HESA

Higher Education Strategy Associates

Category Archives: funding

April 21

Harvard. I Mean, Really.

Last week, the Harvard Crimson printed some unofficial estimates on the university’s current capital campaign.  Be forewarned: these numbers will give many of you a heart attack, so to soften the impact I’m going to lead  by providing some background on the campaign. 

Universities raise money.  Sometimes it’s small donations, sometimes it’s big ones.  Sometime the university spends that money right away, sometimes the money goes into an endowment, which means the capital is available in perpetuity and the university only a small fraction each year (often less than the interest earned).  The standard “take” from endowments these days is 4%, hence the fundraising joke “the quickest way to turn $1 million into $40,000 is to endow it”.  Big donations – the kind you read about in the papers – are almost always endowments.

(The campaign numbers are two paragraphs away.  Are you sitting comfortably?  I want you to be sitting comfortably, because it’s going to be a shock.)

Every 15 years or so universities do something called a “capital campaign”. This is an intense, time-limited effort to get a lot of money out of donors, usually for purposes of acquiring specific physical assets like a new building or two – though the politics of universities are such that capital campaigns aren’t entirely about infrastructure (it’s suicide not to fundraise for scholarships at the same time, for instance).  Capital campaigns always have the same format: they start with a “quiet” period in which money is raised behind the scenes.  Then, after a year or more, they have a public launch ceremony in which the institution sets a goal for the campaign and announces that “surprise!” they’ve already met some suitably high percentage of that goal.  Needless to say, this is always done in such a way that the announced goal will be surpassed.  The face(s) of this effort are always drawn from the senior ranks of local business and alumni.

(Are you ready?  The number is coming.  Deep breath.)

The largest ever university capital campaign was concluded in 2011 at Stanford University, which raised $6.2 billion.  Naturally, when Harvard launched its campaign in 2013, it set a target of $6.5 billion ($8.1 billion Canadian), of which it raised $2.8 billion during the “quiet” phase.  Last week the Crimson broke the story that the $6.5 billion target had been reached.  The University declined to comment, noting that it only announces updates every October, but if true this means that with two years to go, the campaign is on track to raise something on the order of $10 billion by the time it finishes in 2018.

(Everything OK?  Another deep breath.)

Think briefly, if you will, about what $8 billion looks like.  It’s about three years worth of the entire budgets of our granting councils.  It is 33% more than the gross domestic product of Prince Edward Island; (or, if you want to get all internationalist about it, equal to the GDP of Malawi).  It is more or less equal to the aggregate operating budgets of all the universities in Ontario.  And remember, this is just the take from four and a half years of a capital campaign.  We’re not talking the entire endowment here – that’s six times as large again (US$37.6 Billion at last reporting but presumably around US$40 billion now).

Of course, all of this money comes tax-free.  Donations are deductible to the donor, and of course universities are charities and consequently exempt from most taxes.  But at a certain point you have to wonder whether or not Harvard is a charity in any meaningful way.  What’s the public good of having all this money go to a single institution?  Assuming a 30% tax rate, the Harvard campaign has cost American governments almost $2.2 billion in lost revenue.  Imagine the number of students that could be supported with that money. 

Recently, the legislature in Connecticut debated taxing charities’  endowments (read: Yale’s endowment) if they exceeded $10 billion because beyond a certain point it’s tough to make the case that there’s a genuine public benefit to that money.  In the end, they chose not to pursue this idea, but this is – deservedly – going to be a significant public policy issue for the next few years.  There are limits to the amount of money a university needs.  Berkeley aside, the top half-dozen American research universities are now reaching that limit.

April 20

The Politics of Unfreezing Tuition

Freezing tuition is a terrible policy.  Free tuition is actually a better idea.  At least it’s based on a particular theory of access and public expenditure.  A tuition freeze is just a decision not to take any more decisions.  It’s a recipe for drift.

And what’s worse, the longer you let policy drift, the harder it is to stop drifting.  Case in point: Newfoundland.

To recap: In 2000, the province of Newfoundland decided to reduce tuition by 5% a year over four years and then freeze tuition thereafter.  And it’s been frozen ever since, with the agreement of all political parties.  The ostensible rationale for this is that it improves access to post-secondary (though in truth participation rates remain well below those in Ontario, where tuition is 3 times as expensive); in practice, what it’s done is reversed the flow of student from Newfoundland to Nova Scotia, bringing home their own students and attracting a few hundred new ones.  

