HESA

Higher Education Strategy Associates

October 31

Towards a Theory of Strategic Plans in Higher Education

I had an interesting discussion on twitter a few days ago about the nature of University strategic plans, and specifically, why they are rarely written in a manner that feels meaningful to faculty.  Having pondered it for a few days, I thought it would be worth jotting down some ideas.

  1. The university is, in most cases, a loosely-coupled organization.  For the most part, people in Fine Arts could not care less what is going on in the Faculty of Agriculture (and vice-versa).  Even within individual departments, teamwork is to some degree optional (you have your classes and research agenda, and I have mine).  This is not surprising because the real rewards system in higher education lies within the structure of each discipline.  The famous and somewhat unfair  question “is your allegiance to your university or your discipline” matters here.
  2. Issues of discipline vs. university aside, to a significant degree professors behave as if they are independent contractors who nevertheless get a steady pay check from some place called “the university” which far from being a common enterprise, is rather a set of services one uses selectively and sometimes even reluctantly.  That’s not to say everyone behave or feels this way, but a sufficiently large proportion does, making the notion of common enterprise problematic.
  3. Or, to put it another way: “The Faculty exists to protect the department from the University.  The Department exists to protect me from the Faculty.  And the Department can go jump in the lake.”  Many professors believe at least two if not all three of those sentences. This makes universities platforms for independent teaching and research rather than an organization with a coherent value proposition of its own.
  4. But while the university looks like a particularly anarchistic jazz band from the inside, from the outside (i.e. from the POV of governments, students and parents), it’s an orchestra.  That is, someone is in charge, and everyone has a part to play in a common purpose.  In fact, they’d probably be pretty annoyed to find out no one is in charge.  And so the people nominally managing the university (the Board, the administration) are obliged to make out as if the organization does have some common purpose beyond everybody doing their own worthy thing.
  5. One of the ways they assert that there actually is a university, and not just a group of departments connected by a steam plant, is to make strategic plans.
  6. Strategic planning as performed in universities is borrowed from strategic planning in the corporate sector, with a few differences:
    • Companies have unique value propositions.  With very few exceptions, universities do not.
    • Under no circumstances are strategic plans allowed to make fundamental trade-offs between constituent different parts of the university.  All boats must rise.
    • Prestige, not profit, is the measure of success (as indeed it is for individual professors within their own disciplines).
  7. The only strategic plans that actually meet all three criteria are strategic plans which focus on increasing net revenues to the university.  Co-incidentally, senior administrators have also noticed that funneling money to faculty does generally keep them happy.  Not unreasonably, this leads senior administrators to believe that as long as the money keeps flowing, the faculty will be happy.
  8. Strategic Plans are therefore written primarily with the governments and major philanthropists in mind.  Keep them happy, and money will keep flowing, and faculty will be happy, and new projects can be started, and prestige will rise.
  9. Corollary: strategic plans are usually written in ways which require faculty to do as little as possible.  They are agendas for administrators, not faculty.

Now, for those faculty members that are happy simply puttering along on their own – that is, those who most senior admins believe are the median professors – this whole thing works out just fine.   But not everyone feels that way.  And for people who want a stick with which to beat admins over the head, one of the easiest things in the world is to pick up a strategic document phrased in language designed to speak to governments, businesses and philanthropists and say “this document is too corporate, it doesn’t speak the language of science and academia”.

No kidding.  That’s a feature, not a bug.

Are there other, more inclusive, ways of doing strategic planning?  Sure.  But they require much tougher discussions about actual academic priorities, discussions that might involve campuses being more than just platforms for individual research agendas, or which might involve sacrificing some activities for the good of others.  And though we might wish it were otherwise, there aren’t a lot of examples of shared governance bodies being up to having those kinds of discussions.

I invite feedback.

October 28

Priorities

Next week, everyone’s favourite Federation of Students is going to have a “Day of Action” to demand “Free Education for All”.  A few months ago I explained why some student groups think it’s a good idea to be protesting right now even while governments are quite sympathetic to them  (tl:dr: it’s because Sticking It To The Man is more important that achieving practical results).

