HESA

Higher Education Strategy Associates

Author Archives: Alex Usher

January 23

A Puzzling Pattern in the Humanities

Big news in Alberta the other day: the University of Alberta has decided to cut fourteen (14!) programs, in the humanities. That’s on top of a programs cull just two years ago in which seventeen programs – mostly in Arts – were also axed! Oh my God! War on the humanities, etc, etc.

Or at least that’s the way it sounds, until you read the fine print around the announcement and realise that these fourteen programs, collectively, have 30 students enrolled in them. The puzzle here, it seems, is not so much “why are these programs being cancelled” as “why on earth were they ever approved in the first place”?

For the record, here are the programs being axed: Majors programs in Latin American studies, Scandinavian studies, honours programs in classical languages, creative writing, history/classics (combined) religious studies, women and gender studies, comparative literature, French, math (that is, a BA Hon in math – which is completely separate from the BSc in Math, which is going nowhere), and also Scandinavian studies (again). And technically, they are not being axed, but rather “suspending admissions”, which means that current students will be able to finish their degrees.

Two takeaways from this:

The first is that the term “programs” is a very odd and sometimes misunderstood one. Universities can get rid of programs without affecting a single job, without even reducing a single course offerings. In the smorgasboard world of North American universities, all programs are essentially virtual. The infrastructure of a university is essentially the panoply of courses offered by departments. Academic entrepreneurs can then choose to bundle certain configurations of courses into “programs” (with the approval of a lot of committees and Senate of course). Of course, programs need co-ordinators and a co-ordinators get stipends and more importantly a small bump in prestige. But overall, programs are very close to costless because departments are absorbing all the costs of delivering the actual courses. (The real costs are actually the ludicrous amount of programming time involved in getting registrarial software to recognize all these different degree pathway requirements).

It doesn’t actually have to be this way. Harvard’s Faculty of Arts and Science only has about fifty degree programs; pretty much every mid-size Canadian university has twice that. And there’s no obvious benefit to students in this degree of specialization. What’s the advantage of this? Why, apart from inertia and a desire not to rock the boat, do we put up with this?

A second point, though. Readers may well ask “why do these kinds of program cuts always affect the humanities more than any other faculty”. This is a good question. And the answer is: because no other faculty hacks itself into ever-tinier pieces the way humanities does. Seriously. This isn’t a question of specialization – every field has that – it’s a question of whether or not to create academic structures and bureaucracies to parallel every specialization.

Imagine, for instance, what biology would look like if it were run like humanities. You’d probably have separate degrees and program co-ordinators for epigenetics, ichnology, bioclimatology, cryobiology, limnology, morphology – the potential list goes on and on. But of course biology doesn’t do that, because biology is not ridiculous. Humanities, on the other hand…

There are lots of good histories of the humanities out there (I recommend Rens Bod’s A New History of the Humanities and James Turner’s Philology: the Origins of the Modern Humanities), but as far as I know no one has ever really looked in a historical way as to why humanities, alone among branches of the academy, chose to Balkanize itself administratively in such an odd way.  For a set of disciplines which constantly worries about being under attack, you’d think that grouping together in larger units would be an obvious defence posture.  Why not just have big programs in philosophy, languages and literature and philology/history and be done with it?

January 19

American Higher Education Under Trump

Tomorrow, Donald Trump will be sworn in as the 45th President of the United States (actually, the 44th person to be President: Grover Cleveland’s two non-consecutive terms screw up the count).  What does this mean for higher education?

First off, let’s recollect that where higher education is concerned, the US, like Canada, is a federation where the main decisions about funding public education are made at the state level. Decreased state investment in institutions and consequent rises in tuition have given the federal government a larger though indirect role in the system because the salience of student aid has risen.  And of course, the government spends an awful lot of money on scientific research, primarily but not exclusively through the National Institutes for Health (NIH) and the National Science Foundation (NSF).  And let’s also recollect that while the President names the Secretary of Education, a lot of control over specific budget items rests with Congress, which, despite being controlled by Republicans, will have ideas of their own.

Recall that Trump barely spoke about higher education during the campaign, other than endorsing an even-more-expensive version of income-based repayment than the existing one which was recently discovered to be costing nearly over $50 billion more than expected (short version: he wants to raise the repayment maximum from 10% of income to 12.5% but shorten the time before forgiveness to just 15 years).  Also, his education secretary Betsy DeVos, is a K-12 specialist (I’m using the term loosely) with very few known views on higher education.  I think it’s a given that their instincts will anti-regulatory and pro-market (which means things are looking up for private for-profits), but it’s hard to see them initiating a lot of new policy.  Which means the policy reins, such as they are, will likely be held by the Republican Congress and not the White House.

So what to expect?  Well, I think we can rule out any continuation of the Obama White House’s free college agenda, or anything vaguely like it.  That idea won’t disappear, but it’s something that’s going to happen in the states rather than in DC (witness Andrew Cuomo’s decision earlier this month to launch his own Ontario-like free tuition-plan).  Beyond that, you’re likely to see some cutting back on institutional reporting requirements, particularly with respect to Title IX, the federal law on sex-discrimination in education, and possibly a push towards more competency-based education.

