HESA

Higher Education Strategy Associates

Category Archives: Funding and Finances

December 05

A Wish List for Budget 2017

A few days ago someone asked me what my wish list would be for the federal 2017 budget.  The science/innovation part of my answer will take a couple of posts to summarize (I’ll start addressing some of the issues related to the Science and Innovation Agendas over the next few days); but today I thought I’d give you my thoughts on the student aid part of the equation.

Briefly, I have three wishes.  They are, in order:

1)      Implement the promise on Aboriginal student funding.  In the Liberals’ 2015 manifesto, there was a promise to increase funding to the Post-secondary Student Support Program (the program which provides funding to bands across the country to send their members to post-secondary education) by $50 million per year.  For whatever reason (I explored this a bit back here), the Liberals chose not to implement that promise in the last budget.  Now, there is lots not to like about this program, and lots of ways it could be improved.  But the funding challenges for First Nations students are real, and we shouldn’t give them short shrift because of a desire to wonk around with program design first.  Fulfill the promise, increase spending on PSSSP by $50 million, wonk later.

2)      Increase Aid Limits for Mature Students.  Canada has a not-very-stellar record of adults getting training.  Part of it has to do with the way we support them while they are in school.  Provincial training programs usually cover programs of less than a year in length, and they tend to provide decent (though not lavish) support for living expenses.  If the program’s longer than a year then you tend to get pushed to provincial/federal student aid programs where the basic assumption is that everyone lives like an 18 year-old.  That’s wrong. People who return to education from the labour market tend to have houses or live on their own in digs considerably above the student norm.  They have credit card debt, they have cars.  Yet student loan rules basically says they need to chuck all that an find a roommate to live with.

 There’s a way to fix this.  As far as calculating student resources, we already have a two-tier system: less four years out of secondary school (or less than two years in the labour market, we assume parents are contributing to a student’s cost of attendance.  After that, we don’t, and students become eligible for more money.  There is no reason we could not do the same for calculating student resources, giving older students higher allowances (and higher aid limits).  I wouldn’t stick the dividing line at four years: I’d probably put the line at doctoral studies or three consecutive years in the labour market or something like that.  But either way: if we want to encourage more adults to return to school, something like this is necessary.

 3)      Improve Repayment Assistance.  As I noted last week , over the income range from the mid-$30,000s to $50,000 and at average levels of indebtedness, Canadian student loan borrowers are paying more on a monthly basis than loan borrowers anywhere else in the world (I didn’t actually include the whole word in that post, but trust me the five countries I did show are the ones you need to care about as debt tends to be higher there than in other jurisdictions).  There’s a simple solution here: tweak the Repayment Assistance Program (RAP) to limit the amount borrowers have to repay to 15% of income rather than 20% over the repayment threshold of $25,000.  For borrowers making less than $25,000 this will make no difference (they still pay zero), and for borrowers making over about $50,000 it won’t change anything either (which is fine because by an large they’re quite capable of repaying loans), but in-between (which is the income-range where most borrowers are for the first couple of years after leaving school) it would make a big difference.

Over to the folks in the Langevin Block.

November 22

Higher Salaries + Lower Workloads = More Sessionals

On Sunday night, the University of Manitoba and its faculty union hashed out a tentative deal to end a three-week strike.  No details are publicly available yet, but I think the dispute – and the likely strategies used to resolve it – are a useful way of understanding some general concepts around the economics of universities in Canada.

Directly or indirectly, institutions get their operating funds from having students sit in classrooms.  Tuition fees are directly related to credit hours and government operating grants are usually at least indirectly related to them.  One might question this in a place like Manitoba, where there is no actual funding formula and money is just handed out as a block on a historical basis, but as I showed back here the distribution of funding between Manitoba institutions actually looks almost exactly like it would if the province were using a weighted enrollment formula system like Quebec’s or Ontario’s.  So we can more or less dispense with that argument and make the simple equation “bums in seats” = revenue.

