s | HESA

    Re-capturing the early 80s | HESA

    Most of the time when I talk about the history of university financing, I show a chart that looks like this, showing that since 1980 government funding to the sector is up by a factor of about 2.3 after inflation over the last 40-odd years, while total funding is up by a factor of 3.6.

    Figure 1: Canadian University Income by source, 1979-80 to 2022-23, in billions of constant $2022

    That’s just a straight up expression of how universities get their money. But what it doesn’t take account of are changes in enrolment, which as Figure 2 shows, were a pretty big deal. Universities have admitted a *lot* more students over time. The university system has nearly doubled since the end of the 1990s and nearly tripled since the start of the 1990s.

    Figure 2: Full-time Equivalent Enrolment, Canada, Universities, 1978-79 to 2022-23

    So, the question is, really, how have funding pattern changes interacted with changes in enrolment? Well, folks, wonder no more, because I have toiled through some unbelievably badly-organized excel data to bring you funding data on this that goes back to the 1980s (I did a version of this back here, but I only captured national-level data—the toil here involved getting data granular enough to look at individual provinces). Buckle up for a better understanding of how we got to our present state!

    Figure 3 is what I would call the headline graph: University income per student by source, from 1980-81 to the present, in constant $2022. Naturally, it looks a bit like Figure 1, but more muted because it takes enrolment growth into account.

    Figure 3: University income per student by source, from 1980-81 to the present, in constant $2022

    There’s nothing revolutionary here, but it shows a couple of things quite clearly. First, government funding per-student has been falling for most of the past 40 years.; the brief period from about 1999 to 2009 stands out as the exception rather than the norm. Second, despite that, total funding per student is still quite high compared with the 1990s. Institutions have found ways to replace government income with income from other sources. That doesn’t mean the quality of the money is the same. As I have said before, hustling for money incurs costs that don’t occur if governments are just writing cheques.

    As usual, though, looking at the national picture often disguises variation at the provincial level. Let’s drill one level down and see what happened to government spending at the sub-national level. A quick note here: “government spending” means *all* government spending, not just provincial government spending. So, Ontario and Quebec probably look better than they otherwise would because they receive an outsized chunk of federal government research spending, while the Atlantic provinces probably look worse. I doubt the numbers are affected much because overall revenues from federal sources are pretty small compared to provincial ones, but it’s worth keeping in mind as you read the following.

    Figure 4 looks at government spending per student in the “big three” provinces which make up over 75% of the Canadian post-secondary system. Nationally, per-student spending fell from $22,800 per year to $17,600 per year. But there are differences here: Ontario spent the entire 42-year period below that average, while BC and Quebec spent nearly all that period above it. Quebec has notably seen very little in terms of per-student fluctuations, while BC has been more volatile. Ontario saw a recovery in spending during the McGuinty years, but then has experienced a drop of about 35%. Of note, perhaps is that most of this decline happened before the arrival of the current Ford government.

    Figure 4: Per-Student Income from Government Sources, in thousands of constant $2022, Canada and the “Big Three” provinces, 1980-81 to 2022-23

    Figure 5 shows that spending volatility was much higher in the three oil provinces of Alberta, Saskatchewan, and Newfoundland & Labrador. All three provinces spent virtually the entirety of our period with above-average spending levels but the gap between these provinces and the national average was quite large both in the early 1980s and from about 2005 onwards: i.e. when oil prices were at their highest. Alberta of course has seen per-student funding drop by about 50% in the last fifteen years, but at the same time, it is close to where it was 25 years ago. So, was it the dramatic fall or the precipitous rise that was the outlier?

    Figure 5: Per-Student Income from Government Sources, in thousands of constant $2022, Canada and the “Oil provinces”, 1980-81 to 2022-23

    Figure 6 shows the other four provinces for the sake of completeness. New Brunswick and Nova Scotia were the lowest spenders in the country for most of the period we’re looking at, only catching up to the national average in the mid-aughts. Interestingly, the two provinces took two different paths to raise per-student spending: Nova Scotia did it almost entirely by raising spending, while in New Brunswick this feat was to a considerable extent “achieved” by a significant fall in student numbers (this is a ratio, folks, both the numerator and the denominator matter!).

    Figure 6: Per-Student Income from Government Sources, in thousands of constant $2022, Canada and selected provinces, 1980-81 to 2022-23

    An interesting question, of course, is what it would have cost to have kept public spending at 1980 per-student levels. And it’s an interesting question, because remember, total spending did in fact rise quite substantially (see Figure 1): it just didn’t rise as fast as student numbers. So, in Figure 7, I show what it would have cost to keep per-student expenditures stable at 1980-81 levels both if student numbers had stayed constant, and what it would have meant in practice given actual student numbers.

