HESA

Higher Education Strategy Associates

Category Archives: Ontario

January 07

How Universities Are Becoming More Labour-Intensive

Yesterday, I showed how universities in New Brunswick were – despite welcome new promises of stable funding from the provincial government – facing problems because salary increases were going to eat all the available new money.  Some of you possibly thought I was being alarmist.  But it’s easy enough to show how this can happen.  In Ontario, it already has.

For data here, I pulled the financial statements for the last five years at the “Big 8” (Toronto, Waterloo, Western, Queens, Guelph, York, Ottawa, and McMaster), which comprise about 75% of all university spending, and hence are a pretty good proxy for the university system as a whole.  It’s not as good as Stastcan data; but, on the other hand, it gives me something past 2011, which is the most recently-available Statistics Canada/CAUBO report.  And here is what it shows:

Figure 1: Total and Salaries/Benefits Expenditures, 8 Largest Ontario Universities, 2009-2013

 

 

 

 

 

 

 

 

 

 

 

 

Expenditures at these institutions rose from $7.4 billion in 2009 to $8.6 billion in 2012, before falling back to $8.45 billion in 2013.  That’s a 14% nominal increase, which is about 6% after inflation – not bad.  Meanwhile, salaries and benefits rose from being 59% of overall budgets to being 63% of overall budgets.

Now that doesn’t sound so bad, either.  But let’s look at the same data another way:

Figure 2: Increases in Total and Salaries/Benefits Expenditures, 8 Largest Ontario Universities, 2009-2013

 

 

 

 

 

 

 

 

 

 

 

 

This looks considerably less good, doesn’t it?  As new money has come in and permitted higher spending, salaries and benefits have eaten fully 92% of the increase.  This, friends, is the consequence of increasing salary mass by 5% per year, when income is only growing at 3%.

And the consequences for the rest of the budget?  After salary increases, the Ontario 8 only had $83 million to put into non-salary areas.  On a base of about $3 billion, that’s an increase of about 3%, but after inflation, that’s actually a 4% reduction, i.e., a fall of about 1% per year.  And of course much of that money is earmarked for things like research, so in terms of disposable income, it’s likely that the figure is actually much higher.

Outside Ontario, we don’t see quite the same pattern.  I pulled 7 other comparable institutions (UBC, Alberta, Calgary, Saskatchewan, Manitoba, McGill, and Dalhousie) and found that on the whole they spent a greater proportion of their money on salaries (66% in 2013, compared to 63% in Ontario), but that there was no sudden change in the way money was spent (only 67% of new expenditure went to salaries, meaning the average went unchanged).  That said, there were differences inside this group.  Most actually managed to decrease their salary-to-total expenditure ratios; the two exceptions were Alberta (where salaries took 86% of all new expenditure) and McGill (where they took an astounding 179% of new expenditures).

For a set of institutions that endlessly bang-on about how hi-tech they are, Ontario universities are apparently one of the very few industries in the provinces that are becoming more labour intensive over time.  And that won’t change until compensation increases start coming into line with increases in income.

June 12

Projections From Queen’s Park

Professionally, I am a killjoy.  Most of my job involves explaining why education funding is not going to go back to the good times of the eighties any time soon.  How bad things are going to get differs from place to place, and today I want to show you why I think there’s big trouble still ahead in Ontario. 

Let’s start with the fact that government expenditures have risen sharply in recent years, as shown in figure 1.  The Liberals held expenditures steady at about 15% of GDP until the recession hit and that number jumped to 18%.  The government’s goal now is to reduce that amount – slowly – by freezing program expenditures at 118 Billion as of next year.  If the Tories get in, you can be sure that they’ll be spending even less than that.  So, unless you believe in an Andrea Horwath majority, the strong likelihood is that there is no new money coming into government coffers anytime soon.  If more money is going to go into PSE, it will have to be at the expense of other budget priorities.