Where it gets interesting, though, is on student-aid.  It’s not just that we’re likely to see cuts in things like loans to graduate students and (pace Trump’s own views) loan forgiveness.  We may see a return to more private capital in student loans (which would mostly be a bad things); we may also see institutions be required to pay for some of the costs of their own students’ loan defaults (an idea colloquially referred to as requiring institutions to have “skin in the game”.  Some think that the new Congress may push what are known as “Income Share Agreements”, which are kind of like graduate taxes only the entity giving the student money and then collecting a percentage of income afterwards is some kind of private investment firm rather than government.  One of the most crazy/plausible ideas I’ve heard is from University Ventures’ Ryan Craig who mused recently on twitter about setting rules whereby institutions might have to provide a certain fraction of total aid via ISAs in order to be eligible to receive federal aid.

On the research side: who knows?  Clearly, climate science is going to have a hard time.  But health sciences often do well under Republicans; the National Institutes of Health went from $18 billion/year to $30 billion/year under Bush Jr, for instance.  And Trump might decide to do something big and crazy like announcing a lunar base or a Mars mission (the former is a favourite of Newt Gingrich, the latter an obsession of Elon Musk, who suddenly seems quite close with the incoming White House), either of which would have substantial positive ramifications for university science budgets.  So we’ll see.

But put all this into some perspective: as far as Congressional priorities are concerned, changes to student aid are going to come several light years behind repealing Obamacare and dismantling various environmental protections.  The former in particular has some pretty serious budget impacts as repealing Obamacare is going to cost a ton of money.  That’s going to cause a scramble for offsetting budget cuts – one could imagine some pretty big across-the-board cuts in which higher education-related programs will simply be collateral damage.

It’s bound to be interesting, anyway.  Though I for one am glad I get to watch it all from a safe distance.

January 17

Another Lens on Bleak Graduate Income Data

So, yesterday we looked at Ontario university graduate employment data (link to: previous).  Today I want to zero in a little bit on what’s happening by field of study.

(I can hear two objections popping up already.  First; “why just Ontario”?  Answer: while Quebec, Alberta, British Columbia and the Maritimes – via MPHEC – all publish similar data, they all publish the data in slightly different ways, making it irritating (and in some cases impossible) to come up with a composite national figure.  The National Graduate Survey (NGS) in theory does this, but only every five years but as I explained last week has made itself irrelevant by changing the survey period.  So, in short, I can’t do national, and Ontario a) is nearly half the country in terms of university enrolments and b) publishes slightly more detailed data than most.  Second, “why just universities”?  Answer: “fair point, I’ll be publishing that data soon”.

Everyone clear? OK, let’s keep going).

Let’s look first at employment rates 6 months after graduation by field of study (I include only the six largest – Business/Commerce, Education, Engineering, Humanities, Physical Sciences and Social Sciences – because otherwise these graphs would be an utter mess), shown below in Figure 1.  As was the case yesterday, the dates along the x-axis are the cohort graduation year.

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Two take-aways here, I think.  The first is that the post-08 recession really affected graduates of all fields more or less equally, with employment rates falling by between 6 and 8 percentage points (the exception is humanities, where current rates are only four percentage points below where they were in 2007).  The second is that pretty much since 2001, it’s graduates in the physical sciences who have had the weakest results.

OK, but as many in the academy say: 6 months isn’t enough to judge anything.  What about employment rates after, say, 2 years?  These are shown below in Figure 2.

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This graph is smoother than the previous one, which suggests the market for graduates with 2 years in the labour market is a lot more stable than that for graduates with just 6 months.    If you compare the class of 2013 with the clss of 2005 (the last one to completely miss the 2008-9 recession), business and commerce students’ employment rates have fallen only by one percentage point while those in social sciences have dropped by six percentage points, with the others falling somewhere in between.  One definite point to note for all those STEM enthusiasts out there: there’s no evidence here that students in STEM programs have fared much better than everyone else.

But employment is one thing; income is another.  I’ll spare you the graph of income at six months because really, who cares?  I’ll just go straight to what’s happening at two years.

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To be clear, what figure 3 shows is average graduate salaries two years after graduation in real dollars – that is, controlling for inflation.  And what we see here is that in all fields of study, income bops along fairly steadily until 2007 (i.e. class of 2005) at which point things change and incomes start to decline in all six subject areas.  Engineering was down, albeit only by three percent.  But income for business students was down 10%, physical sciences down 16%, and humanities, social sciences and education were down 19%, 20% and 21%, respectively.

This, I shouldn’t need to emphasize, is freaking terrible.  Actual employment rates (link to: previous) may not be down that much but this drop in early graduate earnings is  pretty disastrous for the majority of students.  Until a year or two ago I wasn’t inclined to put a lot of weight on this: average graduate earnings have always popped back after recessions.  This time seems to be different.

