Higher Education Strategy Associates

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February 14

How to Fund (1)

Over the next three days, I want to talk about funding formulas.  I know I did this a couple of years ago, at the start of the Ontario funding formula review exercise (see here, here, and here, but it’s worth revisiting  partly because I’m cheesed off at how Ontario managed to botch the review, but also, it’s because I’ve been looking at funding formulas in Europe and the US for article I’ve been writing, and it’s absolutely stunning to me how pretty much everyone except Canada has some kind of performance measurement in their formula, but we can’t because everyone is afraid of creating “winners” and “losers”.  So today I’d like to give you a kind of grand overview of how funding formulas actually work, tomorrow I’ll have an overview of how formulas work in various parts of the world and then on Thursday I’ll come back to blow off steam about Ontario.

Are you sitting comfortably?  Then I’ll begin.

There are basically seven ways governments can hand money over to institutions.  They are, in more or less ascending order of policy sophistication:

Negotiated BudgetsMost of the developing world works on this system.  An institution tots up its wish list for the year, shows up at the Minister’s office, which says yea or nay to a variety of requests, and that’s that.  The government is under no obligation to treat institutions in the same manner and so “favoured” institutions often make out pretty well under this system.  This system tends to exist in countries where trust in institutions is low: effectively this system gives government a line-by-line veto over institutions budgets.

Historically-based lump sums.  This is more or less how it’s done in most Canadian provinces.  Government looks at what they gave each institution last year (which probably has at least some relationship to costs and outputs) takes a gander at provincial finances this year, and decides what everyone’s going to get in consequence this year.  It’s a step up on negotiated budgets in the sense that everyone gets treated more equally.  In provinces like Newfoundland and PEI, where there’s only one institution, this systems makes sense (because really, why make a formula when there’s only one institution?).  It probably makes less sense in Alberta, which also uses it.

Enrolment-based fundingIn most of North America, including Canada’s two biggest provinces, the majority of cash transferred by governments to institutions is simply based on the numbers of students enrolled, with more expensive programs given an extra “weight”, allegedly based on real costs (so, a medicine student is worth 5x an arts student, etc.).  These weights vary quite a bit from jurisdiction to jurisdiction so it’s a bit dubious that they are really based on “actual costs”.  It’s better to think of them as consensual fictions which are mutually convenient for both institutions’ and government’s planning purposes.  (Intriguingly, during the Ontario funding formula discussions, one of the most urgent pleas from institutions was “don’t mess with the subject weightings”.  Make of that what you will.)

Output-based FundingFitfully, the world is moving to various types of output-based funding.  In the US that means small amounts of funding based on various measure of progress/completion; in Europe, it’s quite large amounts of funding, usually some combination of student output and research outcomes.   Where it is based on student funding, the money is often weighted by the discipline from which the student graduate, just the way enrolment funding is. Note that output-based funding is not the same thing as outcome based funding.  There are a very few places which get funded based on student employment rates or student loan default rates (though the Harris government in Ontario did give that a try for awhile and countries like Finland do incorporate employment outcomes in funding decisions at the margins).

Competitive Funding. In Canada, we traditionally think of competitive funding as occurring at the level of the individual researcher.  But increasingly, we’re seeing funding being competitive at the institutional level (think CFI, think CFREF).  In other countries – particularly those which provide money for teaching and research in two separate envelopes – this has been the norm for a long time.

Mission-based funding.  There are a few places – Austria in particular – where funding is at least partially conditional on fulfilling a particular mandate or reaching a set of goals.  (Arguably, British Columbia uses this method, but the conditions are softer than in Austria).  In some ways this is a throwback to a negotiated budget system, but with an actual check for  “return on investment”.

Other Stuff.  Governments hand out money for all kinds of reasons.  Some are recurrent, such as being a Northern university (in Ontario, anyway) or a university serving the French community. In some countries you will see special envelopes for institutions to maintain art galleries and museums.  Then there’s the stuff which is basically play-money for ministers wanting to make a few headlines: throw-away money for a new building here, a new building there, money for mental health initiatives, or entrepreneurship centres, or what have you.  Most often seen in election years.

(If you want to split hairs, there’s an eighth way: subsidizing student tuition dollars through loan and grants.  But we’ll stick to the direct methods of subsidy for now).

Most jurisdictions of course use multiple means of dispersing funds.  For instance, though a majority of the world’s jurisdictions provide funds primarily as “negotiated”, “lump-sum” or “enrolment-based formula” systems, they still often have pockets of money given out competitively, or as “other” funding.

Internationally, what is striking about Canada (and to some extent the US) is how reliant they are on methods 2 and 3 compared to Europe which on the whole uses method 4 (output-based funding) a lot more.  I’ll show those differences in more detail tomorrow.

February 13

When Should the Education System Say “No”?