    Figure 7: Funds required to return to 1980-81 levels of per-student government investment in universities, Canada, in millions of constant $2022

    Weird-looking graph, right? But here’s how to interpret it. Per-student public funding did fall in the 80s and early 90s. But it rose again in the early aughts, to the point where per-student funding went back to where it was in 1980, even though the number of students in the system had doubled in the meanwhile. From about 2008 onwards, though, public investment started falling off again in per-student terms, going back to mid/late-90s levels even as overall student numbers continued to rise. We are now at the point where getting back to the levels of 1980-81, or even just 2007-08, would require a rise of between $6 and $6.5 billion dollars.

    Anyways, that’s enough sunshine for one morning. Have a great day.

    Source link

  • College Financials 2022-23 | HESA

    College Financials 2022-23 | HESA

    StatsCan dropped some college financial data over the XMAS holidays.  I know you guys are probably sick of this subject, but it’s still good to have some national data—even if it is eighteen months out of date and doesn’t really count the last frenzied months of the international student gold rush (aka “doing the Conestoga”).  But it does cover the year in which everyone now agrees student visa numbers “got out of control,” so there are some interesting things to be learned here nonetheless.

    To start, let’s look quickly at college income by source.  Figure 1, below, shows that college income did rise somewhat in 2022-23, due mainly to an increase in tuition income (up 35% between the nadir COVID year of 20-21 and 22-23).  But overall, once inflation is taken into account, the increase in college income really wasn’t all that big: about a billion dollars in 2021-22 and about the same again in 2022-23, or about 6-7% per year after inflation.  Good?  Definitely.  Way above what universities were managing, and well above most sectors internationally?  But it’s not exactly the banditry that some communicators (including the unofficial national minister of higher education, Marc Miller) like to imply.

    Figure 1: College Income by Source, Canada, 2017-18 to 2022-23, in Billions of $2022

    Now I know a few of you are looking at this and scratching your heads, asking what the hell is going on in Figure 1.  After all, haven’t I (among others) made the point about record surpluses in the college sector?  Well, yes.  But I’ve only ever really been talking about Ontario, which is the only province where international tuition fees have really taken flight.  In Figure 2, I put the results for Ontario and for the other nine provinces side-by-side.  And you can see how different the two are.  Ontario has seen quite large increases in income, mainly through tuition fees and by ancillary income bouncing back to where it was pre-COVID, while in the other nine provinces income growth is basically non-existent in any of the three categories.

    Figure 2a/b.  College Income by Source, Ontario vs Other Nine Provinces, 2017-18 to 2022-23, in Billions of $2022

    (As an aside, just note here that over 70% of all college tuition income is collected in the province of Ontario, which is kind of wild.  At the national level, Canada’s college sector is not really a sector at all…their aims, goals, tools, and income patterns all diverge enormously.)

    Figure 3 drills down a little bit on the issue of tuition fee income to show where they have been growing and where they have not.  One might look at this and think its irreconcilable with Figure 2, since tuition fees in the seven smaller provinces seem to be increasing at a rate similar to Ontario.  What that should tell you, though, is that the base tuition from which these figures are rising are pretty meagre in the seven smallest provinces, and quite significant in Ontario.  (Also, remember that in Ontario, domestic tuition fees fell by over 20% or so after inflation between 2019-20 and 2022-23, so this chart is actually underplaying the growth in international fees in that province a bit.)

    Figure 3: Change in Real Aggregate Tuition Income by Province, 2017-18 to 2022-23, (2017-18 = 100)

    Now I want to look specifically at some of the data with respect to expenditures and to try to ask the question: where did that extra $2.2 billion that the sector acquired in 21-22 and 22-23 (of which, recall, over 70% went to Ontario alone) go?

    Figure 4 answers this question in precise detail, and once again the answer depends on whether you are talking about Ontario or the rest of the country.  The biggest jump in expenditures by far is “contracted services” in Ontario—an increase of over $500M in just two years.  This is probably as close a look as we will ever get at the economics of those PPP colleges that were set up around the GTA since most of this sum is almost certainly made up of public college payments to those institutions for paying the new students had arrived in those two years.  If you assume the increase in international students at those colleges was about 40,000 (for a variety of reasons, an exact count on this is difficult), then that implies that colleges were paying their PPP partners about $12,500 per student on average and pocketing the difference, which would have been anywhere between about $2,500 and $10,000, depending on the campus and program.  And of course, most of the funds spent on PPP were spent one way or another on teaching expenses for these students.

    Figure 4: Change in Expenditures/Surplus, Canadian Colleges 2022-23 vs 2020-21, Ontario vs. Other 9 Provinces, in millions of 2022

    On top of that, Ontario colleges threw an extra $300 million into new construction (this is a bit of an exaggeration because 2020-21 was a COVID year and building expenses were abnormally low), and an extra $260 million (half a billion in total) thrown into reserve funds for future years.  This last is money that probably would have ended up as capital expenditures in future years if the feds hadn’t come crashing in and destroying the whole system last year but will now probably get used to cover losses over the next year or two instead.  Meanwhile, in the rest of Canada, surpluses decreased between 2020-21 and 2022-23, and such spending increases as occurred came mostly under the categories “miscellaneous” and “ancillary enterprises.”