Now to anyone who’s read this blog for more than once, it’s probably clear that I take a pretty dim view on the Free Education for All line.  I do believe there’s an argument for free education at the college level; however, beyond that, the case is pretty weak.  Low-income students already have net zero tuition in most of the country.  For students from families making $40,000, subsidies (that is, grants, loan remission and tax credits) are already larger than college fees in eight provinces – all ten if we include Manitoba’s and Saskatchewan’s graduate rebate programs.  They’re also larger than university fees in five provinces: Newfoundland, New Brunswick, Quebec, Ontario and Manitoba.  Put that altogether and it’s clear that over 90% of all low-income students are already paying net zero tuition and will gain little from eliminating tuition.  The big wins, therefore, are for richer students.

Free tuition does not reduce intergenerational disparities.  It cannot produce greater equity in enrolments without a massive and seriously unlikely displacement of upper-income students from universities.   And even Karl Marx understood that it was regressive.

But let’s put all that aside.  Let’s assume for a moment that we all agree that any regressivity which occurs in completely subsidizing education for students from wealthier backgrounds is offset by the inherent benefits of universal programs.  Or, let’s assume we agree with American scholar/author and free-tuition advocate Sara Goldrick-Rab (whose new book Paying the Price is very good by the way) that the only way to really ensure that the poor get the money they need is to subsidise the rich, too.  Programs for the poor are poor programs, she says, so only universality can save the poor. (I don’t think this is true in Canada – the Trudeau government has just shown how to do targeting with its changing tax credits into grants – but I grant the possibility it may be the case in the US, so let’s go with it for now).

But even if we assume all that, we still need to assume that there is money available.  And in one sense there clearly is:  governments can make anything happen if they want to.   They just have to decide to do it.  It is a political question more than a financial one.  But politics, as they say, is about choices.  And the issue is: what would we choose not to pay for in order to ensure that kids from above-median income families don’t have to pay tuition?

Peace-keeping?  Should we say no to a mission to Mali to keep wealthier kids from paying tuition?  Childcare?  Do we choose to invest less in childcare to make university free for those who can clearly afford it?  Or what about clean drinking water on First Nations’ territories?  More investments in mental health?

Because of entrenched interests and programs, it’s very difficult for democratic governments to move money from program to program.  When incremental money arrives, they have to assign it to whatever priorities they think most important.  It could go back to taxpayers via a tax cut, or it could go to pay down debt, or it could go into a priority spending area.  When someone says “government should eliminate post-secondary fees”, in practical terms what they are implicitly arguing is that “students from wealthier backgrounds (because those are the primary beneficiaries) deserve this money more than families with childcare needs, or First Nations families living in communities with boil water advisories.  I know they would explicitly deny this, but from the perspective of the government, which has to choose between competing priorities, this is exactly what is being advocated.  That’s how lobbying works.

To recap:  Free fees would help the rich most, would not reduce intergenerational inequality, will not work to reduce inequality of access, and to boot would take money away from other important policy priorities, many of which (e.g. First Nations’ health and sanitation) are transparently of higher importance.

Remember all that on November 2nd.

October 27

Fun With Library Statistics (Part 2)

Is there any part of the university that has been more transformed over the past decade than libraries?  One of the fascinating things about looking through old Canadian Association of Research Libraries (CARL) statistical reports is how many things weren’t counted, say ten years ago.  Expenditures on databases?  Not counted.  Logins to databases?  Searches or article requests?  Nope, nope.  Not that those things didn’t exist back then – they just weren’t central enough to university missions to be thought worth counting.

One thing which was counted back then (and is still counted today) is loans.  And if you want to get a sense of how libraries have changed in the past decade or so, check out this graph of changes in initial loans between 2004-05 and 2014-15, by institution.

Figure 1: Change in Numbers of Initial Loans, Canadian Research University Libraries, 2004-5 to 2014-5

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Nationally, initial loans are down 58% across 27 CARL universities over the past decade (Brock and Ryerson are not shown because they did not provide statistics in 2004-05), from 11 million per year to just 5 million per year.  Simon Fraser has experienced the lowest drop – just 24%.  At Concordia, the fall was 81%.  And these figures do not account for growth in student numbers: add those in and figures would drop another 20% or so.

In other words, libraries are decreasingly about books but increasingly about electronic resources.  And this has had impacts on employment.  Across all 27 institutions, FTE employment is down 11%, with the biggest falls at some of the most research intensive universities: Alberta down 35%, McGill down 33%, Queen’s down 26%.  Toronto bucked that trend with a fall of just 5%, and four institutions (Calgary, Carleton, SFU and Ottawa) actually saw increases in employment.  But overall we are seeing a decline in numbers.