There’s an argument going on in the UK right now about re-introducing grammar schools.  Until the 1960s, grammar schools were a selective tier of the secondary system.  Everyone took exams at the age of eleven, and the most academically able were selected to go to these schools, the purpose of which (everyone understood) was to enable people to go to university.  Those who did not pass were essentially out of luck as far as further education went: their choices were circumscribed by the time they were eleven. Germany and some other central European countries still operate on this basis.  For some reason, the current government thinks it’s a good idea to go back to that system.

Like many others, I think it’s wrong for the education system to filter people at an early age.  Among other things, streaming – or any rationing by ability, really – is inevitably classist.  Yes, some poor kids will get through and get “a good education” and by some people’s lights this makes selection an “engine of mobility”.  But far more are consigned to the loser bin at an early age.  And that’s not good: you can’t ask the education system to kill people’s dreams off at such an early age.

But here’s the question: if not then, when?  Should the education ever say no to someone’s dreams?

We used to say “no” to people a lot.  We used to fail out a lot of kids from high school and that was OK, because hey, we had to have standards (I note with interest that Ken Coates and Bill Morrison, in their new book Dream Factories, have taken to calling near-universal high school completion rates an obvious example of “dumbing down”. Nice.) We used to restrict entry to university a lot.  Heck, 30 years ago we had fewer than half the number of students we had today, and the median student today would have had trouble accessing university in the late 1980s.  In some parts of Europe, even though they have so-called “open” admissions systems (everyone who passes the exit examination of the top-secondary school stream, such as the baccalaureat or the abitur) it remains policy to fail out large numbers of students after first year who “can’t handle the work” – that is, say yes, then say no.

To a considerable degree, widening access is about learning how not to say no to people.  But to some extent this just puts off the day of reckoning, because after education comes the labour market and the labour market is under no obligation to say “yes” to anyone.  There are more people who want to be professors than there are tenure-track jobs, more people wanting to be lawyers (crazy but true) than there are positions at law firms, more teacher-wannabes than teaching positions.  “No” comes, eventually, at least for some.

Now some people will argue that because the labour market says “no”, the education system also needs to say no – especially when it comes to professional schools. To these people, the expansion of law school (or Master’s degrees in education, take your pick) is a travesty. All those people paying for an education which doesn’t necessarily bring in a huge rate of return?  What we need to do is reduce the number of incoming students so as to raise average rates of return!  (There is a similar argument with doctoral students: there are never going to be enough academic jobs for these students, so why let them in in the first place)?

I get that argument, but to me it doesn’t wash any more than early selection washes.  Yes, there are more wannabe lawyers and teachers than available positions.  But why should anyone but law firms and schools be the ones who say no?  Why should higher education institutions be the gate-keepers?  Until you’ve actually given people a chance to succeed at a professional school, how would you know who the best lawyers/teachers will be anyway?  And how, in practice, will institutional gate keeping not simply re-introduce the class-based outcomes?

The only legitimate argument in favour of limiting enrolment, it seems to me, is if public money is at stake.  At some point, a government which feels it is not getting a good return on its investment because graduates are not getting jobs would be within its right to stop funding new places.  But if students are spending their own money, as they do for law school, why should anyone want to stop students from spending their own money to pursue their desired career?

Yes, consumers need to be protected from mis-selling, obviously; institutions shouldn’t be allowed to mislead people about the odds of someone eventually saying “no”.   But other than that, the moral case for institutions as gate keepers isn’t much better than that for bringing back grammar schools.

February 10

Four Megatrends in International Higher Education – Demographics

Last week I noted that one of the big factors in international education was the big increase in enrolments around the world, particularly in developing countries.  Part of that big increase had to do with a significant increase in the number of youth around the world who were of “normal” age for higher education – that is, between about 20 and 24.  Between 2000 and 2010, that age-cohort grew by almost 20%, from a little over 500 million to a little over 600 million.  Nearly all (95%) of that growth came from Asia and Africa.

Figure 1: Number of People Aged 20-24, by Continent, 2000 to 2030


But as figure 1 shows, 2010 was a peak year for the 20-24 age group.  Over the course of the 2010s, numbers globally will decline by 10%, and not reach 2010 levels again until 2030 (intriguingly, this is almost exactly true for Canada, as well).  A problem for international higher education?  Well, maybe.  Demography isn’t destiny.  But to get a bit more insight, let’s look at what’s happening to the demographics within each region.

In Europe, the numbers for the 20-24 year old group are falling drastically.  In Western Europe, the decline is relatively moderate and reflects a gradual drop in the birth rate which has been going on for about fifty years.  In Eastern Europe, the fall is more precipitous, a reflection the fall in the birth rate during the occasionally catastrophic years of the switch from socialism to capitalism.  In Russia, youth numbers are set to drop by – ready for this? – fifty per cent (or six million people) between 2010 and 2020.