    2022-23 of course was not quite “peak international student” so this analysis can’t quite tell the full story of how international students affected colleges.  We’ll need to wait another 11 months for that data to show up.  But I doubt that the story I have outlined based on the data available to date will not change too much.  In short, the financials show that:

    • Colleges outside Ontario were really not making bank on international students.
    • Within Ontario, over a third of the additional revenue from international students generated in the 2020-21 to 2022-23 period was paid out to PPP partners, who would have spent most of that on instruction.
    • Of the remaining billion or so, about a third went into new construction and another 20% was “surplus,” which probably meant it was intended for future capital expenditure.
    • The increase in core college salary mass was miniscule—in fact only about 3% after inflation. 

    If there was “empire building” going on, it was in the form of constructing new buildings, not in terms of massive salary rises or hiring sprees. 

    Source link

  • More Eating the Future | HESA

    More Eating the Future | HESA

    Morning everyone. Welcome back. Some statistical wonkery today, with respect to the analysis of government expenditures on postsecondary education.

    Many of you will recognize Figures 1 and 2 from earlier blogs or the State of Postsecondary Education 2024. They represent the two most-common ways to look at commitments to postsecondary education: the first in per-student terms, and the second in per-GDP terms.

    Figure 1: Provincial Expenditures per FTE Student by Sector, 2022-23

    Figure 2: Provincial PSE Expenditures, by Sector, as a Percentage of Provincial GDP, 2022-23

    These two approaches have their respective strengths and weaknesses, and not surprisingly they generate slightly different conclusions about how strong each jurisdiction’s efforts are writ to postsecondary education, one focused on the “recipients” of funding (students) and the other focused on the source of the funding (the local economy). Neither is definitive, both are useful.

    But there is another way to look at this funding, and that is not to look at how much institutions receive as a proportion of local jurisdictional output, but to look at what percentage of government spending is devoted to educational institutions. Examined over time, this figure tells you the changing status of postsecondary education compared to other policy priorities; examined across provinces, it can tell you which provinces put more emphasis on postsecondary education. Of course, no one tracks this in Canada, because it involves a lot of tedious mucking around in government documents, but what is this blog for if not precisely that? I wasn’t doing anything on my holidays anyways.

    So I decided to pair my long-term data series on provincial budgets (the most recent one posted back in April), with a new data series on total provincial spending which I derived simply by looking at consolidated expenditures in each province since 2006 and expressed in these same budgets. Usual disclaimers apply: provincial spending definitions aren’t entirely parallel (or at least they use different words to describe what they are doing) particularly with respect to capital, so inter-provincial comparisons are probably a tiny bit apples-to-oranges even if each province’s data is consistent over time. Take the exact numbers with a grain of salt but I think they will mostly stand up to scrutiny.

    Figure 3 shows provincial transfers on postsecondary institutions across all ten provinces as a percentage of total provincial spending. And it’s…well, it’s not good. As recently as 2011-12, provinces spent five percent of their budgets on postsecondary education. Now it’s three and a half percent. Or to put it another way, as a proportion of total spending, it’s down by about thirty percent.

    Figure 3: Provincial Spending on PSE as a Percentage of Total Provincial Spending, Canada, 2006-07 to 2024-25

    Is this due to particular events in particular provinces? Not really. Let’s just take a look at the four big provinces (which make up 85% of the postsecondary system. The provinces all started in different places (Alberta, famously, spent a heck of a lot more than other provinces back in the day) and the slope of decline is gentler in Quebec than elsewhere, but the basic path of decline and the eventual destination is similar everywhere. Notable by its absence in any of the four provinces are any clear break-lines which coincide with a change in administration—these declines are pretty consistent regardless of whether governments are left, right, or centre. It’s not a partisan thing.

    Figure 4: Provincial Spending on PSE as a Percentage of Total Provincial Spending, Selected Provinces, 2006-07 to 2024-25

    Figure 5 shows each province’s performance both in 2006-07 and 2024-25. As can clearly be seen, every province saw a decline over the 18-year period. This was not especially driven by one or two provinces: all provinces seem to have come to an identical conclusion that postsecondary institutions are not worth investing in. The size of whatever drop was in most cases inversely proportionate to how high spending was back in the initial period. The biggest drops were in Alberta and Newfoundland, which back in the day were the two highest spenders, riding high as they were on oil revenues. The smallest drop was New Brunswick, which was the weakest performer back in 2006-07. Ontario…is Ontario. But basically, the entire country is converging on the idea that investments in postsecondary need to be in the 2.5%-4.5% range rather than in the 4-7.5% range as they did 20 years ago.

