HESA

Higher Education Strategy Associates

September 19

Cultural Determinants of Data Acquisition Costs

I saw a fascinating piece in the New York Times awhile back.  It was about a trend at American universities, asking applicants if they were gay or not.  Apparently, these institutions believe that by asking students this question, they are sending a message that they are a gay-positive environment.

Interesting.

Americans think that transparency about identity is the path to utopia.  Enrolment statistics by race?  They’ve got them.  Indeed, they are required to keep such statistics, because of a clutch of laws designed to monitor whether or not Blacks (and, to a lesser extent, Latinos and America Indians) are being discriminated against.

In Canada, the rule of thumb is simple: on forms used for administrative purposes, you can’t compel anyone to reveal data about identity, beyond what is strictly necessary to achieve the purpose for which the information is being collected.  So, on applications to universities and colleges, asking people’s names and addresses is about as far as you can go (provinces have different standards on whether you can ask gender – some say you can’t).  Asking about ethnicity, or aboriginal status?  Totally verboten.  Whereas in the US it’s mandatory.

What that means is that, in Canada, acquiring any data about students – other than raw numbers – requires voluntary surveys.  And those can get expensive: done centrally through StatsCan (and its levels of quality standards) they cost millions; even if you just get a decent-sized consortium together to do something, it will run into hundreds of thousands once you count everyone’s labour costs.  You can get it down into the tens of thousands if you go with an electronic survey, but then there are response bias issues (you can correct for them, but it requires someone to have already done a decent survey to begin with – and with the loss of the census long form, it’s not clear that we have such a survey).

Of course, even Canada is at least somewhat ahead of, say, France.  There, the local conception of nationalism means that state agencies are forbidden from classifying citizens as anything other than citizens.  Blanc, beur, noir: they’re all French according to the government, and its socially unacceptable to classify them as anything else.  A morally attractive stance, perhaps, but what it means is that the French have real trouble measuring social inequality in ways that matter.

All of this is simply to say, if you’ve ever wondered why we don’t have statistics on ethnicity the way the Americans do, it’s this: they assume racial bias exists and keep stats to measure it.  We assume that racial bias exists, and so try to mask parts of individuals’ identities to prevent it.

September 18

Cutting the BS on Teaching and Research

Sometimes people ask me: “what would I change in higher education, if I could”? My answer varies, but right now my fondest wish is for everyone to just cut the BS around the teaching/research balance.

Whenever a debate on teaching and research starts, there’s always people who either intimate how “unfortunate” it is that we have to talk about trade-offs, or people who claim that any deviation from the current trade-off means the death of the academic.  But this is nonsense.  There are only twenty-four hours in a day; trade-offs between teaching and research are always being made.  The issue is not teaching v. research, but where the balance is.  Twenty-five years ago, it was perfectly normal for professors to teach five courses a year.  Now, even at mid-ranking comprehensives, the idea of 3/2 is enough to cause paroxysms.  Just because it’s a good idea for professors to combine research and teaching doesn’t mean that any specific combination of research and teaching is right.

Even if we take it as read that, “engagement with research” makes you a better teacher (something which is much less empirically established than many assume), it’s clearly not equally the case in all disciplines.  Researchers in some disciplines – Physics and Math come to mind – are so far removed from the understanding of your average undergraduate that it’s probably a waste of everyone’s time to put them together in a classroom.  Conversely, language courses are almost never taught by people engaging in research on language acquisition, because it’s unnecessary.  Indeed, first and second year courses in many disciplines probably don’t even need researchers teaching them – a fact institutions acknowledge every day because they keep handing them to non-tenure track faculty.