But, as with professorial staff (with whom they are often grouped in the same collective agreements), librarians have seen a considerable upward drift in pay.  So while FTE employment is down, nationally, aggregate staff compensation is still up 3% in inflation-adjusted dollars (for comparison, aggregate professorial salaries are up about 39% over the same period).  But here again the variation at the institutional level is absolutely enormous, from +50% at Regina, to -22% at McGill.

Figure 2: Change in Real Expenditures on Library Staffing, Canadian Research University Libraries, 2004-5 to 2014-5

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So much for staffing: what about acquisitions (or, more broadly, materials)?  Good news here, these grew by 9% between 2004-05 and 2014-15, though again, there’s really not that many institutions which are close to the national mean.  Of particular interest here are the identities of the two institutions who saw the biggest increase in spending: namely, Memorial and Ottawa.  Probably not coincidentally, these are the two institutions currently engaged in the biggest rows about cutting back on periodicals (see here and here).

Figure 3: Change in Real Expenditures on Library Materials, Canadian Research University Libraries, 2004-5 to 2014-5

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These last two graphs raise the question: do institutions have consistent strategies with respect to allocating their budgets between staffing and acquisitions?  Are both budgets being raised (or lowered) in tandem or are schools cutting in one so as to invest more in the other?

Figure 4: Change in Staffing Budgets v. Change in Materials Budget (in real dollars), Canadian University Research Libraries 2004-05 to 2014-15

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Here’s the way to understand figure 4.  In the upper left quadrant, you have institutions which are increasing their staffing budgets, but decreasing their materials budget (at the very top left is Regina, which is +50% and -15%).  In the top right quadrant you see institutions which have increased both staffing and materials (the most notable example here is Ottawa, at +56% and +24%).  Moving on clockwise to the bottom right, you see institutions which have cut staffing budgets and increased their materials budgets, and here you have both McGill and Alberta cutting the former by about 20% and increasing the latter by 12%.  And finally, in the lower left quadrant, you have three institutions (Queen’s, Montreal and Windsor) which have seen real decreases in both staffing and materials.

Nationally, there seems to be very little correlation – positive or negative – between changes in one kind of spending and change in the other.  To the extent that library expenditures are strategic, institutions seem to be pursuing a wide variety of strategies in this area.  It would be interesting to correlate this data with user satisfaction surveys to see if any of them are more likelier than others to produce satisfactory outcomes.

October 26

Fun With Library Statistics (Part 1)

The Canadian Association of Research Libraries (CARL) recently issued its annual statistical report.  I thought I’d take the opportunity over the next couple of days to take a look at a few interesting patterns in library practices and expenditures.  They shed some interesting light on the pressures Canadian academic libraries face right now.

Some methodology here: CARL has 29 university members, from the very large U of T (almost 74,000 FTE students) to UNB (under 8,000 FTE students).  As a result, expressing figures in terms of “average per institution) (as CARL does) is kind of weird.  So I have chosen to display all institutional values on a “per student” basis.  This has some problems of its own (libraries don’t just service students, not all students use libraries with same intensity, etc.) but they are less severe than doing it on a per-institution basis.

Let’s start with Library expenditures. A little over half (55%) of library expenditures go towards salaries and benefits.  On average, across all institutions, CARL universities spend $432/student per year on this, but the range is enormous.  At the top end Memorial and Calgary were spending over $700/student, but at Sherbrooke, Brock and Ryerson the amount was under $300 per student.

Figure 1: Per Student Expenditures on Salary & Benefits, Canadian Research University Libraries, 2014-15

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Most of the rest of the library budget goes on “materials”, which is predominantly the acquisition of titles and periodicals.  Across CARL institutions, the average expenditure on this item is $365/student per year, but again there is huge variation around the mean. McGill and Memorial both spend over $600/student; Saskatchewan spends over $700/student.  At the other end, Ryerson, UQAM and Brock are all under $200 per student.

Figure 2: Per Student Expenditures on Library Materials, Canadian Research University Libraries, 2014-15

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As you can see, some universities end up towards the top of both lists (mainly those in provinces with a lot of natural resource revenues), and some end up towards the bottom (mainly those universities which aren’t actually all that research-intensive).  But the interesting thing to me is the relationship between those two graphs: what’s the ratio of spending on staff to spending on materials?  Well, nationally, CARL members spend just under 85 cents on materials for every $ spent on salaries.  Again, there’s quite a bit of variation.

