OCTOBER 2025: THE DARKENING PICTURE
Canadian post-secondary education (PSE), critical to the country’s social and economic future, is in trouble. Failures, at both the campus and provincial levels, have set many leading universities on a path to unsustainability. One (Laurentian) filed for creditor protection in 2021 and, with its lessons apparently unlearned, others could be destined for a similar fate.
The universities have been dragged down by a tide of bureaucratization that has deflected funding away from the classroom, impaired educational quality, needlessly driven up student fees, and turbocharged student debt. Now the universities face a potentially devastating hit to their income base, which will make the situation much worse.
The numbers most relevant to the educational mission are accounted for in the General Operating (GO) Fund. It covers over 60% of total spending at the average Top 25 university, with the remainder coming mainly from capital expenditure and the vitally important area of Research (which is not addressed on this site but suffers collateral damage from some of the issues outlined here). The numbers are eye-popping, with total expenditure at the average Top 25 university surpassing $1.5 billion in 2024.
GO incomes are predominantly provincial operating grants and student fees. GO expenditures cover all the teaching and student services activities, and most costs relating to the overall operation of the entire university, such as administration and physical plant activities. (See HERE for an explanation of the income and expenditure numbers used on this website.)
In-depth analysis of the universities’ own number exposes two disturbing realities that, together, encapsulate the decline in Canadian PSE:
- While provincial support for PSE has certainly declined, the challenges faced by Canada’s universities have not resulted from lacking income.
- Much of PSE’s adversity is self-inflicted, because most universities have failed to deploy their funds prudently, consistently prioritizing support functions ahead of their “core mission” academic activities.
These realities run counter to the longstanding and widely-held perception that all of PSE’s adversities can be traced back to a single source – inadequate provincial funding. While the provinces can certainly be criticized for much of the adversity that students and faculty have been forced to face over the past two decades and more, they are not the only parties responsible for that adversity.
The challenges faced by Canada’s universities have not resulted from lacking income.
The perception that inadequate provincial funding has left PSE short of income is not supported by the universities’ own numbers.
A 1) Real GO Income Per FTE Student Since 2001 (Top 25)
1 A) 2024Download this table (Opens in new tab)
REAL PSE Income has increased by almost 30% since 2001 – from an average of $20,354 per FTE student to $26,385. So, GO Income at the average Top 25 university has increased by significantly more than the cost of living and rising enrollment combined. That’s not an income problem.
The perception that PSE’s challenges are the direct result of inadequate provincial funding deepened significantly when the provinces began reducing funding levels. The following chart clearly shows that “watershed point” for Canadian PSE.
A 2) Changes in Real GO Income Per FTE Student – By Category (Top 25)
1 A) 2024Download this table (Opens in new tab)
- Between 2001 and 2010, REAL provincial funding across the Top 25 increased from an average of $12,521 to $14,205 Per FTE student (the 13.4% increase in the above chart), but Per FTE student fees increased by even more – $6,680 to $8.900 (33.2%). Total GO Income rose from $20,354 per FTE to $24,745 (21.6%).
- Since 2010 the balance has shifted dramatically. REAL provincial funding has declined from $14,205 Per FTE to $11,061 (DOWN 22.1%), but increased student fee income (rising from $8,900 to $13,174 – up 48%) has more than compensated. So, despite that 22% decline in the provincial funding level, total GO Income has still increased – from $24,745 per FTE to $26,385 (up 6.6%). That’s a $1,640 per FTE (inflation-adjusted) increase in total income since 2010; remember that number – we’ll talk about it more farther down.
Those numbers show that there is certainly justification for student frustration at the provinces. For them, the consequences of provincial underfunding become apparent in a very public way every year, at budget approval time. Some 90% of GO Incomes are derived from two sources – provincial grants and student fees. Senior administrators make clear that they only have two options for responding to inadequate provincial funding – to increase student fees and to implement cuts.
