On Monday, the Alberta Government released some details about the Performance-Based Funding (PBF) scheme it wants to implement for next year.  Herewith, the lowdown.

The Good News: It’s a performance-based funding scheme, which leapfrogs Alberta about two stages ahead of where it currently is in terms of funding planning (it is currently one of the largest jurisdictions in the world with no funding formula at all).  And it avoided copying the more bone-headed indicators that Ontario chose to use (for details on Ontario’s indicators see here; to find the really terrible indicators just text search for the word “hammers”).

The Bad News:  Well….pretty much everything else.  Alberta had a few months to reflect on what Ontario did, and they came up with a scheme that looks like Ontario’s PBF with only minor differences.  Which, as I have pointed out a couple of times, is not very good. 

The province has told institutions it is looking at up to 20 indicators and has released a list of fifteen that it is considering.  As in Ontario, each institution will be able to pick one indicator of their own by which they should be measured; one journalist told me that apparently students have also been promised the ability to select one province-wide indicator.  It’s not clear yet if they will choose to play ball. 

A lot of indicators under consideration look like ones we’ve seen in Ontario: things like employment rates, median income, work integrated learning opportunities, and sponsored research revenue.  Some are a bit different – there’s at least one access measure in here (thank God) in the form of Indigenous enrolment, a whole bunch of weird financial indicators (more on that in a sec), plus a survey of employers asking whether the students they supervise from institution X are in fact well-trained (good luck getting adequate sample sizes, guys).  The more speculative ideas from Ontario, like measuring “skills” directly through PIAAC-like surveys, are absent.

The financial indicators are…well, I’m going to be kind and say, “not very well thought-through”.  Institutions are going to be scored on “administrative expense ratios”, the suitability of which kind of depends on what y’all include in there (when I was in AB in December, there was talk it would include student services, which I am sure will drive student unions around the bend).  Or there’s the “Campus Alberta Grant Dependency Ratio”, which is just basically income from government grants divided by total expenditures. From what I can tell this is a massive financial incentive to favour higher-paying international students over lower-paying domestic ones.  Then there is a bafflingly-labelled indicator called “Expenditure Targets,” which is explained as “Total Number of full-load equivalent students divided by Total Expenditures” but this is just totally bizarre because in effect it contradicts the previous indicator.  As if the government can’t make up its mind if institutions having money is a good thing or not.

Leaving the indicators aside, the real problem with this proposal its plan to turn indicators into dollars is NOT the sensible, envelope-based system that pretty much every one in the world uses, in which the government sets aside $X for performance-based funding and institutions compete for it.  Instead, they have chosen the possibly-goofy, possibly-just-malevolent contract-based system in which institutions have a chunk of their base grant clawed back (in Alberta they are apparently shooting for 40% after a couple of years of phase-in, somewhat less than the 60% target Ontario chose). Institutions have to compete to win it back, indicator-by-indicator.  Targets are set for each indicator, and if you miss even one indicator, some of your grant gets clawed back and returns to Treasury.  No bonus points for exceeding targets; it’s an all-stick, no carrot approach.

What this means is that a lot is riding on where those targets are set.  If you set the targets high, then a lot of institutions are at risk of losing money, making the whole exercise seem like a budget-cutting exercise in disguise (it does not help matters perceptually that the Advanced Education business plan clearly envisages overall funding cuts of 20-25% over the next three years).  This is what I call “painful” Performance-Based Funding.  But maybe – just maybe – the government will wimp out and make the targets easy to hit.  That way they can keep institutions more or less whole while still claiming they are tough guys by making 40% of funding performance based (given the lack of squawking about performance-based funding from institutions in Ontario, I surmise this is what is happening there). This is what I call “pointless” Performance-Based Funding

Now, I hear that at the press conference, when the Minister was asked how this scheme rewarded performance if no institution could possibly come out ahead, he hedged and said, well, maybe there could be some way to take some of the money clawed back from institutions and put it into a separate competitive fund …it gets hazy after that.  I am not sure I believe that the government doesn’t have a firm plan for the money (Alberta isn’t Ontario, and the cabinet office doesn’t usually allow Ministers to pull stuff out of their derrières).  But let’s say this comment was legit: what the Minister is describing is the envelope model!  The one he chose not to implement!  If you actually want to reward performance, why not build that into the system directly instead of through some half-thought-out add on?

<headdesk>

Here’s what I think happened.  The political timetable was set before anyone fully developed this stuff.  The timetable says: “implement in April”.  That means consultations have to start now, which in turn means some design work had to have happened before XMAS in order to frame the consultations.  Since the McKinnon report was in October, there wasn’t a whole lot of time to do the hard work that would have been required to come up with a state-of-the-art envelope system like, say, Tennessee’s.  And so, instead, they just grabbed the nearest example they had to hand (i.e., Ontario’s) copied it, and hoped no one would notice.

(N.B. to all public servants: there actually do exist SPECIALIZED FIRMS which can help you with exactly these kinds of rush jobs AT REASONABLE RATES, DISCRETION GUARANTEED, etc.  Just saying).

Anyways, long story short: it’s good that Alberta is moving on performance-based funding, but Good Lord what a wasted opportunity.  They had a chance to improve on Ontario’s half-baked effort and instead copied nearly all the least-baked bits. Discouraging.