Now as I said yesterday, we shouldn’t be too quick to blame this on a huge changes economy to which institutions are not responding; it’s likely that part of the fall in averages comes from allowing more students to access education in the first place.  As university graduates take up an increasing space on the right-hand side of an imaginary bell-curve representing all youth, “average earnings” will naturally decline even if there’s no overall change in the average or distribution of earnings as a whole.  And the story might not be as negative if we were to take a five- or ten-year perspective on earnings.  Ross Finnie has done some excellent work showing that in the long-term nearly all university graduates make a decent return (though, equally, there is evidence that students with weak starts in the labour force have lower long-term earnings as well through a process known as “labour market scarring”).

Whatever the cause, universities (and Arts faculties in particular) have to start addressing this issue honestly.  People know in their gut that university graduates’ futures in general (and Arts graduates in particular) are not as rosy as they used to be. So when the Council of Ontario puts out a media release, as it did last month, patting universities on the back for a job well-done with respect to graduate outcomes, it rings decidedly false.

Universities can acknowledge challenges in graduate without admitting that they are somehow at fault.  What they cannot do is pretend there isn’t a problem, or shirk taking significant steps to improve employment outcomes.

January 16

Ever-bleaker Graduate Employment Data?

So just before I quit blogging in December, the Council of Ontario Universities released its annual survey of graduate outcomes, this time of the class of 2013.  The release contained the usual platitudes: “future is bright”, “vast majority getting well-paying jobs”, etc etc.   And I suppose if one looks at a single year’s results in isolation, one can make that case.  But a look at longer-term trends suggests cause for concern.

These surveys began at the behest of the provincial government seventeen years ago.  Every graduating cohort is surveyed twice: once six months after graduation and once two years after graduation.  Students are asked questions about their employment status, their income and about the level of relationship between their job and their education.  COU publishes only high-level aggregate data, so we don’t know about things like response rates, but the ministry seems pleased enough by data quality, so I assume it’s within industry standards.

Figure 1 shows employment rates of graduates six months and two years out.  At the two-year check point, employment rates fell by four points in the immediate wake of the 2008-9 recession, (be careful in reading the chart: the x-axis is the graduating class, not the year of the survey, so the line turns down in 2006 because that’s the group that was surveyed in 2008).  Since then it has recovered by a little more than a point and a half, though further recovery seems stalled.  At the six-month point, things are much worse.  Though employment rates at this point are no longer falling, they remain stubbornly seven percentage points below where they were pre-recession.

Figure 1: Employment Rates, Ontario University Graduates, 6 Months and 2 Years Out, by Graduating Class, 1996-2013

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If you want to paint a good story here, it’s that employment rates at 2 years out are still within three percentage-points of their all-time peak, which isn’t terrible.  But there doesn’t seem much doubt that students are on average taking a bit longer to “launch” than they used to; employment rates six months out seem to have hit a new, and permanently lower floor.

Now, take a look at what’s happening to starting salaries.  As with the previous graph, I show results for at both the six-month and the two-year mark.

 

 Figure 2: Average salaries, Ontario University Graduates, 6 Months and 2 Years Out, by Graduating Class, 1996-2013, in $2016

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What we see in Figure 2 is the following:  holding inflation constant, during the late 1990s, recent graduates saw their incomes grow at a reasonably rapid clip.  For most of the 2000s, income was pretty steady for graduates two years out (less so six months out).  But since the 2008 recession, incomes have been falling steadily for several years; unlike the situation with employment rates, we have yet to see a floor, let alone a bounceback.  Real average incomes of the class of 2013 six months after graduation were 11% lower than those of the class of 2005 (the last fully pre-recession graduating class); at 2 years out the gap was 13%.  Somehow these points did not make it into the COU release.

That, frankly, is not good.  But it seems to me that we need to hold on a little bit before hitting panic buttons about universities being a bad deal, not being relevant to shifting labour market, etc, etc.  Sure, the drop-off in both employment rates and incomes started around the time of the recession and so it’s easy to create a narrative around changed economy/new normal, etc etc.  But there’s something else that probably playing a role, and that’s an increase in the supply of graduates.

 

Figure 3: Number of Undergraduate Degrees Awarded, Ontario, 1999-2013

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The other big event we need to control for here is the massive expansion of access to higher education.  In 2003, the “double-cohort” arrived on campus and that forced government to expand institutional capacity, which did not subsequently shrink.  Compared to the year 2000, the number of graduates has increased by over 50%; Such an expansion of supply must have had some effect on average outcomes. It’s not simply that there are more students competing for jobs – something one would naturally assume would place downward pressure on wages – but also, the average quality of graduates has probably dropped somewhat.  Where once graduates represented the top 20% of a cohort in terms of academic ability, now they probably represent the top 30% or so.  Assuming one’s marginal product in the labour market is at least loosely tied to academic ability, that would also predict a drop in average post-graduation incomes.  To really get a sense of what if anything has changed in terms of how higher education affects individuals’ fortunes in the labour market, you’d want to measure not average income vs. average income, but 66th percentile of income now vs. 50th percentile of income fifteen years ago.  Over to you, COU, since you could make the microdata public if you wanted to.