    Figure 5: Provincial Spending on PSE as a Percentage of Total Provincial Spending, by Province, 2006-07 vs 2024-25

    Now, the obvious conclusion you might draw from this is “hey! Huge declines in public support for public postsecondary education!” But this is not quite correct. Remember: these are ratios we are looking at. Some of the delta will be due to changes in the numerator, some will be due to changes in the denominator. Figure 6 shows changes in both postsecondary spending and total provincial spending. And what’s clear is that the changes we have been examining in Figures 3 and 6 have more to do with the expansion of total spending rather than a decline in PSE spending.

    Figure 6: Real Change Provincial Spending on PSE Institutions vs Real Change Total Provincial Spending, Canada, 2006-07 to 2024-25 (2006-07 = 100)

    That increase in provincial spending in the last decade—30% over and above inflation—is wild. And deeply inconvenient for anyone who wants to build a narrative around generalized “austerity.” But what is clear here is:

    1. transfers to universities and colleges have trailed provincial spending everywhere and without reference to ideology of the governments in question, and
    2. ii) if transfers had not trailed general spending, they would be roughly $9.5 billion better off than they are today.

    And by a simply *amazing* coincidence, $9.5 billion–in real dollars—is almost identical to the increase in income  postsecondary institutions have seen in revenue from international students over the same period (it’s about a $9.2 increase from 2007-08 to 2022-23, the last year for which we have useful data—the 2024-25 is likely somewhat higher but we don’t know by how much).

    There a number of conclusions one could draw from this, but the ones I draw are:

    • Governments are spending more. A lot more. They just aren’t spending on PSE. Instead, they are spending it on an ageing population and other things that juice consumption. Eating the future, basically.
    • The drop in government support for PSE relative to overall spending increases is universal. No government provides any evidence of contrarian thinking. None of them think PSE is worth greater investment.
    • Changes of government are also almost irrelevant. They may change the “vibe” around postsecondary education, but they don’t change financial facts on the ground.
    • There is a really basic argument about the value of postsecondary education which somehow, postsecondary institutions are losing with governments and, I think by implication, the public. That, and nothing else, needs to be the focus of institutional efforts on external relations.

    Provincial governments are eating the future. But the data above, showing that the trend transcends geography and political ideology suggests that at base, the problem is that the Canadian public does not think postsecondary education is worth investing in. Working out how to reverse this view really needs to be job one for the whole sector.

    (Or, to be a bit cuter: the sector needs to do a lot less Government Relations and a lot more Community Relations.)

    Source link

  • The Meaning of 2025

    The Meaning of 2025

    So, was that a fun year, or what?

    From Marc “Tonya” Miller and the federal government knee-capping the postsecondary sector in January to Marc “Harding” Miller and the federal government coming back around in September to knee-cap the college sector specifically to Ontario college presidents calling each other whores and more…it was a year to remember. Heck of a ride.

    But as catastrophic as the current fall in revenue seems, it’s worth remembering a couple of things. First, we’re not alone in this. Australia, the UK, France, the Netherlands: they’re all going through something similar. So are some (primarily but not exclusively blue) US states. And second of all, Canada’s institutions are still on most measures better funded than those elsewhere in the OECD (although that advantage is getting narrower all the time). So there’s an argument to be made that there’s nothing special going on here, and in a way this is just reversion to the mean. Not a lot of comfort in that, obviously, but misery loves company, etc.

    There is, I think, a  world-wide phenomenon (though perhaps it does not capture the dynamics of low and middle income countries) which is: NOBODY WANTS TO PAY FOR IT. Higher education is expensive on a per-student basis and it now extends to a far higher percentage of the population than it has at any point in human history. The implicit assumption within higher education communities was that by broadening access to higher education, we would win more public approval for higher education finance. Instead, by making higher education the norm, we made the “gains” from higher education a lot harder for graduates to see since they weren’t as “exceptional” anymore. There’s a point where attempts to boost access to pos-secondary education ceases to feel like spreading opportunity and starts to feel like imposing chores. Beyond that point, public support for higher education falls.

    (More generally, the closer institutions come to being “universal,” the more they seem like utilities, and the fraction of the population that wants “world-class” utilities is vanishingly small. People just want utilities to work, quietly and properly, with no fuss—which is probably why evident dysfunction like months-long campus disruptions from encampments are so deeply unpopular.)

    In other words, we’ve spent 80 years building a system of higher education that is simply more expensive to run than the public is willing to support. Some countries have tried to get around this by financializing things a bit, imposing tuition fees but putting off the bill via student loans, and that helps somewhat as long as governments don’t use that as an excuse for continuing to reduce public funding (which, barring the UK, they mostly haven’t). Some, like Canada and Australia, have tried the neat trick of getting foreigners to pay for their higher education systems via international student tuition fees, but over-reliance on this tactic tends to run up against externalities in the housing market.