The immediate hits are always taken by students, and their extent is reflected in that chart. Faculty seldom voice concern about fee increases because the alternative would be cuts that adversely impact their already-underfunded academic programs.
Against that backdrop it’s inevitable that the provinces become the target for criticism. Senior administrators tend to sit back and let the provinces take the heat. Their heavy focus on income inadequacy during the budget approval process further entrenches the perception that they are grappling with a revenue problem.
Meanwhile, something more insidious and damaging is slipping by unnoticed on the expenditure side, year after year. This is where faculty need to look for the real cause of the challenges they are continually required to face.
Income adequacy is determined not just by the amount of the income but also by how efficiently it is utilized.
Every PSE institution has an obligation to maximize its delivery of funds to the “core mission” academic areas, while having due regard for the need to provide a range of support services to students, and to operate the institution as cost-effectively as possible. Strong regard must also be given to the impact that decisions exert on the deepening societal problem of student debt.
If a university fails to utilize its funding prudently, it will further the perception that the problem is funding, when it might also be spending. Until this awareness deepens the provinces will remain in the crosshairs of criticism from both students and faculty.
Most universities have failed to deploy their funds prudently, consistently prioritizing support functions ahead of their “core mission” academic activities.
The Expenditure side of the GO Fund covers eight functions. Each can be assigned to one of three “Big Picture” categories – Academic-focused, Operational Support, and Student Services (see foot of page). Canadian PSE would be in far better shape if most of those increased incomes had been channelled to the core-mission Academic areas, but the reverse happened:
B) Changes in Real GO Expenditure Per FTE Student – By Category (Top 25)
1 A) 2024Download this table (Opens in new tab)
Instead of receiving the highest priority in budget allocation decisions, the Academic area was accorded the lowest.
More about GO Resource Allocation
Staff costs account for more than 70% of GO Expenditure, so the shifts shown above are an almost direct reflection of the universities’ spending on staff. As outlined HERE, we can drill into the CAUBO numbers and see how key elements of that staff cost money has been spent. The seams we need to reach relate to expenditure on faculty in Instruction, and expenditure on the non-academic staff who support that academic activity; the cost of these support staff can be borne de-centrally (within the faculties) or centrally (in Central Administration).
This exercise produces clear insight into the changing relationship between academic expenditure and administrative cost since the provinces started reducing support levels in 2010, although growing “administrative bloat” had been an issue long before that. The reduced provincial support magnified the importance of removing inefficiencies in order to maximize the delivery of funds to the Academic function. That started to happen for a couple of years, but then the universities reverted to their longstanding practice of prioritizing administrative support over academic funding.
C) Administrative Salaries & Wages Per Dollar of Faculty Salaries (Top 25)
1 A) 2024Download this table (Opens in new tab)
That chart provides a frustrating insight into the degree to which the administrative component has been permitted to overpower the academic component. In 2010 the average Top 25 university spent 51.1 cents on administrative support staff for every dollar it spent on faculty salaries; last year that number was 59.7 cents. The numbers for the Top 50 – another 25 universities were added to this site two years ago – show the same picture. (It is necessary to emphasize that the cost of staff in the separate Student Services area is not included in that graph line. Administrators have been known to advance that false explanation when challenged about rising administrative costs.)
The universities’ own numbers confirm what faculty and students have long suspected. There has been major growth in “administrative bloat”, with spending on administrative staff increasing at a much higher rate than spending on the academic staff who fulfil the “core mission” functions.
Efficiency assessments expressed in percentages or ratios are somewhat abstract and don’t convey the consequences in ways that resonate. This is where assessing the Relative Cost Impact (RCI) becomes important.
Quantifying the RCI involves calculating the answer to this question:
What is the additional cost of that increase in administrative support since 2010 (from 51.1 cents per dollar of Faculty salaries to 59.7 cents)?
The following chart tracks the real cost of that increasing administrative bloat since 2010.
