Everything you need to know about last Thursday’s horror show in a handy Q&A session.

Q: What’s the damage this time?

A: I swear to God I do not understand how the province of Alberta explains anything financial.  The University of Alberta claimed the system-wide cut was $126 million, the Globe and Mail said it was $135 million.  I count the cut to operating institutions as being $175 million if you use the 20-21 budget as a base, and $142 million if you use 20-21 estimates (see chart below, from page 25 of the Budget).  So depending on which of these numbers you choose, it’s a cut of anywhere between 6 and 8%.  And that’s on top of a 4% cut in 2020, in a budget delivered just before the pandemic hit.  

Table 1: Alberta Advanced Education Estimates, 2021-22

Q: Brutal.  And this is on top of a bad year, revenue-wise?

A: Looks like it.  The table below is from page 6 of the Ministry Business Plan, which in theory rolls up all the budgets of the province’s post-secondary institutions.  Tuition revenues appear to have fallen $90 million, and sales, services and “other” seem to be down about $400 million, which makes intuitive sense except that for some reason they don’t seem to be reporting much in the way of lowered costs, which does not seem right.

Table 2: Alberta Advanced Education Business Plan Revenue Figures, 2021-22

Q: And that’s on top of previous cuts?

A: Yes.  In real terms (i.e. after inflation), Budget 2021-2022 provides the system as a whole with about $500 million less in public money than did the final budget of the previous government in 2018-19.  That’s a drop of about 20.5%.  If you insist on ignoring inflation, the figures would be $405 million and 16.6%, respectively.

Figure 1: Operating Support for PSE Institutions, Alberta, 2016-17 to 2021-22, in millions of $2021

Q: Is it over yet?

A: Nope. The annual Ministry Business Plans, which purport to “plan” on a three-year rolling basis, maddeningly does not actually specify government spending on a three-year basis.  Rather, what it does is identify all the “revenue” and “expenses” that do not involve provincial operating funds, and then reports a “net operating result” which is pretty close but not exactly equal to the provincial operating grant (institutional deficits, which in normal times are not a thing but clearly are in Pandemic times, also show up in there).   Figure 2 shows what the Ministry Business Plans projected as a net operating result in each of the last three years and compared to the actual budget allocation.  Pretty clearly, the government was until recently planning on another 11% cut for next year.  The new ministry business plan shows a smaller but still significant 7% cut for next year.

Figure 2: Reconciling Budget Allocations and Business Plan Forecasts

Q: Are these cuts being made equally across the system?

A: HAHAHAHAHAHAHAHA.  Mercy.  No, they are not.  

Look, the political problem here – which literally everyone in Alberta understands but can’t say out loud – is that the most overfunded institutions by far are the regional colleges: places like Grande Prairie, which happen to be located in safely Conservative ridings.  It is politically untenable to hit those institutions, so the pain must be inflicted more heavily on the universities.  And in particular, on the University of Alberta, which is located in a city which is – from a political point of view – deeply unreliable from a Conservative point of view.  The three research universities – Alberta, Calgary and Lethbridge – are absorbing something like 60-70% of all cuts, and Alberta alone is absorbing 40-50% of it.

If you’re wondering how the UCP government managed to engineer this, it’s worth considering that Alberta doesn’t currently have a funding formula, which leaves government freer than it would be elsewhere in distributing cuts.  So, for instance, the 2019-20 cuts – which were administered mid-year because the election was held in May – were distributed based on which institutions had the largest reserves and thus which could best “bear” a mid-year cut.  This just happened to punish the University of Alberta because the previous year that institution had made significant efforts to restrain cost growth (no good deed goes unpunished).  

Since 2020, cuts have been distributed on the basis of some kind of comparison of government subsidies of “peer institutions” across the country.  We know that Alberta and Calgary are being compared with their counterparts in the U-15.  Undoubtedly, these institutions were much better-funded than their U-15 peers, though to be fair their peers have had a couple of decades to develop alternative financing sources and cutting them without letting them develop these is a tad on the reckless side.  In theory, all the other universities and colleges were also measured against “peer” institutions, but it’s not entirely clear who their “peers” were (AFAIK this data has never been released, even to institutions themselves), and so there is room for reasonable doubt about whether there was data cherry-picking with respect to developing the basis for cuts to regional colleges.

Q: What does Alberta’s Performance-Based Funding system have to do with all of this?

A: Not a thing.  PBF is a way of distributing a portion of what remains of public funding, not a means of reducing public funding.  As far as we know, the system will look a lot like Ontario’s, which, as I showed back here, doesn’t actually do much to either reduce or re-distribute money.

Q: See you back here next year?

A: Count on it.