Funding Scholarship and Skill—an analysis of Canadian postsecondary education revenues.

This week’s CSBR Student Economist examines research prescriptions and policy proposals on the topic of post secondary education in Canada and explores whether the revenues of Canadian universities, degree granting colleges, community colleges, and trade schools have reflected recommendations and government resolutions.

On October 22, 2009, the Organisation for Economic Co-operation and Development (OECD), a Paris-based international forum with the mission of advancing policies that improve economic and social well-being, released its debut Learning for Jobs report as part of a broader initiative to promote educational systems that adapt to labour market needs in order to increase economic growth.  The Learning for Jobs report recommended that governments implement educational and vocational programs that “reflect student preferences and employers’ needs” and build frameworks in which the costs of postsecondary education are shared between governments, individuals, and current/prospective employers in addition to other related policy prescriptions.  The Secretary-General of the OECD Angel Gurria hailed the findings of the report and summarized that “if we can give young people high quality training, then we have a much better chance to succeed [in emerging from the economic crisis].”[1]

The clamour for greater investment in educational programs that promote in-demand skills has been echoed by labor economists and government leaders alike.  The group advocating for action includes the current Prime Minister of Canada Justin Trudeau, who in addition to proposing a relaxing of rules on student loan repayment and increasing the level of non-repayable grant assistance by $850 million per year by fiscal year 2019/20,[2] proposed allocating an additional $750 million per year towards provincially administered skills and apprenticeship programs as part of the 2015 Liberal Party platform.[3]  Furthermore, Trudeau pledged to roll back then Prime Minister Harper’s education cuts “and help more Canadians get the basic literacy and numeracy skills they need to find a decent job.”[4]

Though the policy recommendations and government positions have been publicly espoused, the execution of these education and skills investment plans will be spread out over many budgetary cycles with reiteration of long term commitments in the meantime.  For example, the Canadian Federal Budget for 2016 calls for an additional $125 million allocated to Labor Market Development Agreements which was significantly less than the amount proposed during the 2015 parliamentary campaign.[5]  To evaluate whether or not the policy proposals for the future are in keeping with the government’s past funding of post secondary educational institutions, it is helpful to examine past revenues of post secondary institutions.

The data conveying Canadian university and degree-granting college revenues shows that non-federal, government sources (provinces, municipalities, etc.) are the largest sources of funding for Canadian universities contributing 39.8% of all revenues in 2015/2016.  Furthermore, the revenues from non-federal sources have largely remained constant between 2011 and 2016 whereas revenues from the federal government have fallen 6.8% over the same five year period.  Though government related revenues have either remained steady or declined, tuition as a revenue source soared 22.2% between 2011 and 2016 as total university and degree granting college revenues climbed 7.7%; in 2011 tuition as a revenue source represented only 23.5% of all university revenues whereas by 2016 tuition and fees comprised 27.9% of revenues.  It can clearly be seen that tuition growth (an expense largely shouldered by individuals) has been a key factor in the growth of university revenues.

In the data showing community college and vocational school revenues, it is readily apparent that federal, provincial, and municipal government funding has generally increased at a steady rate between 2010 and 2015 at 17.5%, 3.0%, and 55.7% respectively (with the notable exception of the decrease in federal government funding in 2013/2014).  Though federal and non-federal governments contribute to the revenues of community colleges and vocational schools, the local governments (provincial and municipal) carry the largest proportion of the expense burden at 61.7% compared to 1.5% of community college and vocational school revenues coming from the federal government in 2014/2015.  When comparing the proportion of total revenues coming from tuition and fees, the proportion of total revenues from tuition at community colleges and vocational schools is lower than that of universities and degree-granting colleges (24.8% and 25.5% respectively).

In conclusion, though Canadian universities, degree-granting colleges, community colleges, and vocational schools all exist within the same greater educational system, significant differences exist between the various educational institutions including but not limited to revenue sources and funding structure. To achieve the recommendations set out by the OECD in the Learning for Jobs report (2009) and address the key policy issues such as the need for greater skilled trade programs as outlined in the Canada Education Policy Outlook (2015), the federal government must engage in closer cooperation with provinces and business leaders to foster greater cooperation between community/vocational colleges and employers by promoting apprenticeships and ensuring that students have access to financing and information on in-demand careers.  Furthermore, the federal government should monitor the growth of university tuition and student loan debt for recent college graduates.  With a postsecondary education attainment rate of 59.2%[6], Canada ranks among the most educated and skilled nations on earth; however, there remains room for improvement.

By,

John Butler

Works Cited

[1]“Action needed to improve quality and relevance of vocational education and training, says OECD” Summary of Learning for Jobs Report.  OECD (2009) http://www.oecd.org/education/actionneededtoimprovequalityandrelevanceofvocationaleducationandtrainingsaysoecd.htm

[2] “Post-secondary Education” Liberal Party (2015) https://www.liberal.ca/realchange/post-secondary-education/

[3] “Job and Skills Training” Liberal Party (2015) https://www.liberal.ca/realchange/job-and-skills-training/

[4] Justin Trudeau; speech to union-run training facility for plumbers and steamfitters (September 15, 2015) http://www.cbc.ca/news/politics/canada-election-2015-trudeau-jobs-skilled-training-1.3228505

[5] “Budget 2016”

[6] “Population with tertiary education”-OECD Data https://data.oecd.org/eduatt/population-with-tertiary-education.htm

Picture titled, "Governor Visits North Point High School", taken by Maryland GovPics On February 11, 2013, obtained through Creative Commons (https://flic.kr/p/dUyh6K