    Which means we finally have to confront the problem of nobody wanting to pay for the system we have created.

    There will be huge economic and geo-political ramifications to not paying for the system. Canadian universities depend on having fat margins in undergraduate and professional master’s degree to subsidize research. To a lesser but not insignificant extent, colleges depend on having fat margins in non-tech programs in order to cross-subsidize expensive programs in the trades programs. We don’t talk about these cross-subsidies much (in fact most institutions try to hide them as much as possible, which is a big reason that politicians and even public servants don’t really understand why universities and colleges behave the way they do), but they are fundamental to the way we organize institutions.

    Think about the consequences of reducing those cross-subsidies within universities at the exact moment when advances in technology are opening up huge potential advances in energy, materials science, and health. We (and the Brits, and the Aussies, and the Dutch) are simply going to cede advances in these areas to other countries who are not cutting back on science. China, probably. India and Turkey, maybe. And think about cutting the cross-subsidies in colleges at the exact moment when we need more and better-trained skilled tradespeople in order accelerate the construction of housing and other critical infrastructure.

    (Remember in 2016, when we could console ourselves that however big a disaster Trump was, at least Canada could profit by offering an attractive landing spot for international science and tech talent? Well, we aren’t saying that in 2024. We could be hiring up a storm of top talent, but the money isn’t there to do it, and the housing market is such a disaster we’re afraid to invite people in. Both levels of government have much to answer for.)

    Anyways, it’s easy to bitch about funding but as you’ve heard me say before, no one is coming to save us. There’s zero evidence that anyone in government is suddenly going to decide that Eating the Future is wrong, so the sector is going to have to work out solutions on its own. Non-enshittified solutions, that is. Maybe, just maybe, it’s time to re-think the whole model to make it less costly and more efficient. And that doesn’t just mean asking questions about whether we need this new building, or that academic program or this new executive position, or quite so many student services devolved to the faculty level (all of which are important!) but also some more fundamental questions, like:

    Is it integral to our model that undergraduate degrees be four years in length? (There are parts of Canada, like Manitoba, where it is not.)

    Are research and teaching really the complementary goods many claim they are, or would more specialization of effort be of benefit? (Equally: why should teaching cross-subsidize research, as it so plainly does in a variety of ways?)

    Do degrees need to be awarded along disciplinary lines (which have inconsistent relations to occupations and careers) or are there other ways to do it?

    What if, instead of giving research money to (mainly) universities and asking them to get matching funds from industry, we gave vouchers to industry to work with universities/colleges that they could either use or lose?

    What if colleges got out of skilled trades training altogether and handed it over to industry?

    Few people are going to like all the answers (or even the questions) here, but nevertheless these are the kinds of questions the post-secondary system should be asking not just itself but the rest of society as well.

    But that’s all for next year. In the meantime, happy and restful holidays to all. There will be a podcast tomorrow and our AI Newsletter on Friday, but this will be the final blog of 2024. Regular service will resume January 6. Be well

    The post The Meaning of 2025 appeared first on HESA.

    Source link

  • Fall and Rise | HESA

    Fall and Rise | HESA

    Fall and Rise

    The question I am getting more often than any other these days is: “what are you hearing about cuts at colleges and universities?” And my answer for the most part has been: “damned if I know.”

    The reason for my confusion is that publicly available details are few and far between. The HESA Towers team has been scouring the public record for details on institutional budget announcements; by our count, only 34 universities or colleges have so far announced anything concrete about their 25-26 budget plans and/or any planned cuts as a result of changing international student numbers. It’s possible more have been announced internally but just not caught the notice of the local press; we’ll be doing a lot more digging over the next couple of weeks. My guess is that many institutions are trying to avoid bad headlines by simply not going public about any plans to cut…but of course in the process, they are making it harder to convey to the public the magnitude of the downsizing being forced on the sector.

    (This is a really interesting version of the Tragedy of the Commons!).

    Some additional problems with the data: such information as one can glean from public sources is often skimpy and inconsistent: sometimes you get a figure for “loss of anticipated revenue,” sometimes you get a “projected deficit” (which sometimes is for 24-25, and other times for 25-26, and whether the figure is for operating budget or total budget take a bit of digging). Sometimes the numbers of programs being cut are announced but the identity of the programs is secret. Often you see that there will be budget cuts of $X million but there is no clarity about where those cuts will come from or the timeframe for the return to budget balance. In terms of job “cuts” as near as we can tell only five institutions have announced specific numbers for layoffs which have actually so far occurred, for a total of 214 lost jobs. You may have seen higher estimates from other sources, but these seem to include data on jobs which “will be affected” and it’s not 100% clear how many of these are permanent jobs which will be eliminated vs. permanent posts which will not be filled, or contract jobs which will not be renewed. All of these nuances may sound petty, but it’s really hard to get meaningful numbers unless you get this stuff right.