Figure 2: Number of People Aged 20-24, Selected Countries in Europe, 2000 to 2030


In East Asia, the story of the first ten years of the century was the huge increase in youth numbers in China (yes, the one-child rule was in effect, but the previous generation was so large that raw numbers continued to increase anyway).  But once we reach 2010, the process reverses itself.  China’s youth cohort drops by 40% between 2010 and 2020. Similarly, Vietnam’s drops by 20%, as does Japan’s (which additionally lost another 20% between 2000 and 2010).  Of the countries in the region, only Indonesia is still seeing some gentle growth.

Figure 3:  Number of People Aged 20-24, Selected Countries in East Asia, 2000 to 2030


The story changes as we head west in Asia.  India will continue to see rises – albeit small ones – in the number of youth through to 2030 at least.  Pakistan will see an increase of 50%, albeit from a much smaller base.  Numbers in Bangladesh will rise fractionally, while those in Turkey will stay constant.  Iran, however, is heading in the other direction; there, because of the precipitous fall in the birth rate in the 1990s, youth numbers will fall by 40% between 2010 and 2020 (i.e. on a similar scale to China) before recovering slightly by 2030.

Figure 4: Number of People Aged 20-24, Selected Countries in Southern & Western Asia, 2000 to 2030


I’m going to skip the Americas, because numbers there stay pretty constant over the whole period and the graphs therefore look pretty boring (just a bunch of lines as flat as a Keanu Reeves performance).  But here comes Africa, where youth numbers are expanding relentlessly.

Figure 5: Number of People Aged 20-24, Selected Countries in Africa, 2000 to 2030


The six countries portrayed here – Nigeria, Ethiopia, Egypt, Kenya, South Africa and Tanzania – make up just 40% of the continent’s population, but they are quite representative of the continent as a whole.  By 2030, there will be more 20-24 year-olds in Nigeria than there are in North America, and growth in numbers in Tanzania, Kenya and Ethiopia (as well as Nigeria) between 2015 and 2030 will exceed 50%.  The outliers here are South Africa, where youth cohort numbers are going to stay more or less constant, and Egypt, where the numbers drop in the 2010s before starting to grow again in the 2020s.

So what can we learn from all this?  Well, what it means is that overall, youth numbers are shifting from richer and middle-income countries to poorer ones.  While many developed countries like the US, France, Canada and the UK are more or less holding their numbers constant (or, more often, showing a dip in the 2010s and a subsequent rise in the 2020s), we are seeing big, permanent drops in numbers in places like Russia, Iran, China and Vietnam and big increases in places like Nigeria, Pakistan and Kenya.

Ceteris paribus, this is bad news for international student flows because on average, the potential client base is going to be coming from poorer countries.  But keep in mind two things: first, international education is by and large the preserve of the top five percent of the income strata anyway, so national average income may not be that big a deal.  Second, while the size of the base populations may be changing, what really matters for total numbers is the fraction of the total population which chooses to study abroad.  China is a good example here: as our data shows, the youth population is falling drastically but international student numbers are up because an increasing proportion of students are choosing to study abroad.

Bottom line: the world youth population is now more or less stable, after decades of growth.  For international education to continue to grow means finding ways to convince people further down the income strata that study abroad is a good investment.

February 09

Skills and Youth

What with the Advisory Council on Growth’s paper on skills, and the Expert Panel on Youth Employment wrapping up, public policy is suddenly back to a focus on skills – and in particular what skills youth should have.  So, let’s talk about that.

While some in the federal government will state forcefully that they are not – repeat NOT- going to be like the previous government and tell students what fields they should study (read: welding), literally every time skills come up they start babbling about coding, tech and whatnot.  So as near as I can tell, this government is just as directive about skills as the previous one, it’s just that a) they’re pushing a different set of skills and b) they aren’t actively trashing programs of study they see as less valuable, the way the Tories did with sociology.

The Liberals’ urge to get everyone tech-ing is understandable, if shallow.  What’s the one part of the youth labour market where kids are doing better than ever?  Engineering and computer science.  Are tech-enabled industries the wave of the future?  Well, kinda, depending on your definition of what that means.  But let’s think a little bit more about what that means.

Consider what I would call “hard” tech skills: the people who actually do code or computer science for a living. There’s just not that many of them around.  And here’s a secret: even if Canada becomes some kind of massive tech haven, there still won’t be that many around.  It’s simply not a high-employment industry.  Defining it really ambitiously and assuming high rates of growth, these jobs might equal five percent of the labor force.  So, yeah, let’s increase the size of engineering and CS programs, a bit.  But that’s not a skills solution for the economy as a whole.  We need something for the other 95% of the population.

Now, there’s a broader set of tech skills that matter to a broader subsection of the population.  Some people call these “coding skills” but it’s actually closer to digital literacy.  Basically, people who work with databases all the time – whether they are in accounting or sales or advertising or what have you – can become more productive if they better understand the logic behind databases and have some understanding of how algorithms might improve their use.  Artists and designers can command higher salaries if they have some digital skills.  To be clear – this doesn’t mean we need more credentials in these areas.  It means we need more people in the workforce who possess thee skills as part of their toolkit.  They could learn this stuff through coding schools or “bootcamps”, or maybe more colleges and universities could integrate these skills into existing programs but more likely most people are going to acquire these skills informally.  Which is fine, as long as they have them.

