HESA

Higher Education Strategy Associates

Tag Archives: Enrolment

November 28

Canadian Enrollment Data, 2014-15

Statistics Canada published the 2014-15 enrollment data last week and I thought I would give you a bit of an overview.  The data is based on snapshots of enrollment taken in the fall, so we’re talking a 24-month lag here (most other OECD countries can do this in 12-18 months), but this is Statscan so just be glad you’re getting any data at all.

The headline news is that enrollment in 2014-15 was up – barely – from 2.048 million to 2.055 million students (i.e. by 7,000 students), which puts enrollment at an all-time high. As a percentage of the Canadian population, students are thus now 5.8% of the Canadian population.  Just to put that into perspective: that’s roughly the population of Saskatchewan and Nova Scotia combined.  if students were a province, they would be the country’s fifth-largest.  Students make up roughly the same proportion of the population that works in education, law, social services and government services occupations combined, or roughly 5.5 times the number of individuals employed in natural resource occupations.

Figure 1: Enrollment by Level and Intensity, 1994-95 and 2004-05

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But while enrollment increased at both universities and colleges, there are some interesting dynamics if you poke around a bit under the hood.  The main one is that part-time enrollment fell substantially for the second year in a row at universities and third at colleges.  Full-time and part-time enrollments are going in completely different directions at the moment.

Figure 2: Changes in Full- and Part-time student enrollments, 2010-11 to 2014-15 (2010-11 = 100)

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The other really interesting trend in enrollments has to do with international students.  Over the past five years, total full-time enrollment at colleges and universities has increased by 126,000.  48% of that increase is accounted for by international enrollments.  Or, to put that another way: domestic student enrollment has increased by about 5%, but international student enrollment has increased by 56%.  These figures are shown below in figure 3.  Apologies for lines not being distinct, but that’s a factor of the trends being almost identical in both the college and university sectors.

Figure 3: Changes in Domestic and International Full- time enrollments, 2010-11 to 2014-15 (2010-11 = 100)

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That last graph is especially important when you think about institutional finances.  Assuming (at a high level of generality) that tuition income from international students is about three times what it is for domestic students, that implies that over 75% of the increase in tuition revenue over the period 2010-11 to 2014-15 comes from international students.   I’ll try to get into more detail on this at some point before Christmas, but by my back-of-the-envelope reckoning that makes international student fees responsible for almost exactly 50% of total increase in operating funds over those five years.

Let that sink in for a bit.  Fifty percent.

There are a lot of implications to that number.

February 04

Lessons from Scandinavia on the Value of Tuition Fees

Whenever you hear somebody complaining about higher education funding in Canada, it’s usually only a matter of time before someone says “why can’t we be more like Scandinavia?”  You know, higher levels of government funding, no tuition, etc., etc.  But today let me tell you a couple of stories that may make you rethink some of your philo-Nordicism.

Let’s start with Denmark.  The government there is trying to rein public spending back in from a walloping 56% of GDP, and bring it back down to an only slightly less-imposing 50% by 2020.  And it’s doing this while the economy is still weak, and while oil prices are falling (Denmark has some North Sea oil so, like Canada, it tends to see low oil prices as a negative).  So cuts are on the way across many services, and higher education is no exception: universities there will see cuts of 2% in their budgets for each of the next four years.  Over to Finland, where it’s the same story in spades.  Nokia as a technological saviour/massive boost to government coffers is long gone, and economic contraction in Russia is hitting Finnish exports hard.  With the economy declining and the government trying to stay out of debt, the government there also laid out cuts to many services, including higher education: there the hit is a cut of roughly 13% out to 2020.