Over the past 25 years, teaching norms at large universities went from five courses per year to four, to even three; that is, full-time teaching time went down by 20-40%.  The academy did this without ever engaging the public about whether that was the right way to spend public and student dollars.  It’s therefore worth debating, in light of current fiscal pressures, whether the current (historically unprecedented) trade-off between research and teaching is the right one.  We once had good research universities with many professors teaching five courses a year; there’s no reason we couldn’t do so again.  Shutting discussions down – as CAUT Executive Director, Jim Turk, recently did – by equating any change in the balance as an attempt to turn universities into high school isn’t just unhelpful and obnoxious: it’s BS.

And so I say: no more BS.  Let’s all be grownups and talk reasonably about what balance makes sense, not just for professors, but for students and the public as well.

September 17

Why Public Higher Education Should be Free…

… is the unfortunate title of a new book by Robert Samuels, a professor at the University of California, and president of the University Council – American Federation of Teachers.  The title is unfortunate because the book’s not really about free tuition; the subject doesn’t really get a look-in until about three-quarters of the way through.  Rather, Samuels’ book is mostly about (as he puts it in the title of his first chapter) why tuition goes up and quality goes down.  When Samuels focuses on this issue, it’s an excellent book.  When he strays, it’s not.

Let’s start with the good stuff.  Chapter 2, “Where the Money Goes in Research Universities,” is genius.  Not because it’s saying much that people don’t already know – pack in the undergrads, teach them using underpaid sessionals, reserve “real” profs for graduate students and research – but because it’s very rare anyone on the inside of universities exposes this strategy in stark naked terms (ok, yes, Ian Clark and co. have also done it, but Skolnik aside they aren’t academic lifers). I mean, sure, people like me talk about it all the time, but within institutions themselves there’s an omertà about it all.  Samuels is a rare bird in stating that while reductions in government support haven’t been helpful, a lot of higher education’s wounds on the undergraduate front are self-inflicted.

Where he’s less good, frankly, is on actual issues of money.  The chapter on university endowments – which focuses entirely on bad risk management practices leading up to 2008, without bothering to consider university long-term investment practices, or the recovery of endowment positions since 2008 – is either inept or mendacious, I can’t tell which.  And Samuels makes no serious attempt to prove his claim that, with just a few revisions of mission, tuition could be made free.  It’s not that he doesn’t have good ideas for making institutions less costly, it’s that the extent of possible savings is not quantified, and he can’t seem to decide if such savings should go to improving the plight of sessionals by making them full-time, or passing the savings on to students.  It’s a a lot of hand-waving, frankly.

As for the touted benefits of free tuition?  Basically, it’s that poorer students would be better off if it were so.  This is true, but could just as easily be achieved with grants.  Why governments and institutions should provide windfall gains to millions of students from better-off families in order to make it free for poorer ones isn’t addressed.

So, briefly: 9 out 10 for the first three chapters because it’s an unusually clear and concise statement of the problems and of the current political economy of universities.  After that, it’s about a 5 out of 10.

September 16

And the Winner is…

OK, all that data I gave you last week was fun, but let’s get back to the serious business of snark.  I know you’ve all been waiting to hear the winner of the “Worst Back-to-School Story” competition.  And so, without further ado:

Stories reporting on the CIBC World Markets report about how students were choosing the “wrong” subjects received nominations from a number of you.  However, while these were indeed irritating, I don’t feel that they really achieved the level of awfulness commensurate with this award.

Runner-up was a Globe online piece by Zander Sherman, who, if you’ll recall, wrote a seriously terrible book on education about a year ago.  His prescription for improving higher education’s real problems was to send it back to the twelfth century, with Latin, Greek and hazing for all.  It’s not clear if he was attempting satire, given that his antipathy is to compulsory education; but if satire was his aim, it didn’t work.

But this year’s winner, without a doubt, was Gary Mason’s article, University Students: Another Day Smarter But Deeper in Debt.  Slathered with inaccurate, misleading, or totally out of context data, it really stood out from the field.

Here’s my annotated guide to this wretched article:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bravo Gary, and thanks to all our contestants.  Your contributions make the back-to-school period what it is today.

