HESA

Higher Education Strategy Associates

Category Archives: Quebec

December 11

Scholarships, Proximity Talks, and the PQ’s Lost Mojo

In the late 90s, Canada was still seemingly on the edge of a break-up.  But exactly 15 years ago at the Hotel Des Gouverneurs in Quebec City, that started to change, thanks to a scholarship program.

Recall: in the summer of 1997, the Chretien government gave in to a long-standing demand of the Government of Quebec, and the province’s chattering classes, and handed-over powers for labour market training programs.  The silence from said chattering classes was deafening.  Partly in retaliation, Chretien decided he’d poke Quebec in the eye by creating a Millennium Scholarship Foundation to hand out scholarships to all Canadians, including Quebecers (it was created as a private foundation precisely in order to do an end-run around Quebec’s opt-out from the Canada Student Loans Program).

The PQ, predictably, went mental.  Even the provincial Liberals – who back then felt a need to regularly buff their nationalist credentials – joined in, sponsoring a motion in the National Assembly that said Quebec would not work with the Foundation unless: a) Quebec got a proportional share of whatever money was on offer; b) Quebec would get to choose who got the recipients; and, c) there should be no duplication with provincial aid programs.  The PQ agreed because it figured these were terms the Foundation could not meet, and so the motion passed unanimously.  The PQ position was strengthened in the fall of 1998 when it won re-election, in part on a campaign against federal intrusions into provincial jurisdiction. Advantage Quebec, right?

What the PQ didn’t reckon on was Norman Riddell, the Foundation’s Executive Director.  He went around the country striking deals with every other province, which more or less met Quebec’s criteria.  He gave every province a share of Foundation money equal to its share of population, he let them “choose” students by saying he’d give money to students with the highest need, but accept provincial decisions about how to define need.  And there’d be no duplication, because he’d pay the provinces a small fee to run the whole thing for him anyway.  Advantage, Foundation.

This annoyed the PQ, because they’d been counting on the feds being unreasonable in order to sustain their Ottawa-is-Satan narrative.  They stalled, claiming it was beneath their dignity to negotiate with a “mere” Foundation, and insisted all negotiations be with Ottawa.  This threw sand in the wheels because Ottawa’s intergovernmental affairs machinery is ponderous to the point of parody.  By December ’99, just a month before money would start to flow in the other nine provinces, there was still no deal.

At which point, la Federation Etudiante Universitaire du Quebec (FEUQ) came to the rescue.  It had dawned on students that there was: a) money on the table that their members would miss out on, and b) a deal to be made if the government of Quebec weren’t so obstinate.  The students forced Quebec back to the table.  Of course, Quebec still wouldn’t talk directly to the Foundation.  Instead, the feds had to act as intermediaries, shuttling back and forth between two hotel rooms to strike a deal, just like Northern Irish “proximity talks”.  It was deeply ludicrous, but a deal was eventually done, and Quebec students got their money like everyone else.

A few months later, Bouchard resigned as Quebec premier.  It was mostly because his party rank-and-file had become an enormous pain in the ass, but in his resignation speech Bouchard cited his failure to make Quebecers hate the Foundation as one of the reasons he felt it was time to move on.  Without Bouchard, the sovereignty movement caught a terminal case of lost mojo, and now stands weaker than at any time since the 1960s.

There’s no real point to this story, other than that those proximity talks (in which I participated) happened almost exactly 15 years ago to the day. And that, where student aid policy is concerned, Canada is – and always has been – a pretty goofy place.

October 22

Scenario Planning for Ontario and Quebec

Yesterday, we looked at data from 2004 to 2012 to examine income and expenditure trends for Canadian universities, and found that salary and operating budgets were both moving up at a pace of around 4.4% per year in real dollars.  Today, I want to do a bit of scenario planning for the country’s two largest provinces using the same technique of focussing just on operating grants, tuition, and salaries. 

Ontario

Ontario sits in between two divergent trends – real public funding has been stable or declining for many years, while tuition revenue has been increasing by about 8% per year, thanks mainly to the influx of international students.  As a result, since 2009, operating budgets have been increasing by 3.8% per year, which has been enough to deal with salary mass rises of 3.9% per year.