Now, in North America, when you hear about cuts like this you tend to think “oh, well, at least the government will let institutions make some of it back through tuition, either by increasing enrolment, or raising fees, or both”.  And in general, this attenuates the impact of funding cuts (unless of course you’re at Memorial in which case you are plain out of luck).  But remember, these are free-tuition countries.  By definition, there is nothing that can attenuate the cuts.  And so that 2% per year cut for the next four years in Denmark?  The University of Copenhagen has since announced a first round of cuts equaling 300M DKK ($62 million Canadian), equal to about 5.5% of the university’s operating budget, and that will involve cutting 500 staff positions.   Those cuts in Finland?  The University of Helsinki has decided to cut almost 15% of its staff positions.

Total reliance on government looks good on the way up; much less so on the way down.  That’s why tuition fees are good.  You know students will pay tuition fees every year, which makes them more dependable than government revenue.  Fees balance the ups and downs of the funding cycle.

Another thing tuition fees do is to provide an incentive for institutions to accept more students; if institutions can’t charge tuition and aren’t funded according to student numbers, their inclination will be to accept fewer students, thus undermining the “access” rationale for free tuition.  And this seems to be the case in allegedly-access-friendly Sweden, where enrolment in first and second degree programs has actually been in decline over the past few years.

Total Bachelor’s/Master’s Enrollment at Swedish Universities, 2007-2014

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I know what you’re wondering: is it a demographic thing?  No.  The 2015 version of the annual report, Higher Education in Sweden (which is a great report by the way… one of those documents you wish every country could publish), makes it clear that the ratio of applications-to-acceptances for students with no previous post-secondary education (i.e. 18-19 year olds) has actually been rising for the last few years (from 2:1 to 2.5:1).  And it’s not a financial thing either: between fall 2010 and fall 2014, real expenditures at Swedish universities increased by 12%, or so.

So what’s going on?  Well, a few things, but mainly it seems to be that universities prefer to get more dollars per student than actually increasing access.  And I mean, who can blame them?  We’d all like to get paid more.  But I genuinely cannot imagine any jurisdiction in North America – you know, big, bad North America, with its awful access-crushing neo-liberal tuition regimes – where reducing spaces while government expenditures were increasing wouldn’t be considered an absolute scandal.  Yet this is what is happening in Sweden, and apparently everyone’s OK with it.

Total reliance on government funding can make universities complacent about access.  Fees can incentivize institutions to actually admit more students.  Fees have a role to play in access policy.  The data from Scandinavia says so.

January 25

One In, One Out

I had a discussion a few months ago with a government official who was convinced she knew what was wrong with universities.  “They have no discipline,” she said.  “They just go out and create new programs all the time with no thought as to what the cost implications are or what the labour market implications are, and so costs just keep going up and up.”

I told her she was only half right.  It’s absolutely true that universities have no discipline when it comes to academic programs, but the problem really isn’t on the creation side.  When universities start a new program, it has to go through a process where enrolment is projected, labour market uptake estimated, and all that jazz.  And yes, there is a certain amount of creativity and outright bullshit in these numbers since no one really knows how to estimate this stuff in a cost-effective manner.  But basically, these things have a decent track record: they hit their enrolment targets often enough that they haven’t fallen into disrepute.

The problem is that these enrolment targets aren’t hit exclusively by attracting new students to the institution; there is always some cannibalization of students from existing programs involved.  Therefore, while each new program might be successful in its own terms, these programs were succeeding only by making every other program in the faculty slightly less effective.

And here’s where the lack of discipline comes in.  At some point, institutions need to sit back and take a look at existing programs, and be able to prune them judiciously.  When resources – particularly staffing resources – are static, if you keep trying to pile on new programs without getting rid of the old ones, all you get are a lot of weak programs (not to mention more courses staffed by sessionals).

And here’s one of the biggest, dirtiest secrets of academics: they suck at letting things go.  They are hoarders; nothing, once approved by Senate, must ever be taken away.  Prioritization exercises?  Never!  After all, something might be found not to be a priority.