    The story of how universities and colleges deal with the sudden loss of international student income (and the long-term consequences of provincial disinvestment) is the biggest and most consequential story in Canadian postsecondary education this century. How we deal with this collectively will shape the sector for over a decade, maybe even out to 2050. The HESA Towers team is working hard to document what is happening and help the sector make sense of fast-moving events and respond appropriately. So today I want to tell you about two initiatives we’re launching.

    The first is a Retrenchment Watch, which will follow developments in institutional cutbacks not just in Canada, but around the world (albeit with a particular focus on the anglosphere). Higher education probably hit peak public funding around the globe over a decade ago, but what we’re now seeing is an actual contraction of the sector as a whole, happening via an un-coordinated set of decisions made by individual institutions according to local imperatives. Understanding how this is happening is of great importance, not just for posterity but for present-day decision makers. And we’ll be making this information freely available to all via Retrenchment Watch.

    For the moment, the Retrenchment Watch is extremely bare bones, but we’ll be filling it out very quickly over the next few weeks, with the Canadian institutions first. If you want regular updates on who is cutting what as well as some basic pattern analysis, please fill out this form, and we’ll get you signed up to our newsletter so you’re always up-to-date.

    The second is what we are calling “The Recovery Project.” We know that institutional leaders aren’t just thinking about surviving cuts, they’re also thinking about how to position their organizations to thrive in the aftermath. To help them, we’re launching a subscription research project looking at universities and colleges around the world who have faced serious financial sustainability problems over the past three decades and examining how they turned their fortunes around. In a crisis, there’s no time to re-invent the wheel: with this research institutions can understand better what works, when and why. By spreading the cost of research collectively across many institutions, we can offer this premium product—which involves monthly reports and webinar sessions for all members—at a huge discount to individual schools (and if your school is a member of the University Vice-President’s Network, we’ll be offering an even bigger discount).

    If you’re interested in joining this project, my colleague Tiffany MacLennan has been working to bring this information together. Email her at [email protected] and we’ll get back to you ASAP with a prospectus.

    There’s no disguising how the sector is taking a beating right now. It will recover. The only question is how quickly, and which institutions will be at the forefront.

    Source link

  • Money and Vibes | HESA

    Money and Vibes | HESA

    As I mentioned yesterday, I recently spent some time at the International Association of Universities’ (IAU) annual meeting in Tokyo earlier this month. It’s tough to organize a meaningful international meeting about what you might call the “hard” issues in university management (resources, budget allocations, management styles) because these vary so much from one part of the world to another, and so the program tends to be taken up with more universalist themes like “values.” 

    The interesting thing about values was the divide in the room(s) about how insecure everyone felt about them. The white folks in the room spoke a lot about “challenging times,” which was mostly code for “holy crap, not Trump again, won’t we ever get out of this authoritarian populist nightmare?” But interestingly, the Africans in particular were not really interested in this discussion. They deal with strong-arming governments nearly all the time, and so there was a slight edge of “wake up, times are always challenging” to some of their interventions. 

    I’ll spare you the blow-by-blow, but something occurred to me as I listened to the various sessions: “vibes” are really the way that universities keep score of their successes, collectively at any rate. Sure, it’s nice that governments give them money—and they are bloody expensive to run—but what really matters is whether they are loved and respected. 

    For an empiricist like me, this is really annoying. I can measure investments and can compare them from one university or one country to another. But vibes? Very difficult to measure. Hard even to come up with a definition that makes sense across countries: in Canada we do measure how much the public “trusts” universities, but in other countries the vibes are much more directly about their ability to accept new students, or whether they are helping the country advance economically.

    But what the hell? Let’s give it a try!

    Below is a 2×2 (it’s not social science unless there is a 2×2!) that shows change in both total financial resources and vibes over the past five years in various countries. Data for the money axis is from my own records and analysis (you can see some of it back here from the talk I gave in Helsinki a couple of months ago), while data on the vibes axis is totally made up, based on my own observations. I’d be happy to discuss a better way to operationalize and measure this axis, but for the moment let’s just say this attempt to visualize how universities are faring is illustrative rather than in any way definitive and move on to the exercise itself

    (If you’d like to argue for a specific source of information for various countries, or just argue my choice of placement of a particular country on the vibes scale, get in touch!)

    What you can see plainly from Figure 1 is that higher education systems occupy one of three quadrants. There’s the one where both money and vibes are changing for the better (Turkey, India), one where money is going up but vibes are going down (the USA), and places where both money and vibes are headed in the wrong direction (the UK). 