In short, don’t let institutions off the hook on this, but recognize that some of this was bound to happen anyway because of access trends.

More graduate income data fun tomorrow.

January 13

Restore the NGS!

One of the best things that Statistics Canada ever did in the higher education field was the National Graduates’ Survey (NGS). OK, it wasn’t entirely Statscan – NGS has never been a core product funded from the Statscan budget but rather funded periodically by Employment and Social Development Canada (ESDC) or HRDC or HRSDC or whatever earlier version of the department you care to name – but they were the ones doing the execution. After a trial run in the late 1970s (the results of which I outlined back here), Statscan tracked the results of the graduating cohorts of 1982, 1986, 1990, 1995, 2000 and 2005 two and five years after graduation (technically, only the 2-year was called NGS – the 5-year survey was called the Follow-up of Graduates or FOG but no one used the name because it was too goofy). It became the prime way Canada tracked transitions from post-secondary education to the labour market, and also issues related to student debt.

Now NGS was never a perfect instrument. Most of the income data could have been obtained much more simply through administrative records, the way Ross Finnie is currently doing at EPRI. We could get better data on student debt of provinces ever got their act together and actually released student data on a consistent and regular basis (I’m told there is some chance of this happening in the near future). It didn’t ask enough questions about activities in school, and so couldn’t examine the effects of differences in provision (except for, say, Field of Study) on later outcomes. But for all that it was still a decent survey, and more to the point one with a long history which allowed one to make solid comparisons over time.

Then, along comes budget cutting exercises during the Harper Government. ESDC decides it only has enough money for one survey, not two. Had Statscan or ESDC bothered to consult anyone about what to do in this situation, the answer would almost certainly have been: keep the 2-year survey and ditch the 5-year one. The 5-year survey was always beset with the twin problems of iffy response rates and being instantly out of date by the time it came out (“that was seven graduating classes ago!” people would say – “what about today’s graduates”?). But the 2-year? That was gold, with a decent time series going back (in some topic areas) back almost 30 years. Don’t touch that, we all would have said, FOR GOD’S SAKE DON’T TOUCH IT, LEAVE IT AS IT IS.

But of course, Statscan and ESDC didn’t consult and they didn’t leave it alone. Instead of sticking with a 2-years out survey, they decided to do a survey of students three years out, thereby making the results for labour market transitions totally incompatible with the previous six iterations of the survey. They spent millions to get a whole bunch of data which was hugely sub-optimal because they murdered a perfectly good time-series to get it.

I have never heard a satisfactory explanation as to why this happened. I think it’s either a) someone said: “hey, if we’re ditching a 2-year and a 5-year survey, why not compromise and make a single 3-year survey?” or b) Statscan drew a sample frame from institutions for the 2010 graduating class, ESDC held up the funding until it was too late to do a two-year sample and then when it eventually came through Statscan said, “well we already have a frame for 2010, so why not sample them three years out instead of doing the sensible thing and going back and getting a new frame for the 2011 cohort which would allow us to sample two years out”. To be clear, both of these possible reasons are ludicrous and utterly indefensible as a way to proceed with a valuable dataset, albeit in different ways. But this is Ottawa so anything is possible.

I have yet to hear anything about what, if anything, Statscan and ESDC plan to do about surveying the graduating cohort of 2015. If they were going to return to a two-year cycle, that would mean surveying would have to happen this spring; if they’re planning on sticking with three, the survey would happen in Spring 2018. But here’s my modest proposal: there is nothing more important about NGS than bringing back the 2-year survey frame. Nothing at all. Whatever it takes, do it two years out. If that means surveying the class of 2016 instead of 2015, do it. We’ll forget the Class of 2010 survey ever happened. Do not, under any circumstances, try to build a new standard based on a 3-year frame. We spent 30 years building a good time series at 24 months out from graduation. Better have a one-cycle gap in that time series than spend another 30 years building up an equally good time-series at 36 months from graduation.

Please, Statscan. Don’t mess this up.

January 12

Post-Brexit Options

One highly amusing by-product of the frantic Canada-EU-Walloon trade negotiation finale last fall was watching the UK government suddenly realize that negotiating agreements with a 27-country trade bloc is actually really difficult and that this Brexit thing is almost certainly not going to end well.  Which of course has some reasonably significant implications for UK universities.  But how exposed are UK universities to Brexit?

Arguably, the bigger post-Brexit implications have to do with staff who may be denied residency, future staff who won’t be allowed entry and broken research partnerships with EU-funded colleagues on the continent.  But I’m going to limit my analysis here to the student intake because it’s a little easier to quantify.

Let’s at what’s at stake for the UK in terms of international student numbers.

UK International Student Numbers by Country of Origin


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Source: UK Council for International Student Affairs. EU shown in red, non-EU in blue

Somewhat surprisingly (to me at least), only about 30% of the UK’s international student body comes from the EU, with Germany and France the largest source countries.  That’s about 125,000 students, paying roughly £9,000 per year, so that’s a £1.1B hit to the sector.  That sounds big (and of course it’s nothing to be sneezed at), but in a sector worth around £33B, it’s not *that* crucial.

