HESA

Higher Education Strategy Associates

Category Archives: Funding and Finances

January 09

You Couldn’t Make It Up

This email is G-rated, so I can’t use the full range of sexual/scatological imagery needed to describe my true feelings about the Ontario government’s Tuition Rebate announcement last week. I’ll keep it to: I told you so.

To recap, the Ontario Liberals made a not-particularly sensible election promise to give a 30% rebate tuition to full-time dependent students. But at least it involved giving some new money to low-income students, even if it came at the cost of providing a lot of money to families who clearly didn’t need it. And at least their proposal wasn’t as dumb as the CFS critique of it, which demanded (with the usual self-righteousness) that the government give less money to low-income students so that students from families making over $160,000/year not be excluded.

(Seriously: CFS’s definition of “progressive” policies includes ones with redistributive outcomes like the Bush tax cuts. Obviously, student views need to be heard, but let’s not pretend the CFS’s possess intellectual coherence).

Anyways, the Liberals got post-election religion on the deficit and someone, somewhere – the Premier’s office, maybe? – subsequently decided that the new grant had to be revenue-neutral. That meant the rebate went from being a good-news new money story to a money-shuffling what-the-hell? story.

The source of the $400 million needed to fund the rebates is still unclear. We know that some will come from the elimination of the Textbook Grant – hilarity alert: this was the Liberals’ signature PSE promise in the 2007 election – the Queen Elizabeth II Scholarship and the Ontario Student Trust Fund. We also know that some will come from displacement; students with relatively high need who get the new grant up front will get less OSOG at the end of the day (something the Liberals who spun this three months ago swore blind was never going to happen).

Now, those two sources don’t add up to nearly $400 million, so there’s some more cuts coming that we don’t know about. But based on what we do know:

– Students from high-income families who get this grant will be $800-$1,600 richer. Students from low-income families who are needy enough to receive OSOG will be no better off because of displacement.
– The Textbook Grant and the QEII were more narrowly targeted on income than the rebate – killing one to fund the other means, on aggregate, shifting money from poorer families to better-off ones.

Bottom line: cannibalizing existing programs to fund the Tuition Rebate means more money for upper-income families and less money for low-income ones. Oddly, the CFS is still unhappy, despite this being exactly what they asked for. Not just bad policy, then: bad policy presented so poorly your main critics don’t realize they got their wish.

Honestly, you couldn’t make it up.

January 03

Our 2012 Forecast

Hello, all. We’re back up and running at HESA Towers, and we’re starting the year with a list of things to look for in 2012.

The #1 story of the year in Canadian higher education will almost certainly be labour unrest. The faculty strike that just ended at Brandon lasted a staggering 45 days while at McGill, the non-academic staff were on strike from September to early December. Unions appear to be getting bolshier while money is starting to become tighter – not exactly a recipe for campus harmony.

Budget season won’t be pretty. At the federal level, ministries have all been told to present options for cutting budgets by ten per cent (best evidence yet of the Harper machine’s media management excellence – the press hasn’t caught even a whiff of what’s on the way). Transfers are safe, but program spending probably isn’t; granting council money that doesn’t look like value for money is probably at some risk.

In the provinces, our best guess at the moment is that we will see significant funding increases in Newfoundland and Saskatchewan, real declines in Ontario and B.C., and status quo everywhere else. At least one and possibly two provincial governments will significantly revamp their student aid programs.

On the international stage, it will become clearer that higher education reform in India is a mirage, while in China, sky-high levels of institutional indebtedness plus continuing high rates of graduate unemployment will push the sector into major reform. In Europe, the repercussions of the financial crisis will be centre stage, and it will become clearer that the Bologna process has become more a discussion group than a reform process (albeit a pretty interesting one). In the spring, all eyes will be on the U.K. to see how the largest tuition hike in history affects application and enrolment figures.

Financial pressure on American institutions will ease slightly as state tax receipts rise, but student debt will occupy (so to speak) centre stage and likely play a prominent role in the presidential election. Unlike the rest of the world, the search for solutions to student debt in the U.S. lies squarely on getting institutions to be more cost-effective; expect echoes of that debate to waft north across the border.