But can Ontario keep up that pace?  We’re already at the start of a phase where domestic enrolments are declining, and at best government income is going to decrease by about 1% per year in real terms (according to the government’s own budget papers, future increases will be 1%, less than the recent norm of 2%).  So a best guess at what’s going to happen is that government income trajectory will remain negative, and the 8% per year budget increases will start to trail off somewhat.  If this happens – and of course this still depends on ever-increasing international student numbers, which is by no means assured – then current levels of salary mass increases can be tolerated.

But what if things don’t go as planned?  What if international student numbers don’t offset losses from declining domestic student numbers?  What if the Wynne government decides to make one significant cut (say, 5%) in budgets this year to finally get the deficit under control, now that they have a majority government?  In this case, assuming no change in salary mass trajectory, salaries would rise to 82% of combined operating grant and tuition, from 76% today.  That may not sound like much, but let me turn those words around and phrase it another way: in order to accommodate current levels of growth in the salary budget, in a pessimistic scenario, the non-salary portion of the operating budget – light, heat, scholarships, lab supplies, etc. – would need to be cut by 25%.

Figure 1: Budget Scenarios for Ontario, 2012-13 to 2017-18

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So the quick summary here is: If you want salary mass increases to continue, find ways to bring those foreign students in.  Otherwise, you either have to accept massive cuts to non-salary areas or a cut in salary growth.

Quebec

The situation in Quebec is both more straightforward and more problematic than in Ontario.  There, the government has already signalled it will cut funds in nominal terms next year in order to balance the budget.  The only question is what happens afterwards – and I have assumed here that spending will rise again at the rate of projected GDP growth.  Tuition revenue growth was never as high in Quebec (5% per year in real terms) as it was in Ontario, as Quebec doesn’t attract as many international students – there is no obvious reason to think this will change.  On the other side of the ledger, salaries as a percentage of total income is 87% of combined government grants and tuition, compared to 76% in Ontario (if you’re wondering why Quebec universities feel poorer than Ontario ones, there’s your answer right there).  You can come up with other scenarios, of course, but most plausible ones look worse than this.

Put these factors together and you get a pretty ugly picture.  Operating budgets are simply not likely to grow much in the short term, so even a continuation of current salary trends – a 2% real increase per year, or about half what it is in Ontario – would mean salaries rising from 87% of income to 91.4% of income.  Meaning, in short, that without a change in salary policy, Quebec universities would have to cut a third of their non-salary budget in order to make ends meet.

Figure 2: Budget Scenario for Quebec, 2012-13 to 2017-18

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Whichever way you look at it, the numbers are ugly.  Compression of salary mass seems almost inevitable in Quebec; for Ontario to avoid the same requires institutions to continue a not-necessarily-sustainable trend of enrolling ever-increasing proportions of international students.

Tomorrow, we’ll get out of central Canada and see how things stack up elsewhere.

November 28

Some Free Advice for the Parti Quebecois

So I see that the Government of Quebec, far from hitting their zero deficit target this year, is in fact going to come in with a deficit of about $2.5 billion.  This means that, not only will the “reinvestment” in higher education – the money that was going to compensate institutions for not getting their promised tuition increase – not come any time soon, but it’s better than even-money that there’ll be cuts this year instead.

Two points:

1)      Hey, CREPUQ!  Still think the “playing it quiet” strategy in the spring of 2012 was such a hot idea?  Congratulations on such a well-executed plan.

2)      Man, Quebec universities need to find some revenue sources.

That second one is a bit of a problem, of course.  The PQ has indexed domestic tuition to some form of inflation, and, as I understand it, the Liberals have agreed to this policy as well – so that’s out.  It could charge differential fees to out-of-province students, but they already tapped that well back 1996, so that’s out too.

So what about international students?

There are two oddities about Quebec’s international student fee policy.  One is the policy of having regulated fees in some disciplines (e.g. arts, science) and de-regulated fees in others (e.g. engineering and business).  Institutions get to keep all the money they take from students in de-regulated programs, but in regulated ones, any money received over and above what domestic students pay gets clawed back by the Ministry (yes, really).  The second oddity is that international students from la francophonie pay Quebec tuition.