    What we don’t see, really, are any countries in the top left quadrant where vibes are going up but money is going down. And I think what that tells you is that good vibes are not absolutely required in order for universities to receive new money, but they make it a whole heck of a lot easier. Which is of course why university Presidents are so concerned with public opinion.

    Anyways, this is all pretty theoretical. But I think it points to the possibility that perhaps measuring public sentiment about universities in consistent ways across countries might yield some interesting insights into the determinants of public funding. And in any event, if vibes are the way that universities measure their own success, shouldn’t we try to measure that in the same way we measure institutional finances?

    Source link

  • From Jazz to Symphony | HESA

    From Jazz to Symphony | HESA

    I spent all last week in Asia, at events put on by the International Association of Universities (IAU) in Tokyo and the Organization for Economic Co-operation and Development (OECD) in Jakarta. As usual, these meetings were interesting for me not so much because I can discover secrets of “how they do things better elsewhere” (they don’t, by and large, we’re all screwed for roughly the same reasons, which is that the public does not want to pay for the kind of institutions that academics want to work in), but simply because they help me get a wider take on the direction that global academia is heading.

    And here’s the thing: having sat through five days of meetings, I am more convinced than ever that universities are, globally, caught in a conflict of their basic institutional logics. And also, that for some reason, no one wants to talk about this openly even though it is self-evidently a pretty big deal. Let me explain.

    Over the course of the 19th and 20th centuries, at different paces in different parts of the world, universities went from being purely institutions of instruction to institutions that also engaged in advanced research. In the United States, where this process went the furthest, the fastest, it was shaped substantially by one man: Vannevar Bush, President of MIT and special scientific advisor to President Roosevelt during WWII. Bush was appropriately excited by the strides made by American science during the war, and wanted the party to continue after the war was over only with one difference: instead of giving scientists untold billions and placing them under military control as was the case for the Manhattan Project, Bush thought the correct path forward was for the government to give scientists untold billions and then leave them alone to make their own decisions about how the money should be spent. That’s not quite how things panned out, but there is no question that the system of curiosity-driven research that emerged gave an awful lot of power to individual researchers and left universities as mere intermediaries for funding. Or, as a colleague sometimes puts it, with respect to research missions, universities are simply holding companies for the research agendas of individual professors.

    And let’s face it, this worked well for many decades. The scientific output of universities working under this model has been amazing (see my interview with David Baker on global science from a few weeks ago). And it didn’t require universities to take on a particularly dirigiste role with respect to the faculty. In some ways, quite the opposite. It was during this period after all that a professor challenged then-Columbia President Eisenhower with the immortal words: “we faculty are not employees of the university…we are the university.” So as far as anyone could tell, the public could just dump money on scholars working in hubs and good things would happen.

    Somewhere over the past few decades, though, the mission of universities changed. Instead of being asked to provide research, they were asked to promote local economic growth, or provide solutions to “grand challenges” or sustainable development goals. And these were challenges that universities took on—gladly for the most part. “Look!” they said to themselves, “Society wants our knowledge/help/advice, we get to show how useful we are, and then people will love us and give us even more money.” And trust me, this is happening All. Over. The. World. Oh sure, the details vary a bit by place in terms of whether the push is more on institutions to push local economic growth or to help deliver social progress, and the extent to which this obligation is imposed on institutions and to what extent they embrace it on their own…but the trend is universal, unmistakable. 

    Except (how can I put this?) I am fairly sure that the lessons institutions learned with respect to growing research outputs do not translate well into these new missions. Research is something that can be done within academia; these new tasks require partnerships and relationships. Things which institutions are a lot more capable of delivering reliably than individual professors, whose commitment to particular endeavors may be more transitory, shaped as they often are by the availability of funding streams, changing research interests, the occasional switch of institutions, etc.

    It has taken universities awhile to work this out. The initial assumption that universities could take on all these missions could be met in much the same way that the research mission was: just assemble a lot of smart people in one place, and wonderfully imaginative solutions will naturally emerge. No central coordination necessary, and great universities could continue working as they had always done: like a great jazz band, where the anarchy is the point.

    But if these new missions actually imply a need for more durable structures to bring stability to partnerships and relationships, then a jazz band approach is probably not such a hot idea. If these missions require institutions to be able to act corporately, strategically, then jazz doesn’t cut it anymore. Neither does Big Band. You need something closer to a symphony orchestra. And boy, the implication of that change is significant. The locus of control and responsibility shifts upwards from professors to the larger institution. Professors, increasingly, would need to be treated as if they are second cello—that is, as parts of a larger musical enterprise—instead of as Thelonius Monk or John Coltrane. It would be a fundamental re-think of what it means to be an academic.