Figure 1 – Ontario Government Expenditures as a Percentage of GDP

The problem is that health care cost inflation tends to take precedence in the scramble for spare dollars in provincial budgets. In Quebec, for instance, healthcare’s share of the budget grows by about 0.75% each year – meaning it will break 50% of the budget sometime towards the end of this decade, with other budget priorities increasingly cast into the background.

Ontario, seemingly, doesn’t have this problem, with expenditures staying relatively constant around the 40% mark.

Figure 2 – Health and Long-Term Care Expenditures as a Percentage of Overall Budget Expenditures

 

The problem is, this is an illusion.  Health expenditures have actually been going up by nearly 7% per year since 2001.  The only reason health care hasn’t exploded as a share of the budget is because the Liberals have been increasing all spending by a similar amount.

 Figure 3 – Annual Growth in Health Care and Total Budgeted Expenditures, Ontario, 2001-2012

 

But, as mentioned, the Ontario government is budgeting for zero growth in program expenditures through to 2018.    Any increase in health care costs has to be met with cuts elsewhere in the budget.  Indeed, if health care costs were to continue to rise at around 6% per year, that would mean cuts to the rest of the budget – including PSE – of roughly 22% by 2018.

Figure 4 – Implicit Ontario Budget Cuts, All Non-Health Budget Areas, Under Current Budget Caps and Various Health Care Inflation Scenarios

Maybe health care cost increases will be lower than 3% (even though that’s not happened in well over a decade).  Maybe PSE will be spared its full proportion of the cuts.  Maybe.  But it seems to me almost impossible to construct a scenario where money for PSE increases.  Cuts of 1-2% per year –enough to offset most of the potential gains from permitted tuition increases – seem much more likely.

Realistically, the only place Ontario universities are going to be getting any extra dollars over the next five years is international students.  Plan accordingly.

May 21

Post-Graduation Employment

The meme on “underperforming universities” these days revolves around the idea that specific fields of study – usually Bachelor’s degrees in the humanities – do not lead to good jobs.  But this depends in no small measure on what one means by a “good job”, and over what time frame one chooses to measure success.

The graph below shows data from Ontario, six months after graduation.  Between 2003-2007, the employment rate of graduates in the labour market (i.e. excluding those who chose to study) bounced around between 92 and 94%.  In 2009, the rate fell by about 7%, to roughly 86%, more or less equally across all disciplines. Some fields of study were consistently below the average – specifically, fine arts, physical sciences (which seems to include biological sciences), and engineering.  Some fields of study were well above the average, notably education and nursing.  Humanities and social sciences ended up half way between the two.

Employment Rates of Ontario Graduates Six Months After Graduation in Selected Fields of Study, 2003-2009

 

 

 

 

 

 

 

 

 

 

 

 

The science figure is especially interesting, isn’t it?  Makes you wonder why there’s an S in STEM.

Now, some of you will surely be scratching your heads at this point.  Aren’t STEM graduates supposed to be in high demand?  How are both getting beat by Arts grads? Three quick answers. The first is that these figures exclude people who have gone back to school (unhelpfully, the Ontario data doesn’t tell you how big a number this is).  Two is that Engineers may take longer for a job search because they are secure in the knowledge that their eventual job will pay pretty well (see below) – the pattern we see after six months is also the pattern after twenty-four, as the chart below describes. And three is that the picture does change a bit after two years.

Employment Rates of Ontario Graduates Two Years After Graduation in Selected Fields of Study, 2003-2009

 

 

 

 

 

 

 

 

 

 

 

 

The classes of 2003 and 2005 had 2-year employment rates of about 96.5%.  That fell to about 95% for the class of 2007, and 93% for the class of 2009.  The fall was concentrated in education, humanities, social science, fine arts, and physical sciences; other disciplines saw less change.