Last but not least, there’s the ultra-important Human Capital Song Contest, which exactly NONE of you have chosen to enter so far. Either you were all really busy over the holidays or you are collectively lamer than a Malaysian student loan fight song (MP3). I prefer to believe it’s the former, so I’m leaving the contest open for a couple of more weeks.

Back to work!

December 12

Comparing Support for the Social Sciences and Humanities

After writing about SSHRC a couple of weeks ago one very loyal reader requested that I elaborate on the point that the social sciences and humanities are treated well in Canada compared to other countries. I’m a sucker for loyal readers, so:

I’ll say straight off that that comparing national granting council budgets is tricky because there are some significant structural differences in the way research gets funded in different countries (i.e., not all funding goes through granting councils). When reading what’s below, remember I am likely missing some important mitigating factors that might affect the comparison. If you spot any, let me know – I’ll be happy to print corrections to any biases I may have here.

With that caveat, let’s check out how the rest of the English-speaking world funds granting councils.

Canada’s total granting council budget is split 43.7%-41.6%-14.6% between NSERC, CIHR and SSHRC. In the U.K., there are 6 councils which grant directly to researchers – one for Medicine, one for Arts & Humanities, another for Economic and Social Research, and three in the sciences (Biotech/Biology, Engineering and Physics, and Natural Environment). Mapping this to Canadian categories, the split is 64.7% to NSERC equivalents, 22.6% to Medicine and 12.7% to SSHRC equivalents. In Australia, the National Health and Medical Research Council (NHMRC) takes about 52% of the overall research budget, and the Australian Research Council (ARC) gets the rest. Parsing out 2009 ARC grants by disciplines gets you a figure of 13.2% of the total budget going to SSHRC subjects and 34.5% going to NSERC subjects.

The United States is the real outlier here. There is a National Endowment for the Humanities (NEH), but very little of its money goes to scholarship – it’s closer to the Canada Council than it is to SSHRC. The National Science Foundation’s budget is not easy to analyse, but excluding hard-to-classify stuff like Arctic research and “general education programs,” I find $4.3 billion going to researchers in NSERC disciplines and $247 million going to researchers in SSHRC disciplines. The National Institutes of Health (NIH) gives out a whopping $25 billion in competitive grants – which is more than three times the NSF and NEH combined.

So, Canada comes out tops on social sciences and humanities funding, though not by a huge margin. Where researchers here might have a complaint is that so much SSHRC funding is dedicated to graduate scholarships – pull those out and look only at funding for research projects and Canada’s total might not look quite as good for those in the social sciences and humanities.

The real question, of course, is “does this extra financing give us better research in the social sciences and humanities”? But I’ll leave that one to the Council of Canadian Academies.

November 28

Weak Arguments

I am a social scientist. I like the social sciences. I also like the humanities, even if I do find many people’s defense of the humanities to be shrill and weirdly ahistorical. So, naturally, I’m a fan of SSHRC.

What I am not a fan of, however, is some of the drivel that passes for advocacy on SSHRC’s behalf.

One argument that gets pulled out every once in awhile and which annoys me immensely is the one that says, “Social sciences and humanities have 55% of the professors but only get 15% of federal grant dollars” (or whatever the numbers happen to be this year). Sometimes this is phrased via applications, such as “1 in 3 professors/postdocs/grad students in sciences gets an NSERC grant compared to only 1 in 9 in the social sciences and humanities” (or whatever the numbers are this year).

These arguments aren’t wrong because the figures are wrong – the figures are immaterial. These arguments are wrong because they presuppose some kind cross-disciplinary equity which is neither true nor desirable.

Society is not under any obligation to give research grants to scholars. To the extent that it does, it will do so in pursuit of societal goals. Some of these will involve the social sciences and humanities, but it’s safe to say that most will not. There is no country in the world which divides research dollars equally by discipline; Canada, by and large, treats its social sciences and humanities extremely well (seriously – go check out the proportion of granting council dollars given to SSHRC disciplines in the U.S., the U.K., Australia and France and see if you still think Canada’s miserly on this front).