    There you have it: an old version of a university in which great things happen just because you put a bunch of smart people in close proximity to one another, and another which requires substantially more organization and (in a Weberian sense) bureaucracy. And it’s not that universities are being asked to choose—they aren’t. It’s worse than that: because these new missions are meant to be in addition to the older ones of teaching and research, universities are being asked to be both of these things at the same time. And that’s a recipe not only for unhappiness, but also for incoherence. Universities are simply becoming less effective as their missions multiply. 

    None of this has escaped the notice of governments. They were mostly quite enthusiastic about the idea of universities as community resources, places that in effect apply brain power on-demand to various types of social and economic problems and are getting frustrated that jazz-based universities can’t deliver. Despite promises to the contrary, old-style universities simply aren’t set up to deliver the promised results, leaving an expectations gap that is souring relations with that subset of governments that don’t view higher education as the enemy in the first place.

    And this, in turn, is contributing to a widespread recession in vibes around universities: simply put, they are not liked and admired the way they used to be. But more on that tomorrow.

    Source link

  • Quick Update on Research Funding

    Quick Update on Research Funding

    Remember the spring budget, when the Federal government announced a heavily back-ended $1.8 billion (spread over five years) boost to research grant funding, as well as the creation of a capstone research organization which might have its own funds to co-ordinate challenge-based research? Well, the federal government has recently been fleshing out these announcements through a series of badly coordinated media releases. And so today, we’re going to go on a quick government press release safari to try to work this out.

    The three granting councils have all issued statements about how much new funding they expect to receive over the next five years. SSHRC says that its share of the $1.8 billion will be $316 million. CIHR says it is in line for $540 million over five years. NSERC does not provide a figure over five years, but it does say it what it will receive in years one and five, and since these figures are both pretty close to the numbers CIHR cites, I’m going to go ahead and say that NSERC is set to get something around $540 million as well. Total to the councils is therefore $1.396 Billion over five years.

    In addition to this, the government says it is going to give $182 million over five years for the creation of 224 new Canada Research Chairs. It also says it will be providing $452 million to the Research Support Fund (RSF) for things such as establishing digital tools to support research and cybersecurity and supporting inclusive and indigenous research. A separate press release says it will be providing $354 million to support the indirect costs of research. 

    Now, if you’re counting carefully, you’ll realize that total government announcements total to $2.03 billion. Which, it should be superfluous to add, is not $1.8 billion.

    Confused? Me too.

    And the government is not done with announcements. Recall from the spring budget that one of the key announced changes was the creation of a “capstone” organization which would sit above the tri-councils without actually directing them. Details on what it would do and how were scarce, mainly because ISED and Finance were at loggerheads over the issue and so the feds did what they always do and punted the question for a few months with the magic words “details to come in the Fall Economic Statement.” 

    Now, it’s not entirely clear that there actually will be a Fall Economic Statement (Dec. 21st is fast approaching and there’s still no date set), but one key question it was meant to resolve was whether or not the capstone organization would, as recommended by l’Université de Montréal’s estimable Frederic Bouchard and the rest of his Advisory Panel, have funds of its own (beyond those run by each of the tri-councils) for a) multi- and interdisciplinary research that falls through the cracks between the councils and b) mission-driven research. I think the general assBudumption in the research community is that while the capstone organization might not get a ton of money for these activities, the sum would nevertheless be non-zero. So we’re more than likely not just $200 million dollars over the originally-announced budget but probably $300 million or more.

    It’s not peculiar that this government might go over budget on something. What is peculiar is that the current government, famous for believing (or at least giving every evidence of doing so) that spending money is in and of itself evidence of program effectiveness, wouldn’t take credit for it. If they were actually bumping up their overall spend, past form suggests they’d be shouting it from the rooftops instead of letting some random higher education blogger work it out on his own and then share it with a few thousand of his closest followers. 

    A mystery to be cleared up soon I guess. 

    One other point of note here is a wrinkle in how the additional indirect support grants will work. Overall, indirect support has been equal to about 22% of “direct” funding: that is, for every dollar of tri-council grant that goes out, 22 cents accompanies it to cover overhead (most informed observers think actual overhead is closer to 50 cents, but this is another story). The sum being allocated in these announcements—$354 million to accompany a $1.4 billion increase in council grants—is more or less in line with this figure.

    BUT—and this will be a big but for some people—the money is only going to be given to institutions which receive more than $7M/year in tri-council grants, which basically means the U15 plus a half-dozen others. Why? Well, because that 22% average is just that: an average. The biggest tri-council grant recipients (i.e. the U15) only get indirect funding equal to about 18% of their tri-council grant haul. At some of the smallest institutions, the figure can be as high as 80%. This equalization formula has, as you can imagine, driven the U15 absolutely spare over the two decades it has been in force, and so you can read this part of the announcement as a victory for the Big Rich Universities. 

    More when we get a Fall—or possible a Winter—Economic Statement. See you then.

    Source link