As long as some of those new students were staying in province and helping reverse the long-term population loss, that was probably a good deal for the province.  Of course, no one actually tracked this to see if it was true and the policy was working, but that’s cool – this is Canadian postsecondary policy and we’re used to never evaluating the success of a program.  But now that oil revenues have plummeted and unemployment seems headed back towards 20%, it’s harder to maintain that this is happening, and so the cost of the tuition pledge seems to outweigh the benefit.  And given the government is currently spending roughly 33% more than it is taking in tax revenue, time for a change of policy, right?

Wrong.  In last week’s budget, the government raised all sorts of fees related to apprenticeship, which tends to heart lower-income learners.  It cut student aid, turning part of its vaunted grants programs into loans, which also hurt lower-income learners.  And it cut $14 million from Memorial’s budget.  But God forbid it touch tuition.  Upper middle-class people pay that stuff. Nuh-uh, no way, not touching.

Actually it’s somewhat worse than that.  The government didn’t touch tuition, but instead started making noises about how Memorial has always had the ability to set it’s own tuition (nudge, nudge) and of course the government expected to do what was right for students (wink wink).  I mean, first of all this is nonsense – the tuition freeze promise has been formally written into every provincial budget since 2000 – and second of all it’s unbelievably cowardly.  Unable to muster the political courage to get rid of tuition on its own, the government is reduced to pleading for the university to do something (but maybe not too much) to help it out of a jam.  I suspect if Memorial weren’t so broke ($54 million in cuts over two years, if you include cuts to the pension plan) it would tell the province to grab a chair and then rotate at an ever-increasing speed around that idea.  I know I would.

But the point is this: even a new government, with a massive majority in the legislature, facing the biggest fiscal emergency in twenty years, and having the courage to cut all sorts of programs still doesn’t have the courage to touch tuition.  It will touch all sorts of things which hurt the less-fortunate, but not tuition.  The upper middle-class defends its privileges to the last.  Which is precisely why those privileges shouldn’t be given out in the first place.

April 19

The Balkanization of Canadian Student Aid

So, a couple of things happened late last week worth mentioning:

First, the Newfoundland Budget was released and as predicted it was a slash-and-burn exercise.  The province, facing a deficit of something like 8% of GDP, had to make major changes.  Unbelievably, the tuition freeze stayed, sort of (more on this tomorrow), but student aid took a hit.  Remember in 2014 when Newfoundland eliminated grants?  That’s over, the first $40 week in provincial aid is now a loan again.  But more importantly, the government has completely eliminated grants for students studying outside the province if their program of study is offered inside the province.  So, a law student going to Dal gets the grant, but if God forbid you want to study Science or Engineering somewhere other than MUN – it’s loans only on the provincial side (said students would still receive federal grants).

Second, the premier of New Brunswick announced pretty much out of nowhere that low-income students in his province would be free and that details would be available from the Ministry of Advanced Education “in a few days” (at time of writing we’re still waiting).  Not many details yet – from the few nuggets available it sounds a lot like the Ontario program (provincial tax credits are being axed) – which is of course a Good Thing.  But one key point did come out, namely that the grant would not be portable.  If you chose to leave New Brunswick, it would be loans only on the provincial side.

I. Am. Furious.

The extent to which young people in Atlantic Canada are treated as “resources” to be hoarded is just appalling.  It’s almost never “how can we attract young people”, it’s “how can we keep the ones we’ve got from leaving”.  From a very young age, bright young people are essentially sold a bill of goods by guidance councilors and community leaders – “don’t leave the province, it’s a betrayal to leave the province, you are our future”.   The guilt-trips are outrageous.  And now along comes provincial policies in Newfoundland and New Brunswick to use financial means to punish students who have the temerity to want to study outside the province. 

