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Last week, freshman Ontario Finance Minister Vic Fedeli appeared before the Economic Club in Toronto and, reading from the best-selling book “Oh My God Who Knew the Previous Government Left the Finances in Such Terrible Shape: A Guide to Your First Provincial Budget”, announced that the actual, real, pinkie swear, true budget deficit for this year was $15 billion rather than $6 billion and that to help close the gap, Ontario colleges and universities would be asked to increase their intake of international students by 25,000 or so.

Well, actually, no he didn’t.  But he may as well have.

The key phrase in the speech was about how everyone is going to have to bear an equal share of the burden in order to get the budget back in balance.  He probably doesn’t mean that literally.  $15 billion is 10% of the provincial budget and I’m willing to bet he’s not going to impose a 10% cut on the health sector. But let’s assume for the sake of simplicity that he means the cuts are going to be roughly proportionate across all areas of government. And let’s also assume, for the sake of simplicity, that the Tories aren’t planning on letting economic growth do any of the lifting on balancing the budget, and that it’s all going to be achieved through cuts.  I have no idea if that is true or not, but such an approach would provide room towards the end of their term for tax cuts, which I sort of assume is the Tory endgame, so let’s go with that.  What does it mean for post-secondary education?

Very roughly: about a $180 million cut to student assistance and a $520 million cut to institutions, which we can assume will be split roughly 66-34 between universities and colleges.

So, what does this mean?

Well in student aid it could mean a lot of things.  I actually think the cuts to student aid could be a lot bigger than $180 million, simply because that budget has grown so much in the last few years (more than doubled since 2011-12, mainly because funds that used to go into tax credits now go through student aid to fund the province’s targeted free tuition program).  I hope it doesn’t, obviously, but it’s a possibility.  That said, there are some easy places to cut in student aid that would have minimal effects on student welfare.  Students from families making between $110,000 and $170,000 receive $1800 in grants because even though everyone recognizes this was the goofiest part of the old Ontario 30% tuition refund, the Wynne government refused to trim it when they re-jigged the system to become a Targeted Free Tuition system in 2016.  Cutting those grants (if those students need money, let them borrow) probably delivers most of the needed savings.  To get the rest of the way, if need be, lower the threshold for full tuition rebate slightly or (better) increase the phase-out rate above the threshold.  No muss, no fuss, popular and sensible program basically intact.  Sorted.

The money for institutions is a little trickier.  There’s really no way to do achieve savings other than cut the basic grant (oh- and not spend new money – so either those new campuses the Liberals announced may get delayed a couple of years or the cuts to other campuses will be deeper).  So, everyone should just assume that the cuts on the order of 10%.  That’s not the end of the world or anything: institutions in Ontario are already so little dependent on provincial funds that a 10% cut means about a 4% drop in total college revenues and 2.5% in total university revenues.  But it’ll sting.

But the key question is: what will institutions do when faced with cuts of this magnitude?  The answer, as I outlined a couple of weeks ago, is easily deduced from recent experience: they’ll admit more international students.  In the university sector, at prevailing rates of tuition, a $350 million cut can be made up by admitting another 14,000 students; in colleges, where tuition is lower, a $170 million cut likely means around 11,000 new students.

Now unless the government has really not been paying attention, it must know this is how things will shake out in the sector.  So, when it is strongly implying a 10% cut (maybe more if health care gets ring-fenced), it is also likely aware that it is in practice also announcing an increase of about 25,000 international students over and above the 100,000 or so already studying in the province.

Fortunately, Agent May is still on the job.

This business of getting foreigners to pay for our education system is pretty addictive, once you really get started down the path, isn’t it?