September 13

Financing Canadian Universities: A Self-Inflicted Wound (Part 5)

We’ve covered a lot of ground in the last few days.  Back on Tuesday, we asked the question why faculty-student ratios could fall by 20% over two decades when per-student income had jumped by 40% over the same period.  The best way to sum up the answer is with the following graph:

Changes in Total and Operating Income per Student, Academic Salary Mass, and Student-Teacher Ratios, Indexed to 1992

 

 

 

 

 

 

 

 

 

 

 

 

The top line is total income per FTE student.  That rose 40% between 1992 and 2010, most of it in a few glorious years in the late 1990s.  The next line is operating income per student, which only rose 20% per student over the same period. That’s still good, of course, but it does mean that other parts of the university were receiving money at a faster rate than the operating budget was.

Now let’s look at academic compensation.  Despite an increase in the operating budget, total academic compensation (i.e., salaries + benefits) fell.  All of that fall happened prior to about 2002 – since then, the two have moved more or less in tandem.  What that means is that a lot of money within operating budgets was being moved into other areas.  As we saw on Wednesday and Thursday, the big “culprits” were scholarships, utilities, and, to a lesser extent, central administration.

Finally, there’s the faculty:student ratio, which fell more or less in lockstep with academic salary mass until 2001.  After that, individual faculty salaries began to rise.  Thus, even as total academic salaries stabilized, that amount bought ever fewer professors, because their real salaries were rising.

And that’s basically the story.  Billions of dollars went into the academy in the last twenty years, coming from students, government, and other sources.  But a disproportionate amount of that money went into non-operating areas (such as research).  And a disproportionate amount of operating money went into areas other than academic salaries.  And average faculty wages rose substantially in real terms.

That, ladies and gentlemen, is how faculty:student ratios can fall by 20% while income per student rises 40%.  And it’s worth underlining here: virtually all of this has to do with changing priorities within the academy, not changes in government policy.  It was universities who urged the new focus on research.  It was universities which made the decision to favour other spending categories over academic salaries.  It was the academic community as a whole which decided to pay more money to fewer professors, rather than keep salaries stable and hire more staff.  No one made the academy do this.  It’s a self-inflicted wound.

We have met the enemy, and he is us.

September 12

Financing Canadian Universities: Are Administrators to Blame? (Part 4)

In yesterday’s post, I dismissed the idea that administration was to blame for academic salary mass falling as a percentage of operating budgets, noting that the big areas of spending increase over the last two decades were scholarships, benefits, and utilities.  But it is still true that salary mass of non-academics rose more quickly than it did for academics.  Total academic salary mass went from $4 billion in 1992, to $5.5 billion in 2010, while “administrative” salaries went from $3 billion to $5 billion (all figures in 2011 constant dollars).  So in a sense, one could argue that some crowding out occurred.

But who are all these administrators?  Are there more of them, or are they just getting paid better than they used to?

Unfortunately, we have no datasets on non-academic staff numbers in Canada (heck, thanks to budget cuts, as of last year we have no datasets on academic staff numbers either).  What we can do, though, is track dollars by category to get a sense of what kinds of functions are receiving non-academic salary dollars.

Figure 1 – Distribution of Non-Academic Salaries by Function, 2011

 

 

 

 

 

 

 

 

 

 

 

 

Of the $5 billion in non-academic salaries, the largest chunk (32%) is still spent under the rubric of instruction (e.g. lab technicians, departmental secretaries, teaching and learning centres, etc.).   Student services and physical plant (i.e. maintenance) employees make up another 11% each, or about $550 million apiece, per year.  IT workers are another 8%, library 7%, and non-credit instruction 3%.  Most of those salary categories are things that are relatively central to the process of education.  That leaves 28% – or about $1.3 billion – in what we think of as “classic” central administrators, the bogeymen/women of contemporary universities.

If we wanted to find “waste” in universities, we might look for it by looking at where non-academic salaries were growing the fastest.  This we do in Figure 2, below.  The left-hand column shows the share of the increase in non-academic salaries that each category received over the 1992-2010 period; the right-hand column shows the shares of spending each area had in 1992.