Getting rid of academic programs is one of the purest examples of Mancur Olson’s Collective Action problem. Getting rid of any given program will hurt a few people a lot, while the majority will barely feel the benefits.  The advantage in terms of political mobilization always goes to the side who perceive themselves to have the most at stake, and so they are very often able to mobilize support and stop the cuts (this point is made very well in Peter Eckel’s excellent book Changing Course: Making the Hard Decisions to Eliminate Academic Programs).  But over time, if you can never cut any programs, then the collective does start to hurt, because of the cumulative effect of wasted resources.

Of course, Olson’s theory also gives us a clue as to how to solve this problem: there need to be stronger incentives within institutions for people to support program closures.  One way to do that would be to introduce a one in, one out rule.  That is, every time Senate endorses a new program, it has to cut one somewhere else.  Such a rule would mean that pretty much anyone in the university who has an ambition to open a program at some point would have an incentive, if not to support specific program closures, then at least to support an effective process for identifying weak programs.

Might be worth a try, anyway.  Because this hoarding habit really needs to stop.

January 21

Marginal Costs, Marginal Revenue

Businesses have a pretty good way of knowing when to offer more or less of a good.  It’s encapsulated in the equation MC = MR, and shown in the graphic below.

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Briefly, in the production of any good, unit-costs fall to start with as the benefits of economies of scale start to rise.  Eventually, however, if production is expanded far enough you get diseconomies of scale, and the marginal cost begins to rise.  Where the marginal cost of producing one more unit of a good rises above the marginal revenue one receives from selling it (in the above diagram, Q1), that’s the point where you start losing money, and hence where you stop producing the good.

(This gets more complicated for products like software or apps where the marginal cost of production is pretty close to zero, but we’ll leave that aside for the moment.)

Anyway, when it comes to delivering educational programs, you’d ideally like to think you’re not doing so at a loss (otherwise, you eventually have a bit of a problem paying employees).  You want each program to more or less, over time, come close to paying for itself.  It’s not the end of the world if they don’t, cross-subsidization of programs is a kind of core function of a university after all; but it would be nice if they did.  In other words, you really want each program to have a production function where the condition MC=MR is fulfilled.

But here’s the problem.  Marginal revenue’s relatively easy to understand: it’s pretty close to average revenue, after all, though it gets a bit more complicated in places where government grants are not provided on a formula basis, and there’s some trickiness when you start calculating domestic fees vs. international fees, etc.  But the number of universities that genuinely understand marginal cost at a program level is pretty small.

Marginal costs in universities are a bit lumpy.  Let’s say you have a class of twenty-five students and a professor already paid to teach it.  The marginal cost of the twenty-sixth student is essentially zero – so grab that student!  Free money!  Maybe the twenty-seventh student, too.  But after awhile, costs do start to build.  Maybe on the 30th student there’s a collective bargaining provision that says the professor gets a TA, or assistance in marking.  Whoops!  Big spike in marginal costs.  Then where you get to forty, the class overfills and you need to split the course into two, get a new classroom, and a new instructor, too.  The marginal cost of that forty-first student is astronomical.  But the forty-second is once again almost costless. And so on, and so on.

Now obviously, no one should measure marginal costs quite this way; in practice, it would make more sense to work out averages across a large numbers of classes, and work to a rule of thumb at the level of a department or a faculty.  The problem is very few universities even do that (my impression is that some colleges have a somewhat better record here, but the situation varies widely).  Partly, it’s because of a legitimate difficulty in understanding direct and indirect costs: how should things like light, heat, and the costs of student services, admissions, etc., be apportioned – and then there is the incredible annoyance of working out how to deal with things like cross-listed courses.  But mostly, I would argue, it’s because no one wants to know these numbers.  No one wants to make decisions based on the truth.  Easier to make decisions in the dark, and when something goes wrong, blame it on the Dean (or the Provost, or whoever).

Institutions that do not understand their own production functions are unlikely to be making optimal decisions about either admissions or hiring.  In an age of slow revenue growth, more institutions need to get a grip on these numbers, and use them in their planning.