The idea that the underlying logic of research grant funding should be “equal treatment of scholars” rather than “spending money where society thinks it will bring greatest returns” is actually fairly offensive. It reeks of entitlement, for one thing, which is never a good start from a PR point of view.

SSHRC funds great work. Sure, there are duds, but that’s true at NSERC and CIHR, too. It’s the nature of the beast. Researchers in the social sciences and the humanities can and should make their case for funding on the social returns of their research, not on some half-baked notion of equality.

November 03

The Robin des Bois of Canadian Higher Education

In its budget this past spring, Jean Charest’s government announced its plans to increase tuition in Quebec by $325 per year for five years, beginning next fall. By 2016-17, the basic undergraduate tuition in Quebec will reach $3,792 for a typical, 30-credit year. While the tuition increase will keep Quebec students’ fees well below the average elsewhere in Canada, the increases still clock in at 75% over five years. Clearly there is potential for a significant impact on enrolment.

So it was with great pleasure that I read the recent report of the province’s committee on access (en français), the Comité sur l’accessibilité financière aux études.  The report describes the government’s plans to expand the already robust student aid system to ensure the most vulnerable students remain immune from a price shock.

Here’s the bluffer’s guide to Quebec’s tuition increase:

1. Tuition will increase by 75% by 2016-17…

2. Except for low-income students who receive financial aid, since the province will cover the entirety of their expanded tuition bill in the form of non-repayable bursaries; some lower-middle-income students will also benefit from expanded access to the bursary program…

3. Additionally, the province is planning to expand access to its loans and bursaries program by reducing the amount of income it expects a parent or spouse to contribute to a student’s education.

4. All told, the province is ramping up student aid funding by $118.4 million, an amount equivalent to 35% of the new tuition revenue

The province’s student groups are bellyaching about the tuition increase and the fact that, from a certain perspective, the province is robbing Peter to pay Paul. There is some merit to this view – after all, the expansion of student aid is only necessary because tuition is going up and is going to be funded from new tuition revenue. Except that Peter will still be getting a relative deal on higher education, Paul needs the additional support and Mary (the gouvernement) is out of cash. The analogy that fits best is that of an institutionalized Robin Hood: wealthy families will contribute more to a system in dire needs of funds, and low-income families won’t find themselves overstretched.

A tip of the cap to the Comité: through research and thoughtful reflection, it has shown exactly how a tuition hike can be made progressive.  Félicitations!

October 24

The Central Canadian Jock Windfall

The other day I was flipping through public policy maven Charles Clotfelter’s new book Big Time Sports in American Universities (you can get the gist via this interview on YouTube). It reminded me to check up a bit on a subject which intrigued me a few years ago, namely the evolution of sports scholarships in Canadian universities.

Fifteen years ago, Canadian athletic scholarships were still both small and rare: even in 2001-02, CIS schools were distributing just $3.4 million in scholarships to 2,439 athletes. By 2009-10, those figures had risen substantially: now, just over 4,000 students per year receive a combined $10 million in athletic scholarships (all data from CIS’s statistics page).

But what’s really interesting is where the increases have occurred. Since 2001-02, scholarships at prestige schools like U of T, UBC and Alberta haven’t increased that much. The Atlantic schools for the most part have kept their increases below the average in the rest of the country (the exceptions being Dalhousie, up 395% to $414,000, and Acadia, up 477% to $550,000), though it is nevertheless significant that this tiny region, home to less than 10% of Canadian students, accounts for 32% of all scholarship spending.

No, the real change in Canadian athletics is happening in big central Canadian universities – basically, the OUA plus the Anglophone Quebec universities. Check out some of these eye-popping percentage increases: McGill up 664% to $222,000, Concordia up 886% to $224,000, Carleton, up 1138% to $265,560. And that’s only the ones for whom it makes a modicum of sense to express change in percentage terms, i.e., who were spending more than $20,000 to begin with. We could get into others: Queen’s, up from $18,000 to $177,000, McMaster up from $5,000 to $218,000, and Wilfrid Laurier, up from $12,000 to $299,000.