Figure 3: Ratio of Expenditures on Library Materials to Library Staffing Costs, Canadian Research University Libraries, 2014-15

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At one end, you have McGill, which spends $1.38 in materials for every dollar they spend on staffing, which suggests either that they are a lean machine or that their collection specializes in some ludicrously expensive journals (it’s probably not a coincidence that all the institutions at the left hand side of the graph have medical schools).  At the other end, curiously, you have the two francophone Quebec universities where the spending ratio is extremely low: 50 cents on materials for every dollar in staffing at Université de Montréal and 48 cents at UQAM.

Might these differences in some ways be related to utilization rates?  One crude way of looking at usage is to look at turnstile counts, which are tracked at 23 of the CARL institutions.  Measured on a per-student basis, one again sees massive differences, the average across the country is 70 turns per student per year, but it ranges at the top end with Saskatchewan recording 100 turns per student per year to Laval, which only gets 24.  One might expect that universities with higher turnstile counts might need a slightly higher staffing count to deal with more users.  But in fact the relationship between the two is essentially non-existent.

Figure 4: Turnstile Counts vs. Materials:Staff Ratio, Canadian Research University Libraries, 2014-15

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That leaves us with a bit of a puzzle as far as why we see such different cost patterns at different universities.  There are presumably some relevant structural and historical reasons why you get this kind of spread: different universities need of different library services, costs may be elevated because of specialized holdings; for instance, MUN manages a Centre for the Study of Newfoundland which is undoubtedly costly and would likely elevate staff costs considerably).  So, one shouldn’t leap to conclusions about the efficiency of any particular library based on this kind of comparison; but at the same time this kind of data does allow us to ask much better questions about why each university’s library cost structure looks the way it does.

Not that Libraries have that much to answer for in this respect. As we’ll see tomorrow when we look at trends over time, libraries have been able to contain their costs far better than the universities to which they belong.

October 25

What could a new private university in Canada look like?

Yesterday I outlined why a major private university has never emerged in Canada.  But I also suggested that it wasn’t impossible one might pop up in the future if it were backed by someone with sufficiently deep pockets and an eye for strategy.  Here is what I mean by this:

For a private university to be a success, it needs to be getting thousands of students.  Say 4,000 or so.  It’s not impossible to operate below that level, but it’s precarious.  Ask Bishop’s.

And that’s tough.  Getting people to commit to a university before it has any visible sign of success (such as well-employed graduates) is extremely difficult when there are quite prestigious institutions available nearby, as is the case nearly everywhere in Canada.  Ask Quest.

Any new university is likely to take a few years to catch on; and yet it must be able to put out a quality product during that time.  Hence the need for deep pockets.  But there also needs to be a real value proposition for a new institution: a reason to go there rather than a regular university.  England’s Buckingham University and Australia’s Bond University (both private universities which have managed to clear the 4,000 student mark) did this by offering accelerated degrees that allowed a student to graduate more quickly.  That might also work here, but let me suggest a couple of other ways that might work too.

The first possibility is to create a university which can compete with big public universities on price.  There are a couple of ways of doing this, but basically it means re-thinking the structure of an institution.  One popular route these days is to do away with departments (which are an utter cost sink and the source of pretty much any cost-inflating idea a university can come up with) and leave faculties as the only level of administration.  Combine this structure with a human-resource strategy which combines a few well-rewarded big names with a mostly casual staff, and there’s the possibility of creating an institution which is cost-effective while still carrying enough prestige to attract students.  In the United States, two new universities have been built along more or less this model in the past decade (Harrisburg University of Science and Technology and University of Minnesota Rochester), although neither has gone quite as far as Professor Vance Fried and his prescriptions in a well-known 2008 paper which purported to offer “Ivy-like” education for below $7,500 per student.  In Ontario, back a few years ago when for some reason the government thought it was going to build three new universities, a similar idea was proposed by Centennial College plus Maureen Mancuso and Alastair Summerlee of Guelph University.  The proposal was technically ineligible and the competition for new campuses never happened anyway because (whoops) the number of 18 year-olds started declining in 2013 (and who could possibly have foreseen that at any time since 1995?).  But nevertheless I think it shows there’s at least some appetite to head down this route, and that it would be possible to go down this route for at least Arts, Sciences and Business.