But still, put those two sets of tech skills together and you’re covering maybe a quarter of the labour force.  And that’s not good enough.  What are we going to do for everyone else?

No one has a crystal ball that can help understand what jobs of the future look like.  But it does seem the case that if technology is going to be as disruptive as the tech-boosters think it will be, then a lot of jobs are going to be automated.  In fact, human employment will be increasingly be concentrated in things that computers or robots cannot do.  And in the main, those are either jobs that require a wide variety of physical skills or jobs that involve judgement and empathy.  Last year, Geoff Colvin wrote a book on this subject called Humans are Underrated, which is worth reading if you’re into this topic.

Put it this way.  We’ve got a minority of our future workers who will be working hard to make better robots and algorithms to do things humans can’t do (at least not near the price computers can do it).  But we’re also going to have a majority of our future workers who are going to have to work hard at making themselves unreplaceable by machines by employing very human skills like empathy and narrative.  Why in the name of all that’s holy would we focus our energies just on the first group of workers?  Why not acknowledge what’s actually happening in the labour market and say: we’re going to work on both?

A final point about skills and youth.  As I noted back here something really does seem to have changed in the labour market after 2008.  Full-time enrolment rates in particular have shifted downwards – but this is much more pronounced among the younger age groups (15-19) than it is among older ones (25-29).  This is consistent with a theory of skills-biased technological change: younger people have fewer skills than older ones.  But be careful here in equating the acquisition of skills with obtaining an education.  Employers want people who can get a job done: by and large when they talk about “skills shortages” what they actually mean is “experienced worker shortages”, because to them acquired tacit knowledge matter at least as much formally-acquired knowledge.   To put that a little more concisely: it’s not just that education is more important than ever, but experience is also more important than ever, especially for young people.

I know the Expert Panel will be thinking about these issues, because they kindly invited me to a roundtable event last week and we talked about all this (thanks, Vass!).  But the people who really need to be thinking about these issues are colleges and universities – perhaps more the latter than the former.  Study after study for the last two decades have shown that the number one reason students attend university is to get a god job.

As I’ve just run through, jobs are about experience and skills.  Could be tech skills, could be empathy/narrative skills: either is fine.  Slowly, institutions are coming around to the idea that experience matters and so work-integrated learning is expanding.  Great.  Hard tech skills?  We’ve got a lot of that covered.  Integrating second-level tech skills into other programs in Arts, Science and business.  Getting there (in some places, anyway).  But the narrative/empathy stuff?  I know some people blather on about how humanities give you these skills somehow by osmosis, but do they really?  Who’s checking?  How is it being measured?  And why on earth would we want to limit that stuff to the Liberal Arts anyway?

If I were a university President, these are the kinds of things I’d be asking my Deans to think about.

February 08

New York, New York

With the Republicans in control of both Congress and the White house for at least the next two years, the fight for “free tuition” is moving to the state level.  And so to New York, where Governor Cuomo has proposed a form of “free tuition” for anyone attending the City University of New York (CUNY) or the State University of New York (SUNY) and whose family earns less than $125,000.  So what does this mean exactly?

Well, to be clear, it’s not the same kind of free tuition Hillary Clinton was offering back in the election campaign.  (There are many kinds of free tuition, as I noted back here; refresh your memory, if you like).  Clinton was offering – with scant details – a vision where with enough federal funds, states and their public university systems would agree to stop charging tuition fees to students from families below $125,000 in income (or, roughly, 80% of the student population.  That idea was always a little bit pie-in-the-sky: the impracticalities of it were well covered by Kevin Carey at the time.  What Cuomo is offering instead is a top-up plan to make tuition “net free”.  Basically, he’s going to offer students below the cut-off line whatever amount of grants it takes to equal the amount they pay in tuition.  This payment, to be known as an ‘Excelsior Scholarship” (really), is thus equivalent to tuition minus any grants the student is already receiving from the federal or state governments via the Pell grant system.

Now, you might be saying to yourself: hey, that kind of sounds like the Ontario model.  That’s good, isn’t it?  To which the answer is: yes, it is a lot like the Ontario model.  It’s income-targeted net free tuition.  Except a) in some respects it’s going to be more like New Brunswick, with a big step-function (link to: ) at $125,001 instead of a nice smooth slope of benefits like Ontario and b) the threshold for getting full benefits is ludicrously high and has perverse consequences.

What do I mean by perverse consequences?  Well, the thing is that for students at the low-income level of the spectrum, federal and state grants already equal tuition.  So literally none of the money involved here is going to help them.  The biggest winners in the Cuomo proposal are precisely those people who get no grants right now – basically from families with about $80K and up in family income.  And yet these are the people who have the least trouble going to college right now.