Now, how much of this money would institutions actually give up if Brexit goes through?  That’s still a big unknown, because it depends on how many foreigners will be allowed to get visas post-2019 and whether or not students will be considered within the cap.  For the past few years – since now-PM Theresa May became Home Secretary in 2010 in fact – the Home Office has been including non-EU students in the cap, and as a result international student numbers have been falling for quite a while now and are now about a third lower than they were before the Cameron government took office.  A similar result with EU students would see a loss of about £400 million to the sector.

But, say some, that’s without accounting for any loss from higher tuition fees.  Pre-Brexit, EU students pay what domestic students pay.  Post-Brexit, they will in theory pay a higher “international” fee.  These fees depend on the type of course undertaken: they average £13,394 for lecture-based programs, £15,034 for laboratory-based programs and £24,169 for clinical disciplines (see here for more details).  Some feel that a shift to these higher fees may deter even more students.  Frankly, this is a weak argument: if institutions really want foreign students, they can lower the fees (the bigger threat is probably these students’ loss of access to UK student loans, without which many might find even the current fees a struggle to bear).  And anyways, these higher fees mean that if UK universities only lost 1/3 of their EU students, they’d actually be up on the deal thanks to higher tuition rates.

Anyways, as you can tell, I’m not convinced that the loss of EU students is in fact a major challenge to the UK higher ed sector, though obviously it might be to specific universities who are overweight with this group.  It certainly makes you wonder why some institutions are musing about creating “overseas” campuses inside the EU (see here, here).    The answer, primarily, is that these proposed campuses are about trying to get around research collaboration barriers more than they are about gaining student numbers through branch campuses. I can’t actually imagine many EU countries (or the EU itself) would be daft enough to leave such loopholes open, but you never know.  But in any event, branch campuses are high-cost, high-risk and for students tend to be very much second-choice to home institutions.  If there are a lot of frustrated, wannabe-English students in Europe as a result of Brexit, they’re probably likelier to head to Ireland or North America as they are to go to University of East Anglia – Lens, or University of Chichester-Malmo.

In short, the student-side of Brexit should be a lot less concerning than the staff side of Brexit.

January 11

Admissions policies: Marks-Based, Broad-Based, or Random?

Though here in egalitarian Canada we don’t like to talk about it much, the fact of the matter is that universities are selective.  More people want to enter them than there are places available.  The more prestigious the institution, the greater the imbalance between demand and supply of places, thus requiring more challenging and discerning barriers to entry (though self-selection reduces actual application numbers somewhat).  The question is: on what basis should we select students?

(OK, some of you are now saying “not so fast! not all universities are selective!  What about countries like France or Germany which give automatic access to everyone who gets a Baccalaureat/Abitur? which have “open access”?  Or what about Quebec?”  Well, in fact “open access” countries are nothing of the sort – they just put the selection filter further back in the educational chain when they stream kids at age 12 or so.  Quebec is a different case: the UQs will accept anyone in possession of a CEGEP diplome d’etudes collegiales (DEC) which in global terms is pretty radical.  But selection still exists at the rest of the province’s universities).

Now, of course, in selecting students, everyone thinks we should consider “merit”.  But in most of the world, merit simply means “taking exams well”.  It means passing a set of secondary matriculation exams (e.g. in France and Germany), or a set of national university entrance exam (China’s gaokao, College Scholastic Ability Tests in Korea, etc) or even in some cases specific university entrance exams (for instance, the University of Tokyo – an exam sufficiently difficult that specially-programmed AI robots cannot yet pass.  Occasionally, as in the US or Sweden, psychometric exams like the SAT are used as well.  Are these methods fair?  Depends on your criteria.  If you think test and exam-testing are the be-all and end-all of merit, then yeah.  If not, no.  But finding alternatives is tricky.

Famously, the elite US universities went for a broader definition of merit in the 1920s, one which emphasized character and sporting ability.  Of course, the reason they did this was because their WASP donor base was getting pretty freaked out about the number of Jews getting in under the old scholastic-ability-only rules (see Jerome Karabel’s The Chosen for more on this).  That worked until the late 1960s/early1970s, when growing concern about racial inequality led some to start musing about whether elite private institutions shouldn’t be forced to accept more minority students.  Lo and behold, the definition of merit was changed to avoid clubby, exclusionary things like “character” (at least in the clubbable sense of that word) and include nice things like “diversity”.  Of course what it didn’t do was restore points for simple “academic merit” alone.  Nowadays, some see this as discriminating quite significantly against one ethnic group in particular: Asian-Americans, who by some reckonings are estimated to have a 67% lower chance of admission that a white student with similar GPAs/SATs.