Figure 2 – Distribution of Increases in Non-Academic Salaries, by Function, 1992-2011

 

 

 

 

 

 

 

 

 

 

 

 

Figure 2 reinforces some traditional narratives; salary mass in central admin did indeed increase faster than for other non-academics.  But so too did salary mass in non-credit instruction, and in physical plant.  Total salaries in “instructional” areas (lab techs, etc.) fell relative to the total, but so too – and to a much greater extent – did salaries in student services.  Total non-academic salaries in libraries, meanwhile, literally did not increase at all.

Bottom line: There was “excess” growth in central admin salaries – that is, growth over-and-above its inflation-adjusted 1992 share, to the tune of $325 million.  Not nothing, to be sure, but a very long way from explaining the shortfall in academic salary mass.

September 11

Financing Canadian Universities: A Curious Story (Part 3)

Yesterday, we saw that Canadian student-faculty ratios rose by 24% between 1992 and 2010, even though operating grants per student went up by 20%.  The cause, it turned out, was a combination of individual academic salaries rising, while aggregate academic wages fell, as a proportion of operating grants.  What we didn’t do yesterday was ponder why academic salary mass didn’t keep up with operating grants, and where the money went as a result.

Figure 1 – Operating Expenditures by Category, 1992-2010, in Real 2011 Dollars

 

 

 

 

 

 

 

 

 

 

 

 

Figure 1 shows that the two biggest categories under operating expenditures are “academic salaries”, and “other salaries and wages”.  Throw in benefits – compensation under another name – and these three categories make up about two-thirds of total operating expenditures.

With so many categories, it’s a little difficult to see exactly how much each category increased over time in Figure 1, so in Figure 2 we simply show growth indexed to 1992 levels.

Figure 2 – Growth in Expenditure Categories, 1992=100

 

 

 

 

 

 

 

 

 

 

 

 

Of the six major expenditure categories, academic salaries increased the least, by some margin – just 37% in real dollars, not quite enough to keep up with growth in student numbers.  Non-academic salaries – the next largest category – increased by 70%.  But growth for benefits, “other instruction & research”, and “other” (a catch-all category including travel, utilities, and externally contracted services) was all over 100%.

For reasons of legibility, Figure 2 excludes two line items that were in Figure 1.  The first is library expenditures, which are actually pretty trivial in the big picture (1.7% of operating expenditures).  The other is scholarships, which are excluded because they would have broken the scale.  Here’s what happened to scholarships between 1992 and 2010:

Figure 3 – Total Scholarships Expenditures, 1992-2010, in 2011 Dollars

 

 

 

 

 

 

 

 

 

 

 

 

This is one of those things universities just don’t get credit for.  Scholarships (a term which here includes both need and merit-based aid) increased by more than seven-fold, after inflation.  Based on previous research HESA has conducted, I estimate that between 55 and 60% of this money went to graduate students, which is consistent with large institutions’ increasing emphasis on research and graduate studies.

Another way to look at this question is to look simply at changing shares of total operating income, which we do below in Figure 4.

Figure 4 – Change in Shares of Operating Budgets by Category, 1992-2010

 

 

 

 

 

 

 

 

 

 

 

 

Although spending in all categories rose between 1990-2012, some spending categories “gained share”, while others lost it.  The biggest losers were faculty, as academic salary mass fell by 9 percentage points as a share of the operating budget.  Had they kept their share constant, there would have been another $1.6 billion in money for academic salaries.

But the “culprits” were not the oft-scapegoated bogeymen of “administration”.   Rather, the line items that significantly gained share were actually scholarships, non-wage benefits, and “other” (mainly utilities and externally contracted services).  This is not a story often heard on campus.  But it’s the truth.