Finally, there is the issue of income.  Here you see the real knock on studying in the humanities;  it’s not that they don’t get jobs – it’s that they end up in some jobs that don’t pay well.  Now, their incomes do increase about twice as fast as others between six months and two years (in the midst of a recession, they jump, on average, by 21%), but they start from a lower base.  An interesting point here, which I have made before, is that the difference in outcomes between students in the sciences and the social sciences is negligible.

Income of Ontario University Graduates Six Months and Two Years Out, Selected Fields of Study, Class of 2009

 

 

 

 

 

 

 

 

 

 

 

 

Clearly, jobs aren’t the issue – students of all stripes find work soon enough.  The issue is the rate of return.  We should focus on that.

February 14

That Conservative White Paper

On Tuesday, the Ontario Conservatives released a “white paper” on Higher Education.  It’s an extraordinary document, by far the most detailed vision for PSE ever released by a Canadian political party.  Everyone in higher education should read it, even if they aren’t likely to enjoy it much.

Much of the paper revolves around the notion of reducing the cost of delivery of higher education.  For that reason, it liberally raids the ideas of Ian Clark et. al on teaching faculty, as well as the goofier elements of Glen Murray’s plans regarding online education.  On the assumption that transparency will improve efficiency, there are musings on getting administrations to better explain spending, and even a threat of legislation on financial transparency for student unions.  (Students!  Time to read up on voluntary student unionism.

Much will be made about the paper’s “College First” pledge – which suggests students should be encouraged to go to college rather than university (partly in the name of cost savings, partly due to some ideas about graduate earnings, which rely on some fairly cock-eyed data analysis), but the vagueness about how to do this suggests to me there’s less here than meets the eye.  I think a bigger deal is the idea that, in the name of excellence, there should be a mechanism to choose “elite” programs, which would receive extra investment AND be allowed to charge higher fees.  The idea that this can be determined via a set of objective metrics like graduate employment and income suggests that the paper’s authors have never examined those metrics to see how much inter-institutional variation there really is (note: there’s almost none).

Oddly, for a conservative party, this paper is a recipe for much, much heavier government involvement in the running of post-secondary education.  A few months ago, I wrote that the main difference between right and left on higher education policy in Canada was that one of them didn’t care how universities were run, while the other thought it knew how to run them better than actual university and college staff.  Well, that distinction’s gone now.  This paper is prescriptive about what should be taught, how it should be taught, and how accounts should be published.  It suggests that some tuition liberalization will be allowed, but only for programs which the government itself picks.  The only part of the system that will have less regulation are private career colleges.  They’re OK, apparently, because they’re cheap.

This is an ambitious paper which should be applauded for asking a lot of very good questions.  Ontario institutions need to spend the next few months patiently explaining why there are better answers than the ones contained in here.

January 09

They’re From Queen’s Park, and They’re Here to Help

Want to know what’s in store for higher education in Ontario?  Take a quick look at the platforms of Liberal leadership contenders.

Eric Hoskins’s five point “prescription” for a healthy Ontario omits education entirely.  Similarly, co-front runner Sandra Pupatello’s platform avoids any and all mention of education.  Ditto for Gerard Kennedy (at pixel time, he actually appears not to have a platform of any kind).

Kathleen Wynne and Charles Sousa each have similar platform commitments to increasing co-op, experiential learning, etc.  In general, this is a Good Thing, of course, but there are some undertones of curricular tinkering here which should make universities slightly nervous.  Wynne also wants to provide “stimulus for increased opportunities to graduate studies” (whatever that means), greater credit transfer mobility and – funds permitting – create a scholarship to promote entrepreneurship (one suspects this idea was not focus-tested with any actual entrepreneurs).  Harinder Takhar has a grab-bag of ideas, which range from expanding public sector internships, to eliminating barriers to recognition of international credentials (good luck with that!), to something not-fully-baked about extending tuition tax credits to businesses if they pay for a student’s tuition.

Nobody, you’ll notice, is promising any actual money to institutions.  They’re all sticking by the current government’s promise – matched in the last election by both opposition parties – to not spend a new cent on higher education until 2017.