At least you can sort of excuse the Newfoundland one on grounds of austerity because financially that government really is in trouble.  But New Brunswick?  They canned a huge graduate tax rebate last year and promised to re-invest the money.  There is no way that amount of money wouldn’t cover an extension of the program to out-of-province students.  Hell, Ontario actually cut total grant + tax-credit dollars in its announcement and still managed to extend the coverage of its new grants (currently, the Ontario Assistance Grant is portable but the Ontario Tuition Grant is not – the new grant is fully portable).  Instead, New Brunswick is doing this specifically to try to divert New Brunswick students away from out-of-province schools in order to give its own universities more tuition revenue and hence obviate the need for the province itself to actually pony up some money.  Brian Gallant calls that a win; we’ll see if he thinks the same when New Brunswick lose students after Nova Scotia and PEI retaliate in kind.

Now look, I get it.  People want what’s good for their communities, and the economics of Atlantic Canada have been scary for decades.  It’s easy to retreat into a defensive shell.  But holding your own youth hostage is not cool.  Those kids aren’t resources to be hoarded; politicians need to let them go and succeed wherever they want to succeed.  Student aid should be about expanding opportunity, not limiting it.

These changes need to be reversed.  And if the provinces won’t do it on their own, the federal government should change the legislation underlying the Canada Student Loans Program to penalize partner provinces whose loan programs don’t provide mobility across Canada.  More than ever before, their programs are built around federal largesse – Ottawa should extract something in return.  And freedom to study without penalty anywhere in the country is a right worth fighting for.

April 18

Some Alternative Explanations for Provincial Funding Decisions

So, last week (see here) I contrasted the fact that higher education was a consistent winner at the federal level over the past twenty years, and contrasted that with the fact that higher education had largely been a loser at the provincial level since about 2010 (and not just in the sense that funding is falling in real terms – also in terms of having the ability to offset those losses with higher fees).  I went on to suggest that this contrast was more than passing curious since both levels of government are ultimately responding to the same electorate.  And I finished by saying that the only possible answer here was that politicians and the public are a lot happier with what universities and colleges are doing on the research front than on the undergraduate teaching front.

A few readers pointed out that it was a bit facile to call that the “only possible answer” and offered some possible alternative explanations, including:

  • The state of the economy and provincial fiscal capacity.
  • Changing demographics and lower student numbers
  • The fact that some provinces at least have privileged resource development over knowledge production
  • Provinces understand that universities can make up the difference by loading up on international students

OK, so clearly I shouldn’t have said my explanation was the “only” possible explanation.  But I still think it’s the most likely one.  Let’s run through those possibilities.

State of the economy?  Both levels of government are suffering from weak growth, so it’s difficult to use as an explanatory variable.  Yes, the feds are in somewhat better shape fiscally and able to dive into debt in part to fund higher education, but that hardly explains higher education’s success in the latter Harper years.

Privileging resources production over knowledge production?  I think that actually proves my point.  If post-secondary education can’t compete with commodities whilst we are in the middle of the mother of all commodity downswings, then post-secondary education’s perceived value proposition must really be terrible.

Demographics?  This could be a more persuasive argument – the reductions in the real value of grants look somewhat less scary in some provinces if you express them in per-student levels.  But a) that doesn’t explain a reluctance to see tuition rise and b) the reductions in government grants don’t map onto changes in demographics very well (i.e. the biggest drops aren’t in the provinces with the biggest demographics issues).   This factor is in fact probably exercising some influence on policy-making but I don’t think it’s in the foreground.

The “foreign students will pay for the difference” argument?  This is an interesting one because it reverses the usual causality argument – is increasing internationalization of enrolments a cause or a consequence of government funding decisions?   I tend to view it as the latter, but can’t really rule out the former.   But man, if it is the former, provincial politicians should be called out on this.  Someone ought to actually force them to say “do you expect post-secondary institutions to increasingly fund themselves by being finishing schools for the Asian middle-class”?  Because if the answer is yes, everyone needs to be thinking much more carefully about their internationalization plans.

So maybe there are some other potential explanations.  But ask yourself this: can anyone imagine a government relations strategy which is successful in reversing this decline which doesn’t rest on an improved “offer” from post-secondary institutions?  Even if demographics were the problem, the answer to the problem is still going to hinge on the question “what can institutions do better/differently that would change politicians minds?”  Even if dissatisfaction with current offerings is not the (sole) root of the problem, can anyone imagine a positive solution which involves universities and colleges staying at the status quo?

No?  Me neither.