It’s clearly time for Quebec to get rid of both these policy oddities.  The first one can’t be eliminated on its own, as it will be perceived as favouring the anglo universities, and, you know, dieu nous en garde.  But if both are killed together, then there’s something in it for everyone.  McGill gets to cash-in on all the Americans who come to study Arts, and enjoy the more righteous legal drinking age, and U de M and Laval get to actually charge all those European and African students who come over for the Engineering and Business programs.

(This is where someone says: “but they’ll lose students if they charge more!”  Irrelevant.  The only issue is whether they make up the attendant lost revenue through higher fees.  Which shouldn’t be hard.)

The benefits of the francophonie tuition policy are minimal.  Heck, one of its main consequences is that the Quebec government is currently subsidizing over 700 French students each year to study in English at McGill.  So why bother?  For the Quebec government, killing it would be a cost-free way to help universities with their funding issues.  It should be a no-brainer.

May 23

A Rare Piece of Good Policy in Quebec

So, although it wasn’t widely noticed at the time, one really excellent piece of policy came out of the crap-fest that was the Quebec Education Summit, a couple of weeks ago; it’s a policy that deserves a great deal of wider study and emulation.  For the first time in Canadian history, a government managed to get rid of a crappy tax credit, and use it to improve targeted, needs-based subsidies.

Here’s what happened. The PQ, during its naked bid to win the affections of students in the run-up to the 2012 election, promised students that not only would they rescind the tuition hike imposed by the Liberal government, but they would also uphold the generous new student aid package the Liberals offered as a sweetener.  But of course, that meant spending double – so they needed a new form of revenue, at a time when the provincial budget was under pressure.

Enter the tax credits.

Now, if you’ve at all been following student aid over the last decade, you’ll know that Canada went tax-credit crazy around about 1998.  Mostly, it was a federal thing – a way for the feds to get money to parents for education, without the tedious mucking about of negotiating deals with provinces.  But some provinces went along for the ride, too. In any case, the value of education tax credits rapidly surpassed the combined value of grants and loan remission.

Total Value of Education Tax Credits vs. Grants & Remission, Canada, 1990-91 to 2009-10, in Billions of 2010 Dollars

 

 

 

 

 

 

 

 

 

 

 

 

Why does this matter?  Because tax credits are given out without regard to income or need.  And since kids from better-off backgrounds are more likely to go to PSE, tax credit expenditure, on aggregate, mostly ends up in the hands of people from the top 2 income quartiles.  Grants, on the other hand, are more likely to end up in the hands of people from the bottom 2 quartiles (the reason they don’t end up there entirely is because a lot kids from richer backgrounds get quite a lot of aid once they turn 22, and become “independent” students).

Distribution of Benefits by Income Quartile, for Selected Student Assistance Measures

 

 

 

 

 

 

 

 

 

 

 

 

Source: Usher, A (2004) Who Gets What? The Distribution of Government Subsidies for Postsecondary Education in Canada. Toronto: Educational Policy Institute.   

Now, over the past decade, a number of groups have recommended replacing tax credits with grants of some kind – even the CFS, who bizarrely denounce tax credits as regressive, even though they have EXACTLY the same re-distributive consequences as the tuition cuts which the CFS backs so fervently (consistency is not their strong suit).  Almost everyone – bar Michael Ignatieff – ignored these calls, essentially on the grounds that  Canadians wouldn’t stand for what would amount to a tax hike.

Well, now the PQ has proved them wrong.  A government has converted a regressive universal program into a targeted progressive one, to no opposition whatsoever, even in a highly-taxed province.  Policy-makers in the rest of the country should take note.

May 03

The End of CREPUQ and its Implications

So, the Conseil des Recteurs et Principaux des Universites du Quebec (CREPUQ) died this week, after the number of institutions pulling-out of the alliance rose to eleven.

The basics of the dispute are simple.  The big research universities are starving for cash; they’d prefer to get it from tuition fees if they can (students are a more dependable source of income than flighty governments), but they’ll take it via the funding formula if they have to.  From the Laval/Montreal perspective: not only did the UQs shaft research universities on tuition by not backing the Charest plan, but now they’re screwing them on the funding formula by cozying up to a PQ plan that rewards institutions based on contributions to access, rather than research.  So instead of “so-so-so… solidarité”, it’s “so-so-so… so long, and don’t let the door hit your behind on the way out”.

