Well, the Council of Ontario Universities or COU is looking for a new President and CEO. The role of COU is to serve as a voice for the province’s university sector and help improve the public policies that affect the sector. As the ad for the position states: “As a member-based organization, COU provides the collective voice of Ontario universities to government in an effort to enhance higher education in the province. COU works with its member institutions to convene the dialogue on issues, develop consensus, advocate positions, and advise policy makers. In addition to its important advocacy and policy work, COU co-ordinates a number of shared services for members, including inter-university transit of documents, application processing, and an online portal of research resources for students and faculty.”
Of course, the big challenges for the next president of COU include dealing with the projected slower growth of university enrollment and the development of a new funding formula for Ontario universities in a period of fiscal restraint. This comes after a period of remarkable expansion in the Ontario university system both in terms of student enrollment as well as funding. Between 2005/06 and 2012/13 undergraduate FTEs increased by 19 percent and graduate FTEs by 54 percent. While universities always advance the case for more money, the fact remains that operating grants from the Ontario government to its universities and tuition revenues have increased substantially – faster than the rate of inflation.
The future however will see a slowdown in enrollment growth given the reduced size of the demographic cohorts available for post-secondary education, increased competition from degree granting community colleges and the leveling off of participation rates in post-secondary education. Moreover, some awkward realities as noted by George Fallis have emerged with respect to how universities have absorbed all that money. Class sizes have increased and the reliance on part-time instructors grown while salaries have also grown making Ontario university administrators and faculty amongst the best paid in the country if not most of the world.
Add to all of this the high amount of long-term debt accumulated by universities from their capital expansion to accommodate more students, and one can see why the next ten-years is going to be a real challenge. Ontario allowed its universities to take on rather large amounts of debt over the last decade as a substitute for more government capital funding or additional fees on students. While debt service costs are currently relatively modest, they still absorb a millions of dollars that might otherwise be available for university operations.
Given slower enrollment growth and a funding system that rewards ‘bums in seats’ universities will find their resource envelope growing less slowly than in the past but they are saddled with an expensive cost structure. How the province wants to deal with university funding is going to be the big challenge. On the one hand, the province has liked a ‘bums in seats’ formula because it has helped foster the accessibility agenda the province has and grown university participation and enrollment. Dangling money for more students has provided the incentive for universities to meet the province’s agenda.
At the same time, this makes the bulk of university funding dependent on enrollment – grants per student enrolled combined with tuition revenues paid per student means a potential for large revenue fluctuations if enrollment drops. One need only look at what has is happening to smaller Ontario universities dependent on Education faculties for their enrollment – for example Nipissing - as applications to education dropped recently. Then there is the recent case of Wilfrid Laurier which apparently has also seen its expenses rise faster than revenue. For these universities, the future has arrived making them the fiscal canaries of the academic mine.
Given the desire to balance budgets in an era of slow economic growth and the resulting fiscal restraint, one might expect the provincial government to be partial to converting its university funding formula to a block grant. Universities might find that attractive given that it would provide them with a stable core of funding to meet their fixed costs or their research mission and use tuition revenues to meet their remaining costs. As well, their funding would become less sensitive to short-term enrollment fluctuations. The province might like such an approach because it would actually reduce funding volatility across institutions (and its own university outlays) by pegging the growth rate of the grant to GDP growth or inflation (think of the federal Canada Health Transfer after 2017). However, not tying its grant contribution to enrollment might give it less influence with respect to advancing its accessibility or differentiation agendas.
In the end, expect the focus of the provincial government to remain with funding tied to outcomes. The outcomes may not emphasize enrollment but some other policy target the provincial government has in mind. The provincial government expects to see a return to its spending on universities and will expect more for less given that some recent research has suggested that universities can increase quality outcomes without increased funding. The real challenge will be in negotiating what those “quality outcomes” are going to be and who will set that goal – universities, the provincial government or prospective employers. All the best to COU’s next CEO.