Is this really where these universities want to be seen to be spending money on the eve of a serious downturn in public funding? Even assuming most of this is from alumni donations (which I suspect is not in fact universally the case), what’s the point? Have these universities become noticeably better at inter-university sport? Or has a scholarships arms race just created windfall benefits for a particular group of students?

Sport is about performance. It would be nice if we thought of university budgets the same way.

September 29

Differentiating University Missions (Part Four)

One way or another, the underlying argument for differentiation is essentially the story of Adam Smith’s pin maker – that there are increasing returns to specialization. What those increasing returns are, exactly, is a matter of some dispute. For Harvey Weingarten, the increasing returns are essentially “more quality” – that is, for any given quantity of dollars we’ll see a higher return in terms of better research, better teaching, etc. He doesn’t really think you can save much money because of the politics.

Ian Clark and his co-authors of the book Academic Transformations, on the other hand, phrase their argument explicitly on the issue of finances – basically, that as resources become more scarce, there is a public policy case for a making institutions more specialized because it will result in a cheaper system.

Now, in both cases, the pro-diversification advocates are basing their argument on increases in productivity. The difference is essentially one of phrasing: one is about saying we can do more with the same, the other saying we can do the same with less. Politically, the former is a lot more palatable; given where we are fiscally, the latter is probably more realistic.

The strongest opposition that Weingarten’s piece encountered was from the provincial faculty association, OCUFA, which published its own piece on differentiation shortly after in response to the piece Weingarten wrote with Fiona Deller. Oddly enough, OCUFA’s response was actually more of a refutation Clark et al’s piece than it was of the Weingarten-Deller one. It seems as though the fact that Clark and co. received some HEQCO funding for their work meant that OCUFA viewed the two sets of arguments as identical even though they aren’t (quite).

Essentially, therefore, the argument against differentiation so far has boiled down to: “no, because it might mean less public money.” But it’s not as though the significant increases in per student funding has necessarily delivered big increases in quality – a point which OUSA executive director Sam Andrey made very forcefully at our conference yesterday. Empirically, saying that the alternative to differentiation is more funding just isn’t very convincing.

But there’s another possible argument against mission differentiation: namely, that it delivers a lot less than promised. As COU’s Bonnie Patterson suggested, it may be that the way forward isn’t so much about differentiation of mission in terms of the research and teaching function as it about differentiation of profile and areas of effective specialization. More on that tomorrow.

September 28

Differentiating University Missions (Part Three)

Here’s an important question. Why don’t Canadian governments act as if outputs matter when it comes to funding universities and colleges?

There’s nowhere in Canada where the overwhelming majority of operating funding isn’t essentially determined by enrolments (OK, you get goofy exceptions like Nova Scotia where the funding formula is based on what enrolment was in 2003, but apart from that…). But this creates no incentives other than to try increase market share, which essentially is a zero-sum game. It’s also really dull.

If we want to shake things up and get institutions to pursue differentiation, we need to go in a radically different direction. And in this respect, I’m a big proponent of the methods of the X Prize Foundation. Put a carrot out there big enough for institutions to pursue and institutions will change their behavior.

Interested in emphasizing good teaching? Why not offer $50 million annually to the institution that comes top on teaching quality in the next Globe and Mail satisfaction exercise? I guarantee that dozens of institutions will snap to it in terms of emphasizing teaching.

(Yes, yes, I know it’s an imperfect measure of teaching. But do it once and it’s an absolutely certainty that institutions will come up with a better measurement method the next year, so why not, you know?)

One could do the same kind of thing in terms of all sorts of outputs. The institution with the greatest impact on local economies? $40 million every five years. The institution that does the most to improve graduate employability? $80 million every five years. The amounts don’t actually matter that much, as long as they are big enough to drive institutional behaviour.

Where quantitative data can’t quite provide a definitive answer, adjudication can be done entirely by academics themselves (though preferably ones from out-of-province or from other countries) – by all means, let’s keep the principle of peer review. If nothing else, it will make institutions pay attention to their own outputs a lot more assiduously, which would be a good in and of itself.

As we saw yesterday, academia left to itself won’t provide diversity. You can try to tie institutions down to particular missions, but that’s likely to meet with resistance. So why not put down the stick and try some carrots instead? Considering how badly we’ve done at incentivizing diversity to date, the downside seems pretty minimal.

