HESA

Higher Education Strategy Associates

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February 12

HESA’s 2014 Federal Budget Commentary

Hi all,

The team at HESA towers was up late last night putting together – as we do every year – a review of the Federal Government’s Budget measures, as they relate to higher education and training.  Far from being the snooze-fest many had predicted, it turned out there was a whole bunch of crazy stuff in there, from vast but slightly hazy research funds, to largely inexplicable apprenticeship loan programs.  You can read all of our budget coverage, HERE. Still not 100% sure what to make of it all, to be honest: but we’d love to hear  your reactions.

 

Ciao,

Alex

August 28

The Opposite of Strategy

The London Free Press recently published a summary of Western’s new draft strategic plan (there’s a longer version on Western’s website, but it’s password protected).  I urge you to read it.  It’s not uniquely bad by any means – there are lots of other institutions who have published similar sorts of documents – but it nevertheless represents a kind of quintessence of what’s wrong with university strategic plans.  It is a Stepford Wife of a strategy.  Nothing about it says, “Western”.  You could slap pretty much any mid-sized university’s name on it and no one would be any wiser.

Apparently, Western is going to become “world-class” by “hiring the best people”, and will invest in research by creating 50 new research chairs.   They’re also going to be, “educating students to succeed” (better than the alternative, I suppose) by expanding graduate programs (increased research-intensity, under another name), and establishing new professional graduates programs (a new synonym for “cash cow”).  They’re also going improve relations with alumni and London-area stakeholders (neither of which has any intrinsic relationship to world-classness); and finally – this one’s my favourite – they will “find new funding sources”.

(There are a couple of bones in here to undergraduates, but the old mission of offering “the best undergraduate experience at a research-intensive university” is nowhere in evidence).

I hope for Western’s sake that the actual draft document is more nuanced than the Free Press’ summary.  If strategy is about finding your unique strengths, and building on them, then this little list is the exact opposite of strategy.  There are no ideas here which haven’t already been used by several hundred other universities around the world.  There’s no unique value proposition, nothing that would allow Western to say “we’re different, and here’s why”.  Just rote genuflection at the altar of more research, and more grad students.

(Again, let me be clear – Western is hardly the country’s only offender on this score.  There are many other institutions out there with equally Stepford-Wife-like strategies.  They know who they are).

World-class research-intensiveness is not achieved by much other than sheer financial firepower (Korea’s Seoul National University and KAIST come to mind).  Bluntly, there is no chance that Western’s resources over the next decade are sufficiently large to succeed in that league. Mid-sized, public universities who mindlessly go down the “more research, more grad students” road are entering a fight for prestige they can’t possibly win.

Trying to excel by being like everyone else is a weak strategy.  Standing out and gaining prestige in a crowded field relies in part on being prepared to take audacious risks that challenge orthodoxy.  Before this plan moves from “Draft” to “Final”, let’s hope Western figures out which risks it should take.

July 29

Looking Forward to 2017-18

Last week we looked at likely paths for government funding in the big four provinces.  Today, I want to look at how that might translate into actual changes at institutions.

The outlook for government funding, if you’ll recall, looks like this:

Figure 1 – Nominal Non-Health Dollars Available by Province, indexed to 2013.

 

But governments only account for about 54% of total revenue.  Students make up 39% and “other” makes up about 8%, so to look forward, one needs to look at these other two sources as well.

It’s hard to discern a historical pattern for “other revenue” (mostly because endowment income rises and falls like a yo-yo), so let’s just assume for the sake of argument that it will grow at 4% for the next few years.  Tuition is more predictable:  Ontario has locked in 3% annual increases for the foreseeable future, while Quebec’s tuition will be linked to inflation (roughly 2%).  Western provinces are more volatile on policy, but a reasonable guess is that BC’s path will be similar to Quebec’s while Alberta, being more populist and with cash to spare, will average something just below inflation (say, 1% p.a).  Of course, aggregate tuition dollars have very little to do with average tuition limits, but for the moment let’s assume no increase in student numbers.

So, add all those dollars together and what do we get? 

Figure 2: Net Income Projections for Post-Secondary Education, by province, to 2017-2018

 

That’s a little better, no?  See what a little tuition can do?

Still, this is only income. We still need to look at expenses.  Here, let’s assume that universities are able to keep their operating budget increases to 3% per annum (tight but do-able).  In that case, assuming no enrolment growth, institutions in Alberta should have a very small surplus in 2017, while Ontario institutions will face a collective deficit equal to 11% of expenditures, or around $950 million.