The main issues at play in the Manitoba dispute were related to salaries (faculty want more) and workload (faculty would like to limit management’s ability to increase it).  Now, if you want a big rise in pay, the university needs to find revenue to compensate.  In general, the way Canadian universities have been meeting faculty pay demands over the last six years or so is to raise enrollment, in particular international student enrollment, because it usually brings in more dollars per student.  On the whole, they’ve been reasonably successful at doing so. But the other faculty demand – maintained or reduced workloads – makes this a difficult trick to pull off.  Even if you fully accept the logic behind reducing workloads, the fact that revenue is a function of bums in seats means that faculty’s two goals are essentially incompatible.  Effectively, what is being demanded is that the university spend more and earn less.

Absent a major tuition increase, there are only two ways to square this circle.  The first, which the faculty association likes to talk about at great length is that the university can afford to do both because there are millions of dollars being salted away in various nefarious ways (which for the most part is nonsense because what on earth so senior administrators possibly have to gain by not spending money?) or, frivolously spent on fixing buildings or that old favourite “administrative bloat”.  While it’s certainly true some non-academic expenses have been rising, an awful lot of those increases have been concentrated in areas like IT and student services rather than everyone’s favourite bogeyman of “central administration”.  Undoubtedly some savings could be found in these places and diverted to faculty salaries, but they would be unlikely to do the trick entirely.  According to data from the Financial Information of Universities and Colleges (FIUC), the U of M’s entire “academic salaries” budget was just over $158 million in 2014-15; a 6.9% increase would mean an $11 million hit just in salaries plus another $2 million (roughly) in benefits.  In contrast, the entire budget for salaries in central administration is $22 million.

The second way of dealing with the problem is to allow faculty salaries to rise while simultaneously lowering the average cost of instructors.  A contradiction in terms?  Well, no.  All one has to do is hire more sessionals.  Since they are remunerated at – effectively –about a quarter of the rate of a full-time professor  it’s possible to both increase bums in seats (i.e. revenue) and keep the increase in average instructional costs to well below 6.9%.

I obviously don’t know what’s in the agreement reached Sunday night and there’s not going to be anything in the agreement which explicitly says “let’s go hire more sessionals”.  But it’s implicit in the logic of the faculty’s demands.  Universities don’t like to admit this is how they deal with faculty pay hikes because they are wary of charges of “cheapening” undergraduate education, and faculty unions don’t like to admit this is what happens because GOD FORBID their pay demands have negative externalities.  Still, both sides know exactly how this process works and neither side can claim the least bit of innocence in the process.

It’s the way the game is played.

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.

September 30

Athletics Scholarships in Canada

Time was, about twenty years ago, Canadian universities didn’t spend money on university athletic scholarships.  Then things changed and universities turned on the taps.  Today we ask the question: “how’s that going for everyone”?

Well, it’s not going too badly, if you’re an athlete.  Just under 5,830 students received athletic scholarships totalling $15,981,189 in 2013-14 – that’s a little over $3,000 a pop.  CIS officially recognizes twenty-one sports, nine of which have teams for both genders (eighteen total), plus football which is male-only and rugby and field-hockey which are female-only.  However, roughly 85% of the scholarship dollars are concentrated in just nine sports, as shown below in Figure 1.  Some have almost no scholarships at all: inter-collegiate curling, for instance, has only 16 scholarships nationally for both sexes.

Figure 1: Top Sports by Scholarship Expenditure, 2013-14

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What’s interesting here is that over time, the amount of money spent on Athletics scholarship has been rising quickly and steadily.  Even after accounting for inflation, Canadian universities spent nearly three times as much on athletics scholarships ($16 million vs. $5.8 million) in 2013-14 as they did ten years earlier.  It’s an interesting choice of expenditure by allegedly cash-strapped institutions.