This brings us to the higher education sector’s favourite son, Glen Murray, who caught almost an hour’s worth of headlines back in November when he launched his campaign with the idea of a flashy-sounding “no-money down tuition plan”.  Here’s how he describes it:

“Our plan will allow students to attend university with no money down. Instead, they can choose to borrow for each year of study up to $4,000 for college tuition and fees, $7,000 for undergrad’ tuition and fees, and not have to repay until they get a good job after graduation.  After graduation, repayment of loans and the interest rate applied would be on a sliding scale, depending on your income after you graduate.”

If this sounds familiar, it’s because student loans already work in almost precisely this fashion – something one might have hoped Murray had picked up on while he was Minister.  The only difference between this plan and the existing system is that Murray’s seems to eliminate parental contributions for that portion of the loan dealing with tuition.  That’s not a terrible idea, but it’s not new (see: this IRPP proposal from 2004) and it’s of no net benefit to anyone already benefitting from student loans.

Basically, it’s all a bit grim.  Budget accordingly.

September 28

Credit Transfer Agreements

Minor buzz earlier this week about a credit-transfer agreement between seven universities in Ontario. According to the press release, Queen’s, McMaster, Western and the Universities of Toronto, Ottawa, Waterloo and Guelph have agreed to full recognition of each others’ first-year university credit.

While credit mobility generally is a Good Thing, this specific announcement puzzled me a bit. How is this actually new? Back in 1995, the Council of Ministers of Education, Canada introduced the “Pan-Canadian protocol on the Transferability of University Credits,” which essentially said that ALL first- and second-year course credits across Canada should be transferable. The Council of Ontario Universities (COU), to which all seven of these institutions belong, endorsed the protocol with a couple of riders to the effect that the right of credit transfer didn’t imply a right to transfer, and that institutions could still accept or reject whichever students they wanted. At least one of the seven universities actually passed this agreement through its senate; all seven of them endorsed it – 16 years ago – through COU.

The easiest interpretation here is that most or all of the seven have in fact been ignoring their own endorsements for the past decade and a half and so the agreement is genuinely new in practice if not in theory. And it’s easy to see why: credit or degree recognition, at the end of the day, is about trust. You have to trust another institution’s academics in order to recognize them as equivalent (or better) than their own. And until now that wasn’t happening.

This trust factor is in fact a major rationale behind quality assurance regimes the world over; institutions gain one another’s trust by setting explicit standards and meeting them. But that’s not very Canadian. We don’t like explicit standards and, as a result, we have no trust. And for some reason, whenever a government (or CMEC) wants to break the deadlock, they run from the obvious (but difficult) trust-based solutions preferring instead to blunder around shouting “thou shalt recognize each others credits,” to little effect.

Clearly, these seven institutions trust each other and are prepared to treat each others’ teaching as their own. It’s not surprising: six of them are U-15 members and so view one another as equals anyway (then there’s Guelph, which we said was basically U-15 quality a few weeks ago – apparently others agree).

That’s great, but there’s a more interesting question: why don’t they trust anyone else? I’d love to just ask the seven presidents: “what would, say, Laurentian have to do to join this agreement?” The answer, I think, would illuminate much about how institutions understand the term “quality” and the dog-eat-dog nature of the fight for institutional prestige.

September 10

Worst Back-to-School Article, 2012 Edition

Carol Goar from the Toronto Star, take a bow. Your article “Ontario students paying more but getting less” wins my vote as the most facile, ill-informed article of la rentrée.

The article contains two basic screw-ups which merit the award.

First, the “paying more” bit. Her contention is that the average tuition fee has risen $4182 since when Mike Harris was elected. The figure is correct, but unadjusted for inflation. When you actually compare apples to apples – as any first-year econ student would do – you lop 35% off the increase; in real dollars the tuition increase is actually $2718.