In Canada, we’ve mostly relied on a portfolio of marks over high schools rather than a set of exam results, but the result is pretty similar: the academically inclined (a status yuuuugely-correlated with parental education levels) win out just the same.  Because none of our institutions is that selective, we’ve never seen the kind of crazy admissions scenes the US has, but a few selected hard-to-enter faculties have, most notably the Sauder School at UBC.  Back in the early 2000s, it took averages in the mid-90s or higher to make it in.  But the business community who hired Sauder graduates wasn’t enthused about the quality of the output: too many kids who knew math, not enough who understood leadership.  So Sauder moved to something called broad-based admissions, which basically meant a more intensive evaluation of students in order to create an entering class which was less academically focussed and more “well-rounded”.  Not surprisingly, some think this gives an edge to the white upper middle class and served mostly to reduce the number of Chinese students at Sauder (which, say it softly, may have been what the Vancouver business community meant when it said it wanted fewer kids who were “good at math”).  Yet broad-based admissions were such a success that they were introduced across the university just a few years later.

Now there are ways to run broad-based systems which don’t simply reinforce cultural capital:  the Loran Scholarships have a long track-record in doing precisely that, mainly by evaluating achievement in the context of parental background.  But most systems don’t do that, and as the University of Manchester’s  Steven Jones’ has pointed out in a couple of excellent recent articles, most attempts to broaden the base of assessment end up reinforcing privilege.  Which leaves you with a conundrum.    If you set a firm marks-based standard, you’re probably giving a huge advantage to those with better-educated parents; in a broad-based system, you’re probably giving an advantage to those with a lot of cultural capital.

Is there another way to do it?  Well, yes.  Two, as a matter of fact.  The first is to try to select on something other than academics or character.  Robert J. Sternberg, an American academic, has written an engaging book entitled College Admissions for the 21st Century which recounts his own efforts to create tests to complement the SAT/ACT by measuring things like tacit knowledge, wisdom, and creativity.  Some skepticism is warranted – Sternberg is talking his own book, after all – but it’s an intriguing effort that more should emulate.

The second way is lotteries, which have been used extensively for medical school admissions in both the UK and the Netherlands (though it is being phased out in the latter).  Usually what happens in admissions lotteries is that the bar for admission to the lotteries is set substantially below what it would be if pure competition were allowed to reign.  So, if we take the case of somewhere like the Sauder School, instead of setting the bar at a 95 or 96% average, you set the bar at say 80%: not so low as to let in just anyone, not so high as to exclude candidates who might really benefit from a Sauder education.  Maybe that gives you five times as many students as you can handle: fine, just pick one out of five of these students randomly.  In the Dutch variant, you might give a bit of an edge to higher-scoring students by giving them multiple entries into the lottery, but that’s optional.

Clearly, this doesn’t give you “the best” students, if you define “the best” as doing well on exams or being elected student council President.  But that’s the point.  It gives you a good class of students without creating educational arms races which produce either the gruesome test-taking cultures of East Asia or the nauseating college admissions industry of the US.  As such, it deserves to be in wider use.

January 10

The Politicization of University Accounting

Back in the fall, the Canadian Alliance of University Teachers (CAUT) published an interesting little guidebook called CAUT’s Guide to Analyzing University & College Financial Statements, written by Cameron and Janet Morrill, two profs at the University of Manitoba’s Asper School of Business.  Stripped to its essentials, it purports to be a DIY guide for faculty to help hold their institutions to account over finances.

Nothing wrong with that.  Learning how to read financial statements is a good thing.  The issue is the subtext (“THEY’RE LYING TO YOU!”) and the curious way in which they treat the matter of internally restricted funds.

In practice, universities have three types of funds.  There are unrestricted funds: money which they can do whatever heck they like with.  For the most part this is equivalent to the annual operating budget.  There are externally restricted funds – money which can only be used in manners specified by outsiders who have provided them money.  These include most research budgets and infrastructure money (you can’t take CFI money and blow it on beer and popcorn) as well as – of course – money destined for the school’s endowment.

But then there’s a third and slightly more curious type of money called “internally restricted funds”.  These are funds which institutions have set aside themselves for various purposes, usually related to the long-term health of the institution.  They don’t show up as a separate category on balance sheets, though a quick read of notes accompanying the financial statements is usually sufficient to work out their size (admittedly not the most exciting pastime).

The CAUT document is implicitly a guide for how to hunt for evidence that administrators are lying about the institution’s health.  The document starts off in fact by the authors telling the tale of how gradually they came to understand that their own university’s financial position was not fragile but loaded, thanks to their sophisticated understanding of “interfund transfers” (i.e. the process of putting money into internally restricted funds).  Left unsaid: hey, these internally restricted funds could be going to increase professor’s salaries!

Occasionally the document seems to accept the existence of and rationale for internally restricted funds, but the kicker is in the appendices, where they produce a step-by-step guide to working out how much unrestricted cash an institution really has on hand, and use the financial statements of the University of New Brunswick and the University of Ottawa as their case studies.  The formula they use is a little complex but basically it comes down to 1) find out how much money they have in “investments” 2) subtract the endowment and externally restricted funds 3) the residual is “unrestricted cash and investments”.  Which of course can only be true if you completely ignored internally restricted funds.