The second possibility would take the opposite route.  If Canada has an available niche, it’s in luxurious, prestigious liberal arts colleges (yes, there is the U4 League, but none of them could be described as luxurious – indeed provincial funding models leave these kinds of universities pretty stretched).  So why not try to charge top dollar for a Liberal Arts school with big names?  This has been the approach of AC Grayling’s New College of the Humanities (NCH) in London for the past four years and – regulatory niggles aside – it seems to be doing reasonably well.   Now I know what you’re thinking: who wants to pay for Liberal Arts degrees, unemployment, baristas, etc.  But the fact is, as institutions like Middlebury, Bryn Mawr and indeed NCH show, provided the level of instruction is good and the student-teacher ratio small, there are lots of people prepared to pay for that kind of education.  Maybe not 4,000 people for year, but if the fees are high enough, a university can survive at somewhat smaller numbers.

So yes, the potential for a private university is there.  What’s missing so far is ambition and money.  One day, someone will fill that gap.  It’s just a question of when.

October 24

Why don’t we have private universities in Canada?

Every once in awhile I get asked a question like “why doesn’t Canada have private higher education”?  The answer is complicated, in part because the question isn’t as precise as it seems.

To start, we have a lot of private higher education in Canada, but it’s at the sub-degree level.  Stats on private higher education in Canada aren’t good but the best estimates suggest that there’s something on the order of 150,000 students attending somewhere in the region of 1800 institutions.  Something like a third of these students are in programs of under 3 months in length; most of the rest are in programs between 3-12 months in length.  Close to 2/3 of enrollments are either in health fields (medical assistants and technologists, for the most part) or in some form of IT/media (systems analysts, animation, etc.).  Though the quality of these institutions varies, these programs survive and thrive because they fill a perceived need for employment-oriented courses of less than 12 months in length.  Universities and colleges don’t fill that need, so the market does.  Simple.

Now, the answer to why we don’t have something more like American private, non-profit universities is a bit trickier.  We actually did, once.  A good chunk of the universities in the Maritimes, Quebec and Ontario started life exactly the way American private universities did: as private, often religiously-focussed institutions making efforts to ensure that local communities would have access to a supply of education teachers and clergymen.  While governments began supporting universities in the 19th century, the assistance was spasmodic, in many places support was not regularized until after the second world war.  Technically, universities like McGill are still private, in the sense that they choose their own Boards of Governors with no interference from government.  They are “public” because they take public money in return for accepting conditions on how the money is spent (observing rules about tuition fees for instance), but there’s nothing to say they couldn’t at some point change their mind about this.

Actually, Canada still has a private system of universities, but they are (with one exception) religious in nature: Trinity Western in BC, King’s, Concordia and St. Mary’s in Alberta, Canadian Mennonite in Manitoba, Redeemer in Ontario, the Atlantic School of Theology – you get the idea.  Quest University in British Columbia, set up a little over a decade ago, is the only secular private institution out there.

And this brings us to the heart of the question: when people ask “why no private higher ed in Canada”, what they really mean is “why aren’t there more Quest Universities out there”?  And it’s a fair question: all over the world,private universities are a major part of national systems of higher education.  Even in free-tuition Germany, over 10% of students choose to study in private fee-charging institutions.  So why not here?

It’s not, for the most part, a legal issue.  Most provinces have legislation which permits private organizations to offer degrees provided they can demonstrate quality of provision (use of the term “university” is a little trickier and usually requires an act of the legislature, but in principle there’s nothing stopping a government from bestowing that term on a private institution).  And yet, despite this we still see few examples of private degree-granting institutions.

To understand why, we need to go back to our observation about why private colleges thrive in Canada at the sub-degree level: because they offer something no one else does.  The way to think about private higher education is that it will thrive where there is a niche that public universities cannot or will not fill.  In most developing countries (as well as in countries like Japan, Korea and Taiwan), private higher education thrives because governments cannot or will not supply higher education in sufficient quantity to meet demand.  In Eastern Europe, private higher education thrived in social sciences in the wake of communism because these faculties in public universities were utterly discredited and/or couldn’t provide education in high-demand subjects like business and commerce.  And as higher education gets more stretched in other countries in Europe one might start to see more private higher education providers (particularly in the UK)

But in Canada, there simply aren’t so many niches.  Our universities are well-funded, cover pretty much the entire spectrum of studies, and compared to most university systems around the world, quite open to covering new and emerging areas of study even if they aren’t “traditional”.  With few niches to fill, there isn’t a lot of room for private providers.  Quest University does its thing by staking out a unique value proposition around pedagogy (the block learning system) and outdoor activities – probably not a niche that could sustain competitors, but enough of one to sustain itself.