September 10

Financing Canadian Universities: A Curious Story (Part 2)

So yesterday we noted how universities’ per-student income had increased 40%.  But we also noted that it’s a universally acknowledged truth that pretty much everyone in higher ed will swear up and down that things are worse than ever, always doing more with less, etc.  Is there a way to reconcile these competing notions without simply coming to the conclusion that profs and administrators are delusional/greedy?

Well, sort of.  Let’s start with Figure 1.

Figure 1 – Income per FTE Student and Student-Teacher Ratio

 

 

 

 

 

 

 

 

 

 

 

 

The blue line (left axis) just highlights you what I showed you yesterday – that per-student expenditures jumped from $23,000 to $33,000 over the period in question.  The red line (right axis) shows something different: the ratio of FTE students to FT professors.  This, weirdly enough, also increased over our period.  In fact, the ratio went up by 24%, from just below 18:1 to a shade over 22:1.

This is, pretty much, bananas; indeed, it’s a pretty stunning indictment of higher education as a whole.  Per FTE student income rose by 40%, and not only was that money not used to reduce student-teacher ratios, but the ratio actually deteriorated by 25%.  How is this possible?

Well, one reason is that the operating budget grew more slowly than other types of income.  Operating funds were up 82% over our period; research money, on the other hand, increased 178%.

Figure 2 – University Income by Fund1992-2010

 

 

 

 

 

 

 

 

 

 

 

 

But that’s not really a full answer – even if you pull out all those other income sources, operating budgets per student still rose by 20%.  So why are student-teacher ratios going up?

There are basically two reasons.  The first is that professors cost more than they used to.  Just looking at the period 2001-2009 – the period for which I happen to have data handy – average faculty salaries jumped by about 24% in real terms.  Now, that’s after a decade in which salaries stayed roughly even, or dropped a little, so the increase for 2001-09 period should be pretty close to the increase for 1992-2010.  In other words, the cost of a professor rose more or less proportionately with income per student.

Everything else being equal, that means that student:faculty ratios should have stayed roughly  the same, rather than having risen.  But here’s the second reason: everything else wasn’t equal.  Operating budgets increased twice as fast as academic salary mass, and, as a result, the percentage of operating budgets going to academic salaries fell from about 39% to 30%, mostly in the 1990s.

Figure 3 – Academic Salaries as a Percentage of Operating Budgets

 

 

 

 

 

 

 

 

 

 

 

 

So it was the combination of rising salaries and changing spending priorities that caused the rise in student ratios.  But this just begs the question: what were these new priorities?  Where did the money go? Stay tuned.

September 09

Financing Canadian Universities: A Curious Story (Part 1)

if you pay attention to discussions of higher education funding, one of the memes that inevitably pops up revolves around the notion that higher education has been under some brutal, neo-liberal assault since… well, I’m not sure, but probably since 1995 at least, and everything is being defunded, laid on the backs of students, it’s the end of civilization, dark ages ahead, etc., etc.

Problem is, this yarn is utterly at odds with the data, which tells a very different story.  Starting today, I’d like to tell you that story.

Are you sitting comfortably?  Then I’ll begin.  Let’s jump right to Figure 1.

Figure 1 – Total University Income By Source, in Billions, 1992-2010

 

 

 

 

 

 

 

 

 

 

 

 

Now, the first time I saw Figure 1, I assumed it was in nominal dollars.  But it isn’t.  Those are real, constant dollars, folks.  And in real terms, university income more than doubled between 1998 and 2010.

Sure, the 1990s sucked – government expenditures fell in real terms, and the system only kept itself afloat through greater reliance on private income (mostly tuition).  But the 2000s were years of simply eye-popping growth.  Basically, every year, it was 6-7% growth after inflation.  If anyone in academia is puzzled as to why higher education is seen as spoiled by much of the rest of the public sector (and indeed the public-at-large), this graph is the answer.

