Category: Funding and Finances

  • 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 tmaclennan@higheredstrategy.com 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.

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  • 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?

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  • 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.

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  • 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.

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