Figure 2: Total Athletics Scholarships by Gender, 2003-4 vs 2013-4, in constant $2014

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I suspect most institutions would probably defend it as a kind of strategic enrolment investment, much the way they defend other kinds of tuition discounting.  I mean, does it really matter if you give someone a $5,000 academic entrance scholarship or a $5,000 athletic scholarship?  They’re both forms of tuition discounting.  And of course, the absolute amounts are trivial.  $16 million is only 1% of the total amount of funding given by universities to students (if you include funding to graduate students).  And if you want into get into truly ludicrous comparisons, it’s less than what the University of Michigan spends on salaries for its football coaching staff.

A final point to make here is around gender equity.  Male and female athletes receive awards at roughly the same rate (45% of athletes of each gender receive an award), which is good.  However, imbalances remain in terms of the number of athletics spots for men than women (53% of all athletic team spots are male, compared to about 41% of undergraduates as a whole), and in terms of the size of the average award ($3,286 vs. $2,737).  Those results are better than they were a decade ago, and they appear to be slightly better than they are in the US, where actual legislation exists in the form of Title IX to enforce equity in sports, but they are still some ways from equal.

September 26

Reforming Funding for First Nations Students

I see from this article by John Ivison of the National Post that the issue of funding for post-secondary education for First Nations is becoming a bit of a hot potato.  Time for us to take a look at the situation.

I think most people now get that First Nations’ students don’t receive “free education”.  They pay tuition fees like everyone else.  What they do have (if they have “status”) is a parallel student aid system, which is called the Post-Secondary Student Support Program or PSSSP. If you are unclear on the difference between “status” and “non-status” Indians, have a peek at this primer from the âpihtawikosisân  blog.  PSSSP is a $322 million/year program, under which Aboriginal Affairs and Northern Development Canada (AANDC) distributes this money according to a somewhat obscure formula to the 600-odd bands across the country.  They in turn hand out that money to their own members who wish to take higher education courses.

In theory, PSSSP is a need-based program, and bands are supposed to allocate money according to need “up to” maximums in various categories (tuition, living expenses, books, child care, etc).  But individual bands aren’t blessed with a whole lot of need-assessment capability, and in practice pretty much everyone who is admitted to the system gets the maximum.  And so given a relatively stable overall budget (the program’s growth has been capped at 2% per year since – if I recall correctly – 1990), increasing costs and increasing numbers of people wishing to use the program, what happens is that many are not able to access the program at all.  About 20,000 students receive money each year, with each receiving on average about $15,000.  Each band has a “waiting list” in which people are prioritized according to various criteria.  The total number of people on waiting lists is not an easy number to pin down, but it’s generally estimated at just north of 10,000 students.

Lifting the growth cap on PSSSP should be a relatively high priority, and the Liberals did promise an extra $50 million infusion in their manifesto.  One of the biggest disappointments in last year’s federal budget was the Liberal government’s failure to follow through on this promise.  The story here is complicated, but basically goes like this: in their costing document, the Liberals misunderstood how much was actually in the AANDC budget and so had a hole in their projections when it came to paying for their promises on Aboriginal K-12 education.  In order to meet Aboriginal groups halfway (actually somewhat less than that) on K-12 spending, they killed the PSSSP increase and threw the money into the K-12 pot.

Unwilling to spend any political capital going after a government which was sky-high in the polls, aboriginal groups were very low-key in their criticism of the budget.  After all, a majority government is in power for four years – and there’s some chance the Liberals will make good on their PSSSP promise in their second budget.  Perhaps to that end, towards the end of the summer criticism grew from both First nations and student groups (a hat-tip to the Canadian Federation of Students on this one); expect a renewed push on this front over the fall.

But there’s another element to this story not getting much play.  A few years ago, in a paper I wrote for AANDC , I noted that in fact almost everyone who qualifies for PSSSP would also qualify for the Canada Student Grant.  That would be another $3,000 per student per year.  Multiply that out across the 20,000 or so students currently getting PSSSP, that’s $60 million a year.  So if you could get everyone who currently gets PSSSP to also sign up for the Canada Student Grant and then have bands deduct that amount from their PSSSP award, bands would save enough to fund another 4,000 students at current PSSSP levels of funding.

