HESA

Higher Education Strategy Associates

Tag Archives: Provincial

August 19

Cuts at the University of Alberta

If anybody wants to know what Ontario universities are going to look like over the next couple of years, they could do worse than check out what’s going on in Edmonton.

To recap: In its spring budget, the Government of Alberta cut 7% from university operating grants.  Since then, Alberta universities have been working out how to deal with this cut.  At Athabasca, it’s meant significant layoffs.  At Mount Royal it’s meant program closures.  At the University of Alberta, so far, there’s been more sound and noise about the size of the cutbacks ($60 million over two years) than details.  

The university initially tried to persuade the faculty union to give back some or all of the raises it won for 2013 and 2014 in the last round of collective bargaining.  Predictably, this went nowhere, although the faculty union’s rationale (“it doesn’t matter if we refuse because saying yes wouldn’t come close to delivering a comprehensive solution”) had the merit of being amusingly reminiscent of those used by the anti-Kyoto crowd (“it doesn’t matter if we don’t meet Kyoto commitments, because China”).  This seemed to take the administration by surprise and out came a buy-out plan which – it is feared – could see many productive mid-career faculty leave (though I’m skeptical – where would they go?  Not many universities with salaries comparable to Alberta’s are hiring these days)

Note, though, that the 7% cut in operating grants does NOT mean a 7% cut in the budget.  That’s because the University of Alberta only gets 65% of its money from government.  When you add in all the new money it is getting from students – mostly international ones – income for 2013-14 is likely going to be almost close to what it was in 2011-12 budget.  Yet this is enough to force the university into salary buy-outs, position terminations, the elimination of travel and hosting budgets, etc.  And if you think it’s bad being a prof, try being a grad student: in the Arts faculty, 20 percent of TA positions are being cut. 

How is it that all these positions and activities could be funded three years ago but can’t be in 2013-14 on exactly the same budget?  The answer, unfortunately, is simple: tenure, low productivity and the prioritization of research all cause serious cost inflation such that even the tiniest reduction in university budgets causes absolute chaos.

Here’s the thing: no sane President can go to the public and argue that their institutions are doomed without perpetual budget increases of 3-4%.  The ONLY alternative is to make university cost structures less rigid.  Any university not focusing on that problem is in deep trouble.

May 10

Feed the Students, Starve the Schools?

Yesterday, I outlined the 2013-14 budget picture for university and college operating transfer funds.  Today, I’m doing something similar for student assistance. It’s a very different picture.

In addition to the caveats I mentioned yesterday regarding the challenges of budget-to-budget comparisons, student aid analysis poses its own unique set of challenges.  The main one is that provinces have trouble accurately predicting demand; so if in one year demand soars (or falls), the next year tends to bring a big budget increase (or decrease) to bring numbers into line with reality. Also, at least theoretically, student aid is counter-cyclical.  As student incomes rise, need goes down, and so too do aid expenditures.  So a declining budget doesn’t necessarily mean a government is cutting – it may also mean that students are better off (or that a government budgeted high the previous year, and is bringing estimates down to match reality).  In short, some care is required in interpretation.

That said, here’s what we see when we look at student aid budgets across Canada from 2012 to 2013.

Change in Student Aid Expenditure Estimates, 2012-13 to 2013-14, by Province

 

 

 

 

 

 

 

 

 

 

 

 

According to provincial estimates, BC and Newfoundland both appear to have cut student aid, but I have my doubts about whether this happened in practice.  In BC, the reduction may be a recategorization of certain expenses; in Newfoundland, the budget speech actually indicated an enrichment of the program this year, so my guess is that they wrongly budgeted high in the previous year, and are bringing estimates down accordingly.  But here’s the key point: nationally, aid is up by $135 million (or about 6.4%), to $2.3 Billion.

This is not a one-year fluke, either. If we extend the baseline back to 2011-12 (which allows us to see the full effect of Ontario’s unnecessary tuition rebate scheme), we see the following:

Change in Student Aid Expenditure Estimates, 2011-12 to 2013-14, by Province

 

 

 

 

 

 

 

 

 

 

 

 

Your eyes do not deceive you; that’s a 25.4% increase nationally, over two years. Institutions, in comparison, received a 0.9% increase.  To put this another way: student aid is up $465 million; institutional funding is up $156 million.  For every new dollar going into higher education, just 25 cents are going to institutions.

Distribution of New Provincial Appropriations for Post-Secondary Education, 2011-12, 2013-14

 

 

 

 

 

 

 

 

 

 

 

 

This 75-25 split might make sense if provinces were allowing institutions to make up cuts through tuition, as they did in the 1990s.  But this isn’t the case.  This year, tuition increased nationally by a little over 2.5%; next year, it will almost certainly be less than 2%.  The 75-25 ratio might also make sense if student aid money were going to poorer students; but of course that’s not true either; the Ontario 30% grant by design primarily ended up mostly in middle-class hands.

This vote-chasing foolishness is tolerable for a year or two.  But if provincial governments don’t change tack, we’re soon going to have a real institutional capacity problem on our hands.  Mark my words.

May 09

2013-14 Provincial Budget Analysis

The last of the provincial budgets was delivered last week, so it’s time for a quick analysis of spending on operating funding for universities and colleges.

Some important caveats on this data: Budgets often have only a vague relationship with what actually gets spent.  Last year in Quebec, for instance, what eventually got allocated to institutions was a good $120 million less than what was budgeted.  So numbers for 2013-14 need to be viewed as provisional.  And to be consistent, if you’re going to analyse a set of budget figures, you need to compare them to the previous year’s budget, which can be equally unreliable.  On top of all this, governments change their reporting systems periodically, which means you have to do a lot of irritating hunting around to try to get something comparable.

For instance, if you look at the material distributed by the Government of Ontario in last week’s budget lock-up, they claim a $22 million increase in transfers to institutions; if you compare it to what they said they would spend in their last budget, they’re down by $68 million.  In Quebec, operating grants are reportedly set to increase by about 1%, despite last year’s mid-year cut.  $30 million of that make-up can be explained by the government’s sticking to its investment plans; as for the other $150 million, I can’t explain it at all, and nor can anyone I’ve spoken to in Quebec.  Mysteries abound.

Lastly, it’s worth remembering that “total operating grants” (I’ve excluded capital funding here) is a different figure from “formula funding” – governments seem increasingly keen to give money for specific purposes outside the formula (in Ontario, for example, 25% of the announced “increase” was for a special fund for student mental health).  There is little predictability for institutions around these funds.

Enough banter.  Here’s the chart:

Change in Provincial Operating Transfers to Institutions, Budget 2012-13 to Budget 2013-14

 

 

 

 

 

 

 

 

 

 

 

 

Six of ten provinces had cuts, albeit mostly relatively small ones; Saskatchewan is the real outlier here, where the good times, seemingly, continue unabated.  Nationally, we appear to have had an absolute net decline in provincial operating funding of about $120 million, on a total expenditure of $16 billion.  That’s a fall of 0.7%, or 1.7% in real (after-inflation) dollars – more if you don’t believe the Quebec figure.  That’s the third year in a row we’ve had a fall in real expenditures (-1.6% in 2011-12, -0.27% in 2012-13), but I believe this is the first time since the late 1990s that we’ve had a national fall in nominal dollars.

What’s in the future?  Well, we might not see another nominal decrease next year, but if you look at the underlying budget fundamentals in the provinces, I can’t see institutions getting increases over inflation until 2016-17 at the earliest.  Better hope those international students keep coming.

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