About this website

Over two million students study at Canada’s colleges, universities and polytechnics – the equivalent of 1 in every 18 Canadians. It’s a constantly regenerating sector that, at any point in time, contains almost 10% of the future national workforce – people whose skills and financial circumstances will be vital to Canada’s social and economic well-being.

It should concern every Canadian that we are saddling this group with debilitating debt. When they leave campus, most have no car, no house, no life-partner, and none of those joyous but expensive things called children. And yet many already owe tens of thousands of dollars. That is hobbling them at a crucial point in their lives, and undermining the Canadian economy. Every year this picture worsens. Frustratingly, the financial analysis shows that much of this is needless.

On the Front Page we saw that the face of PSE in Canada has changed since 2001. Provincial (i.e., public) support levels have diminished since 2009, but increasing student contributions have far more than filled that gap. Across the Top 25, enrollment-adjusted income growth has exceeded inflation by 31% since 2001, and yet the perception continues to be that inadequate funding is the central issue. However, when we study the expenditure side of the equation, we see clear evidence of selective profligacy that is undermining quality, inflating student fees (fuelling that debt), and threatening sustainability.

So how has this happened?

Most of the issues outlined on this site do not result from inescapable societal, technological and economic change. They are self-inflicted, and have developed in the shadows created by lacking vigilance at both the campus and provincial levels.

Our colleges, universities and polytechnics consume billions of dollars of public and student funding, and yet their complex finances only move into public view, briefly, when their annual budgets must be approved.

Society relies on a triumvirate – senior administrators, boards of governors, and provincial ministries – to ensure the effective use of public funds, and to safeguard PSE and students. The first two are the active participants in the process, while the provinces place their reliance on the boards.

The board members (often provincial appointees) oversee the financial and administrative affairs, and ensure the overall health of these vital institutions on behalf of the public. Most live busy and successful lives away from their volunteer board roles. They don’t have time to conduct their own research, and are dependent on the information placed before them.

This is where the process is breaking down.

Every year, senior administrators make budget recommendations to their board, providing numbers to support the recommendations. Provinces and students claim that they can’t afford what their institutions are expecting of them. Administrators warn that “anything less will trigger cutbacks”. The budgets are eventually approved, often with a combination of fee increases and cuts that adversely impact the academic program.

The efficiency decline since 2001 reveals that the process is flawed and dangerous. The habitual “go to” solutions for budget shortfalls do not solve the problems, but worsen them.

The are three typical flaws:

  • A failure to monitor longer-term patterns (not just the last year or two) has caused universities to fall victim to “issue-creep” – a situation in which small annual movements turn into major change over a longer period. They have compounded this problem by comparing themselves to peers that are usually suffering from the same issues; this illustrates the danger of “social proof” – the notion that if everyone else is doing it, then it must be okay.

 

  • The numbers submitted by senior administrators to support their recommendations (and the comparator schools) are often selected to produce a desired outcome rather than what may be the right outcome. This exacerbates the “issue-creep” problem.

 

  • The process has displayed a disturbing inability to differentiate between costs that should be tied to academic activity levels (“variable costs”), and those that should remain more stable (“fixed costs”). When enrollment and research activity increase, budget allocations in directly-impacted areas should move with them. Those variables have a far lower impact on support areas.

 

Perversely, a reverse logic has applied in budget decisions. Over the past two decades, funding directed to the support functions has increased faster than funding for Instruction. Central Administration, in particular, has received a disproportionate share, taking it away from Instruction, where it’s needed most because of increasing enrollment. Since 2001, Central Administration costs across the Top 25 have risen by 186%, while Instruction costs have increased by just 147%.

The budgeting weaknesses have produced a damaging cost-and-impact spiral. Small movements each year have bestowed additional funding on some areas only by taking it away from others. Over time, the small movements have turned into much larger movements, and become major issues. It wasn’t sudden change, but a gradual drift that has turned dangerous.

This situation has been allowed to develop and worsen over many years – beyond the awareness of those who are there to prevent it.

That rampant bureaucratization of universities represents a failure of governance and governments.

But the issues of today are destined to worsen. That’s why the situation must be addressed.

 

The Ticking Time Bomb

The rapid escalation of costs that should be more fixed than variable represents the timer on the “ticking time bomb”.

