Universities under pressure

This article is associated with the WLUFA Advocate 4.4 November 2015.

This article was first published in the Ontario University Student Association’s July 2015 edition of Educated Solutions (pp. 8 – 10). The Advocate thanks OUSA for permission to reprint it here.

Universities under pressure
By Dr. Max Blouw

It is increasingly difficult for any Ontario university to ‘Reach Higher’. In fact, our universities today are less sustainable and resilient to setbacks than they have been for some time. Why? And what can be done to change course, to build resilience and strength in our institutions?

Ontario has invested massively in university education over the past decades. Much of the increase has been to fund more students (access). Some of the increase has gone directly to students in the form of increasing scholarships, bursaries, loan programs, and grants to reduce tuition costs (student financial aid). However the formula that funds institutions has remained virtually unchanged – ensuring that while the numbers of students (and cost to government) has escalated dramatically, the resources available to support students within the universities have become increasingly constrained.

Within this broad framework, and to specifically examine why institutions currently have less capacity than in the past, consider the following pressures:

Revenues are in decline due to:

• fewer university-bound domestic students, the end of the “echo” generation
• lower provincial contributions to the cost of education; “efficiency” and other reductions
• increased regulation of tuition and other fees, and appropriation by government of some fee revenues, such as $750 per international graduate student

These factors have resulted in Ontario universities occupying the very bottom echelon of funding per student (combined grant, tuition, and other fees) in all of Canada. They have contributed to the vulnerability of our system to sustain itself in quality and capacity, and to compete on the international stage.

While institutional revenues have become increasingly constrained, costs rise rapidly due to:

• the premium price of intellectual talent combined with pattern bargaining among our faculty, staff and contract employees drives remuneration considerably higher than in other sectors of the economy
• high levels of sector-specific inflation (e.g. copyrighted printed and e-materials, scientific and health equipment)
• increasing expectations and mandates by society and governments for direct public benefit from research
• higher expectations on universities to engage with the challenges of their communities and regions, and with the grand challenges that our world faces (climate change, conflict, poverty, inequality … etc.)
• pension deficiency contributions and other post-retirement benefits costs,
• maintenance and renewal of specialized and ageing infrastructure, including buildings
• capital borrowing costs to support strong growth in student numbers over the past decades
• meeting the needs of an increasingly diverse and service-oriented population of students
• increasing occupational, safety, and other workplace standards
• growing requirements for accountability and detailed reporting
• and increased costs associated with inter-institutional competition and advocacy
It is important to note that these forces are not experienced equally by institutions, and that considerable variation exists among them in financial health and the ability to withstand adversity.

Beyond these, three other important factors drive differences in sustainability and resilience among universities:

• Location: Students are unevenly distributed across Ontario. There will be a dip in university aged student numbers in the short-term in nearly every census area in the province. However, and importantly, the dip will be minor and/or reverse quickly in the core of the GTA (Halton, York, Peel, and Toronto) and growth will follow. In other parts of the province the decline in university-aged students is forecast to continue indefinitely. Universities in, or close to, the GTA, will be able to attract students and revenue much more easily than those in more remote parts of the province. Growth in student numbers has been the dominant driver of financial capacity of nearly all universities in Ontario for some time, so those that are in regions of ongoing demographic decline have a bleak future unless changes are made in how universities are funded.
• Reputation: Is the most important asset that any university has because it facilitates the attraction of talent and resources. Reputation depends on age of the institution, location, size and complexity, performance of faculty in research and in shaping the opinions of the day, ability to capture the public imagination about the relevance and importance of the contributions it makes (newsworthiness), and relationship in prestige to other institutions in Canada and around the world. Reputation rises only slowly, and it is often out of step with reality for rapidly-changing institutions. Unfortunately it often has little to do with teaching outcomes and the student experience (which virtually every institution understandably touts), or with the contributions of the university to its communities or region.
• Program mix and revenue per student: The current funding formula in Ontario provides higher revenues to some academic programs than to others. At one time there may have been a connection between cost to deliver a program and government revenue per student (known as the BIU “yield”) to support that cost. But today such a relationship is not formally recognized, and a logical basis for variation in BIU yield is unclear. Among universities there is great variation in the mix of general, professional, undergraduate and graduate programs, so there is considerable variation among universities in the amount of support they receive per student. Liberal arts universities with few professional or other specialized programs receive less support per student than universities with a higher proportion of specialized, professional and graduate programs. As a rule then, larger, and more research intensive universities with more specialized programs have greater financial health than those that are smaller, less specialized and with fewer professional programs.

When we take these three major influencers of financial health (location, reputation, revenue-per-student) and apply them to the universities in Ontario we see considerable variation (but also remember that universities are not well funded relative to the rest of Canada). Those in high growth (GTA) locations with strong reputations and high revenue-per-student programs are more resilient and sustainable. Others have less strong reputations and are in negative growth locations with lower revenue-per-student program mix, so they are more vulnerable; in some cases highly vulnerable. Others are in intermediate zones of strength/vulnerability depending on the mix of their location, reputation and revenue-per-student.

In other words our universities are very highly differentiated in their fundamental capacities and potential, and well beyond the sense implied by SMA documents. This differentiation in financial capacity and ability to deliver on university mandates for the education of our students is more fundamental than the differentiation described by SMA agreements. Funding formula review must go beyond a narrow consideration only of government operating grants. To meet the needs of future students throughout Ontario it (or a larger process) must address, in a more sophisticated and nuanced manner than has been achieved in the past, the relationships among institutional mission, location and demographic opportunity, reputation, cost of programs relative to revenue for programs, balance between student (tuition) and government (operating grant) contributions, and the contributions by institutions in teaching and to the community.

This will be difficult. It will require all stakeholders to take a system view and to engage in solving problems beyond the confines of their immediate self-interest.

All Ontarians benefit from a vibrant university system – supporting well those institutions that are at the pinnacle of international reputation and performance, while equally supporting those that make vital local or regional teaching, learning and community contributions. Our goal must be to make all of our universities more sustainable, resilient and, dare we hope, robust institutions that will carry their differentiated missions forward with confidence and capacity.

The views expressed are the personal views of the author, and certainly not the reflections, positions, opinions or priorities of Wilfrid Laurier University where he is president, nor of the Council of Ontario Universities of which he is chair.