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.