One interesting thing about the 2000s is how the different revenue streams all went up at about the same pace.  That is, tuition income and income from private sources continued to rise after 1998, but they didn’t become a larger portion of the pie, because revenue from government was rising so quickly.  At the start and end of that period, the revenue split remained 54% government, 21% tuition, and 25% other revenue.  So much for “governments downloading costs to students”.  Student fees certainly went up, but government spending went up proportionately, too.

Ah, say the skeptics, but you’re only accounting for inflation.  What about that huge influx of students?  Surely, if we showed this data on a per-student basis, it would show the ever-deprived nature of our universities.  Well, no, as a matter of fact.  FTE numbers in universities did indeed rise, but only by about 50%.  So on a per-student basis the graph looks like this:

Figure 2 – Per-FTE University Income by Source, 1992-2000

 

 

 

 

 

 

 

 

 

 

 

 

Between 1997 and 2006, per-student funding rose by roughly 40%, from about $23,000 to $33,000 (again, this is in constant dollars).  For the rest of the decade, per student dollars remained reasonably consistent, give or take a huge hit on endowment revenue in ’08.  If I could extend that graph out to 2013 (which I can’t), you’d probably see a small drop in government funding offset by an increase in (mostly international) tuition dollars.

So why does everyone think universities are getting poorer when in fact they’re getting richer?  Tune in tomorrow.

September 06

Grants and Net Prices

Yesterday, we saw how tax credits lowered net prices by refunding students (or their families) roughly one out of every three dollars spent on tuition.  But that’s not the whole story, because there are a lot of university students who also get some form of non-repayable assistance (i.e. grants); for them, tuition is even lower.

Let’s start with Quebec, where net tuition after tax expenditures is a mere $1,555.  Data from the latest Aide Financiere aux Etudes annual reportadjusted for known changes in student aid expenditures, suggests that somewhere in the neighbourhood of 50-55,000 university students are receiving grants, which, on average, are worth $6,380 apiece.  Meaning that net tuition for grant recipients in Quebec is in fact negative $4,825.

In Ontario, net tuition after tax credits is $5,680.  Everyone with a family income under $160,000 is eligible for the Ontario Tuition Grant, which is (effectively) worth $1,730.  So that means that, in fact, for a considerable majority of the full-time undergraduate population, net tuition last year was is $3,950, which is lower than it’s been at any time since 1998-99.

Figure 1 – Net Real Tuition in Ontario, After Tax Credits and Tuition Rebate, 1995-96 to 2012-3

 

 

 

 

 

 

 

 

 

 

 

 

Here’s where the analysis gets tricky.  In the CSLP zone, many people receive more than one grant, mainly because of the overlap between federal and provincial aid.  But while we know the average size of each grant, there’s no method of working out how many of the 320,000 recipients of federal grants (who receive on average 1.18 federal grants each – you can get more than one) also receive one of the 250-300,000 provincial grants.

However, based on a little bit of policy analysis – and some phoning around to friends in provincial governments – I reckon that between half and 2/3 of all provincial grant recipients are getting federal aid, as well.  That would give us a ballpark of about around 430,000 total grant recipients, of which roughly two-thirds are in universities.  With roughly $1.2 billion being given out in the CSLP provinces, that suggests that the average grant recipient there receives about $2,800.

Taking that data and merging in the Quebec numbers gives us the picture we see in Figure 2: 

Figure 2 – Actual Net Costs, Canada, 2012-3

 

 

 

 

 

 

 

 

 

 

 

 

Across Canada, the sticker price of tuition and fees last year was $6,331.  As we saw yesterday, that falls to just over $4,300 when you take tax credits into account.  And that’s the real net cost for about two-thirds of the full-time student body.  But for the other third, the third that gets grants, real net tuition averages just over $1,000 – and it would appear that for a substantial proportion of these students, the actual cost is negative.

So, when the Statscan tuition numbers come out, just remember: no one actually pays the amounts Statscan reports.  Most students pay about 66% of the sticker price, and the neediest third (proportions may vary by province) pay about 17% of the sticker price.

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