The question here is: if you have a couple of hundred million dollars to spend, why would you give it to a group of people who have no issue attending in the first place?  Why not put money where it will be most effective? Columbia University’s Judith Scott-Clayton suggests there’s good evidence that money going to institutions creates better access outcomes than simply limiting the price.

Even Chile, once very keen on full “gratuidad”, has belatedly come around to this realization.  For budgetary reasons, the government was forced to limit its recent introduction of “free” tuition to students from families in the bottom six deciles of income.  This summer, the Chilean Treasury Department published cost estimates for the program.  In its present state the fully-phased in cost of the program will be 607 billion pesos (about $1.25 billion Canadian, or about $950M American).  Adding each of the next four deciles raises the price by about 350 billion, or 58%.  That is to say, free tuition for everyone would cost over 2 trillion pesos, or over three times as much as it costs for the bottom six deciles.  That difference is equal to 1.5% of GDP.  And what would be the purpose of spending all that money?  The very fact that it costs so much is a reflection of the fact that participation from these groups is already so high they don’t really need government help.  What kind of socialist government prioritizes handing over 1.5% of GDP to families in the top four income deciles?

In short, while targeted free tuition makes a great deal of sense, it really does need to be targeted.  If targeting weakens, the program becomes more expensive and less effective.  New York’s plan, clearly, suffers from insufficient targeting.  Ontario’s plan has it about right.  But beware: the Premier occasionally muses about extending the plan to higher income groups and there’s certainly a chance such an idea will make it into the policy conversation as the provincial election approaches.  That way madness and much wasted public funding lies.

February 07

Innovation and Skills Redux

So, yesterday Federal Finance Minister Bill Morneau’s Advisory Council on Economic Growth released five (!) papers on innovation, skills, and a bunch of other things.  I’m sure there’s a lot of ink on these in today’s papers, mainly around proposals to raise the retirement age (which we actually did two years ago, except the Trudeau government reversed it, but now evidence-based policy FTW, as the kids say).  I’ll restrict myself to some brief thoughts about two areas in particular: innovation and skills

On Innovation:   I must admit I got a bit of a thrill reading page 9 of the report, in which the Council body-slams the innovation Minister’s ideas about geographically-based innovation “clusters”.  They’re polite about it, “applauding” the Minister for coming up with such a great idea, but then go on to say that they’ve actually read the literature and know what works, and it ain’t clusters.  Hilarious.

What do they propose instead?  Well, it’s something called “innovation marketplaces”.  What are those you ask?  Well, to quote the report they’re “centers of technology and industry activity that are developed and driven by the private sector. An innovation marketplace brings together researchers and entrepreneurs with public and private customers around a common business challenge. These marketplaces match innovation demand from corporations and governments with innovation supply from researchers and entrepreneurs. This matchmaking strengthens supply-chain relationships and the flow of information, thereby fueling further innovation.”

If you think that sounds super hand-wavy, you are not alone.  In practice, there’s some overlap with the ideas Minister Bains has been peddling for months (Artificial Intelligence!  Cleantech!) but these idea are more focussed on industry and less geographically-based, both of which are Good Things.  However, it still equates innovation with new product development, specifically in gee-whizzy tech areas, which is a Bad Thing.  (Non-gee-whizzy sectors get their due in a separate paper on growth; a Good Thing to the extent that at least the Council conceptually understands the difference between Growth Policy and Innovation Policy.  I’m yet to be convinced the Minister has such an understanding.)  So there’s some overlap in ideas but considerable differences in the kinds of programs that are supposed to get us there.

But the budget’s only a couple of weeks away.  How does this circle get squared?   Messily, I suspect.  But we’ll have to wait and see.

On Skills:  According to the report, everything is going to be solved by a new agency going by the godawful name “Futureskills Lab”.  As near as I can tell, this agency is going to be a lot like the Canadian Council on Learning was, only: i) more focused on skills than education (by “skills” they seem to mean tech skills – eight of the ten examples of skills used in the report are tech), ii) more focused on (industry-led) experimentation and dissemination and “what works” and iii) it’s also going to be handed the prize of finally sorting out all that Labour Market Information stuff that Don Drummond has been yelling about for years and no one trusts Statscan to get right.  (I kid….Don Drummond would never raise his voice).

OK, so…there’s nothing wrong with funding lots of experimentation on skills and training.  In fact, it’s a great idea.  Fantastic.  The over-focus on tech skills is <headdesk> inducing, but my guess is that reality will kick in after a year or two and we’ll get a broader and more sensible set of skills priorities.  And there’s nothing wrong with better Labour Market Information, though I’m not particularly convinced that adopting all of Drummond’s recommendations will bring us to some kind of Labour Market Nirvana. (Short version, which maybe I should elaborate in a future blog: what Drummond mostly wants is backward-looking, which is great for economic analysis, not especially helpful for job-seekers or students looking to specialize).