November 04

How Canadian Universities Got Both Big and Rich

Earlier this week, I gave a speech in Shanghai on whether countries are choosing to focus higher education spending on top institutions as a response to the scarcity of funds since the start of the global financial crisis.  I thought some of you might be interested in this, so over the next two days I’ll be sharing some of the data from that presentation.  The story I want to tell today is about how exceptional the Canadian story has been among the top countries in higher education.

(A brief aside before I get started on this: there is nothing like a quick attempt to find financial information on universities in other countries to put our own gripes – Ok, my gripes – about institutional transparency into some perspective.  Seriously, you could fill the Louvre with what French universities don’t publish about their own activities.)

For the purpose of this exercise, I compare what is happening to universities generally in a country, to what is happening at its “top” universities.  To keep things simple, I define as a “top” university any university that makes the Top 100 of the Shanghai Academic Ranking of World-class Universities (ARWU).  In Canada, that means UBC, Toronto, McGill, and McMaster (yes, it’s an arbitrary criteria, but it happens to work internationally).  I use expenditures rather than income because fluctuations in endowment income make income numbers too noisy.  Figure 1 shows the evolution of funding at Canadian universities in real (i.e. inflation-adjusted) dollars.

Figure 1: Real Change in Expenditures, Canadian Universities 2000-01 to 2012-13, Indexed to 2000-01 (Source: Statistics Canada/CAUBO Financial Information of Universities and Colleges Survey)

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So this is actually a big deal.  On aggregate, Canadian universities saw their expenditures grow by nearly 70% in real dollars between 2000 and 2010.  For “top” universities, the figure was a little over 80%  (the gap, for the most part, is explained by more research dollars).  Very few countries in the developed world saw this kind of growth.  It’s really quite extraordinary.

But a lot of that money went not to “improvement”, per se, but rather to expanding access.  Here are the same figures, adjusted for growth in student numbers.

Figure 2: Real Change in Per-Student Expenditures, Canadian Universities 2000-01 to 2012-13, Indexed to 2000-01

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Once you account for the big increase in student numbers, the picture looks a little bit different.  At the “top” universities, real per-student income is up 20% since 2000, but about even since the start of the financial crisis; universities as a whole are up about 8% since 2000, but down by nearly 10% since the start of the financial crisis.

This tells us a couple of things.  First, Canadians have put a ton of money, both collectively and as individuals, into higher education over the past 15 years.  Anyone who says we under-invest in higher education deserves hours of ridicule.  But second, it’s also indicative of just how much Canadian universities – including the big prestigious ones – have grown over the past decade.  Figure 3 provides a quick look at changes in total enrolment at those top universities.

Figure 3: Changes in enrolments at highly-ranked Canadian universities, 2000-2001 to 2012-13, indexed to 2000-2001

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In China, the top 40 or so universities were told not to grow during the country’s massive expansion of access, because they thought it would affect quality.  US private universities have mostly kept enrolment growth quite minimal.  But chez nous, McGill’s increase – the most modest of the bunch – is 30%.  Toronto’s increase is 65%, and McMaster’s is a mind-boggling 80%.

Michael Crow, the iconoclastic President of Arizona State University, often says that where American research universities get it wrong is in not growing more, and offering more spaces to more students – especially disadvantaged students.  Well, Canadian universities, even our research universities, have been doing exactly that.  What we’ve bought with our money is not just access, and not just excellence, but accessible excellence.

That’s pretty impressive. We might consider tooting our own horn a bit for things like that.

April 14

Students Won’t Save Us This Time

 I do a fair bit of barnstorming around Canada giving talks on higher education finance.  My audiences, by and large, split into two groups: those that remember the cuts of the late 90s and those that don’t.  The ones who don’t remember them are mostly OHMYGODOHMYGODOHMYGOD about future funding challenges (especially when I show them that – contrary to their belief – that operating income has actually been going up sharply recently).  The ones who do remember are more perplexed: we (eventually) got through the budget cuts of the 90s, and those were much bigger than the kinds of cuts we can expect in the next couple of years – what’s the fuss?