Could this change?  Could a new successful university appear in Canada on the scale of Quest, only larger?  Yes.  But it would take someone with deep pockets and a particular eye for strategy.  More on this tomorrow.

October 21

A Prairie Round-up

If you’re a long-time reader of this blog, you’ll know that every spring I put together a little summary of provincial budgets and what they mean for higher education.  A few days ago I decided to put together a slide comparing the cumulative changes in provincial funding since 2011.  Here’s what it looks like, in inflation-adjusted dollars.

Figure 1: Change in real provincial government transfers to institutions, 2011-2 to 2016-17

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What should immediately jump out at you (apart from the raging dumpster fire that is Newfoundland’s public fisc these days) is that while public funding for universities is flat or declining in most of the country, in the three prairie provinces increases have been the order of the day.  So what’s going on out there?

The nature of the trend-bucking has differed across the three provinces.  In Saskatchewan and Alberta, high energy prices kept spending buoyant at least until a couple of years ago.  Since then, Alberta’s new NDP government has continued to spend, whereas Saskatchewan’s has started to retrench (but spending is still higher  than it was in 2011).  Manitoba’s never-too-hot, never-too-cold economy hasn’t see the big revenues fluctuations of its neighbours, but until earlier this year had a government that was prepared to engage in deficit spending in part so as to provide significant support to post-secondary education.

(You can get the gist of recent policy directions by looking at my recent provincial election analyses for Manitoba, Saskatchewan and Alberta).

So what’s in store for those three provinces now?  Well, for the moment they seem headed in quite different directions.  In Alberta, there were a lot of headlines about the NDP government extending its tuition freeze for a third year, but the interesting part of the announcement was that the Government simultaneously launched a review of the tuition policy with a view to a long-term funding solution.  Now, given that this is a government with a heck of a deficit that isn’t going to be solved through rising oil and gas prices any time soon, you’d have to think this “review” is in fact likely to end up twelve months from now with institutions being able to move somewhat on fees.  Because while the provincial government has been compensating institutions for the freeze, that still leaves income growth at around 2%. As we all know, Canadian universities start to seize up whenever the growth rate drops below 4% –  so there’s a gap there that has to be plugged somehow, and higher fees are almost certainly at least part of the solution.

In Saskatchewan, fees aren’t much on the agenda but the level of government support is.  Resource price falls mean that the government is running a $14 billion budget on $13 billion of revenue, so the province is talking very seriously about shrinking the size of government by 7% or so over the next two years. PSE will undoubtedly get its fair share of that cut; and that’s on top of a 7% cut over the last two years.  Yet so fast was expenditure growth in the first couple of years of this decade that even this massive cut will only bring the province back to the level of spending it was at in 2011.  The government speaks of looking for “transformational change” in PSE but the likelier result will be a lot of unpleasant but ultimately non-transformational corner-cutting and muddling through.

Manitoba feels like the place where fireworks are likeliest.  It has a new Conservative government with a mandate to pull back at least somewhat on public finances. Post-secondary education, one of the previous NDP government’s favourite files, seems likely to get hit the worst.  But the new government has some tools to mitigate these losses: tuition (currently 3rd lowest in the country) can rise, and a ghastly, wasteful post-graduation tax credit can be scrapped.  The former seems more likely than the latter, but both are possible.

Meanwhile, the University of Manitoba Faculty Association, the union which sicced CAUT on its own members when an Economics department dispute over curriculum didn’t go the way some people wanted, has decided that now is the PERFECT TIME to hold a strike to support a wage demand of – are you ready for this? – 6.9% over one year.

If UMFA’s serious about this demand, it could be a long strike.  And that’s not because the demand is unaffordable – in theory anything’s affordable if you cut back enough on library budgets or whatever.  It’s simply politics: the new government is not going to go easy on any para-public body which appears to be out of step with the new mood of thrift.  Just imagine the scene at the MB legislature if the institution were to cave on this:

U of M: “We would like some more money please.  We’re kind of strapped on account of having just given the faculty a 6.9% raise”

Conservative Govt: “HAHAHAHAHAHA Come back when you learn to manage your way out of a wet paper bag”

Agreeing to such a rise would be like signing a suicide note.  Unlikely to happen.

Have a good weekend.

October 20

Ideas to Irritate People

The other day I was reading Sydney: The Making of a Public University by Julia Horne and Geoffrey Sherington, when I came across this fantastic idea.