But why do we need a new institution to do all this?  ESDC could fund experiments and analyses thereof.  Statscan could do the LMI stuff.  What advantage does a new institution necessarily have?  I’m not saying there are no advantages: the Millennium Scholarship Foundation is an example of an arguably unnecessary institution which nonetheless was responsible for some pretty interesting policy and delivery innovations.  But the advantages are uncertain and not well-argued in the report.

And there’s another issue.  The Council is keen that FutureSkills Lab be collaborative.  Super collaborative.  Especially with the provinces.  They really like the whole Canada Institute for Health Information (CIHI) model.  Well, the thing is, the federal government did try something similar a decade ago.  It was called the Canadian Council on Learning (CCL) – remember that? It was well-intentioned, but a political disaster because the feds set it up before actually talking to the provinces, leading the latter to essentially boycott it.  More to the point, CIHI works because it is responsible (in part) to the provinces, not just the feds.  If the Council recognizes the importance of this point, it is not evident in the report, which dances back and forth between saying it should “collaborate with” the Forum of Labour Market Ministers (i.e. with provincial governments) and saying it should be “accountable” to them.

I’ll stick my neck out on this one: “accountable to” will fly, “collaborate with” will not.  If the federal government is going to take up this idea from the council, it needs to make clear to the provinces within the next few days if not hours that this is going to be 100% CIHI clone, accountable to provinces and feds and not a federal creature collaborating with provinces.  If that doesn’t happen, regardless of the merits of more experimentation and better LMI data, this idea is going to be an expensive repeat of the CCL failure.  Federalism still matters.

February 06


Here’s a new one: the Canadian Federation of Students has decided, apparently, that charging international students higher tuition fees is “xenophobic”.  No, really, they have.  This is possibly the dumbest idea in Canadian higher education since the one about OSAP “profiting” from students.   But as we’ve seen all too often in the past year or two, stupidity is no barrier to popularity where political ideas are concerned.  So: let’s get down to debunking this.

The point that CFS – and maybe others, you never know who’s prepared to follow them down these policy ratholes – is presumably trying to highlight is that Canadian universities charge differential fees – one set for domestic students and another, higher, one for students from abroad.  Their argument is that this differential is unfair to international students and that fees should be lowered so as to equal those of domestic students.

It’s not indefensible to suggest that domestic and international tuition fees should be identical.  Lots of countries do it:  Norway, Germany and Portugal to name but three and if I’m not mistaken, both Newfoundland and Manitoba have had such policies within living memory as well.  But the idea that citizens and non-citizens pay different amounts for a publicly-funded service is not a radical, let alone a racist, one.  A non-citizen of Toronto wishing to borrow from the Toronto Libraries is required to pay a fee for a library card, while a citizen does not.  This is not xenophobic: it is a way of ensuring that services go in priority to people who pay taxes in that jurisdiction.  If an American comes to Canada and gets sick, they are expected to pay for their treatment if they visit a doctor or admitted to hospital.  This is not xenophobic either: the price is the same to all, it’s just that we have all pre-paid into a domestic health insurance fund but foreigners have not.

It’s the same in higher education.  American public universities all charge one rate to students from in-state and another to those out-of-state.  Not xenophobic: just prioritizing local taxpayers.  In Ontario, universities are not allowed to use their tuition set-aside dollars – collected from all domestic tuition fees – to provide funding to out-of-province students.  Irritating?  Yes.  Xenophobic?  No.

International students are in the same position.  Their parents have not paid into the system.  Only a minority of them will stay here in Canada to pay into it themselves.  So why on earth should they pay a similar amount to domestic students?  And it’s not as if there’s massive profiteering going on: as I showed back here, in most of the country international fees are set below the average cost of attendance.  So international students are in fact being subsidized; just not very much.

In any event, even if we were charging international students over the going rate, that wouldn’t be evidence of xenophobia.  Perhaps it has escaped CFS’ notice, but there is not a single university in the country which is turning away undergraduate students.  According to every dictionary I’ve been able to lay my hands on, xenophobia means irrational fear and hatred of foreigners; yet now CFS has discovered some odd variant in which the xenophobes are falling over each other to attract as many foreigners as possible.

My guess is that most people at CFS can distinguish between “xenophobia” and “differential fees”.  What’s happened, though, is that part of the brain trust at head office simply decided to use an emotive word to try to stigmatize a policy with which their organization disagrees.  That kind of approach sometimes works in politics: just think of the success Sarah Palin had when she invented the term “death panels” to describe end-of-life counselling under American federal health care legislation.

But effectiveness is not the be-all and end-all of politics.  Sarah Palin is a cancerous wart on democracy.  You’d kind of hope our own student groups would try to avoid imitating her.

February 02

Manitoba’s Golden Opportunity

It’s tough to be in government these days: prolonged slow growth means it’s difficult to keep increasing spending at a rate at which citizens have become accustomed.  Instead, with rising costs and little appetite to raise taxes or fees, governing often seems to be one long exercise in nickel-and-diming.  Higher education – in most of Canada at least – has felt some of this, but in truth has been insulated more than most other parts of the public service.

