Over the past twenty years, much of Canadian post-secondary education (PSE) has failed its mission:

  • Despite paying far more, students are receiving much less; cuts to the classroom have degraded educational quality.
  • Support areas have been accorded higher budget priority than “Core Mission” academic activities.
  • Surely not by coincidence, most of Canada’s leading universities have FALLEN in global rankings.
  • Student debt levels are skyrocketing; this is hamstringing our “next generation” just as they’re trying to build a life beyond campus, creating a major drag on Canada’s economic growth, and imposing long term damage on its social fabric.

This was entirely unnecessary.

The Decade of Squandered Opportunity

The years between 2001 and 2010 saw REAL* General Operating income (adjusted for inflation AND enrollment) increase by 21%. This was an opportunity to improve quality in the classroom while keeping student costs moderate. Instead, Operational Support costs (such as Central Administration and Physical Plant) were permitted to increase by 21%, while increases to the Academic area (mainly Instruction and the Library) were held to 16%. Average student fees increased by 35%.

* All data used on this site comes from the universities themselves. The financial numbers are inflation-adjusted to 2021 dollars. Per FTE (full-time equivalent student) numbers represent “Real” values – adjusted for both inflation and changes in enrollment.

The Decade of Provincial Abdication

In around 2010, most provinces started reducing operating grants – or, at least, significantly reducing the rate of increase, even though enrollments were rising. Seemingly, they viewed the growth in lucrative international enrollment as an opportunity to absolve themselves of some funding responsibility.

In 2009, the provinces provided 60% of Operating income at the average Top 25 university, and students 36%. By 2021 the ratio had switched completely, with provinces contributing 42% and students 49%. (See HERE for the “Top 25” universities.)

If concern for the deepening societal problem of student debt carried weight in the minds of decision-makers, this dramatic funding shift should have magnified the importance of using the funds prudently and keeping student fee increases to a reasonable minimum.

That didn’t happen. As the following chart shows, the same pattern persisted. REAL income increased significantly, but that increase was now derived entirely from students. The damaging prioritization of Operational Support areas over Academic areas continued. In fact, despite the Real income increase and rising enrollment, allocation levels to the Academic activities actually declined.

 

A

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If universities had not developed such a voracious appetite for funding to expand non-core activities, tuition fees would be lower, student debt wouldn’t be hitting record levels, economies in the academic program (many of which were false economies) wouldn’t have been necessary, and those tumbles in global ranking may not have happened. Inefficiency can be extremely costly.

Most universities opted to ‘solve’ the problem with the very behaviour that caused it in the first place – by seeking more money from students to fund the inefficiency, rather than by confronting the inefficiency itself. And most provinces sat by while they did it – to the great detriment of their younger generation, and their own social fabric.

These issues are widespread, but the following table highlights some revealing differences between Québec and the Rest of Canada.

B

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The Major Shift in Staff Budget Deployment

Universities are people-centred entities, and this is reflected in the fact that over three-quarters of the GO budget is spent on staff. The clearest insight into university efficiency therefore comes from how the staff budget is deployed.

Logic would suggest that the deployment would prioritize the Core Mission areas, and reflect rising enrollment.

Again, it didn’t happen. Between 2001 and 2010, enrollment increased by an average of just over 30% across the Top 25, but budget allocations to the Academic areas increased by only 17%, while those to Operational Support increased by 31%.

Shockingly, since the provincial cutbacks started in 2010, triggering major student fee increases and magnifying the importance of fiscal prudence, the growth in Operational Support staff costs (12.7%) has been four-times the growth in Academic area staff costs (3.2%). And this was a period during which enrollment increased by around 18%.

C

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General Operating Staff Costs in 2021 ranged from $330 million at the smallest Top 25 university to over $2.4 billion at the largest, with an average of $581 million, so these shifts represented a very substantial dollar loss for the classroom.

Again, we see marked differences between the Rest of Canada and Québec. While Operational Support costs remain a national issue, at least the Québec universities seem more committed to the Academic areas than their peers in the Rest of Canada:

D

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The most telling consequence of those differences can be seen elsewhere on this site – the Québec universities deliver an average of 68% of their Operating funding to Instruction, while the number for the Rest of Canada is just 62%.

An increasing bureaucratization of universities has triggered a declining commitment to their “Core Mission”.

The patterns outlined in these charts reflect averages across the Top 25 universities. However, when a major issue is widespread, the group as a whole cannot be trusted to establish an acceptable level of efficiency. “Average” performance ceases to be a credible yardstick, and being above it is not an attribute.

The Skeleton in PSE’s Closet

One central issue is the skeleton in PSE’s closet. It’s the widespread practice of allowing spending in areas that are less enrollment-sensitive (Central Administration, Physical Plant) to rise faster than costs in the income-generating areas that are more enrollment-sensitive (Instruction, Student Services). Ironically, this runs directly counter to the basic common sense taught by business faculty just across campus. Once that has been done, sharply higher fees and/or classroom cuts are almost inevitable.

Administrators who spend too much money RUNNING a university damage its ability to BE a university

But this issue goes beyond inefficiency and into the disturbing territory of unsustainability, as discussed HERE. Anyone tempted to dismiss that notion as “scaremongering” should read the first two pages of the Ontario Auditor General’s report on the sad and infuriating story of Laurentian University HERE.

 

Core Mission Commitment

In recognition of its “Core Mission”, the primary goal of any university should be to maximize its delivery of funding to the academic areas, while having due regard for the need to provide a range of support services to students. Any money spent in the Operational Support areas, important as they are, is spent at the expense of the Core Mission areas.

The following chart is a ranking of the Top 25 universities based on their apparent commitment to their Core Mission:

E

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Each university functions within a governance structure in which key decisions are made by its Board of Governors. Numerous members of that board are appointed by the entities ultimately responsible for post-secondary education – provincial ministries. Those ministries have a fiduciary duty to ensure that every post-secondary institution is efficient and true to purpose.

The following chart illustrates the differences in the effectiveness of this governance by ranking the provinces based on the average level of Core Mission commitment shown by their “Top 25” universities:

F

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But even those rankings don’t necessarily portray a true picture of mission commitment. York, the top-ranked university, plummets to tenth when we assess just its level of funding allocations to the Academic areas. That’s because York directs a very high level of its funding to Student Services (15.6%, versus the Top 25 average of 10.1%).

The financial factors that impact efficiency and mission commitment are reviewed in detail in other locations on this site.

The numbers indicate that EVERY university and province has work to do. It’s only fair to point out that the current senior administrators and provincial ministries inherited these problems from their predecessors, but they are theirs’ to resolve. That involves taking meaningful action to reverse the deeply damaging drift that has occurred since 2001.

That’s not an option, it’s an obligation – to Canada and to each new generation.

See HERE for some thoughts on how the inefficiencies were able to develop.

The financial analysis on this site focuses on the key General Operating (GO) 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 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. CAUBO was founded in 1937, and Universities Canada in 1911 as the Association of Universities and Colleges of Canada. Further information on data sources can be found HERE