According to the Morrills, UNB has about $130 million in “unrestricted cash and investments” – you know, just loose money hanging around – while Ottawa has $331 million.  This is preposterous, as even a cursory look at each institution’s financial statements.  At Ottawa, for instance, note 19 of the financial statements clearly notes that the university has $297 million in internally restricted funds (ie., almost exactly what the Morrills claim to be “unrestricted cash and investments”) and note 12 of the financial statements lists a number of the uses of these funds, including: a $57 million for capital expenditures (e.g to match an external grant), $30 million to support faculty research activities, $31 million in a sinking fund to retire long-term debt, etc.

At both UNB and Ottawa – and I think it’s safe to assume it’s true at other institutions as well – internally restricted funds also cover money set aside to cover the unfunded costs of benefits programs, and funds for strategic priorities.  They also cover (and this is one of Canadian higher education’s dirty little secrets) many millions of dollars which are under the control of individual faculties and departments with respect to which the central administration has barely any understanding let alone control.  How did they get these?  Simple: many universities allow faculties/departments to roll over any unspent non-salary-related money in their budgets from year-to-year.  Over time, these can become formidable war chests.  I know of one medium-sized university in western Canada where such funds add up to around $60 million.  But is this really “unrestricted cash/investments”?   I can’t imagine any university administrator trying to take such funds away from lower units.  The words “from my cold dead hands” leap to mind.

So what we have here is a document from CAUT which is encouraging its member locals to label “internally restricted funds” as “unrestricted cash and investments” and hence, presumably, available for distribution to faculty members during collective bargaining talks.  And there is a sense in which this is correct: the designation of certain funds and certain priorities are political designations within the university itself.  It was a decision by the Board of Governors which restricted these funds and the Board could just as easily have not restricted these funds, or restricted them to some other purpose.

It might be a good idea to have an honest discussion about the size and use of these funds, and the trade-offs they entail.  Should professors get more pay at the expense of paying off the institutional debt or covering the unfunded costs of future benefits?  Should the institution have a lower tuition increase this year paid for by raiding faculty funds built up over the years for internal priorities?  I think those kinds of discussions would be helpful and clarifying.

But that’s not what the Morrills and CAUT are trying to do here.  Quite clearly, by claiming that internally restricted funds are in fact “unrestricted cash & investments” what they are trying to do is get more of their members to believe that universities have plenty of money lying around to spend and hence that any holding out at the bargaining table is chicanery rather than prudence.

Let’s not beat around the bush.  This is a lie, one designed specifically to increase labour strife by increasing distrust in university financial statements.  I wonder what CAUT has to gain by publishing it?

January 09

Welcome 2017

Sometimes New Year’s messages write themselves.  I mean, it can’t be as bad as last year, right?

The first half of this year is going to be dominated by two issues: Science and Skills.   This month, former University of Toronto President David Naylor will release his review of the Government of Canada’s Science Policies.  There were a lot of high hopes for this report, some of which are likely going to be disappointed when it actually comes out.  Too many people bought into the whole “Harper War on Science” thing and assumed that a new government and a new broom would clean things up and we’d go back to the peaches and cream days of the early-2000s.  The fact is, the problems in Canadian Science run a lot deeper than that.   I have no doubt the report will lay bare how complex the problems are: the question is whether the government is prepared to take the necessary steps to deal with it (though canning CIHR President Alain Beaudet was a hopeful start).

We’re also going to hear a lot about science through the Minister for Innovation, Navdeep Bains.  I’m going to go lightly on this one because I suspect I will have to weigh in on this repeatedly over the course of the next couple of months.  But basically it sounds increasingly like our “innovation” policy is merely a pro-tech industrial policy.  The logic, I think, is contained in a recent David Wolfe piece in Policy Options  and goes something like this.  A) we need a high tech economy, which means adopting tech more intensively throughout the economy (so far so good), B) therefore let’s spend a lot of money on the ICT industry (wait, what?  How does that follow?)  and C) here are a bunch of things we can do to boost the tech industry (all of which are sensible if you accept point B, less so if you don’t).  Universities will no doubt be pleased because there will be money available for tech investments, but as innovation policy it sure looks like a mess.

On the skills side, there are three piece to watch.  On the innovation agenda, skills showed up unexpectedly as a fairly large theme in their consultations.  But these aren’t “skills” in the Tory sense of “we need more apprentices”; it’s much more about having specific highly-qualified personnel in various science and tech fields.  For the most part that’s going to be handled by immigration, but the government is making (frankly idiotic) noises about “more STEM graduates” (even though there’s little evidence that this is a problem) and more coding in schools.  This is part of a long-standing problematic bias in Canada public policy: any time we have a problem in some area, we assume it’s a quantity problem not a quality problem.  This needs to change.