What people seem to have forgotten about the cuts of the mid-90s is that in most parts of the country (Quebec was an exception), total revenue only fell in two years – mostly in 1995 and 1996 – and was quickly restored in 1997 and thereafter.  In fact, by 2000, universities’ income was nearly a third higher than it had been in 1996.  Yes, governments cut – sometimes savagely – but universities and colleges were bailed out by students.

The bail-out occurred in three ways.  The first was simply showing up in greater numbers.  This was a bit of a surprise at the time, especially to universities.  Total enrolment had been flat at around 600,000 since the mid-80s.  But then just as the cuts started to hit in 95 and 96, the leading edge “baby boom echo” generation turned 19 (Remember David Foot?  Remember how we all had to nod to the demography-is-destiny stuff for a few years?  Good times).  A couple of years later, the participation rate started to grow, too.  Brilliant for post-secondary institutions: their core demographic was growing, and the portion of that demographic that wanted post-secondary education was growing, too.  In a word: more customers.

But it wasn’t just that universities and colleges got more customers – they got more money per customer as well.  Tuition increases?  Governments were handing those out like candy.  For those who find Ontario’s current regime of 3% annual increases unbearable consider the price hikes which occurred under Mike Harris.  1996: 20%.  1997: 20%.  1998: 20%.   Plus de-regulation of fees in graduate and professional programs.  And yeah 30% of that money was set aside for student aid, but those are still some big honking increases.

The third way students bailed out universities was more indirect.  That baby boom echo had some serious political clout behind it.  When the boomers’ kids were in school, boomers made sure universities were at the top of the agenda.  It happened quite suddenly, too.  From nowhere, higher education came to top voter’s lists of concerns in 1996, right about the time the leading edge of the echo turned 18.  It was that polling that made the federal Liberals suddenly enthusiastic about things like Millennium Scholarships, Canada Education Savings Grants and education tax credits.

Problem is that this time around, none of this is happening.  The demographic reality is that in most of the country youth numbers are shrinking, meaning likely fewer domestic students.  The political reality is that politicians are no longer so keen on higher tuition (in part, ironically, because past access gains mean that many more people now pay them, thus making them a bigger political liability).  And the social reality is that the boomers – whose children have now pretty much passed through university – are now more worried about their parents than their kids.

In short, none of the pillars of eventual recovery which existed in the late 1990s now exist.  Increasing domestic student numbers saved universities and colleges in the 1990s by producing much higher institutional revenues (overall, university income rose by nearly a third between 1996 and 2000).  They flat out won’t this time.  That’s why spending cuts loom quite large right now – and will do so until student numbers pick up again early next decade.

April 13

Five Questions for Ken Coates

So, Ken Coates of the University of Saskatchewan published a paper the week before last arguing that there were too many university students and not enough trades students, so we should reduce university enrolments by a third and what the hell is wrong with kids today anyway?  Despite being not much more than a warmed-over version of the paper he co-authored with Rick Miner in IRPP a couple of years ago, it got some attention because it played directly into both the elitist view of universities (all these students devalue the degree!) and the weird view some in Canada have that the only problem with the labour market is that workers are too stupid to see the opportunities in front of them.

The paper is a hot mess of unfounded assertions and questionable logic which raises at least 5 questions (I’d guess readers can come up with a few more of their own) which I think the author needs to answer before the paper can be taken seriously.

1.Why does Coates keep saying today’s young people feel too “entitled”? What does he mean by this disparaging term?  What evidence is there to suggest this generation display a greater sense of entitlement than any previous generation?  Or is this just an arrogant way of saying youth don’t do what Coates thinks they should do?  (Also: does Coates spend a lot of time yelling at kids to get off his lawn?)

2. Why does Coates repeatedly denigrate the idea that “the labour market should be directed by the uninformed educational choices of 17-19 year-olds”?  Has it not ever been thus?  Was there some golden age in Canadian history when the state or business made career decisions on young peoples’ behalf and where economic outcomes were demonstrably better?  Can Coates name a democratic nation where 17-19 year-olds don’t make their own educational choices?  