I’m sure Pauline Marois and Pierre Duchesne couldn’t possibly be happier.

In Quebec, the main consequence will be that certain elements of the HE quality assurance process, which universities – via CREPUQ – used to manage themselves, will now end up in government hands.  But the impact of this implosion outside Quebec is worth watching, too.

At the federal level, we’re at ease with the idea that colleges and universities can have overlapping memberships: ACCC has been joined by Polytechnics Canada, and AUCC now shares the higher education field with the U-15, the Association of Canadian Comprehensive Research Universities (ACCRU), and, just this week, the U-4.  But representation by separate, non-overlapping agencies hasn’t happened yet.

But now the precedent has been set, both in Quebec and in British Columbia, where the research universities and the rest have had different representation since forever.  As dollars become scarcer and institutions become more concerned with their own slice of the pie, and less with the health of the sector as a whole, could we see the same thing happen in Toronto, or federally?

COU probably isn’t in trouble.  A benefit of having largely ignored calls for differentiation from Ian Clark and Harvey Weingarten is that the university sector sees itself as having a fairly common set of interests (increased graduate students for all!).  Federally, it’s a different story.  Already, there are a number of institutional heads who prefer investing their personal time and energy in U-15 issues rather than AUCC: it may just be a matter of time before a couple of them decide their financial investment should be similarly focused.

If it happens, the instigator will be from Quebec or Alberta.  Bank on it.

April 19

A Two-Tier Tuition Regime in Quebec?

Things are getting interesting in Quebec.  First Laval and now l’Université de Montreal are publicly threatening to leave the Conseil des Receteurs et Principaux des Universites du Quebec (CREPUQ).  In the discreet and diplomatic world of Canadian University politics, this is like blowing a vuvuzela during a piano recital.

At one level, this is a delayed reaction to CREPUQ’s limp performance during last year’s tuition fee debate.  At the outset, all institutions agreed to take a common position and speak through CREPUQ, a strategy fatally undermined by CREPUQ’s subsequent decision to spend the crisis hiding under a blanket.  I don’t have any inside information, but reading between the lines, it seems that there was a split between the independent universities (McGill, Concordia, Bishop’s, Laval, Montreal, Sherbrooke) and the UQs, with the former mostly thinking the Charest government didn’t go far enough, and the latter – possibly with an eye on an incoming PQ government – being more ambivalent.  The result was a deafening and damaging silence from the reform’s key beneficiaries.

The lesson Laval and Montreal seem to have taken from this is that CREPUQ and their UQ colleagues are no longer to be trusted.  And so they are now out actively lobbying for a two-tier solution, which would promote their interests over those of the UQ system’s.  Specifically, they are arguing for a two-tier tuition structure which would allow research-intensive institutions to charge a higher fee, while allowing the government to claim it is preserving access by giving students a low-fee option through the UQs.

I think there is some merit in a two-tiered solution.  Clearly, a lot of (mainly francophone) students have made it known that they value cheap universities over good universities.  So, fine, let those be the UQs.  For everyone else, there’s a better-resourced solution, funded by fees rather than government.

But the specific details of the plan are a bit sketchy.  First of all, the link between tuition and research is a bit ridiculous.  What’s the value proposition: “pay us more, so we can pay less attention to you”?  Even if it weren’t ridiculous, the idea that it would apply to just Laval, Montreal, McGill, and Sherbrooke is nuts.  On any research measure other than, “do you have a medical school”, Concordia kicks Sherbrooke’s behind; for it not to be on that list is a transparent piece of linguistic politics and institutional snobbery.

If you’re going down the two-tiered road, it seems to me that there’s a logically solid case for restricting it to just two universities (McGill and Montreal, genuinely world-class and special) or expanding it to six by including all the “independent” universities (i.e. including Concordia and Bishop’s).   Anything else seems arbitrary.

February 25

Is This the Worst Student Movement Ever?

I’m trying to imagine a worse excuse for a student movement than the one Quebec has at the moment; and I have to say that I’m not sure I can.