But the key role of government should not simply be to find ways to cut: it should be about increasing the effectiveness of public expenditures.  And in particular, making sure public expenditures are designed in such a way as to promote and not hinder growth.  That’s why, if there was one place in Canada I wish I could be an Advanced Education Minister right now, it’s Manitoba.  Because, as I explain in a new paper HESA is releasing today, Manitoba has a boatload of poorly-performing expenditures in higher education tax credits that could be re-purposed into areas which could really help the province.

Here’s the scoop: Manitoba has two tax credits – the Education Amount Tax Credit and the Tuition Fee Income Tax Rebate – which are neither particularly effective nor have many defenders within the higher education sector.  The former tax credit is a hold-over from the Diefenbaker era which all provinces (except Quebec) got stuck with in their portfolios when the provinces moved from a tax-on-tax to a tax-on-income system back in 2000.  In the past 12 months, the federal government, the province of Ontario and the Government of New Brunswick have all eliminated this tax credit because it was neither progressive nor efficient, and funneled that money back to student assistance.  The latter tax credit is effectively a tuition rebate for students who stay in the province, which is batty and wasteful for number of reasons I’ve previously outlined here. In any case, it is demonstrably too small to achieve its intended goal of convincing students who would otherwise not live in the province to live in the province.  The result is this money is a windfall gain to graduates, paying them to do something they were going to do anyways.  The elimination of these two tax measures could yield approximately $67 million per year in savings which could be spent more productively elsewhere within the higher education sector.

$67 million is a lot in Manitoba higher education.  Taking that money away from unproductive tax credits could fund a whole lot of new, useful investments.  These include:

  • Adding $14 million/year to provincial student assistance fund.  Spent correctly, this would be  enough to fund an Ontario-like “free tuition” guarantee to low- and middle-class Manitobans even if tuition fees were allowed to rise by a third (which, given how low tuition is in Manitoba, is probably a not a bad idea).
  • Investing $12 million/year to increasing supports to Indigenous students and expanding community delivery of programming in or near First Nations communities
  • Supporting the expansion of work-integrated learning at Manitoba universities and colleges with the creation of a dedicated $15 million/year fund.
  • Redressing a long-standing imbalance in post-secondary spending by increasing the number of seats in non-Metro Manitoba with a $15 million/year investment.
  • Creating an $11 million/year employer-driven “quick response training fund” to make it easier for employers with expanding businesses to access bespoke training.

In sum, for the price of two badly-designed tax credits, Manitoba could make real investments in access, both in terms of financial aid and providing spaces in under-served areas, increase support to Indigenous students and communities, improve the quality of education and provide more funds for employer-led training that could help relieve skills bottlenecks for investors.  How could you pass this up?  Who wouldn’t do this?

Over to you, Manitoba.

February 01

Loving It

Back in the summer you may have heard a bit of a brouhaha about a deal signed between Colleges Ontario and McDonald’s, allowing McDonald’s management trainees to receive advanced standing in business programs at Ontario colleges.  If you read the papers, what you probably saw was a he-said/she-said story in which someone from Colleges Ontario said something like “Ontario colleges are providing advanced credit for people who have been through a MacDonald’s management training program and that’s a good thing for access” and someone from the Ontario Public Service Employees Union (OPSEU) saying something like “Corporate education McDonald’s bad!”

This should have been an unequivocally good news story.  It is a travesty that it was not.  Here’s the real story.

McDonald’s, a company which employees around 400,000 employees directly and whose franchisees employ another 1.5 million, runs one of the largest internal corporate training programs in the world.  That’s not just the famous training center known as Hamburger University in Illinois, which is mainly for mid-management and executive development: they also have training centers in various locations around the world providing training programs for restaurant managers and crews.  While not many young employees stay at McDonald’s very long (turnover is something like 150% per year), a small fraction do stick with it to become managers.  And those that do receive a substantial education through the company in how to run a business.

Now, if you believe in the principles of prior learning recognition, you’ll recognize that this situation is a slam-dunk to create a standardized system of assessment to award credit.  Assessing prior knowledge can be a right mess; assessing knowledge gained through work experience (paid or unpaid) or in other forms of informal or non-formal learning in a way that maps on to some kind of credit or credential system is time-consuming and inexact.  But this situation is different.  With McDonald’s, there’s an actual written-down curriculum that can be used to do the curriculum mapping.  This is – comparatively – easy-peasy.

So what happened prior to last summer was that McDonald’s approached Colleges Ontario to try to work out such an arrangement.  Both sides had previous experience in doing something similar: McDonald’s had worked out a similar agreement in British Columbia with BCIT and Fanshawe College had led a national process to do an analogous type of curriculum mapping with the Canadian Military to allow its soldiers/veterans to count various parts of its training programs towards college credentials.  Faculty and admin representatives from all 24 colleges agreed on the parameters of the deal, then allowed a smaller technical group to work on mapping all the elements of McDonald’s coursework up to the Second Assistant Manager level of training onto the common (Ontario) college standard outcomes for the Business Administration diploma.  At the end of it, it was decided that one level was more or less equivalent to another, and so individuals who had reached Second Assistant Manager could automatically get a year’s worth of credit (there’s no partial credit for having complete some McDonald’s training: this is an all-or-nothing deal).