D) Relative Cost Impact vs 2010 Level ($’000s) – Inflation-Adjusted (Top 25)
1 A) 2024Download this table (Opens in new tab)
By 2024 that spending level increase represented $25.2 million of additional administrative support at the average Top 25 university. That had to come from somewhere, and the preceding charts make clear that it was funded by a combination of increased student fees and lower allocation levels for the Academic areas.
In 2024 it amounted to $718 per FTE student; to be clear, that’s not the total cost of administrative support – just the inflation-adjusted amount by which it now exceeds the 2010 expenditure level.
Either way, each student had to pay $718 in fees in 2024 just to cover that additional cost. Over a four-year program, that’s almost $3,000 more in student fees – and, for many students, $3,000 more graduation debt that will take years to repay.
More about Administrative Cost
Let’s return to that $1,640 number mentioned farther up – the inflation-adjusted increase in average Per FTE income since 2010.
Chart E sets out the Change in Sources and Application of GO Funds Since 2010, showing where the increase came from and how the extra money was utilized.
The first justification for student frustration (there’s another) can be seen in the Income section, because that $1,640 Per FTE increase was the net result of a $3,145 LOWER provincial contribution and a $4,274 HIGHER student contribution; there was also growth of $511 in other incomes.
The real justification for faculty frustration can be seen in the Expenditure section, which shows that their challenges are not caused by lacking income but by how the universities have chosen to utilize the money. Maximizing classroom funding clearly wasn’t a top priority:
- Just $498 of the $1,640 was channelled to Instruction (but most of it went to non-academic Salaries & wages),
- $614 went to Student Services, and:
- $629 (the largest amount) went to Central Administration.
Investing in Faculty certainly wasn’t a priority, either. An infinitesimal $6 of the $1,640 went to Academic Salaries, $849 went to Other (non-academic) Salaries & Wages, $357 went to scholarships and bursaries, and $202 went to professional fees and externally contracted services.
These numbers also provide the second justification for the student frustration. When they commit to a post secondary education they place their faith in their chosen institution to utilize their fees effectively. The inability of most universities to make educational quality their highest priority represents a betrayal of that faith.
All these charts portray a distressing picture of PSE mismanagement. The issues outlined on this site combine to produce the situation PSE faces today – declining efficiency, tumbling educational quality, rapidly-increasing student cost, and skyrocketing student debt levels. The 2021 collapse of Laurentian University sounded a loud klaxon across Canadian PSE but there are few signs that it was heard. The line in Chart C is still on its inexorable upward track.
At the root of all these issues is lacking oversight and weak governance at both the university and provincial levels.
The Unthinkable Consequences of Inaction
As bad as the situation is, a much gloomier scenario is rapidly developing. The reduction in international student study permits, announced by the federal government in January 2024, has already triggered major income declines. The financial impact of lower international student enrollment will start to emerge in next year’s numbers but there’s little doubt that it will be dire. It could well take some PSE institutions (especially in the crucial college and polytechnic side of the sector) to the brink of unsustainability.
Longtime PSE consultant Alex Usher summarized the situation well in a June 2024 commentary. He said “I don’t think it’s an exaggeration to say that in the past 25 years, the sector never found a problem for which the solution was not on the revenue side”. He suggests that “we might have to centre efficiency for a change” and foresees a painful swing to “cost-side solutions”. Nevertheless, “done right, the institutions that emerge on the other side might be better ones.” Read Usher’s commentary HERE.
The case for “cost-side solutions”, rather than more revenue to paint over the ever-deepening rust of inefficiency, has been building relentlessly since at least 2001, but it has been continually ignored. That can no longer be the case because replacing income lost to tumbling international enrollment can only be achieved with significantly higher levels of provincial support, and multi-year, double-digit fee increases for domestic students.
A ‘solution’ focused on income is not just unrealistic – it would represent a continuation of the unforgivable unwillingness to confront the issues that have been undermining Canadian PSE for more than two decades.