But that’s not all; Goar chooses to completely ignore offsetting subsidies, which have ballooned over the past fifteen years. In 1995-96, the province’s expenditure on grants and loan remission was $350/student; now, it’s $1,544. In 1995-96, the average student (or their parents) received about $1100 in tax credits. Now that figure is just over $2100. In other words, if you take subsidies into account, the net increase in real tuition over 15 years was… $600. Or, if you prefer, $40/year. Clearly, a $600 increase is a lot harder to spin as a Bad Thing than a $4182 increase. So the question is: did Goar use the higher figure because she deliberately wanted to sensationalize a subject, or because she is totally clueless about subsidies and inflation-adjustment?

The other way Goar screws up is in looking at the benefits. For some reason she seems focused on the increasingly crowded classroom. And yes, they’re a problem until you realize that the reason they’re crowded is because there are vastly more students attending university than was the case fifteen years ago. In raw numbers, there are 160,000 more university students in Ontario than there were when Harris was elected. The system has grown by 58%. The participation rate is 33% instead of 21%.

Obviously, it would be better if we could accommodate this massive growth without cutting corners, so you can’t say it’s an unalloyed triumph. But to claim it’s a disaster? Come on.

By the time you reach Goar’s conclusion, which essentially is that asking students to pay an extra $40/year to help fund a massive increase in access is evidence of “the quiet death of society’s commitment to ensure that each generation does better than the last,” you’re left either one of two conclusions. Does she genuinely believe that life was better when there were fewer people being educated? Or does she really not understand how little tuition has increased and how much access has improved? Either way, it’s a disastrous article, well deserving of this year’s award.

August 24

The Road to Three

Glenn Murray is a man in a hurry. He talks – it’s never clear how seriously – about shortening degrees to three years within the lifetime of this government. Let’s be generous and grant that the McGuinty government will actually last a full four years – what are the odds of getting to achieving this?

Honestly? Zero. Zip. Bupkis. Here’s why:

There are only two feasible routes to three-year degrees – the compression model and the re-design model. The former is superficially a lot more palatable, in the sense that it doesn’t force profs to re-design curricula and can be implemented more quickly. But in practice, it’s not clear if this is actually the more workable path. The main barrier to this approach is that it still requires a major change in student behavior. And that isn’t going to happen without incentives.

Incentives could be made direct to students by improving student assistance. That sounds simple, if potentially expensive (this is possibly a deal-breaker, given that saving money is job one for Murray). But since only 50% of students use OSAP, half the student body would be unaffected. The only truly effective way to introduce incentives across the entire student body is to change the fee structure, giving students rebates for finishing early or charging penalties for finishing late. But that requires institutions to play ball. So maybe it’s less a matter of incentivizing students than of incentivizing institutions; tweak the funding formula to favour institutions that gets students out in three years, and let institutions themselves work out how best to get students to achieve it. But since most of the economic gains come from larger class sizes and increased student aid costs offset much of the purported gains – can anyone really see the premier sticking his neck out to annoy the universities that way?

The alternative is re-design. This approach has the potential at least to save money and make the system more effective – but even assuming everyone buys into it, drastic curriculum re-design isn’t quick and requires extensive pilot testing. The best analogy here is Ontario’s reducing secondary school from five years to four. This became mandatory in 2002, but was preceded by a fourteen-year period in which four-year graduation was optional. This in turn was preceded by a multi-year period of curricular adjustment; in total, it was almost twenty-five years from the time people began re-designing the curriculum for optional four-year graduation to the time it became compulsory.

I can imagine it being faster for universities; for all their alleged slowness, where curriculum is concerned they change more quickly than secondary schools. But we’re still talking decades rather than years.

Someone needs to tell the Minister.

August 23

Re-designing to Three

So, we’ve covered the ideas of cutting graduation requirements, bringing back grade 12, and degree compression as ways to get to a three-year degree. That leaves course re-design.