September 27

Differentiating University Missions (Part Two)

One of the things that distinguishes Canadian universities from those virtually anywhere else is the unparalleled freedom they have to determine their own mission. In most countries – including our neighbours to the south, I should underline – the final say over public institutions belongs with government. As one of our American-born staffers once explained to a compatriot “the difference is that up here, public universities get funding from the government, and then they tell government to kiss off.” Our institutions have freedoms that are largely reserved for private institutions in most countries.

At one level, of course, this is all to the good. It’s generally accepted that decentralization of authority in education leads to more innovation and responsiveness. What’s intriguing, though, is that despite all this freedom, there’s a remarkable unanimity among institutions about which direction they’d like to be heading: more graduate students, more research intensity and a more globalized posture.

Obviously, this can’t be explained by free institutions looking for market opportunities. It would be ludicrous to suggest that there aren’t communities looking for universities that specialize in undergraduate teaching and that have strong regional development mandates.

What it does suggest, though, is two things: a) there are other, deeper tendencies in academia which are pushing in the opposite direction and b) governments don’t make other missions sufficiently attractive financially.

The deeper tendency is fairly obvious; the professoriate – which owns our universities in all but name – spends the better part of a decade in training being trained to do research and would, given the choice, prefer their professional lives to revolve more around research than teaching. Professionally, great researchers are valued over great teachers. Left to their own devices, this is what they’d prefer to be doing. Hence the trend towards institutional isomorphism.

So the role of government – assuming it doesn’t want all universities to look the same – is to create a system that encourages institutions to act in diverse ways. Assuming tuition is capped and institutions can’t make money out of good teaching by charging for it, government only has two choices. One is that it can use regulatory power to set out different missions for institutions (which is essentially what happens in the U.S., and is also more or less what was advocated by HEQCO’s Harvey Weingarten and Fiona Deller in their paper The Benefits of Greater Differentiation of Ontario’s University Sector).

The other is that government can use a variety of financial carrots to incentivize different types of behavior. More on that tomorrow.

September 14

Data Point of the Week: StatsCan Gets it Wrong in the EAG

So, as noted yesterday, the OECD’s Education at a Glance (EAG) statfest – all 495 pages of it – was just released. Now it’s our turn to dissect some of what’s in there.

Of most immediate interest was chart B5.3, which shows the relative size of public subsidies for higher education as a percentage of public expenditures on education. It’s an odd measure, because having a high percentage could mean either that a country has very high subsidies (e.g., Norway, Sweden) or very low public expenditures (e.g., Chile), but no matter. I’ve reproduced some of the key data from that chart below.

 

(No, I’m not entirely clear what “transfers to other entities” means, either. I’m assuming it’s Canada Education Savings Grants, but I’m not positive.)

Anyways, this makes Canada looks chintzy, right? But hang on: there are some serious problems with the data.

In 2008, Canada spent around $22 billion on transfers to institutions. For the chart above to be right would imply that Canadian spending on “subsidies” (i.e., student aid) was in the $3.5 – 4 billion range. But that’s not actually true – if you take all the various forms of aid into account, the actual figure for 2008 is actually closer to $8 billion.

What could cause such a discrepancy? Here’s what I’m pretty sure happened:

1) StatsCan didn’t include tax credits in the numbers. Presumably this is because they don’t fit the definition of a loan or a grant, though in reality these measures are a $2 billion subsidy to households. In fairness, the U.S. – the only other country that uses education tax credits to any significant degree – didn’t include it either, but it’s a much bigger deal here in Canada.

2) StatsCan didn’t include any provincial loans, grants or remission either. They have form on this, having done the same thing in the 2009 EAG. Basically, because StatsCan doesn’t have any instrument for collecting data on provincial aid programs, it essentially assumes that such things must not exist. (Pssst! Guys! Next time, ask CMEC for its HESA-produced database of provincial aid statistics going back to 1992!) So, what happens when you add all that in (note: U.S. data also adjusted)?

 

Not so chintzy after all.

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