Sound straightforward?  It’s not.  There are a whole bunch of barriers to getting bands to behave this way, not least of all that First Nations deserve to get their money for PSE on a nation-to-nation basis (i.e. like PSSSP) rather than having to go around clawing back $3,000 at a time with other government programs.  And yet, according to that Ivison article, it does seem like the Government of Canada is trying to push the idea of getting more status Indians with PSSSP funding onto student grants.

Is this an alternative to an extra $50 million in PSSP or in addition?  Who knows?  Is the plan to have bands claw back the new grant money from current students, and then distribute it to alleviate wait lists, or to give existing students more money? Who knows. I suspect in practice the answer may vary from band to band.  Either way, the next few months may promise a new era in First Nations Post-Secondary funding.

September 23

Social License and Tuition Fees

So, to Johannesburg, where South African Education Minister (and Communist Party chief) Blade Nzimande finally announced the government’s decision on tuition for next year. He was in a tricky place: students are still demanding free tuition (see my previous story on the Fees Must Fall movement here) and will not accept a hike in fees. Meanwhile, universities are quite rightly feeling very stretched (it’s tough trying to maintain developed-world caliber institutions on a tax base which is only partially of the developed-world): with inflation running at around 6.5%, a fee freeze would amount to a substantial cut in real income.

So what did the minister do? He pulled an Ontario (or a Chile, or a Clinton, if you prefer). Tuition to rise, but students from families with income of R600,000 or less (roughly C$56,000, or US$43,000) would be exempt from paying the higher tuition. Who exactly was going to verify students’ income is a bit of a mystery since the cut-off for student financial aid in South Africa is considerably below R600,000 (a justified cause of further student complaint), but no matter. The basic idea was clear: the well-off will pay, the needy will not. The exact amount extra they would pay? That would be up to individual universities. They could set their own tuition but were strongly advised not to try increasing fees by more than 8%.

It took student unions less than five seconds to find this inadequate and to denounce the government. Several unions have threatened to boycott classes if their institution raised fees.

This raises an interesting question. Why, if students in Chile and Ontario are claiming victory (or partial victory at least) over their fee regimens, do South African students reject it? Well, context is everything. The key here is government legitimacy, or lack thereof.

Let’s take the Charest government in the Spring of 2012. The tuition fee increase that the government proposed was not excessive, and poorer students in fact might have been better off once tax credits were factored in. But absolutely no one paid the slightest bit of attention to the policy details. This was a government that had outstayed its welcome, and was badly tarred by corruption scandals (my favourite joke from that spring: what’s the difference between a student leader and a Montreal mafia boss? Only one of them has to forswear violence in order to get a meeting with the Minister of Education). It had a good, saleable plan, but literally no political capital on which to draw. The plan, as we all know, failed.

(By the by, this is why, if the Couillard government is going to move on tuition fees, it’s going to have to do it this year. Their window is closing.)

I could go down the list here. The big anti-tuition fee protests that got the President of South Korea to promise to reduce tuition in the spring of 2011? That was at the tail end of a profoundly unpopular Presidency (though to be fair in Korea it’s the rare presidency that doesn’t end in profound unpopularity). The Chilean tuition protests of 2011-2? Also at the end of an unpopular presidency. By contrast, the largest tuition fee increase in the history of the world – the increase announced for England in the fall of 2010 – was essentially met with only a single rally, in part because the measure was introduced by a brand-new government which led in the polls. Basically, you need “social license” in order to do something unpopular on tuition fees. Some governments have it, others don’t.