3. Why, if as Coates claims, no one can know the future of the labour market, is he so damn sure we need more college/trades graduates?  Coates: “it is extremely difficult to anticipate downstream market demand for employees”.  Coates: “Governments have a poor track record when it comes to picking winners in the economy”.  Well, if that’s true, isn’t this entire paper – which based on the idea that we know that more college/trades education and less university education is a good idea – an enormous waste of time?  (Or, more simply, “wrong”?)

4. What evidence does Coates have for saying Canadians are defaulting “to the traditional view that a university degree is the best avenue to prosperity” and “turning their children’s dreams against blue-collar work”?  Here’s a quick summary of educational attainment for Canadian males, aged 30 or under, who did their post-secondary education in Canada:

 Figure 1: Highest Level of Educational Attainment, Males Aged 30 and Under, Canada, 2010

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Got that?  Among males under 30, there are almost as many apprentice and trades certificate holders as there are bachelor’s holders.  Throw the colleges in and it’s more than two to one.  Another way to look at the data is to compare the number of males with Bachelor’s degrees with those working in those “in-demand” area Coates is continually babbling about – construction trades, mechanics, precision production, transportation, and all Engineering sub-fields who have less than a bachelor’s degree.  Here are the numbers:


Figure 2: Bachelor’s Degree Holders vs. Workers in Five Key Trades, Males under 30, Canada, 2010

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 In short: Averse to blue-collar work?  Not even vaguely true.

 

5.   Why does Coates think blue-collar work is so hot anyway?  The problem with blue collar work – apart from the fact that it’s seriously gender-biased – is that it’s cyclical.  A lot of people in Canada – including Coates, apparently – forget that because the current commodities cycle has been going on so long, but when commodities prices fall blue collar outcomes are pretty terrible.  Back in the mid-90s, when oil was cheap, we only had about a quarter as many apprentices as we do now.  In the 1980s, unemployment rates for trades grads was over 15%.  How good do you think blue collar will look if oil is permanently back down to $50 and China’s growth rate heads down to 3%?

Coates does have a point in that universities need to do more to make their graduates employable, and he’s also right that more post-secondary learning needs to be experiential in nature.  But to go from there and say that we need fewer university graduates is just a baseless assertion.  He can and should do better.

March 10

Maritime Problems

A couple of weeks ago, Leo Charbonneau over at University Affairs wrote a nice little piece on Maritime universities and the trouble they’re having.  The basic message is that universities out there aren’t doomed – part of the “Don’t Panic” line that AUCC seems to be putting out these days.  The argument was essentially: hey, just nudge the participation rate a point or two, and improve retention a little bit, and those plucky little eastern universities will do just fine.

Allow me to demur a bit.  Once you break down the numbers to the provincial or institutional level, you realize that the picture out east is, in fact, by no means uniform; while the system as a whole is mostly holding steady, there are a few institutions that are in real trouble.

Let’s start by looking at the numbers by province.  In Prince Edward Island, UPEI has done a good job growing its enrolments.  Numbers are off slightly in the last couple of years, but overall they remain about 10% (or about 350 students) higher than they were a decade ago.  Nova Scotia and New Brunswick, on the other hand, both saw falling enrolments from roughly 2004 to 2008.  What’s interesting since that time is the divergence in fortunes between those two provinces.

Figure 1: Total Enrolments by Province, 2004/05-2013/14, Indexed to 2004

In Nova Scotia, the fall during the 04-08 period was concentrated at four universities: Acadia, Cape Breton, Mount Saint Vincent, and Saint Mary’s, all of which lost about 12% of their student body in those four years.  However, during the subsequent rebound, only Acadia actually recovered to any significant extent: most of the growth happened at Dalhousie, which was never hurting for students in the first place.  Nova Scotia as a whole has stayed constant, but what’s actually happened over the last decade is that Dal has grown from being 34% of the provincial system to being over 40%. Meanwhile, Cape Breton, the Mount, and SMU are all a lot more precarious than they used to be.