April 14

A New Deal

Yesterday, I noted that  for the last few years provincial governments have refused to either increase funding to PSE institutions to keep up with inflation, or give institutions latitude to raise tuition to make up the difference. Effectively, provincial governments seem a lot more concerned with ensuring that post-secondary education is cheap than with ensuring that it continues to receive real increases in income.

There are competing opinions about why this is the case. My view is simply that few provincial governments see much political return in allowing institutions to increase fees and/or increasing government grants – which is another way of saying the present value proposition for undergraduate education is not very attractive. I would love to see more evidence about this. Imagine if university and college government relations-types would actually go straight up to MLAs/MPPs/MNA/MHAs and say “what is it we could do to get you to spend more money/allow us to raise tuition”? But they seem not to be doing that (or if they are, the answers are disturbing enough that they are not telling the rest of the community). I’m going to go with Occam’s razor here and stick with: they aren’t buying what the sector is selling at the price the sector wishes.

So what to do? Well, broadly, there are two choices.

The first is to do nothing. Don’t change a thing. Avoid the hard questions and the hard trade-offs and keep telling each other we just need to tell better stories. The result will be years of slow decline. To be fair, some people may prefer this to large-scale change. Fair enough. That’s a defensible position. After all, we could drop twenty percent of real dollars per student and still only be back where we were in the late 1990s. It’s unpleasant, but not the end of the world.

The second is to face up to why public support for new money in post-secondary education money has been dwindling. I don’t have any special insight into this but my guess would be that the cause is rooted in some mix of

1) A perception that salaries at post-secondary institutions are too high. To take one example, when the Windsor Faculty Union gets militant starts threatening strikes despite  an average salary of over $134,000  in one of the country’s least expensive housing markets, you have a perception problem. The same issue arises when universities continue to add senior non-academic staff positions at salaries over of over $100,000, or when a president double-dips his or her salary. In Ontario, the number of university and college employees in the sunshine list has gone from 1190 and 39 (respectively) to 17,065 and 4,910. The numbers will differ a bit across Canada but not much. And yes, that’s not a completely fair comparison because the cutoff line hasn’t been adjusted for the ~50% inflation over the same period. But public perception is not always fair. The reality is that the public looks at institutional salaries and it sees fat

2) A perception that undergraduates – in arts and sciences at least – are a low priority to institutions. There are too many stories of undergrads stuffed into 1,000 seat auditorium, taught by sessionals for half their degree, or finding required courses unavailable due to either size-cap or simply disappearing from the calendar for a semester. This is unfair to colleges, because frankly they do a whole lot better than universities in terms of keeping education at a human scale, but what universities do in lower-year infects a lot of the public perception about PSE in general.

3) A perception that they are not preparing students for the labour force. This one drives many in universities round the bend, because there are lots of disciplines which are not designed to lead to particular careers. But that’s not the issue. Majors are majors and careers are careers – they don’t need to line up and in many cases they shouldn’t. But according to over 80% of students (and probably around 100% of legislators) the reason students and governments pay for post-secondary education is to help students get better jobs. Institutions can accomplish this through a number of different means: providing experiential learning (like, actually provide more, not just the exercise in re-labeling I’m seeing at many universities), building more explicit assessment of communication, team-work and critical thinking skills into the curriculum, and generally treating learning outcomes and career transitions as if they mattered. Colleges are in some respects better than universities at this, but even there many programs don’t have direct labour-market transitions (anyone looked at placement rates in Police Foundations programs lately)

4) A perception that PSE Institutions are not transparent with data. This is undeniably true. I don’t think I need to elaborate on this.

Regaining a measure of public trust will almost certainly be a prerequisite for increases in public investment. Universities and colleges are going to need to make changes – fairly dramatic ones, I think – in these four areas. If I were in university government relations, I’d be field-testing ideas with politicians, to see what it would take to create a New Deal for post-secondary education. What if institutions froze salaries over $100,000, shrank undergraduate class-sizes, revamped curricula to make them more outcomes-focused and became much more transparent with data? Would that be enough to convince the public that what was on offer was a better, more valuable product, one worth investing in?

I don’t know. But it’s worth asking. Because that other option, the long, slow, decline option, looks pretty unappealing.

April 12

Going Overboard on Basic Research?