So what are the criticisms?  Basically, they amount to:

  1. College-level courses need to be taught by college teachers in a college atmosphere
  2. McDonald’s is a big evil corporation. Why with McDonald’s?  Why not others?
  3. Why isn’t mapping available publicly?

The first argument, taken to its logical conclusion, essentially says that PLAR is illegitimate because no knowledge derived from outside the classroom can possibly count. Presumably people who believe this also believe mapping arrangements for Armed Forces training is also a complete scandal.

The second…well, if that’s your belief, I suppose there is no shaking it.  As for why McDonald’s – it’s because they asked.  And they had a hell of a well-documented curriculum to present to Colleges Ontario.  Presumably similar deals are open to other businesses, but no one (to my knowledge) has asked.  As for the third, it’s clear why it’s not public: McDonald’s treats the curriculum of its courses as corporate intelligence – as they have every right to do – and don’t want it published for the world to see.  One could make the argument that a decision involving credits at public institutions needs to be to be fully in the public domain.  But, one, that would mean that virtually every program at Ontario university is suspect (just try finding curriculum maps or un-redacted program evaluations online and see how many are publicly available) and two, faculty co-ordinators responsible for Business Administration from all 24 institutions (all of whom are OPSEU members, incidentally) all saw the detailed curriculum in confidence and signed off on the deal, which seems like a reasonable saw-off.

In short, this is a good deal.  If we want to promote life-long learning and increase prior learning recognition, we need more of these, not less.  Bravo to everyone involved.

January 31

Hiring Decisions

One of the more thoughtful replies I received to my piece on CAUT’s politicization of university accounting pointed out that one of the reasons people didn’t trust university accounting was because they made seemingly incomprehensible decisions with respect to hiring.  How was it, my reader asked, that there was plenty of money to hire sessionals but never money to hire full-time, permanent faculty?  Isn’t that money fungible?  Why spend on one and not the other?

I can see why this might be puzzling if you’re used to seeing budget decisions in annual terms, but it’s actually fairly simple.  Yes, on an annual basis, one new assistant professor might cost the same as eight sessionals (or whatever – pick a number), but on a longer-term accounting, it’s a completely different story.

At this point I should point you to a recent piece by Carleton University’s Nick Rowe, entitled “University Budget Surpluses: Irreversible Investment and Uncertain Demand” which lays out the basic challenge in accounting for academic staff on the university’s books.  (This, by the way, is not the only Nick Rowe piece on universities you should read – everybody should read, and I mean now, his “Confessions of a Central Planner” which is the best thing ever written on university finance ever, by anyone.  Seriously, it’s genius).    I am doing a bit of violence to Rowe’s argument (which is somewhat broader than the case I am making here), but the simple version is this:

University income are uncertain – and in fact getting more uncertain all the time as universities increasingly become more dependent on market operations (i.e. money from students, both domestic and international).  That’s not the fault of anyone in the institution: that’s simply the way public policy has been moving for the past few years.  Now, if you’re a provost or a VP Finance trying to plan for a future, what’s the absolute last thing you want to do?  Add permanent costs.

Well, as Rowe points out, hiring a full-time prof is about as permanent a cost as it gets.  In fact, given the way tenure works and how collective bargaining agreements are written and the fact that retirement is increasingly a thing of the past, a new hire is pretty much the same category of investment as a new building: it’s going to be there for 40 years, minimum.  A new assistant professor should not be viewed as an $85,000 annual cost ($100K with benefits); he or she should rather be viewed as something like an extremely illiquid $6 million asset.

The analogy here is one with personal finances: say you were being paid $100,000 per year and you’re debating whether to buy a house or keep renting.  Then someone came along and said: listen, we’re going to pay you $80,000 and pay you a bonus of between $10,000 and $25,000 per year.  In all likelihood, this means you’ll end up right about at $100,000, but there’s a non-trivial chance that your pay may fall below that level.  Quick: are you now more likely to take on the responsibility of a mortgage?  Or do you stick with renting?  Not everyone will have the same answer here, but certainly most would consider the latter to be the “safer” option.

In any case: institutional policy on temporary vs. permanent hires is probably not a gauge of miserliness or what have you.  A more accurate analysis would suggest that such policies are actually a function of institutional confidence in future revenues.  Where institutions feel good about the future, they will make full-time hires; where they are less confident temps will be hired more often.  That’s not something anyone ever says out loud, for obvious reasons, but it is nevertheless a perfectly sensible long-term planning perspective.  No conspiracy theories about university budgeting practices required.

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