Most of Canada’s leading universities have fallen significantly in the global rankings in recent years, with major declines in their “Academic Reputation” (see HERE).
The obvious question is “Why?”
In its quest for some answers, this site reviews detailed financial data for 25 of Canada’s leading universities (see summary HERE). It focuses on the General Operating Fund, which accounts for almost 60% of the total budget at the average Top 25 school, and covers most of the operational core activities, including the teaching. (The vital area of Sponsored Research is only lightly referenced on the site.)
Is Income really the main problem?
Contrary to popular belief, PSE’s pre-COVID challenges do not appear to have resulted from lacking funding. Across the Top 25, REAL General Operating (G.O.) income has increased by almost 34% since 2001 – that’s after adjusting for inflation and increased enrollment.
All the numbers on this site, and the associated analysis, are inflation-adjusted to 2018-19 levels – the latest year of published data.
The perception of funding inadequacy results largely from the shift in the sources of this income. Across the Top 25, Provincial Grants have fallen from 62% of total G.O. income to 46%, while Student Fee incomes have increased from 33% to 48%.
For the first time, across the Top 25, students are contributing a larger share of G.O. funding than provinces.
This funding shift is the net result of two markedly different periods. See more on Income.
Of course, these are Top 25 averages and there are significant differences between universities and between provinces.
A key trigger for the decline in provincial funding levels was the rapid growth in international student enrollment, bringing in high volumes of new fee income. The provinces saw (and encouraged) this as a way of relieving themselves of some funding responsibility. Both the universities and the provinces have become dependent on this income, and that will become a critical weakness in the post-COVID world.
While frustration directed at the provinces may well be warranted, it’s impossible to ignore the central reality that REAL G.O. incomes have increased by almost 34% since 2001. In fact, they have even increased since 2009 (by 11.4%), despite the decline in provincial support levels; that money has come from students.
This substantial increase suggests that the main causes of PSE’s challenges – and the decline in global rankings – may rest more on the expenditure side of the ledger. That is the focus of this site.
So where is the money going?
The years since 2001 have seen a marked deterioration in spending efficiency at many of Canada’s Top 25 universities; some were already facing threats to their sustainability before COVID-19 arrived, and the pandemic will make this worse. For example (Top 25 averages):
- Operational Support costs (which exclude Student Services) have grown by 92%, while expenditures on Instruction have increased by 83%.
- The cost of Central Administration is a particular issue, having increased by 111%; it has not just tracked inflation and enrollment, but far exceeded both of them combined.
- Total academic salaries have increased by 72%, while non-academic salaries & wages in the Operational Support areas have risen by 90% (131% in Central Administration).
Given these averages, it’s not surprising that most of Canada’s top fifteen universities have fallen significantly in the global rankings.
In 2019, G.O. budgets averaged $746 million across Canada’s Top 25 – more than $1.3 billion across the Top 5. Small percentage changes can represent tens of millions of dollars.
It is important to emphasize that, while there are some endemic issues, efficiency is better at some schools than at others. Encasing them all in multi-school averages does not spotlight those with issues to address. Only rankings can do that.
The table below ranks Canada’s Top 25 universities, and their provinces, across seven Key Indicators providing insight into their expenditure efficiency. These rankings favour universities that prioritize instruction and student support, and keep other costs down. The breadth is important because it’s possible to perform well in some areas but poorly in others. However, performing poorly in most of the areas is indicative of serious issues. (An overview of the rankings, and the supporting analysis for each indicator, can be found HERE.)
THE TOP 25 – OVERALL EXPENDITURE EFFICIENCY RANKINGSOVERALL EXPENDITURE EFFICIENCY RANKINGS
Does an appearance in the lower reaches of the Overall Rankings table denote a weak university? Of course not – some of Canada’s top schools are down there. The supporting tables show that ALL the universities have work to do to improve their utilization of funding, and thus the quality and cost of the education they provide – and their global rankings. However, some clearly have more work to do than others.
This analysis is certainly not perfect, but at least it’s analysis – insight into something that is largely opaque to anyone outside a core group of senior administrators. Although they consume billions of dollars of pubic and student funding, the finances of our universities only move into public view, briefly, when their annual budgets must be approved. Even then, only limited snippets of information are released, usually with an accompanying narrative focused on income inadequacy.
The Rankings will not be well received in some quarters. Our universities are precious national resources, but they tend to resist comparison – especially if it’s unflattering. This analysis provides a glimpse beyond the otherwise opaque, using the universities’ own numbers. What more can we do to exercise public vigilance over our universities than use the numbers they report? If “the numbers aren’t right” or “apples are being compared with oranges”, it’s because the universities have not reported them correctly to the organizations they created many years ago, and continue to fund, for the very purpose of data-sharing.
The rankings require the schools to stand the test of comparison – not just with their peers but also with their own past. If a university moves out of step with either, there are questions to be asked, and usually remedies to be implemented. The reluctance to face these comparisons is what has allowed these issues to develop and worsen.
It has never been more important to face those comparisons than it is now.
Every school faces the daunting impact resulting from the COVID-19 pandemic. All of them must find solutions that don’t involve high expectations from provinces which themselves are reeling from the financial consequences of Coronavirus, or from the historically easy target – students.
The efficiency numbers illustrate the simplest reality of resource allocation – that a dollar spent in one area cannot be spent in another. There is a price to be paid for inefficiency.
It is paid by students, in needlessly-reduced quality and unnecessary demands for higher student fees. It is paid by the classroom, in lower relative funding levels and constant demands to do more with less. It is paid by recent graduates, who must start building their careers and lives with years of crippling student loan repayments ahead of them. And it is paid by Canada, as its top universities tumble in the global rankings, and as its economic growth is constrained because ever-increasing numbers of Canadians are entering the workplace with their disposable income throttled by loan repayment obligations.
The status quo is neither acceptable nor sustainable. It wasn’t sustainable before COVID, and it’s certainly not sustainable now.
PSE is a vital national interest under provincial jurisdiction, and today’s deeply damaging issues have developed under the watch of successive provincial ministries.
Today’s ministers now have a choice.
Option A is to maintain the status quo – to keep pushing the cost of PSE inefficiency onto the shoulders of new generations of students, leaving the burden to weigh them down as they try to build lives beyond the gates of campus, and to allow the decline in quality to continue.
Option B is to force change by implementing much stronger vigilance and governance, and insisting that their PSE institutions attain higher levels of efficiency BEFORE implementing further student fee increases or faculty cuts.
Only one of those options will address the issues of accessibility, affordability, quality and sustainability; the the other will take us in the reverse direction.
We shall see if the will exists to pursue it.
See HEREfor some thoughts on how the inefficiencies were able to develop.
The financial analysis on this site focuses on the key General Operating Fund, which represents almost 60% of the budget at the average Top 25 university, and covers areas such as Instruction & Non-Sponsored Research (Instruction), Student Services, the Library, Physical Plant, and Central Administration. Three-quarters of the G.O. budget is spent on staff. The numbers come from the universities themselves, via their affiliated organizations – the Canadian Association of University Business Officers (CAUBO), and Universities Canada, both working in conjunction with Statistics Canada. CAUBO was founded in 1937, and Universities Canada was formed in 1911 as the Association of Universities and Colleges of Canada. Further information on data sources can be found HERE