There are two other skill-related pieces coming in the next couple of months.  The first is that the Advisory Council on Economic Growth is meant to have a piece out fairly shortly on skills.  It was supposed to be out in late December, but for some reason it was yanked and delayed until January (one possibility: the initial set of recommendations didn’t test well among the people the government trusts on economic issues).  The second is the Expert Panel on Youth Employment, chaired by Vass Bednar.  I have literally no idea what the  latter will say: there are not a lot of clues in the panel’s interim  report, but it seems certain to bring yet more attention to the skills issue.  Possibly, all this adds up to some early actions on skills in a February budget but that may be a little rushed.

That’s the big stuff for the next couple of months.  On top of that, there will be the usual shenanigans on various campuses (it’s budget season, and that’s always good for some laughs).  The British Columbia election is scheduled for May 9th, and presumably that will be an occasion for opening up the goodie box – we’ll see if higher education gets included.  Globally, the big issues will remain Brexit and its ramifications for UK higher education, and China’s attitude towards foreign higher education.

You’re now completely ready for the new year.  Onwards and upwards!

December 16

Farewell 2016

So another year ended.  This one, few will mourn.  Despite their medieval roots, universities fundamentally serve the enlightenment; and the enlightenment, with is emphasis on toleration, progress, science, empiricism, was under attack this year as in no year since 1945.  Though higher education itself was not the target of populists’ wrath, the part of the culture we inhabit certainly was.  And that could make life pretty uncomfortable over the next few years.

I wrote back here  about how the revolt of the mid-west in the US election was about nostalgia for the days when you didn’t need an education to get a full-time job (one can also make a similar argument about the Brexit vote) .  That is, in part at least, an indictment of the education system.  A significant fraction don’t attend because they hate being in school; another significant fraction don’t attend because they don’t think it provides value.  One doesn’t have to accept wilder propositions about the system being “broken” for those two facts to prompt serious thought about how well the education system as a whole is doing its job.

Some have posited that this new revolt of the masses is about inequality and social mobility.  Higher education is having some problems in this respect, especially in the United States and the UK.  And I don’t think there is much doubt that in America a new form of hereditary upper caste is emerging from increasingly stratified education systems feeding students into (see Lauren Rivera’s quite excellent Pedigree).  Canada, thank God, does not face this problem in so virulent a fashion.  As Joe Heath pointed out a couple of years ago, the top three Ivy League schools enrol about 0.1% of all undergrads nationally while Canada’s top three schools enrol about 14% of all undergrads nationally.  Our bottle-necks are thus wider and that spares us the kind of vicious competition for places in top institutions the way we see south of the border.  But let’s not get complacent: there is still a lot more we could and should do in terms of ensuring fair chances for students from non-traditional background.

But there’s also an issue about economic growth here.  The fact is that part of the social bargain since the Second World War has been about delivering inclusive growth.  Now we haven’t always been very good at that – certainly in the eighties and early nineties there was growth that was perhaps the opposite of exclusive (average and median pay fell in this period, before picking up in the mid-90s and staying positive ever since).  The problem right now, is that our economies simply aren’t delivering growth.  And sure, part of that is the huge post-financial crisis debt hangover in the US, and part of it is due to changing demographics, and part of it is due to a whole bunch of other reasons around having picked the low-hanging fruit of productivity gains (do read Robert Gordon’s Rise and Fall of American Growth over the hols if you get a chance).  But universities the world over have grabbed a whole lot of public money over the past couple of decades by selling the public the notion that that research = productivity = growth.  And so it’s reasonable to ask: where’s the growth?  Now, sure, there’s no good counter-factual that allows us to look at what growth would have been like had investments in research not been made.  Maybe things would have been worse without it.  But the fact that there isn’t a slam-dunk positive story that everyone can recognize makes the sector vulnerable.

The populist case against higher education isn’t that hard to construct.  Universities spend billions on research without much proof that it leads to growth.  Spots at elite institutions tend to go to children of the elite.  Full-time academics are mostly in the top 10% of income distribution and a non-negligible proportion in the top 1% yet for some reason in Canada we see at least one faculty strike per year because as a group they believe themselves to be underpaid.

I know some of you hate-read this blog because I’m always on about unsustainable finances and say not-nice things about how institutions spend their money.  But higher education needs public support.  If the public starts to get the idea that higher education is not good value for money, or worse, that it does not serve the greater public good, that support will erode and with it the ability to support all the activities they currently undertake.

In Canada, we aren’t there yet, and with luck we never will be.  But remaining in the public’s good graces takes constant vigilance.  Pay attention to the dollars and cents.  Pay attention to outputs and impacts.  Do not take the public for granted.  In a populist age, nothing could be more dangerous.

That’s it from me for the term.  Normal service will resume January 9th, though you will probably hear from me once next week if, as is widely rumoured, the Finance Minister’s Advisory Council on Economic Growth puts out a report on “skills and innovation” which is as dumb as a bag of hammers. As always, it’s been a pleasure hearing from so many of you over the past few months.  If you have any thoughts on how to improve the blog, things you’d like to hear more of/less of, or just general feedback, I’d love to hear it.  Just write me.

Happy holidays.

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