Figure 3: Budget Gap Projections, to 2017-18

Now, clearly, that Ontario scenario can’t actually happen; long before institutions get to that point, they will cut spending and find more revenue.  What figure 3 really represents is the size of the fiscal gap institutions will need to close over the next few years.

There are many ways to fill such a gap, but the main ones are wage freezes, hiring freezes and increased international enrollments.    But $950 million is a big gap to fill.  By my back-of-the-envelope reckoning, it’s equivalent (roughly) to a combination of a 4-year pay freeze and a 50% increase in international students.  Do-able but painful.

There is of course a very simple way to make most of these problems go away: just give institutions a little more room on domestic tuition. Unfortunately, that’s probably too sensible a solution for our times.

June 24

The THE’s Top 100 under 50

So, last week the Times Higher put out one of its two subsidiary sets of rankings called the Top 100 under 50 – that is, the best “young” (under 50 years old) universities in the world.  The premise of these rankings is that young universities don’t really get a fair shake in regular rankings, where the top universities, almost all from before World War I, dominate based on prestige scores alone.  That the THE would admit this is both excellent and baffling.  Excellent because it’s quite true that age and prestige seem to be correlated and any attempt to get rid of bias can only be a Good Thing.  Baffling, because once you admit your main annual rankings exercise is strongly affected by a factor like age which an institution can do nothing about – well, what’s the point?  At least with the Under-50s a good score probably tells us something about how well-managed an institution is; what the main rankings tell us is more of a mystery.

These rankings  interesting because they highlight a relatively homogeneous group of institutions.  Few of these are North American because most of our institutions were built before 1963 (from Canada, only Calgary, SFU and Vic make this list  and they’ll all be too old in a couple of years).  They’re an intriguing look into the world’s up-and-coming universities: they’re mostly European (and exactly none of them are from the People’s Republic of China).

But there is some serious wonkiness in the statistics behind this year’s rankings which bear some scrutiny.  Oddly enough, they don’t come from the reputational survey, which is the most obvious source of data wonkiness.  Twenty-two percent of institutional scores in this ranking come from the reputational ranking; and yet in the THE’s reputation rankings (which uses the same data) not a single one of the universities listed here had a reputational score high enough that the THE felt comfortable releasing the data.  To put this another way: the THE seemingly does not believe that the differences in institutional scores among the Under-50 crowd are actually meaningful.  Hmmm.

No, the real weirdness in this year’s rankings comes in citations, the one category which should be invulnerable to institutional gaming.  These scores are based on field-normalized, 5-year citation averages; the resulting institutional scores are then themselves standardized (technically, they are what are known as z-scores).   By design, they just shouldn’t move that much in a single year.  So what to make of the fact that the University of Warwick’s citation score jumped 31% in a single year, Nanyang Polytechnic’s by 58%, or UT Dallas’ by a frankly insane 93%?  For that last one to be true, Dallas would have needed to have had 5 times as many citations in 2011 as it did in 2005.  I haven’t checked or anything, but unless the whole faculty is on stims, that probably didn’t happen.  So there’s something funny going on here.

A final point: the geographical distribution of top schools will surprise many.  Twelve schools from the PIGS (Portugal, Ireland, Greece, Spain) made the list, but only one school (State University Campinas) from the BRIC countries did.  That tells us that good young universities are probably a seriously lagging indicator of economic growth – not a category to which many aspire.

June 14

Summer Break

Hi all.

It’s time for me to step back from the blogging for a few weeks.  As of Monday, we’ll be switching to a “One Thought to Start Your Week” until the middle of August; that will let me catch up a bit on things and get prepped for the fall.

I want to say thanks to all of you for reading and commenting.  I learn a lot from your feedback and I’m very grateful for all of it, even when you’re (sometime correctly) chewing me out.  The thousands-strong readership is a really interesting cross-section of academia, and includes hundreds of people from outside Canada as well (what, I always wonder, do they make of it? Are they here for the solid policy analysis or just the Glen Murray jokes?  Mysteries abound.)

But I would like, if I may, to make one tiny request before leaving you  alone (mostly) for the summer: if it’s not too much trouble, could you take a minute to tell me what you like and don’t like?  What should I be writing about more?  What should I be writing about less?  I kind of get the impression that most of you enjoy it when I stick it to the “MOOC fetishists” and do my myth-busting thing about labour-market outcomes – but what else do you like?  I’d really love to know.

In any event – have a great summer and get some rest.  I have a feeling next year’s going to be a big one.

Ciao,

Alex

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