In New Brunswick, the biggest absolute loser has been the University of New Brunswick’s Fredericton campus, which now has roughly 16% fewer students than it did a decade ago (to all those folks who wonder along with AUNBT why UNB keeps getting rid of tenure lines: that’s why).  But in percentage terms, the real disasters are Moncton’s satellite campuses in Shippagan and Edmundston, where enrolments are down 37 and 49%, respectively, over a decade.

Figure 2: Total Enrolments at Universite de Moncton Satellite Campuses, 2004/05 to 2013/14

Some of you may have noticed last week that Sweet Briar College, a small women’s college in Virginia with an endowment of $100 million, and annual fees of $34,000 US, announced it would be closing because its enrolments and finances were unsustainable.  How many students did it have?  550 – about the same as Edmundston, and 100 more than Shippagan. Somehow, neither campus is losing too much money yet – both are losing about $150K on budgets in the $12 million range – but we’re getting close to the point where the viability of both has to come into question.  That will be hugely traumatic for both communities: having a post-secondary institution in town is a major part of both their survival plans.  But it’s hard to see how the provincial government and the Acadian community as a whole can avoid this discussion.

So, is post-secondary education as a whole in trouble in the Maritimes?  No.   But I count four institutions whose enrolments are already down over 10% from where they were a decade ago, plus the two catastrophic cases of Shippagan and Edmundston.  And there are further youth population declines to come.  Yeah, some of this can be offset by international students (though in the case of Saint Mary’s, they’re already at 30% international students, and *still* their overall numbers are down 10%), but I wouldn’t bet they all can.

In other words, don’t be distracted by the aggregate numbers.  There are some very tough decisions to be made at some of these schools.  My guess is one or two of them won’t be here a decade from now.

January 23

Classroom Economics (The End)

So we spent Monday looking at the economic basics of classroom and teaching loads, and Tuesday looking at how difficult it is to improve the situation by increases in tuition or government grants.  Wednesday we saw that reducing average academic compensation (presumably via increasing the proportion of credits taught by adjuncts) can be quite effective in reducing teaching loads, while on Thursday we saw how trying to achieve a similar effect through attacking costs other than academic compensation would require enormously painful – and probably unrealistic – cuts.

What can we conclude from all this?

There is no silver bullet here.  You can’t solve everything on the revenue side because governments: i) aren’t going to fork over the stonking huge amounts of money required to change things; ii) aren’t going to permit large tuition increases; and, iii) at some point are going to put limits on the extent to which universities can escape domestic fiscal problems by becoming finishing schools for the Asian middle class.  At the same time, you can’t solve everything by decreasing average academic wages because: i) tenure; ii) unions; and, iii) casualization can’t go on indefinitely.  Finally, you can’t solve everything by cutting “fat” on the non-academic side because the size of the bloodletting would simply be too big.

So, realistically, the solution to keeping teaching loads (and hence class sizes) manageable is to work at the margins on all three, at once.  The income one is probably the easiest: even if government does not have more money, it could (as I argued back here) allow tuition to rise without students being unduly affected if it simply reformed student aid to make it more efficient and transparent.

On non-academic costs, vigilance is key.  Costs need to be kept in check.  There is a need to continually become more efficient – which probably means looking more seriously at outsourcing certain functions. Bits of IT come to mind, as do bookshops.

On academic salaries, there’s no big secret about what needs to be done.  Every time wages increase, universities either have to get more income, or increase the number of sessionals, or raise teaching loads.  That’s simple arithmetic.  To the extent an institution can keep enrolments up and get a little bit more money per student, on average, the situation can stay relatively stable indefinitely (though it isn’t going to get any better).

Where this gets tricky is where student numbers – and hence income – start to fall.  We didn’t explore that this week because our equation – X = aϒ/(b+c) – assumes that there is budget balance.  But when enrolment drops, expenditure has to drop in the medium term because the lack of students means you can’t release the pressure by increasing teaching loads.