The South African government is in precisely this kind of legitimacy crisis right now. It is not a simple matter of President Zuma’s unpopularity, though his increasingly kleptocratic regime is profoundly unhelpful. It’s a bigger crisis of post-apartheid society. Formal racial equality exists, but equality in economic opportunity, equality in educational opportunity: those are still very far away and in many ways are not much better than they were 20 years ago. Today’s youth, born after Nelson Mandela’s release from prison, no longer feel much loyalty to the ANC as the leader of “the struggle”. They simply see the party as being incompetent, corrupt, and incapable of delivering a better and more equal society.

And it’s that anger, that rage, which is driving the #feesmustfall movement. I think there’s a real chance this won’t end well; there has already been a serious uptick in violence on South African campuses. South Africa’s universities, unfortunately, may end up as collateral damage in a larger fight for the country’s future.

 

September 16

OECD data says still no underfunding

The OECD’s annual datapalooza-tastic publication Education at a Glance was released yesterday.  The pdf is available for free here.  Let me take you through a couple of the highlights around Higher Education.

For the following comparisons, I show Canada against the rest of the G7 (minus Italy because honestly, economically, who cares?), plus Australia because it’s practically our twin, Korea because it’s cool, Sweden because someone always asks about Scandinavia and the OECD average because hey that just makes sense.  First off, let’s look at attainment rates among inhabitants 25-34.  This is a standard measure to compare how countries have performed in the recent past in terms of providing access to education.

Figure 1: Attainment Rates, 25-34 years olds, selected OECD countries

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*Data for Master’s & above not provided separately for Korea and Japan, and is included in Bachelor’s

Education-fevered Korea is light-years ahead of everyone else on this measure, with 69% of its 25-34 yr old population attaining some kind of credential, but Canada is still close to the top at 59%.  In fact we’re right at the top if you look just at short-cycle (i.e. sub-baccalaureate) PSE (see previous comments here about Canada’s world-leading strengths in College education); in terms of university attainment alone, our 34% is slightly below the OECD average of 36%.

Now let’s turn to finances.  Figure 2 shows total public and private expenditure on Tertiary educational institutions.

Figure 2: Public and Private Expenditures on Tertiary Institutions, as a Percentage of GDP, Selected OECD Countries

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Canada spends 2.5% of GDP on institutions, just below the US but ahead of pretty much everybody else, more than 50% higher than the OECD average.  For those of you who have spent the last couple of years arguing how great Germany because of free tuition is and why can’t Canadian governments spend money like Germany, the answer is clearly they can.  All they would need to do is cut spending by about 30%.

(If you’re wondering how UK claims 58% of all money in higher ed comes from government when the latest data from Universities UK shows it to be 25%, the answer I think is that this is 2013 data, when only 1/3 of the shift from a mainly state-based university funding system to mainly student-based funding system had been completed)

Turning now to the issue of how that money is split between different parts of the tertiary sector, here we see Canada’s college sector standing out again: by some distance, it receives more funding than any other comparable sector in the OECD (with 0.9% of GDP in funding).  The university sector, by contrast,  gets only 1.6% of GDP, which is closer to the OECD average of 1.4%.

Figure 3: Expenditure on Tertiary Institutions, by sector, as a Percentage of GDP, selected OECD countries

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*US data not available for short-course, 2.6% is combined total

Now this is the point where some of you will jump up and say “see, Usher?  We’re only barely above the OECD average! Canadian universities aren’t as well-funded as you usually make out.”  But hold on.  We’re talking % of GDP here.  And Canada, within the OECD is a relatively rich country.  And, recall from figure 1 that out university attainment rate is below the OECD average, which means those dollars are being spread over fewer students.  So when you look just at expenditures per student in degree-level programs, you get the following:

Figure 4: Annual Expenditures per Student in $US at PPP, Degree-level Programs only, Selected OECD Countries

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Again, Canada is very close to the top of the OECD charts here: at just over $25,000 US per student we spend over 50% more per student than the OECD average (and Germany, incidentally – just sayin’).