I’m getting some worrying vibes from the new federal government.  It’s nothing I can directly put my finger on (other than some annoying Ministerial tweets last week which seemed to claim that any money put into PSE infrastructure is ipso facto about “innovation”) but I get the sense that the new government is in danger of making some real mistakes with respect to innovation policy.  Specifically, I’m worried that in the rush to repudiate the Harper legacy in all things science, they may end up with an innovation policy that takes us back to the naïve 1990s.

What do I mean by this?  Well, in the late 1990s, when the Chretien government began seriously investing in research (after having initially slashed the bejesus out of it in the 1995 Budget), their rationale went something like this: growth requires innovation, research is the wellspring of innovation, therefore:

      $ to universities for research → a miracle occurs → productive high-tech economic future

And on that not very sophisticated basis, billions were spent.

Now, without denying some good came from this, I think it’s fair to say that this is a pretty limited view of how innovation works.  For one thing, there’s an implicit suggestion that innovation is about “new discoveries” being turned into “new products”.  And while that is one type of innovation, it is far from the only one.  What about process innovations or business model innovations, to name but two?  Why focus on the “big breakthroughs” when so many incremental innovations are possible?  Why focus on only one part of the value chain (and possibly not a part Canada is particularly good at) when there is value in so many others?

To put this more bluntly, to assume that basic research is the only type of research an innovation policy should fund is crazy.  Serious countries understand this.  It’s the reason, for instance, that Germany, besides funding its universities and the Max Planck institute, also funds the Frauenhofer Institutes, which is one of the world’s greatest performers of applied research.

Over the course of the last few years there have been many complaints that the Harper government focused too much on applied research.  True, all granting councils (but especially CIHR) were pulled in the direction of having grantees justify their funding in terms of “immediate benefit” and finding commercial co-partners, etc, and for the most part this idea of injecting some “appliedness” into basic research funding was bad policy.  But the fact is that the actual amount we spend on research which is exclusively applied in nature – that is, Frauenhofer type-stuff, or programs like the Industrial Research Chairs – is actually pretty small.  The revamp of the National Research Council was a stab in a Frauenhofer direction – albeit a somewhat clumsy stab, with over-inflated expectations of quick success.  But now even that’s been thrown into question, the revamp now “suspended” pending the outcome of a review of the government’s review of its basic science policies. 

To be clear, it’s not that the government has yet made any definitive false steps.  But rhetorically it seems to be backing itself into a corner in terms of thinking of innovation exclusively in terms of basic research plus maybe funding some exciting business/university co-location spaces (an idea which I think we could also describe as being less-than-fully-baked, as I explained back here.  That would be a bad mistake.  What Canada needs is a full-spectrum innovation policy, one which doesn’t put all its eggs in the new discoveries/new products basket. 

Or, to put it another way: yes to basic research, but stools need more than one leg.

April 05

Manitoba Election Manifesto Analysis

So, with Saskatchewan’s election out of the way (results unknown at time of writing but I assume it was a Sask Party blowout), it’s time to focus now on the election in next-door Manitoba.  This is somewhat difficult because neither the governing NDP nor the opposition Progressive Conservatives have chosen to do anything so mundane as issue platforms, preferring instead to simply issues a bunch of “priorities” or “announcements”.  The reason for this is straightforward: the Tories are up 20 points and provided no one catches Brian Pallister drinking blood in public, they will win the province’s biggest majority in over a century.  But it can lead to some confusion over what is actually being promised.  Like when Greg Selinger pledged to double the number of yurts in the province.  He said it, but there’s no corresponding pledge on the party website – so is it a promise, or not?

(Obviously the duty of any social democratic government to rectify the market failure in yurts should be clear; the real question is why it’s taken this government 16.5 years to act on this imperative.  I digress).

Enough grumbles: here’s the lowdown.

Over the past sixteen years, the NDP have treated higher education tolerably well.  They’ve put a reasonable amount of money into need-based student assistance (introducing a loan remission program in their first year in office).  Money to institutions has gone up slightly more than the Canadian average, but much of it was to compensate for a decade-long tuition freeze, so in fact the institutions’ net financial position ended up lagging the rest of the country somewhat.