I mean, sure, the Canadian Federation of Students has talked some awful crap about how reducing net tuition for poor students is unacceptable, unless richer kids get a break too – really ludicrous stuff, which objectively favours richer students over poorer ones.  But so far as I know, they’ve never actively aided and abetted a government that was intent on making universities poorer.

But that’s what FEUQ, and the rest of the Quebec student movement, seem to be doing right now.

True story: a few weeks ago, the Conseil des Recteurs et Principaux des Universites du Quebec (CREPUQ) put together a paper which argued that Quebec universities were underfunded relative to their Ontario counterparts to the tune of $850 million per year, or a shade over $4000 per student.  These kinds of comparisons are always a bit fraught, but it was not a bad paper and, obviously, it was meant as a bargaining chip – a way of setting some markers in negotiations with government.

So, what did FEUQ do?  Something that, to my knowledge, no student organization in world history has ever done. They became mouth-pieces for the PQ government, curtly dismissing the study by saying, “just because our schools don’t have as much money as somebody else doesn’t mean they’re underfunded”.

No, seriously, that’s what they said.

FEUQ’s train of thought seems to run something like this:  1) Universities want more money; 2) the provincial government is broke; 3) therefore, new money can only come out of tuition fees; 4) therefore, we’d better oppose this.  The problem is, if you concede point 2 you’re more or less screwed in terms of asking something for yourself, like a more generous student aid system (which Quebec certainly needs, at least for dependent students).   And you’ve gone and hacked-off one of your most natural allies as far as higher education is concerned.

And, frankly, you’ve failed students.  I mean, if the student movement can’t argue on behalf of better funding for education, who can?

I understand and support the students’ argument that universities could better manage their affairs in order to keep pressure off tuition.  Certainly, there have been a number of inexcusable high-cost screw-ups in building construction, which have reflected badly on Quebec universities’ managerial competence, and put needless pressure on university budgets.

But starving universities to keep tuition low is a recipe for long-term decline.  A student union would have to be extraordinarily short-sighted, selfish, or stupid not to see that.  FEUQ’s clearly not stupid; draw your own conclusions.

December 19

Lessons from Quebec

What lessons can we learn from the current mess in Quebec?  I think two stand out – one for students, and one for universities.

The lesson for students is this: it’s great that they can mobilize and maintain pressure on government in the ways they have over the past twelve months.  But, if you fight a tuition fee hike by telling government that there’s oodles of waste and inefficiency in universities, don’t be surprised if they take you at your word, and slash budgets.

Now, frankly, the student associations are kind of screwed.  Can students once again take to the streets to confront this new issue?  Likely not – and the total silence emanating from “the usual suspects” regarding a new wave of protests suggests they know they can’t, either.  But if students don’t do something, they’ll be giving government the impression that they care more about price than quality.  And if this happens, the government really will have carte blanche to do more-or-less whatever it wants to institutional budgets.  So, you know, congratulations to students on beating the government at checkers; too bad there’s actually a chess match going on.

At the same time, the lesson for universities – in particular the government relations folks –is this: when a government goes out on a limb for you, you back them loudly and publicly.  Period.

Granted, the exiting Charest government was among the least palatable champions a university could wish for.  Worn-out, accident prone, and scandal-plagued (joke of the year candidate: “what’s the difference between a Quebec student leader and a Quebec mob boss?  The mob boss doesn’t need to forswear violence to get a meeting with the Minister”), there was almost no one less credible than the PLQ to carry the message about the need for greater investment in higher education.

But, Government Relations 101: “Ya dance with the one that brung ya.”  Whatever they thought about the Liberals, the Presidents should have backed the plan instead of leaving the PR to the Conseil des Recteurs et Principaux des Universites du Quebec  (which was terminally conflicted on the issue), or taking off on foreign trips at the height of the protest.  And not because it was a brilliant plan, either, but because failing to back a government when they do you right makes all political parties question your value as an ally.  The perception that universities are a constituency with little political loyalty almost certainly played some part in the PQ’s decision to pick a fight with them.

As Quebec universities regroup to fight this latest battle, it would be good for them to reflect on how they got in this situation in the first place, and perhaps acknowledge that they blew it last spring.