It’s an ironic situation because, across campus, while the budget process is playing out, professors in the business faculty are warning their students about an important danger: Don’t let your organization build a high volume of fixed costs that it cannot sustain through the next downturn in the business cycle.

But that’s precisely what most universities are doing by allowing Support Costs to grow faster than expenditure in academic areas. The warning may have a more corporate focus in the classroom but it’s just as valid in a PSE setting.

A downturn in PSE would be triggered by declining provincial funding levels or falling enrollment, or – worse still – both. The day of judgment has been deferred by the arrival of increasing numbers of international students, who pay much higher fees. The universities, often with the encouragement of their province, have pursued higher levels of International enrollment less for the cultural “shot in the arm” it brings, and more for the financial one. It’s a dangerous reliance, given Canada’s precarious relationships with countries such as China and Saudi Arabia.

When adversity strikes, and it will at some point, the growing central cost of the support functions will become a millstone. Once taken on, these costs are extremely difficult to reduce.

In a declining enrollment world in which incomes directly reflect student numbers, things would become grim very quickly. In the absence of major reductions in the support costs, the only response would be unmanageable cost increases for the provinces and students, and drastic cuts to all areas including the academic area. Quality and accessibility would suffer, student debt would deepen.

So the burden of that millstone will not be borne by those who created it, but by those who inherit it.

 

Where From Here?

It has long been accepted that universities must enjoy a high level of autonomy. The provinces take a detached role, leaving most affairs in the hands of boards of governors and senior administrators. However, the provinces can no longer sit by while this crisis develops. An expectation of higher fiscal efficiency is not an invasion on academic autonomy; the two are not mutually exclusive. In fact they are complementary, because autonomy without accountability is a recipe for unsustainability. It’s a tightrope walk, but one that must now be undertaken. Much stronger vigilance is the only way of reversing the dangerous and accelerating drift towards that unsustainability.

These challenges were not unforeseen, as the following comments indicate:

 

I believe (that) in all universities around the world we are dealing with very important issues of how to strike the proper balance between universities and governments, how to strike the proper balance between the autonomy of universities and the reasonable accountability of universities for the public funds that sustain much of their activity.

 

These words came from a senior administrator – Dr. Michael Stevenson, then President and Vice-Chancellor of Simon Fraser University.

Unfortunately, that was in April of 2004. And here we are – many years later and deeper in challenge – still frightened of the tightrope.

PSE is a vital national interest under provincial jurisdiction.

The provinces have been part of the problem. They must now, individually and collectively, become catalysts in implementing the solutions.

 

Why have I created the site?

When a site like this emerges from the ether it’s understandable that visitors will want to know where it comes from, who put it there, and what their motivation might be.

Retired since 2008, I spent twenty-five years of my life working at two major universities, initially within central administration but mostly with student government.

I’ve chosen to poke my head above the parapets of retirement because the financial efficiency of our post-secondary institutions has long been a personal hobby-horse (more a labour of concern), and because nothing has changed since I wrote an article on this topic for Macleans in January 2010. I’ve continued accumulating the data, and created this site because I’m concerned at things I continue to see, long after they first became issues. I hope to keep the site updated (time, circumstances and health permitting) as new numbers and new issues emerge.

Of course, I have a natural fondness for students, having worked so closely with them for so many years. But I’m also a Canadian, a father and a grandfather, and that’s why I decided to devote personal time and money to the development of this site. The current situation is damaging, dangerous and unsustainable, and it is negatively and needlessly impacting young lives and the fabric of our country.

Nobody has “put me up to this” – only my two grandchildren can do that to me these days. After spending so much time on this analysis over the years, sharing my concerns is something I feel I have to do before the lid closes on me. And before those grandchildren (hopefully) set foot on campus for the first time.

My hope is that the site will help to spotlight issues that have needed to be addressed for a long time. This reaches to the heart of things that are very important – our students (those of today and future generations), our post-secondary institutions, and the unique Canadian society in which we are privileged to live.

On a closing note, I must beg your indulgence. I was born eons before the technology-crazy world of today appeared. The nature of the subject matter makes this site rather text- and table-heavy, and that won’t work so well for people who do most of their surfing on smartphones and small tablets. And, regardless of how you access it, the site will appear rather rudimentary and lacking in glitzy features; that’s down to two things – at my age it’s substance over style every time, and there are limits on the affordability front.

Thank you for reading.

 

William Doswell Smith – Edmonton, Alberta