But in the last few years, Manitoba has been arguably the best government in the country – the only one which has consistently given institutions increases ahead of inflation.  That’s pretty good.  On the other hand, it has also introduced one of those god-awful graduate tax rebates, with the result that – provided you graduate on time and stay in the province – you’re likely to receive more in grants and tax credits/rebates than you pay in tuition.  That’s inane. 

The NDP’s initial instinct in PSE always seems to be “how can we hand money to students”?  Its election promise to convert the provincial student loan program into a fully grant-based program, as well as spend $4.5 million doubling the funding for the Manitoba Scholarship and Bursary Initiative (MSBI), which is a 1-to-1 top-up for private donations made to institutions for the purpose of establishing scholarships. 

The Liberals appear to have made only one pledge in post-secondary education: that is, to match the NDP on converting loans to grants.  The Tories also appear to have only one promise, and that is to make two changes to the MSBI – increase it by 50% (that is, 50% more than now, but still $2.25M short of what NDP are promising), but changing the rules so it is not a 1-1 leverage but a 1-2 leverage (i.e. $2 in donations triggers $1 in matching funding).  This, apparently, will “leverage more money from the private sector”, which is a stretch if you ask me.  None of the parties seems inclined to touch the demonstrably wasteful and ineffective graduate tax rebate.

The NDP have also made two specific commitments to institutions: to fund a $12 million expansion of student family housing at the University of Brandon (I know little about this project but I assume it would be focused specifically on helping aboriginal students) and a $150 million commitment to the University of Manitoba’s “Front and Center” capital campaign, 80% of which is dedicated to infrastructure.  And if you find it strange that the government is contributing to a capital campaign, well, that’s Manitoba for you.

What’s distressing here is that – as in Saskatchewan – none of the parties have made any pledges at all with respect to core funding of institutions.  Now that might not be disastrous since not one of the parties are looking to implement swingeing cuts (although the left take it for granted that the Tories are lying about only wanting to restrain the rate of growth in government spending), but it does suggest that no one thinks core funding is a priority.  And that’s a problem for the whole sector.

Bottom line: if you’re voting on PSE alone, you vote NDP based both on past record and present promises.  They spend a lot of money on PSE, even if too much of it is wasteful and ineffective.  But the opposition parties don’t appear to put a lot of thought into anything other than how to hand more money to students.  And we probably shouldn’t reward parties with such one-dimensional views of higher education.

April 04

How to Improve Quebec Student Aid

As I noted last week  , the Government of Quebec is about to receive an unanticipated windfall in the form of an $80-$100M/yr “alternative payment” from the Government of Canada when the new Canada Student Grant system comes into effect. What should it do with the money?

An easy reaction from the Finance people would probably be “stick it into general revenues”. The student aid system has got a lot more expensive in Quebec over the last few years. Between 2008-9 and 2013-4, Quebec’s expenditures on student grants rose by 40% after inflation ($563 M vs $405M, in 2015 dollars) which for a province which has been trying very hard to deliver balanced budgets is pretty impressive. So there will likely be some pressure to swallow the cash just say “hey, this money is for our recent upswing in spending, it’s just…late”. And of course there’s not a thing the feds could do about that if they wanted to. That’s how alternative payments work: they are “in respect of” student aid, not “for” student aid.

But let’s assume for the moment that the province wishes to use some or all of that money for student aid: where should it spend? Traditionally, students have usually pushed for reductions in the loan cut-off. In Quebec, the first few dollars awarded to a student are loan, up to a ceiling: after that, everything is grant. The ceiling differs by level of study and somewhat annoyingly is expressed as a monthly limit, but assuming an 8-month school year (yes, CEGEP years are closer to 9-months but stick with me here), the loan cut-off is $1776 for CEGEP students, $2464 for university students, and $3272 for graduate students. Above that it’s all grant. So the simplest change you can make is simply to lower that cut-off, and turn loans into grants.

But let me suggest that’s not the best way to spend the money. Instead, Quebec should do something less sexy, but more effective: change its parental contribution rules. Though Quebec has a reputation for being more accessible than other provinces because of low tuition-fees and relatively generous grants (for those deemed to have need), there is a category of students in Quebec who are actually much worse off than elsewhere because of more stringent contribution rules.

The following graph shows expected parental contributions by province and level of family income.