Back in the 1850s, the University of Sydney (which was formed at more or less the same time as our own University of Toronto, and on a very similar model) was trying to figure out how to attract quality academic staff from the mother country.  The problem of course was how to provide them with a decent pay package when they still didn’t really have a good sense of how many students they were going to have (since most income came from student fees, low enrolment meant low income which could be trouble if you over-promised a set salary to a professor).  So they came up with a solution.  Professors were given a low base pay – a few hundred pounds a year – and then given the right to a share (usually 50%) of the fees generated by their lectures.

How awesome is that?

Imagine instituting that rule at universities today.  At a stroke, it wolud reverse all the perverse incentives which currently exist in the way we teach at universities.  Teachers would clamour for undergraduate courses over graduate ones, lower-year courses over upper-year ones, auditoriums over seminars.  In fact, the problem would be that the rewards of the big courses would be so huge that departments would have to make drastic changes to share the wealth.  No more 1000-student courses: to share the wealth properly, we’ll need to make 10 100-person courses, or maybe 20 50-student courses.  Sure, upper-year students might lose out on their small courses, but that’ll be a small price to pay for avoiding the big auditoriums in lower years.

Wait, I have more!

What if you used a similar idea with doctoral students?  Not with respect to enrolments, but completions.  In the Netherlands for instance, the government pays universities something like 80,000 euros per doctorate, but only for doctorates that are actually awarded. Universities, in turn, sometimes charge a fee to a doctoral students but return part or all of it when s/he completes the degree, just to make sure the student has skin in the game.  Why not attach similar kinds of carrots and sticks to timely completion of a doctoral degree?  Not at an individual level – some delayed/failed doctoral degrees have more to do with the student than the supervisor – but collectively.  So if department X fell below a 60% timely completion rate (for instance) the Dean or the Provost could stop approving requests for conference travel.  Below 40%?  Start denying requests for sabbaticals.  I think the short-term effect would be to concentrate departmental-level thinking about how best to collectively ensure better doctoral-level supervision sharp.

OK, now I don’t really believe institutions should do either of these things.  But I do think that incentives matter.  And there are too few incentives within institutions to put student outcomes first.  And the question really is: why is that?  And what can be done to align staff incentives with student needs?

October 19

The Yale Tuition Postponement Option

If you pay attention to student assistance, you know about income-contingent loans.  And if you’ve heard about income-contingent loans, you probably know that the first national scheme debuted in Australia back in the late 1980s.  You might even know that the first theoretical exploration of income-contingent loans was made by Milton Friedman back in the 1950s (actually, he was talking more about human-capital contracts, but close enough.  And you might occasionally wonder: why did it take 30 years to go from idea to implementation?  Well, the answer is that it didn’t: there was an intermediate stage in which a couple of universities tried to run their own income-contingent loan programs.

The year is 1971. Private 4-year universities were probably at their lowest-ever ebb relative to the big public flagships: massive amounts of public money had been pouring into public universities while privates had yet to really perfect their practice of extracting mega-millions from loaded donors.  But Inflation is starting to rise in America as a result of a decade worth of a guns AND butter fiscal policy.  And so schools like Yale began to think about raising tuition to meet higher costs and regain their place at the top of the academic dog-heap.

Enter economist James Tobin – a man who within a decade would win a Nobel Prize and is today mostly known for his advocacy of a beloved-of-the-left tax on financial transactions (the eponymous “Tobin Tax”).  Room and board at Yale College at the time was $3,900 (yes, I know, I know).  The university wanted to raise fees by about $1500 over the next five years, and so President Kingman Brewster (the model for Walden University’s President King in the comic strip Doonesbury) asked Tobin to come up with a scheme that would allow the institution raise said money without putting too much stress on students.

The result was something called the Yale Tuition Postponement Option.  Students could choose to defer part of their tuition (the part that came on top of the pre-1971 $3,900) until after graduation.  Repayment was a function of both loan balance and income: borrowers were required to repay 0.4% of their income for every $1,000 of tuition postponed (a minimum payment of $29/month was set).  Repayments could take as long as 35 years although it was expected to take less time than that.

There was a catch, though.  Loan programs lose money through defaults.  These either have to be made up through subsidy (which is what happens in most government student loan programs) or mutual insurance among borrowers.  Yale had no intention of subsidizing these loans, and so went the latter route.  These were therefore in effect group loans – you kept paying until your entire borrowing cohort had repaid.  You could escape this only by paying 150% of your initial loan and accrued interest.