It is disconcerting that the task of finding and implementing effective and lasting cost-side solutions rests in the hands of the very entities that have long ignored the need for them – senior administrators, boards of governors and provincial ministries. There will be no effective or lasting solutions unless the root causes of the decline are recognized and rectified. Those factors are explored in depth in the MORE page, but they revolve around lacking vigilance at the campus level, inadequate oversight and weak governance at board of governors level, and multiple failures (both individual and collective) at provincial level.
EFFICIENCY RANKINGS
As troubling as the above numbers are, they are just multi-university averages, and all averages are the product of above-average and below-average performers. It is unfair for all universities to be found equally guilty by group average. That’s why rankings are an important dimension of assessing efficiency.
Rankings provide school-specific insight, but they also create the potential for false comfort. Performing at an above-average level is not an attribute if group-wide performance has been declining for decades. That’s demonstrably the case in most of the Topic areas on this site – triggering the dangerous “normalization of deviance”, discussed on the MORE page.
Rankings require the schools to stand the test of comparison – not just with their peers but also with their own past. If a university’s spending levels move out of step with either (as they unquestionably have), questions must be asked. There may be credible explanations in some situations, but most will not be explained away easily. The failure to monitor – and to require universities to face those tests of comparison – is precisely what has allowed the destructive shifts to develop and worsen.
But the same goes for provincial ministries. As noted in the Academic Commitment topic, they now need to accept that their own failures are pivotal factors in the rapidly-rising student cost, declining educational standards, and accelerating move towards unsustainability. The provinces appoint a significant proportion of Board members and have their own duty of oversight, so they are ultimately responsible for the governance weaknesses that have brought many Canadian universities to this point. They have compounded the resultant damage by shunting a large part of their funding responsibility onto the shoulders of international students. The provinces can also be ranked – based on the performance of their universities.
So, throughout this site there are rankings covering the performance of both the universities and the provinces. They culminate in an overall ranking covering the financial efficiency of each Top 50 university (and province) in 2024. (See HERE for an overview of the methodology.)
Rankings are seldom welcomed in PSE or provincial governments, especially if they paint an unflattering picture, but the assessments are multi-dimensional and utilize the universities’ own numbers. How else can we determine their efficiency in pursuing their Core Mission?
If the resultant picture shows them in a poor light, it is one of their own painting.
FRONT-OVERALL-RANKINGS-2024
Download PDF (opens in a new tab)
********************************
The analysis on this site provides insight into something that is 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 carefully-selected information are released, with a focus on highlighting income inadequacy and justifying student fee increases.
The status quo is neither acceptable nor sustainable.
The long overdue and desperately needed remediation process for Canadian PSE must be built around a fundamental issue of principle.
The problems of excessive cost were created by the lacking vigilance and weak governance of previous years, at both the campus and provincial levels. These problems will be expensive and painful to fix. However, they are not the fault of today’s students – or tomorrow’s. For far too long, a system that is supposed to protect students from needless cost has been allowing it to pile up, and then billing them for it. That’s unconscionable.
Whether the remediation process takes place over time, or is funded from reserves, one of its central principles should be to avoid sticking students with the bill for yesterday’s systemic failings, or with further declines in educational standards.
Thank you for visiting this site.
SOURCE DATA OVERVIEW:
The financial analysis on this site focuses on the General Operating (GO) Fund, which represents over 64% of total expenditure at the average Top 50 university. It covers Instruction & Non-Sponsored Research, Non-Credit Instruction, and the Library (the Academic-focused functions), Computing & General, Physical Plant, and Central Administration (the Operational Support functions), and Student Services. Almost three-quarters of the GO 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. See more information in Data Sources.
N.B. Following its collapse there was no 2021 (2020-21 Fiscal Year) data for Laurentian University. To maintain data continuity, Laurentian’s 2020 and 2022 numbers were averaged for that year.