Figure 1. Expected Parental Contributions Towards Tuition Fees by Family Income* and Province 

Expected Parental Contributions Towards Tuition Fees by Family Income and Province

*Assumes a family of 4, both parents working, one making 10k more than the other.

Below $45,000, all provinces are the same – parents are not expected to contribute in any province. Above about $100,000 Quebec is better than any other province because tuition is lower – parental contributions effectively cap out because tuition is low (they may still get asked to pay for cost of living, but this is pretty similar everywhere. But look at the space $45,000 and $70,000 in family income: there, parents are asked to considerably more – or, to put it another way, students from families in this area receive less in student assistance than their peers elsewhere in the country.

When you hear complaints about student aid in Quebec, this is mostly what it’s about: middle income kids who can’t get loans, let alone grants. If Quebec used its new money to soften its parental contribution requirements (that is, basically shift its curve rightwards by $25,000 or so), it would allow substantially more students into the system and give a break to families in the $45-70,000 annual income bracket. And politically, who wouldn’t want to help this group?

Des idées pour vous mettre une puce a l’oreille…

 

March 08

The Coming Cost Debate in Ontario

Today I want to think about how the new Ontario system of student assistance is going to play out.  I think there is the potential here for quite an interesting and useful debate; but the timetable is somewhat tricky.

As you will recall, the Government of Ontario is rolling out a plan to provide enough grants to fully offset tuition in most university and college programs for students from families with incomes of less than $50,000.  That’s going to happen by 2017-2018.  But the really interesting thing they want to is what they call “net billing”.  It’s going to roll out sometime in early 2018 for students starting in the 2018-19 year.

Until now, student aid in Canada has worked on the fairly bonkers premise that you don’t need to know anything about your student aid package until after you’ve applied to and been accepted by an institution.  Mostly, that has to do with Canadians governments’ instinct to make things easier for themselves more than for clients.  You see students apply for college/university right around the time that governments make budgets (i.e. January-March).  Governments like to have the flexibility to change programs entirely at the last minute, and so prefer to make students wait until after budget season to apply for the next year’s aid.  What Ontario has done is say “that’s stupid”, and will now accept applications a few months earlier so that students’ aid request can be processed at the same time as their applications.  In effect the province has guaranteed that henceforth changes to aid are going to have to be announced a full application cycle before they take effect.  Result: henceforth, students will see on their acceptance letter what tuition is, what grants they will receive, and what “net tuition” is.

Now in the short term, this will work extremely well for the governing Liberals because by a COMPLETE COINCIDENCE (no, really), the next provincial election is scheduled for Spring 2018.  So tens of thousands of students and parents will be receiving these letters announcing clear, accurate (and low) net prices right before voting.  Amazing how that happens.

But in the slightly longer term – say the first twelve months of a new government, when some serious decisions are going to have to be made about paying off the province’s world-beating debt – there’s going to be another debate.  Because the data that feeds into those admissions letters will be in universities’ hands.  And they are going to show in excruciating detail how much public subsidy is going to people who don’t really need it.

Think about the histograms the Council of Ontario Universities will be able to produce.  They’ll be able to show, by income level and field of study, how little families are actually paying.  And they’ll be able to do it not just in reports for wonks like me, but also to parents in the actual acceptance letters.  “After grants, you pay: $1,000.  Actual cost of child’s education: $18,000.  Degree of subsidy: 94.5%”

For families under 50K, the average payment will be zero (which is about where it should be), and the figure will show 100%.  But families around $100K, whose net tuition payment might end up being $2000 or $2500, might be surprised to learn that they are being subsidized to the tune of 88-90%.  And families at $175,000, subsidized at perhaps 65%?  Hmmmm.

I don’t think many people – other than say, the Canadian Federation of Students and their wilder-eyed allies – genuinely believe that tuition for children of wealthier families should be free.  Most people agree that there should be some sort of net price slope, running from zero for students from poorer families and upwards as family income increases.  There’s no consensus about where the threshold for going above zero is, and no consensus about what the grade of the slop should be.  That’s mostly because we’ve never had data to look at the question properly before. 