You can imagine how this went.  A lot of students borrowed, but there was a fair bit of adverse selection (people who worried about their incomes opted-in, people who thought they would earn a lot opted-out).   And as time went on, a lot of graduates groused about subsidizing their less-successful classmates.  The program was phased out in 1977-78 because federal student aid was becoming more generous and because the university was starting to twig to both the problem of adverse-selection program and the problem of keeping in contact with graduates and getting them to voluntarily disclose their incomes.  Eventually, amidst rising alumni discontent, the program was wound up in 2001 and outstanding debts assumed by the University (which by this time could easily afford to do so).

The failure of the Yale Plan was certainly one reason why people were scared off income-contingency for another decade or so, until a reformist Australian government picked up the idea again in the late 1980s.  But from a policy perspective it was not a total loss.  One Yale student who enrolled in the program – fellow by the name of Clinton – thought it was a great idea.    He made it a center-piece of his 1992 election campaign, and an income-contingent tuition option was in place by 1994.  That specific policy never took off, but most of the income-based repayment plans (which are now used by 40% of all borrowers) owe their start to this program.

So, a failure for Yale perhaps.  But a long-term win for American students.

October 18

Presidential Salary Comparisons

The President of Iowa State University was recently reprimanded for crashing one school-owned airplane, overusing the other, and charging the cost to the institution.  The institution’s Board is asking serious questions: such as “why they were paying for the President to go back and forth to his family-owned Christmas Tree business in North Carolina,”  but not, apparently, “why in God’s name does our university own two aeroplanes?” As one does.

As I read this story, I thought “if nothing else, that’s a pretty amusing segue to talking about Presidential salaries, which I haven’t done in awhile.”  I made some international comparisons on Presidential salaries about four years ago, and basically came to the conclusion that i) being an Australian university President was a really sweet gig and ii) Canadian university Presidents were paid a lot less than their counterparts elsewhere.  But hey, what’s a daily blog that doesn’t occasionally revisit the same topic with new data?

So, same rules as last time: For Canada, the data is from the ever-useful CAUT Almanac, except for l’Université de Montréal, which I took from press reports.  For the US, the data is from the Chronicle of Higher Education’s annual survey on Presidential pay (I’d link but it’s paywalled) and is restricted to Presidents of public universities.  UK data is from the Times Higher Education Supplement, and Australian data is from The Australian.  Data for Australia is 2014, for the the UK and the US it is 2014-15 and for Canada it is 2012 (except Montreal, where it is 2014).   Currencies have been converted to US dollars using the 2014 Big Mac Index – if you want to translate these into Canadian dollars, just add 20%.  Figures represent total compensation rather than base pay.

In the first chart, I take the top-ten highest-paid university Presidents in each country and average their salaries.  As is plainly evident, the highest-earners Canadian Presidents are nowhere near as well paid as their foreign counterparts – in fact they receive less than half what top brass are paid in Australia (it’s difficult to be definitive given the different ways of converting currencies, but essentially, the worst-paid President in Australia is better-compensated than the top-earning President in Canada).

Figure 1: Average Salary of Ten Best-paid Public University Presidents in Canada, Australia, UK and US

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Arguably this isn’t an entirely fair comparison because we are simply looking at the average at one end of a distribution.  So, to try to make a more apples-to-apples comparison, I also took an average of salaries at each country’s “top” institutions.  To do this, I looked at the Academic Ranking of World Universities (i.e. the Shanghai Rankings), and took the top 10 public institutions in the US (all in the top 40 worldwide), the top 9 institutions in the UK (the 9 in the top 100), the top 8 institutions in Australia (those in top 150) and the top 6 in Canada (also those in top 150 – meaning Toronto, UBC, Montreal, McMaster, Alberta and Montreal).  Here’s what this comparison looks like: 

Figure 2: Average Salary of Presidents at Top-Ranked Institutions in Canada, Australia, UK and US

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So: everyone’s average drops somewhat because it’s not always the top universities paying the top salaries.  The drops are biggest in the US and the UK, but the rank order of average salaries remains the same: Australia way at the top, Canada at the bottom.  In fact, at roughly equivalent universities, Australian Presidents are making over two and a half times as much as Canadian ones.

To be clear: I’m not making am argument for going hog-wild on Presidential pay here in Canada.  On the whole, I think we’re closer to getting it right on senior exec pay than others are.  But our obsession with executive pay perennial habit of calling out “fat cats” is misplaced.  By international standards, our Senior execs’ pay is pretty modest.  And we keep them away from private planes, too.

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