So, yeah, I’m going to give you my little sermon again: Canada’s is not an underfunded university system by any metric that makes the remotest bit of sense.  If we’re underfunded, everyone’s underfunded, which kind of robs the term of meaning.

That doesn’t mean cuts are easy: our system is rigid and brittle and even slowing down the rate of increase of funds causes problems.  But Perhaps if we directed even a fraction of the attention we pay to “underfunding” to the problem of our universities’ brittleness we might be on our way to a better system.

I won’t hold my breath.

September 08

Trends in Canadian University Finance

New income and expenditure data on Canadian universities came out over the summer courtesy of StatsCan and our friends over at the Canadian Association of University Business Officers (CAUBO), so today it’s time to check in on what the latest financial trends.

In 2014-15, income at Canadian Universities was, overall, a record 35.5 Billion dollars (just above 2% of GDP, if you’re counting).  That’s up 1% in real terms over the previous year and up 5% on five years ago (2009-10).  But the composition of that income is changing.  Total government income is down 2% in real terms from last year and down 8% from 2009-10 (the latter being somewhat exaggerated because the base year included a lot of money from the 2009 budget stimulus via the Knowledge Infrastructure Program (KIP).  Income from student fees, on the other hand, was up 5% on the previous year and 32% up from 2009-10, again taking inflation into account.  That doesn’t mean that fee levels increased that much; this is aggregate income so part (maybe even most) of this change comes from changes in domestic and (more pertinently) international enrollment.

Figure 1: Change in Real Income by Source, Canadian Universities, 2014-15 vs 2013-14 and 2009-10

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Let’s turn to a look at expenditures by type.  Salary mass for academic staff actually fell slightly last year after inflation, but over five years the overall salary budget for academics is up by 10%, after inflation. Again, this isn’t what’s happening to average salaries, it’s what’s happening to aggregate salaries, so it’s partially a function of average and partially a function of staff numbers.  For non-academic salaries, it’s an 11% increase over five years.  And yes, you’re reading that right: labour costs have risen 10% while income has risen only 5%.  Again, that’s exaggerated a bit by fluctuations in incoming funds for capital expenditures, but it’s probably not sustainable in the long term.  Because other elements of the budget are increasing quickly too: for instance, scholarship expenditures rose by 21% over that period to stand at over $1.87 billion.

 Figure 2: Change in Real Expenditures by Type, Canadian Universities, 2014-15 vs 2013-14 and 2009-10

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Finally, let’s take a look at expenditures by function within the operating budget.  Operating budgets as a whole are actually up quite a bit – 14% (this is partially offset by falls in the capital and research budgets).  Here’s how the money gets used:

 Figure 3 – Division of Canadian Universities’ Operating Budgets by Expenditure Function, 2014-15

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As you’d expect and hope, the lion’s share (57%) of the operating budget goes to instruction and non-sponsored research.  Most of the rest goes on three categories: administration, student services, and physical plant.  Figure 4 shows how growth in each of these areas has differed.

Figure 4: Change in Real Expenditures by Function, Canadian Universities, 2014-15 vs 2013-14 and 2009-10

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If you look at the “big four” spending areas, instructional and admin costs rose at roughly the same rate over fiver years (14% vs. 15%), while student services rose more quickly (21%) and physical plant less so (7%, with a 4% drop in the last year).  Non-credit instruction is up very strongly for reasons I cannot quite fathom.  But look at computing costs (up 31%) and “External Relations” (which includes Government Relations, alumni relations/fundraising and other marketing costs – up 27%).

In sum: i) government funding is down in real dollars but student income has replaced that income and more besides, so that institutional budgets are still increasing at inflation +1% per year; ii) compensation budgets (academic and non-academic alike) are rising faster than income, which is a problem for the medium-term and iii) there are a lot of small-ish budget items that are growing much more quickly than salaries (scholarships, computing, student services etc.) but given that compensation is 60% of the total budget, that’s still where the majority of the restraint needs to happen.

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