So when you see the number of applicants to an institution drop by, say, 20% (as first-choice applications have now done at Windsor) over two years, you start to worry.  Without the option to increase loads, expenditures have to fall, and as we’ve seen, the least disruptive way to do that is to increase sessionals.  But since tenure exists and you can’t force out a professor and replace them with a sessional, that’s a marginal solution at best.  Academic compensation will have to fall: either through wage freezes, pension changes, or a reduction in the number of academic positions.  Either that or the institution will close.

There’s no sinister conspiracy here, no evil administrative plots.  It’s just math.  More people should pay attention to it.

November 24

The Arts Problem(s)

There’s no polite way to say this: Canadian universities have an Arts problem.

At the heart of institutions’ looming fiscal problems is their inability to convince major customer groups (government, students) to pay the desired price for the product they’re offering.  The reason for this, mainly, is the perception that the product on offer is not value-for-money.  Part of this is due to our ludicrously opaque student aid systems, which lead students and families and politicians into thinking that net tuition is a heck of a lot higher than it actually is (see here for more on that, or here for the full report).  But part of it also has to do with the fact that people are under the impression that returns on education ain’t what they used to be.

That’s not entirely fair, of course.   The recession is responsible for most of the downturn in graduate jobs, not some sudden change in what the market “wants” in terms of skills.  And it’s not even true that returns are falling for all fields of study: some have held up relatively well in recent years.  But it is a problem in Arts.  Look what data from the annual survey of Ontario Graduates says: though employment rates remain high, the actual monetary returns are very bad at the moment – down roughly 20% in real terms over the past few years.

Figure 1: Average Income (in $2013) Two Years After Graduation, Ontario Graduating Classes from 2003-2011, Selected Disciplines

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Not surprisingly, students are voting with their feet.  Look at the pattern of applications by program in Ontario: after a series of small declines in Arts, last year saw a decline of 10%.

Figure 2: Share of Total Applications to Ontario Universities, by Selected Fields of Study, 2003-14

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The point here is that, increasingly, the perception of Arts is that they aren’t very useful.  And yes, it’s annoying that people want to reduce education to considerations of short-term employment, but it is what it is.  When we ask people to pay so much (either privately or via tax dollars), people expect results, and they aren’t seeing them.

So something has to change in the Arts; not just for their own sake, but for the sake of all of higher education, which is being tarred with the same brush.  And that something is a greater focus on employability.

Now, even saying something like that causes paroxysm among some: “I’m not going to create cannon-fodder for the knowledge economy, etc. etc.”  But as I’ve said before, it shouldn’t be beyond the wit of talented academics to devise a curriculum that meets both the traditional aims of a liberal arts degree, and that places more emphasis on employability skills (what is the ability to critically appraise arguments, appreciate complex chains of causation, and clear and effective writing if not employability skills?).  Indeed, I’ve even suggested there are some good models available from fields like medicine to do exactly this.

But if fixing the Arts was as simple as that, it probably would have happened already.  The biggest problem with Arts isn’t that the curriculum is difficult to alter, it’s that to a large extent curriculum simply doesn’t exist.  For decades, Arts faculties in North America have been headed inexorably towards a “buffet”, where if you take a few courses from column A, a few from column B, and we’ll call it a degree as long as the credit hours line-up.  Or, more bluntly, there is no curriculum, there’s just a bunch of courses.  This is completely unlike Arts faculties in the rest of the world, where course choice is more limited and degrees are much more structured.

So here’s the real issue: the preliminary work required to improve curriculum – that is, getting folks to realize there’s a curriculum in the first place – is therefore pretty massive.  And this is why it’s likely that, even though Arts needs to improve quickly to stem declining enrolments, it’s unlikely that change will actually occur quickly.

In the best of all worlds, this is a task people should have started working on years ago.  But as they say, the second-best time to start anything is now.  We should roll up our sleeves and get cracking.

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