But soon we will.  And that is going to kick start a discussion about who might be able to pay more, especially in times where governments are apparently no longer prepared to hand new money to universities and colleges.  Only this time, no one is going to be able to make misleading arguments about tuition and how it affects the poor, yadda yadda because  a) everyone will finally understand how little low-income students pay and b) because proposals to raise fees will explicitly be made in terms of net fees, and can be targeted specifically to on those families who can pay.  In fact, to start with they won’t be phrased as tuition increases at all, they’ll be phrased in terms of diverting some subsidies from (better-off) individuals to institutions.

And that’s all good.  We will -finally- have informed debate.  Expect the summer of 2018 to be particularly interesting, policy-wise.

February 11

“Corporate, Neo-liberal Universities”

Yesterday, we examined Jamie Brownlee’s claim that government’s were engaging in “austerity” in order to ensure that universities became “corporatized”.  The conclusion was that you have to use some pretty idiosyncratic definitions of austerity to make the term stick even half-way; and even then, it’s impossible to make the charge stick after about 1995.  But what about the more general charge of universities becoming “corporatized”?  Does that have any traction?

The main problem with examining this claim is that the word “corporatization” – much like the term “neoliberal” – can mean pretty much anything one wants it to mean.  I went and checked Brownlee’s PhD thesis for this (available here); in the course of the first few pages, he offers up a number of quite different definitions, without really remarking either on how different they are, or on their implications.

For instance, he says:  corporatization” (refers) to the process and resulting outcomes of the ascendance of business interests in the university system.”  Which is fine I suppose, though it depends quite a bit on how one defines “business interests”.

But there are loopier definitions referenced, too: “Corporatization in the university context involves providing businesses with the means to socialize the risks and costs of research while privatizing the benefits, and to accrue advantages through the transfer of technology to the private sector. It subsidizes the retraining of the corporate workforce through a vocational and technically-oriented curriculum, at the same time as increasing marketing opportunities for corporations and bolstering the perception of business legitimacy in higher education”. 

So here, the notion of research externalities simply goes out the window.  How about the idea that some basic research should be publicly-funded because there are types of research that the private sector will not undertake, as it cannot efficiently capture all its benefits?  That’s now twisted into some kind of corrupting evil because the resulting transfer of technology can be described as a “subsidy” to the private sector.  Also, in a description that will amaze engineering faculties worldwide, simply having a technically-oriented curriculum is now a form of corporatization.

Here’s another gem of a definition, which describes a corporatized university as: an institution that is characterized by processes, decisional criteria, expectations, organizational culture, and operating practices that are taken from, and have their origins in, the modern business corporation. It is characterized by the entry of the university into marketplace relationships and by the use of market strategies in university decision making”.

The first part of that sentence is magnificent in its scope.  Virtually anything could be described as an “operating practice”, which has its origin in the modern business corporation.  “Making biweekly payroll”, for instance.  Or, “actively finding efficient ways to run things”, or the dreaded “finding out if people are doing their jobs and rewarding them accordingly”.  How terrible.  How neo-liberal.

(An aside: I hear lots of cheap talk about “neo-liberal universities”, but nothing about “neo-liberal hospitals”, which are far more advanced than universities at using management techniques that find their origins in the modern corporation.  Why is that?)

The second half, the bit about market relationships, is in some ways even better than the first.  Now the mere existence of tuition fees, or even the notion of student choice, can be used as evidence of “corporatization” because anywhere where money changes hands obviously implies corporatization.  In fact, even a no-tuition system where institutions are paid on some kind of enrolment-basis might be described as “corporatized” or “neo-liberal”, because there would be (horrors) an incentive for universities to enrol more students, and that might lead them to use “marketing techniques” to persuade students to come – which of course is prima facie evidence of corporatization!

(Another aside: I recently saw someone on twitter claim that the increasing numbers of bureaucrats in universities was due to rankings, league tables, and other forms of neo-liberal control.  This is perhaps the first time in recorded history that neo-liberalism has been charged with the crime of increasing public-sector employment.)

So, are Canadian universities “becoming more corporatized”?  Well, if you define corporatization as, effectively, “taking any steps at all to ensure revenue and expenditure balance”, then yes, they are becoming more corporate all the time.  And a good thing, too: because in the real world the alternative to so-called “neo-liberal” universities are either bankrupt universities or much smaller, more access-restricted universities.  Which one would you pick?

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