December 06

The Other Shoe Drops

So, the victorious Parti Québécois, who believe so much in education, who spent all spring and summer hand-wringing and moaning about how that mean, mean Jean Charest was just so… so mean because he wouldn’t invest in Quebec’s youth, and whose election was a massive and historic victory because they cancelled those terrible, evil, neo-liberal tuition fee hikes, has just cut subsidies to all universities’ and colleges’ by five percent.

Oh, and the cuts aren’t coming next year, they’re coming this year.  The one that’s already more than half over.  So, in fact, based on what actually remains of the budget year, the cut’s add up to something closer to 12%.

Of course, I’m sure that the province’s teaching staff, many of whom supported the students publicly – yes, I’m looking at you, Anarchopanda - and joined in their brave resistance to “The Man” will view this development with good cheer.  I forsee them gladly – no, gleefully – agreeing to have their salaries cut so they can show that they’re ready to do their part, and make sure that under no circumstances are students forced to pay another penny towards their education.  Because that’s what solidarity means, isn’t it?

And of course student leaders will be asking universities to publicize the fact that those shortened library hours, those cancelled course sections – that they’re all thanks to the Red Square movement.  In fact, I’m sure that at this very minute, they’re planning a massive new wave of demonstrations in which students will bang pots and pans through the east end of Montreal, in a huge percussive show of support for the Parti Québécois and its cutbacks.

No?  You don’t think so? Wait, you don’t think that students feel shocked and betrayed right now, do you?

Surely not.  Surely everyone understood at the outset that the province was broke and that the alternative to tuition hikes was precisely this kind of cutback.  Surely everyone understood that government spending is limited by the size of the taxbase, and that in a province as highly taxed as Quebec, when you promise something as expensive and unnecessary as a continuation of a misguided tuition freeze, that somehow, someway, it has to be paid for.

No?  You don’t think they understood all of that?  Well, they must be feeling pretty silly today, mustn’t they?

October 12

When Should McGill Go Private? (Part 3)

Over the last couple of days, we’ve seen how McGill could at least theoretically survive leaving the public higher education system and cope with a loss of its $272 million teaching grant. About 85% of the resulting funding gap could be closed on the revenue side; the rest would need to come from internal re-allocations (basically, shifting away from graduate studies and losing a faculty or two).

Probably the biggest implication of abandoning public funding is that the numbers don’t work unless McGill focuses more on undergraduates and less on graduate students, at least in the medium term. That’s a potential turn-off to a lot of the faculty members upon whose shoulders McGill’s reputation rests, and could tilt the balance in any discussion about the merits of going private.

The short-term equilibrium needed to make the plan work involved setting tuition at Ontario levels plus about $3000 and increasing enrolment slightly. But that’s a very short-term solution: McGill’s reputation for quality can withstand higher prices and larger classrooms for awhile, but over time that won’t be sustainable. Quite apart from the need for eventual capital improvements, the school will eventually have to develop a value proposition different from that of public institutions, and that almost certainly means smaller class sizes. The ineluctable logic over time is a significantly smaller school charging prices that are at least in the $20,000 – $30,000 range. But that’s really uncharted territory as far as student price-response goes. That people would pay a premium to go to McGill is almost unarguable. But what kind of premium? Fifty percent more than (say) Queen’s? Probably. One hundred percent? Now the issue of the value proposition becomes pretty acute.

With more money coming through students and their parents, student aid would also start to become a major issue. The province of Quebec wouldn’t be able to cut McGill off, but it would almost certainly find a way to limit the amount of tuition that would be counted as “need” (much as Ontario has done for the past decade). This may not matter much – one implication of this plan is almost certainly a shift in the student body to accommodate more out-of-province students. Most likely, McGill would need to start pumping increasing proportions of new tuition income into its own student aid programs, in exactly the same way U.S. private schools do. But head down that route and every extra dollar returns ever less net revenue; pretty soon you’re chasing your own tail.

Going private would involve some very serious trade-offs for McGill; it’s by no means a panacea. But at least McGill has the luxury of such a debate. For other Quebec institutions, the remainder of the decade looks bleak indeed.

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