There are some examples out there of full-on re-design of programs from four years of seat time to three years of competencies. The best known is probably at Southern New Hampshire University (SNHU), which was the subject of a recent book called Saving Higher Education: The Integrated, Competency-Based Three-Year Bachelor Degree Program. The basics of program re-design are relatively straightforward – working backward from a statement of graduate competencies (outcomes, basically), you work out how to introduce, reinforce and perfect those competencies in the space of 3 normal academic years. SNHU went whole-hog on this, even replacing “courses” with non-concurrent “modules,” hence ditching the idea that all academic units need to be of one term’s duration. Few, in fact, last more than six weeks (in Canada, this would probably force a re-jig of student aid policy due to the 12-week rule).

It’s pretty clear this approach can work in fields like business (which is where it was piloted at SNHU and the University of Charleston); it’s also clear that it can be implemented in a relatively short period of time provided you’re prepared to pay a load of cash for faculty release so they can do the hard slog of program and course re-design. What’s not clear is whether this model actually works in a field other than business. Even SNHU and Charleston – both of whom are fairly evangelical about the 3-year degree – have yet to really see the model break into other areas of study.

There’s no reason it can’t be done, of course. We could go the route of the European Credit Transfer System and base credits on expected hours of work, not seat time. We could re-design whole programs around outcomes, and then put a whole lot more thought into course-sequencing so that students would continue to acquire competencies in a consistent fashion across the curriculum. This is all possible. But what it would really mean – in the arts and sciences, anyway – is ditching the whole smorgasboard curriculum we’ve had since the 1960s. The outcomes-based approach only really works if you keep relatively tight control of courses taken; too much student freedom messes up the careful laddering of competencies.

There’s a case to be made that this kind of change saves money and results in better outcomes. But even if it is the “right” thing to do, it’s not clear that either students or professors are interested. Bluntly, we prefer the inefficiency of the present system. Overcoming that preference is the biggest barrier to three-year degrees.

August 22

Compressing to Three

As we noted yesterday, there are four ways to go about getting university degrees from four years to three. One, cutting grad requirements from 120 to 90 credits, isn’t serious. A second, upping the use of prior learning assessment (or, in extremis, bringing back grade 13), is barely half-serious. That leaves curriculum compression and curriculum re-design.

Curriculum compression is the significantly easier path. No need to change anything other than the speed of students’ path through the system. By getting them to take more summer courses and six courses per term rather than five, they’ll get through that much quicker, saving everyone money.

That’s the theory, anyway. What about in practice? Well, to start with, it’s really not clear that students are interested in this concept. Students can already take six credits a term and take summer credits; they simply choose not to do so. In fact, they are far more likely to extend their programs for four years to five rather than shorten them to three.

There are some pretty basic reasons for this. Students tend to prefer work over school during the summer because they need money. Summer income accounts for something like 65% of all student income, and for a substantial portion of students, it’s their only income. A large number of others prefer to take reduced course loads in order to better balance part-time work with their studies: it’s a lot easier to get four A’s working fifteen hours a week than it is to get five, so students adjust their schedules accordingly. Getting these students to go from four to five classes – let alone six – requires money, and lots of it. They would need to be compensated for lost income, much of which would need to come as grants rather than loans in order to be effective.

How would faster completion save money, then? To some degree at least, student costs align with courses taken rather than time-on-campus; if the number of courses required to get to 120 credits isn’t reduced, it’s not clear how much costs would actually be reduced, other than by increasing class sizes. Come to think of it, this is actually the only way that compression can save cash. Kicking student load up from five courses to six while keeping professor contact hours constant would increase the ratio of outputs to inputs (i.e., “productivity”) by twenty percent. Assuming, that is, that your classrooms are big enough to handle the overflow.

Ceteris paribus, that might save a few hundred million in costs – but that money would almost certainly be consumed by the required increases in student aid. Is that really what the Minister had in mind?

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