You may have heard that there is a Conservative government in Ontario.  You may also have heard that it is, shall we say, keen on reducing government expenditures.  Further, you are aware that a provincial budget is traditionally delivered sometime between February and May.  So, naturally, you are asking yourself: what might the new government’s budget mean for post-secondary education?  What are the best-case and worst-case scenarios?

I can’t claim much here in the way of inside information.  There are a lot of rumours but nothing more than that.  However, two of them are relatively consistent and are in line with everything we know about the expected pattern of overall spending.  They are:

–          A cut in the operating grants of somewhere between 8 and 15%.

–          A cut in OSAP spending larger than the cut to institutions.

Given that, the best-case scenario for institutions probably looks something like this:  institutions take a straight budget cut of eight per cent.  However, the government chooses to wink at measures which allow institutions to make up for this cut via entrepreneurial means (the Minister, Merrilee Fullerton, is a known proponent of increased entrepreneurialism in health care): specifically, through higher international enrollment and a commitment to expedite university and college requests for more niche cost-recovery programming.

Further, the government will cut OSAP expenditures by about 20%, to a total equal to grant expenditures plus tax expenditures in 2015-16.  This, plus the natural increase in demand for OSAP due to tuition drifting slowly upwards will require eligibility cuts: this will be done not by killing the targeted free tuition program and replacing it with something resembling the old grant program, but rather by restricting eligibility. This restriction will be done either by lowering eligibility thresholds to grants or by reducing the number of independent students who may access grants (in either case, total assistance would remain the same, but a student would have to make up for a decline in grants through loans).

And yes, I would say that’s the *best*-case scenario.  Revenue flexibility would mitigate the worst effects of grant cuts to institutions, and a well-designed trimming of the free tuition program would maintain its value for those who need it most and reduce the extent of windfall funds going to students who do not need it.  Trust me, it could get considerably worse.  Here’s how:

First, assume a grant cut on the high-side: say fifteen percent or so.  Next, assume the Conservatives do not allow much in the way of revenue-generation.  In fact, let’s say they actually go the other direction, and impose a tuition freeze. There is a small chance this is to curry favour with an interest group (students).  However, a freeze is more likely justifiable because it’s in line with the modern conservative political view that progress is measured not by growth in incomes (which requires tedious mucking around in monetary and competition policies), but by the extent to which the prices of major consumer goods (e.g. beer, car insurance) never increase.  Assume further that they play a nativist card, declare Ontario PSE institutions to be for Ontarians and impose a moratorium on increasing admissions to international students.  Either one of those would multiply the ill-effects of the cut: together they would be crippling.

Now imagine cuts to OSAP to the order of 30-40%: to bring total spending not down to 2015-16 OSAP + tax expenditure levels, but simple 2015-16 OSAP levels.  Imagine further that after these cuts were carried out, spending was re-profiled in a manner that actively reversed the progressive spending pattern embedded in the current free tuition program; say, by making grants available as a flat rebate to all students.  That would not necessarily kill access (loan programs are remarkably effective after all) but it would make overall funding less fair, by raising net prices for the poor and lowering them for the rich.

The best-case scenario is not good, but it is bearable.  The worst-case scenario would be catastrophic.  I suspect the actual budget will be somewhere in the middle, but I have a nagging feeling it is going to be closer to the latter than the former.